Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics 5 th Edition by Henry R. Cheeseman Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA Chapter 17 Intellectual Property and Information Technology Chapter 17 Intellectual Property and Information Technology

17 - 2Copyright © 2004 by Prentice-Hall. All rights reserved. Intellectual Property Rights  Intellectual property rights include: Patents Patents Copyrights Copyrights Trademarks Trademarks Trade Secrets Trade Secrets Trade Names Trade Names Domain Names Domain Names

17 - 3Copyright © 2004 by Prentice-Hall. All rights reserved. Intellectual Property Rights (continued)  These are very valuable business assets.  Federal and state laws protect intellectual property rights from misappropriation and infringement.

17 - 4Copyright © 2004 by Prentice-Hall. All rights reserved. Trade Secrets  A product formula, pattern, design, compilation of data, customer list, or other business secret.  Many states have adopted the Uniform Trade Secrets Act to give statutory protection to trade secrets.

17 - 5Copyright © 2004 by Prentice-Hall. All rights reserved. Trade Secrets (continued)  State unfair competition laws allow the owner of a trade secret to bring a lawsuit for misappropriation against anyone who steals a trade secret.  To be actionable, the defendant must have obtained the trade secret through unlawful means.

17 - 6Copyright © 2004 by Prentice-Hall. All rights reserved. Trade Secrets (continued)  The owner of a trade secret is obliged to take all reasonable precautions to prevent those secrets from being discovered by others.  If the owner fails to take precautions, the secret is no longer subject to protection under state unfair competition laws.

17 - 7Copyright © 2004 by Prentice-Hall. All rights reserved. Economic Espionage Act of 1996  Makes it a federal crime to steal another’s trade secrets.  It is a federal crime for any person: To convert a trade secret to his or her benefit or for the benefit of others, To convert a trade secret to his or her benefit or for the benefit of others, Knowing or intending that the act would cause injury to the owner of the trade secret. Knowing or intending that the act would cause injury to the owner of the trade secret.

17 - 8Copyright © 2004 by Prentice-Hall. All rights reserved. Landmark Law: Federal Patent Statute of 1952  This law is intended: to provide an incentive for inventors to invent and to make their inventions public, and to provide an incentive for inventors to invent and to make their inventions public, and to protect patented inventions from infringement. to protect patented inventions from infringement.  Federal patent law is exclusive.  There are no state patent laws.

17 - 9Copyright © 2004 by Prentice-Hall. All rights reserved. Patenting an Invention  To be patented, an invention must be: Novel Novel Useful Useful Nonobvious Nonobvious  Only certain subject matters can be patented.

Copyright © 2004 by Prentice-Hall. All rights reserved. Patentable subject matter includes:  Machines  Processes  Compositions of matter  Improvements to: Existing machines Existing machines Processes Processes Compositions of matter Compositions of matter  Machines  Processes  Compositions of matter  Improvements to: Existing machines Existing machines Processes Processes Compositions of matter Compositions of matter  Designs for an article of manufacture  Asexually reproduced plants  Living material invented by a person  Designs for an article of manufacture  Asexually reproduced plants  Living material invented by a person

Copyright © 2004 by Prentice-Hall. All rights reserved. Patent Infringement  Unauthorized use of another’s patent.  A patent holder may recover damages and other remedies against a patent infringer.  Patent holders own exclusive rights to use and exploit their patent.

Copyright © 2004 by Prentice-Hall. All rights reserved. Changes in Patent Law Mandated by GATT  The General Agreement on Tariffs and Trade (GATT) caused the following changes in U.S. patent law: Patents are valid for 20 years, instead of the previous term of 17 years. Patents are valid for 20 years, instead of the previous term of 17 years. The patent term begins to run from the date the patent application is filed instead of when the patent is issued as was previously the case. The patent term begins to run from the date the patent application is filed instead of when the patent is issued as was previously the case.

Copyright © 2004 by Prentice-Hall. All rights reserved. One-Year “On Sale” Doctrine  A patent may not be granted if the invention was used by the public for more than one year prior to filing of the patent application.  This doctrine forces inventors to file their patent applications at the proper time.

Copyright © 2004 by Prentice-Hall. All rights reserved. The American Inventors Protection Act of 1999  Establishes “Inventor’s Rights” by giving the Patent and Trademark Office (PTO) power to regulate invention promoters.  Permits an inventor to file a provisional application with the PTO pending the preparation and filing of a final and complete patent application.

Copyright © 2004 by Prentice-Hall. All rights reserved. The American Inventors Protection Act of 1999 (continued)  Requires the PTO to issue a patent within three years after the filing of an application unless the applicant engages in dilatory activities.  Provides that non-patent holders may challenge a patent as overly broad by requesting a contested reexamination of the patent application by the PTO.

Copyright © 2004 by Prentice-Hall. All rights reserved. Landmark Law: Copyright Revision Act of 1976  Establishes the requirements for obtaining a copyright.  Protects copyrighted works from infringement.  To be protected under federal copyright law, the work must be the original work of the author.  Only tangible writings are subject to copyright registration and protection.

Copyright © 2004 by Prentice-Hall. All rights reserved. Copyright Term Extension Act of 1998  Added 20 years to existing copyrighted works and works to be copyrighted in the future.  Grants copyright terms to: Individual Copyright Holder – life of author plus 70 years Individual Copyright Holder – life of author plus 70 years Corporate Copyright Holder – 95 years from the year of first publication or 120 years from the year of creation, whichever is shorter Corporate Copyright Holder – 95 years from the year of first publication or 120 years from the year of creation, whichever is shorter

Copyright © 2004 by Prentice-Hall. All rights reserved. Copyrighting Software  Key legislation to afford protection to software: Computer Software Copyright Act of 1980 Computer Software Copyright Act of 1980 The Judicial Improvement Act of 1990 The Judicial Improvement Act of 1990 Semiconductor Chip Protection Act of 1984 Semiconductor Chip Protection Act of 1984

Copyright © 2004 by Prentice-Hall. All rights reserved. Copyright Infringement  Occurs when a party copies a substantial and material part of the plaintiff’s copyrighted work without permission.  A copyright holder may recover damages and other remedies against the infringer.

Copyright © 2004 by Prentice-Hall. All rights reserved. The Fair Use Doctrine  The copyright holder’s rights in the work are not absolute.  The law permits certain limited unauthorized use of copyrighted materials.

Copyright © 2004 by Prentice-Hall. All rights reserved. The Fair Use Doctrine (continued) The following are protected under this doctrine: 1. Quotation of the copyrighted work for review or criticism or in a scholarly or technical work. 2. Use in a parody or satire. 3. Brief quotation in a news report.

Copyright © 2004 by Prentice-Hall. All rights reserved. The Fair Use Doctrine (continued) 4. Reproduction by a teacher or student of a small part of the work to illustrate a lesson. 5. Incidental reproduction of a work in a newsreel or broadcast of an event being reported. 6. Reproduction of a work in a legislative or judicial proceeding.

Copyright © 2004 by Prentice-Hall. All rights reserved. Copyright Protection of E-Commerce and Information Technology  Digital Millennium Copyright Act (DMCA) of 1998  No Electronic Theft Act (NET Act) of 1997

Copyright © 2004 by Prentice-Hall. All rights reserved. International Protection of Intellectual Property Rights  In 1997, the World Intellectual Property Organization (WIPO) of the U.N., promulgated two new Internet Treaties: WIPO Copyright Treaty WIPO Copyright Treaty WIPO Phonogram Treaty WIPO Phonogram Treaty

Copyright © 2004 by Prentice-Hall. All rights reserved. Landmark Law: Lanham Trademark Act of 1946 (as amended)  Establishes the requirements for obtaining a federal mark  Protects marks from infringement  Trademarks are registered with the U.S. Patent and Trademark Office (PTO)

Copyright © 2004 by Prentice-Hall. All rights reserved. Trademark Law  The original registration of a mark is valid for 10 years.  It can be renewed for an unlimited number of 10-year periods.  The registrant is entitled to use the registered trademark symbol ® in connection with a registered trademark or service mark.

Copyright © 2004 by Prentice-Hall. All rights reserved. Registration of Trademarks  An applicant can register a mark if: 1. It was in use in commerce, or 2. The applicant verifies a bona fide intention to use the mark in commerce and actually does so within six months of registration.

Copyright © 2004 by Prentice-Hall. All rights reserved. Distinctiveness of a Mark To qualify for federal protection,  A mark must be distinctive – i.e., a brand name that is unique and fabricated, or  Have acquired a “secondary meaning” – i.e., when an ordinary term has become a brand name.

Copyright © 2004 by Prentice-Hall. All rights reserved. Marks That Can Be Trademarked  Trademark – a distinctive mark, symbol, name, word, motto, or device that identifies the goods of a particular business. e.g., Xerox, Coca-Cola e.g., Xerox, Coca-Cola  Service Mark – used to distinguish the services of the holder from those of its competitors. e.g., United Airlines, Weight Watchers e.g., United Airlines, Weight Watchers

Copyright © 2004 by Prentice-Hall. All rights reserved. Marks That Can Be Trademarked (continued)  Certification Mark – used to certify that goods and services are of a certain quality or originate from particular geographical areas. e.g., “Florida” oranges, “Napa Valley” wines e.g., “Florida” oranges, “Napa Valley” wines  Collective Mark – used by cooperatives, associations, and fraternal organizations. e.g., Boy Scouts of America e.g., Boy Scouts of America

Copyright © 2004 by Prentice-Hall. All rights reserved. Marks That Cannot Be Registered  The flag or coat of arms of the United States, any state, municipality, or foreign nation.  Marks that are immoral or scandalous.  Geographical names standing alone.  Surnames standing alone.  Any mark that resembles a mark already registered with the federal PTO.

Copyright © 2004 by Prentice-Hall. All rights reserved. Trademark Infringement  The owner of a mark can sue a third party for the unauthorized use of a mark.  The owner must prove that: The defendant infringed the plaintiff’s mark by using it in an unauthorized manner, and The defendant infringed the plaintiff’s mark by using it in an unauthorized manner, and Such use is likely to cause confusion, mistake, or deception of the public as to the origin of the goods or services. Such use is likely to cause confusion, mistake, or deception of the public as to the origin of the goods or services.

Copyright © 2004 by Prentice-Hall. All rights reserved. Generic Name  A term for a mark that has become a common term for a product line or type of service and therefore has lost its trademark protection.

Copyright © 2004 by Prentice-Hall. All rights reserved. Federal Dilution Act of 1995  Protects famous marks from dilution.  The act provides that owners of marks have a valuable property right in their marks that should not be eroded, blurred, tarnished, or diluted in any way by another.  The act is designed to stop those who attempt to benefit from the time and money spent by a company to develop and promote its famous marks.

Copyright © 2004 by Prentice-Hall. All rights reserved. Federal Dilution Act of 1995 (continued) The act has three fundamental requirements: 1. The mark must be famous. 2. The use by the other party must be commercial. 3. The use must cause dilution of the distinctive quality of the mark.

Copyright © 2004 by Prentice-Hall. All rights reserved. State Antidilution Statutes  States recognize common law trademarks.  Many states have enacted their own trademark statutes. Allow persons and companies to register trademarks and service marks. Allow persons and companies to register trademarks and service marks. Prevent others from infringing on and diluting a registrant’s mark. Prevent others from infringing on and diluting a registrant’s mark.