Oct. 17, 2006 service economy class 1

EVOLUTION OF INTELLECTUAL PROPERTY

Prof. Pamela Samuelson,

UC Berkeley, iSchool & Law

October 17, 2006

Oct. 17, 2006 service economy class 2

WHAT IS IP?

• Intangible rights in commercially valuable information permitting owner to control market for products embodying this information

• Copyrights for artistic & literary works• Patents for technological inventions• Trade secrets for commercially valuable secrets

(e.g., source code, Coke formula)• Trademarks (e.g., Coke) identifies source of goods

& services, distinguish from those made by others

Oct. 17, 2006 service economy class 3

WHY IP?

• Fundamental economic insight underlies US patent and ©: a grant of rights to creators enhances incentives to invest in innovation & make innovative products available

• Many other factors play a role in promoting innovation, but IP is among them

• TM protects against consumer confusion• TS protects against commercial immorality

Oct. 17, 2006 service economy class 4

ENGLISH ROOTS

• Kings issued patents for many things:– Letters patent = open letter from the king– Sometimes for land– Sometimes to attract skilled workers from Europe

• Quid pro quo: must train 2 generations of apprentices (way to get disclosure of the secret techniques)

• Part of the industrial policy of England vis a vis other nations

– Sometimes to inventors of new technologies– Sometimes to publishers for books in early days– Sometimes to pals to give monopoly on trade

Oct. 17, 2006 service economy class 5

ENGLISH ROOTS

• Statute of Monopolies (1623) limited the king’s power to grant patents– Only to new inventions, not to things already known/traded– Facilitated the industrial revolution

• Stationers Guild had informal © system amongst themselves– Whoever 1st registered the title of a work had exclusive right to

publish it– Dispute settlement system within the guild– Deal with the King: SG has the exclusive right to print books, but

had to agree not to publish heretical or seditious materials

Oct. 17, 2006 service economy class 6

STATUTE OF ANNE

• Licensing Acts expired, & Stationers lost their monopoly on printing

• Scottish publishers started publishing popular books, undercutting St’r prices

• Many were unhappy with St’rs for censorship• Led to Statute of Anne enacted 1710

– Exclusive rights in authors of new books, maps, charts for 14 years to promote knowledge

– Statutory © held to extinguish CL © public domain

Oct. 17, 2006 service economy class 7

US CONSTITUTION

• Congress has the power “to promote the progress of science (knowledge)” by giving “authors” an “exclusive right” in their “writings” for “limited times” (© part)

• Also has the power “to promote…the useful arts” by giving “inventors” an “exclusive right” in their “discoveries” for “limited times” (patent part)

Oct. 17, 2006 service economy class 8

WHY I/8/8?

• Need for national uniformity to promote commerce– Each state had its own © & patent laws; many

differences in rules; rights only in that jurisdiction; complying with all requirements was burdensome

• Desire to encourage growth of industries without giving creators $ the new US didn’t have– Grant of exclusive rights as incentive to write new

books and invent new technologies – Promote learning as well as economic growth

Oct. 17, 2006 service economy class 9

FEDERAL IP LAW

• Patent law grants exclusive rights to make, use & sell technological inventions for no more than 20 years– Have to apply for patent, disclose invention, claim

• Copyright law grants exclusive rights to make copies & publicly distribute them, prepare derivatives, & publicly perform original works of authorship for life of author + 70 years– Rights attach automatically by operation of law

• Some specialized IP laws (e.g., plant varieties, chip designs) adopted in the late 20th c

Oct. 17, 2006 service economy class 10

19th C IP POLICY

• US was net importer of © materials– Wanted to create incentives for US authors to write

books– But who cares about Charles Dickens? He can make

enough $$ from selling books in England– No © for foreign authors till last decade of 19th c

• US inventors could study English patents and European industries (e.g., Jefferson travels)– Although non-US inventors were eligible, in practice

they didn’t apply for US patents (“the colonies”)– Practicing non-US patents in US non-infringing

Oct. 17, 2006 service economy class 11

PATENTS IN 19th-20th C

• Issued for some foundational technologies– e.g., Eli Whitney for cotton gin, Samuel Morse for

telegraph, Alex. G. Bell for telephone

• Often for combinations of components or new uses of old products (more modest inventions)

• Pioneer patents cf. patents in a crowded field• Patents highly important in some sectors (e.g.,

pharma/biotech), but vary in importance among industry groups (uncommon in services sectors)

Oct. 17, 2006 service economy class 12

© IN 19th/20th C

• Subject matter of © expanded over time (e.g., to works of fine art, photographs, movies)

• © notice & registration formalities were quite rigid until late 20th C

• Duration of protection got longer (was 14 years, now life + 70 yrs)

• Services sector didn’t much use © either– Advertising an exception

Oct. 17, 2006 service economy class 13

BIG PICTURE ?s

• IP rules well-suited to manufacturing era, but will they do as well for the information age?– More knowhow borne on or near the face of

information products (e.g., biotech, software)– Some valuable information products don’t fit the old

paradigms (e.g., software, databases)

• How to maintain balance in the law?– IP law works in part because of limitations (e.g.,

reverse engineering, reuse of information & ideas)– More IP is not necessarily better IP

Oct. 17, 2006 service economy class 14

LAW & NEW TECHNOLOGY-I

• International News Service v. AP (1918)• INS agents looked at early editions of AP

newspapers, called stories on WWI or telegraphed them to CA, INS papers pub’d stories

• AP papers weren’t ©’d at the time, so no © infringement

• SCt majority agreed with AP that INS had misappropriated “quasi-property” in “hot news”

• Famous Brandeis dissent: info, after voluntary communication, is free as the air to common use

Oct. 17, 2006 service economy class 15

LAW & NEW TECHNOLOGY-II

• Computer software was big challenge for IP law because SW is a machine whose medium of construction happens to be text– Machines, machine parts not copyrightable– Not a “literary work” in traditional sense– Texts and information innovations (“mental processes”)

historically not patentable– Benson decision: only processes that transform matter

can be patented; Diehr more receptive to sw patents– Source code may be trade secret, but program contains

source equivalent; accessible through decompilation

Oct. 17, 2006 service economy class 16

SOFTWARE & IP LAW

• Resolution of software IP dilemma: – Copyright now protects source & object code, fanciful

user interface designs, very detailed structure– Patent now protects algorithms, methods of operation,

functional user interface designs• Widespread concern about “bad” software patents• Software patent portfolios cross-licensed among big players

– Fair use to decompile for legitimate purpose– Trade secret law protects unpublished source, design

documents, & some program internals– Hotly contested whether licenses forbidding reverse

engineering should be enforceable

Oct. 17, 2006 service economy class 17

LAW & NEW TECHNOLOGY-III

• © has long protected compilations of data creatively selected and/or arranged– No © in facts or data

• Advances in new technology make it easy to copy data and reselect/rearrange it

• Substantial expenditures to collect data that is commercially valuable but “unoriginal”

• EU adopted database right to control extractions & reuses of data from databases; tried to get treaty – Anticipated large world market, wanted EU firms to have edge– US has not followed suit; no real market failure

Oct. 17, 2006 service economy class 18

INTERNATIONAL TREATIES

• National treatment rules as a principal norm– I agree to treat your nationals the same as mine– But I’m not going to change my substantive or

procedural laws to conform to yours• Berne Convention for Literary & Artistic Works

set forth minimum standards– OK to have varying rules except on some things (e.g.,

no formalities, life + 50 yrs)– US finally joined in mid-1980’s because it wanted to

have clout in international © policy now that its industries dominated the world market

Oct. 17, 2006 service economy class 19

WHY TRIPS?

• IP treaties lacked “teeth” (a way to enforce treaty obligations)

• USTR became increasingly active in identifying nations whose IPR laws or enforcement did not satisfy treaty obligations, threatening sanctions

• US believed that other nations were free-riding on US innovations by not having adequate IP laws

• Inspiration to tie IPRs to international trade rules (lower textile tariffs if agree to higher IPRs)

Oct. 17, 2006 service economy class 20

TRIPS

• TRIPS Agreement is one of the agreements required to become WTO member – Sets minimum standards for IP laws and for

enforcement– Dispute settlement mechanism to allow 1 WTO

member to challenge another for inadequate laws or enforcement mechanisms

– US has brought several claims, lost 1 itself

Oct. 17, 2006 service economy class 21

CLOSING THOUGHTS

• Rise of services economy has not been thought through by IP lawyers

• Trademarks have historically been the most significant form of IP protection for services

• Business method patents have been issuing since the late 1990’s

• New ?s about how © applies to IT services (e.g., XML schemas)