Chapter 7: Intellectual Property and Unfair Competition
By: Anne Freeman, Justine Stigge, Christian Binkholder, Kevin Hayes, Courtney Dinwiddie, Emmamarie Melyon, and Salisa Suwanprathip, Emily Wilson, Colin Guthrie, Eric Borman, Tony Speno
I. Patents
Patents are select rights given to a person or persons by the government for a set amount of time for the full disclosure of their invention. By doing this, the design(s) of the invention are made available to the public; however, during the patent’s duration, the design(s) can only be used at the discretion of the inventor because he/she is given “the right to exclude others from making, using, offering for sale, or selling the invention in the United States or ‘importing’ the invention into the United States.” With this in mind, what can be patented?
A. What is patentable?
There are three types of patents that are recognized by the United States Patent and Trademark Office: Utility, Design, and Plant patents. Utility patents are issued for discoveries of a new or useful process or machines. Design patents are issued for designs that are considered new, original, and ornamental for a product. One of the most famous examples of a patented design is the shape of the Coca Cola bottle. Plant patents are inventions of asexually reproduced distinct variety of plant. One such patent was granted for an apple tree called “Wildung.”
A patent may not be granted if the invention fails any of 4 requirements: novelty, utility, not obvious, or inventor(s) lacks proof of being the sole creator(s). To be novel, an invention may not be any of the following: previously known or used in the United States, patented in the United States or in a foreign country, or written in any sort of publication, regardless of the country. Utility means that the invention must have a useful purpose or perform the intended operations. Not obvious refers to the idea that any person in a certain field could not have easily thought of the invention. Proof of being sole creator(s) is important to weed out fraudulent claims that are made and to make sure credit resides only with the actual creator(s).
One controversial issue is drug patents. Currently there is no law that prevents modifications of drugs to be patented. This means that someone can experiment with a drug and create a new patent based on observations. If the person conducting the experiment finds a new ingredient or modifies the drug, that person can receive a new patent for the modified drug under the current laws.
B. How to obtain a patent
Granting of patents is conducted solely by the United States Patent and Trademark Office. The creator must include specific details and instructions for the invention, including what its general purpose is and how it is achieved through this invention. If it will help people better understand the invention, creators should include a drawing to illustrate the details given in the application of the product. Once applications are received by the United States Patent and Trademark Office, it is determined whether the invention meets all of the prior requirements for receiving a patent. If the request for the patent is rejected, the creator has one final chance to resubmit his/her invention. If rejected the second time, the creator may appeal to the Office’s Board of Patent Appeals and Interferences.
Once a patent is granted, it is good for twenty years in accordance with the General Agreement on Tariffs and Trade. Depending on the success of the product, it could cause a legal monopoly in the market. One example is AT&T. Until 1982, AT&T was allowed a legal monopoly because the government thought that it was important to have a cheap and reliable long distance telephone service for everyone. In 1984, AT&T was broken up, allowing MCI and Sprint to capture portions of the market share. NOTE: Utilities are often allowed a legal monopoly, but not always as a result of a patent.
C. Life of a Patent
Inventions that were patented before June 8, 1995 usually had a life of 17 years from the date on which the patent was issued. That law has since been changed. Now, if an invention is patented on or after June 8, 1995, the patent will last for 20 years.
A written assignment allows the ownership of the patent to be transferred from the patentee to another party. The patentee can also license to use some of the patent rights, which allows the patentee to retain some of the ownership of the invention.
If an invention is developed because an employer asks an employee to do so, the employee’s incentive and creative work can result in a patent for the employer’s benefit exclusively.
D. Infringement and Challenges to Patents
If an invention is used within the twenty year disclosure of the patent without permission from the creator, the infringer can be sued for tort infringement. Even if a similar, but not identical, product is used or invented, the infringer may still be liable for infringement under the doctrine of equivalents. The doctrine of equivalents states that if the parts of an invention are seen as equivalent to that of a patented invention, even if they are not identical, they may be liable. Infringers may be sued for up to three times the actual damages caused by the infringement plus the court costs and interest. In some cases, the infringer may also be liable for any attorney fees. Other reliefs available for infringement violations are injunctions (the prevention of further infringements). In the fall of 2006, Pioneer brought suit against Samsung for infringement of Pioneer’s patent on plasma televisions. The courts finally ruled in October 2008 that Samsung did indeed infringe upon the patent and awarded $59.3 million in damages.
In some cases, a patent can be challenged by the defendant on grounds of patent misuse. Patent misuse is the action of unreasonably exploiting the monopoly of the patent. This is commonly brought about with tying products. The defendant in the case can also question the validity of the patent or can try to convince the court that the actions are not infringement. Infringement is determined primarily by the context included in the claims of the patent, and if the product the defendant is creating does not fall within the claims, there is no infringement.
II. Copyrights
Copyrights protect original works by an author that have been fixed in a form that allows for the work to be able to be perceived, reproduced, or communicated. A copyright gives the author exclusive rights to the work by restricting other people from using the authors words, expression of ideas, or musical compositions without the author’s permission.
A. Protected Works
There are many categories of works protected by copyrights: literary, music, drama, pantomimes, choreography, pictures, graphics, sculptures, motion pictures, (such as videos and movies), sound recordings, and architectural.
To obtain copyright protection, a work must be fixed, which means to be set out in a tangible and expressible way so that it can be received, reproduced, or communicated. A work must also be original and creative. An example of a copyrighted material is the Lord of the Rings by J.R.R. Tolkien.
Copyright patents do not protect ideas, facts, procedures, processes, systems, concepts, or discoveries. Instead, it covers the works that express these ideas. An exception to the protection of facts is in nonfictional works, which can have exclusive rights like any other copyright patent.
Although copyrights are typically thought of as protection for individuals seeking to protect their intellectual works, copyrights are also used to protect the intellectual works of corporations. One such corporation is the Disney Corporation, who has a copyright on Mickey Mouse.
B. Creation
Any literary work, song, dance, etc. are all considered copyrighted simply by creating and fixing the work. The creator may want to register the work with the United States Copyright Office for infringement purposes, but it is not necessary. By registering the work with the Copyright Office, the holder of the copyright then has the right to file a lawsuit for infringement on the work. For most works, federal law does authorize the creator to give a notice of the copyright; this is not required or necessary but is advisable for anyone who may need to defend the work in court. An example of notice occurs when an author publishes a book. The notice may include the year that it was first copyrighted and the company that copyrighted it.
C. How Long Does a Copyright Last?
Patents and copyrights cannot last forever according to the United States Constitution’s Copyright Clause. This clause protects art and science, which enables authors and any other creator of a copyright or patented work to have exclusive power over their work for a limited amount of time. The amount of time that copyright laws give the creator exclusive power over his/her work has been lengthened multiple times throughout history.
Starting before 1978, copyrights were protected for 28 years from their first publication with an additional 47 year renewal. This gave all pieces of work copyrighted before 1978, 75 years of protection. Congress then decided to establish a normal rule that would apply to all works after 1978. This rule stated that copyrights would last for the life of the author plus an additional 50 years.
In 1988, the Sonny Bono Copyright Term Extension Act (CTEA) was created. This Act added 20 years to the duration of all works created before and after 1978. This now gave works published or registered pre-1978 a 95 year protection term (a 28 year initial term plus a 67 year renewal term). Works copyrighted from 1978 on (including works created before 1978 but not published or registered) have a protection term for the life of the author plus 70 years. If the copyright is owned by a corporation, the life is 95 years from first publication or 120 years from creation, whichever is shorter.
The Copyright Term Extension Act directly affected Walt Disney’s cartoon character Mickey Mouse. The first set of pre-1978 copyright terms would have made Mickey Mouse available to the public domain in the next couple of years if CTEA had not enacted the extension period. While CTEA has protected the copyright of Mickey Mouse, the works of people like Shakespeare are now open for public use.
Eldred vs. Ashcroft
537, US 186 (2003)
“In January 1999, Eric Eldred, creator of Eldritch Press, an Internet provider of public domain works, filed a constitutional challenge to the CTEA. Eldred alleged that the statute violated his First Amendment rights, and that the extension of the copyright protection term exceeded Congress's enumerated powers under the Copyright Clause of the Constitution. Eldred also alleged that the constitutional purpose of "promoting the progress of science and useful arts" was not furthered by CTEA's retroactive extension of copyright in existing works, particularly for deceased authors for whom the increased incentive to create would be irrelevant. Furthermore, Eldred argued that the CTEA violated the "public trust doctrine," a theory traditionally applied in cases of transfer of public lands to private ownership. The court rejected this argument and concluded that the public trust doctrine was not relevant because it applied only to navigable waters, not copyrights.
The United States District Court for District of Columbia rejected Eldred's arguments and held that the CTEA was constitutional. The court first held the First Amendment claim was not supported by case law. It stated that the First Amendment does not provide a right to use the copyrighted work of others. The court then held that retrospective extension of copyright protection did not violate the "limited times" provision of Copyright Act because Congress has the right to define the scope of the copyright period and can enact laws retrospectively. The court finally held that CTEA did not violate the "to authors" language of the Copyright Clause because an author may agree in advance to transfer future benefits that ultimately may be conferred by Congress.”
("Eldred vs. Ashcroft.")
D. Infringement
Copyrights enable the author of a piece of work to maintain exclusive rights over his/her work for a limited amount of time. Therefore anyone who violates one the exclusive copyright laws may be liable for infringement. In order to prove infringement
there are three requirements: (1) the defendant was able to obtain the copyright material; (2) the defendant copied enough material from the copyrighted work to deem it non-coincidental; and (3) there is a significant amount of similarities between the copyrighted work and the infringed work. A copyright infringement can also include the public distribution of the copyrighted work.
Infringement cases must break one of the author’s exclusive rights. Stating that a similar work copied your ideas, themes, or facts of the copyrighted work are not liable under infringement. If the defendant paraphrases or credits that author in their work, they are not liable for infringement.
If copyright infringement is proven, the owner will usual receive money for damages plus any profit the guilty party makes from the material. If the plaintiff elects to receive statutory damages, the amount the plaintiff receives would fall between $750 and $30,000. If the infringement is considered willful, the maximum may rise to $150,000. If the infringement was considered willful and was for commercial advantage or private financial gain, the federal government may decide to press criminal charges.
An example of copyright infringement involves Napster. Napster provided customers with downloadable music free of charge. Owners of the copyrighted songs were upset because they were not receiving payment for their work, and soon filed lawsuits against the company. Today, Napster requires the users to pay for the songs they want to download.