1. © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Chapter 7 Intellectual Property and Internet Law Chapter 7 Intellectual Property and Internet Law

2. 17 - 2 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Intellectual Property Rights Intellectual property rights include: –Patents –Copyrights –Trademarks –Trade Secrets –Domain Names

3. 17 - 3 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 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.

4. 17 - 4 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 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. Defendant must have obtained the trade secret through unlawful means.

5. 17 - 5 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Trade Secrets (continued) Owner is obliged to take all reasonable precautions to prevent those secrets from being discovered by others If owner fails to take precautions, the secret is no longer subject to protection

6. 17 - 6 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Trade Secrets (continued) Successful plaintiff can: –Recover profits made by offender –Recover damages –Obtain injunction prohibiting offender from divulging trade secret

7. 17 - 7 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 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, –Knowing or intending that the act would cause injury to the owner of the trade secret.

8. 17 - 8 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Federal Patent Statute Intended to provide an incentive for inventors to make their inventions public Protect patented inventions from infringement Federal patent law is exclusive; there are no state patent laws.

9. 17 - 9 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Federal Patent Statute, continued Patents for inventions are valid for 20 years Design patents are valid for 14 years Patent term runs from date application filed U.S. follows first-to-invent rule

10. 17 - 10 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Patenting an Invention To be patented, an invention must be: – Novel – Useful – Nonobvious Only certain subject matters can be patented.

11. 17 - 11 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Patentable subject matter includes: Machines Processes Compositions of matter Improvements to: – Existing machines – Processes – Compositions of matter Machines Processes Compositions of matter Improvements to: – Existing machines – Processes – 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

12. 17 - 12 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Patent Applications Must contain a written description of invention Must be filed with the U.S. PTO Patent will be assigned a patent number if granted Any party can challenge the validity of a patent or the issuance of one.

13. 17 - 13 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman One-Year “On Sale” Doctrine Public use doctrine Patents will not be granted if an invention was in the public domain for one year prior to application filing Forces inventors to file within proper time

14. 17 - 14 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman The American Inventors Protection Act of 1999 Permits an inventor to file a provisional application with the PTO pending the preparation and filing of a final and complete patent application. –Provisional rights granted for three months

15. 17 - 15 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman The American Inventors Protection Act of 1999 (continued) Requires the PTO to either issue or deny a patent within three years after the filing of an application Provides that non-patent holders may challenge a patent as overly broad Decisions of PTO appealed to U.S. Court of Appeals

16. 17 - 16 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Patent Infringement Unauthorized use of another’s patent. Patent holders own exclusive rights to use and exploit their patent. Successful plaintiff may recover: –Money damages equal to reasonable royalty rate –Other damage –Order for destruction of infringing items –Injunction against infringer

17. 17 - 17 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Copyright Revision Act of 1976 Establishes the requirements for obtaining a copyright. Protects copyrighted works from infringement. Only tangible writings are subject to copyright registration and protection.

18. 17 - 18 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Tangible Writings Books, periodicals, newspapers Plays, motion pictures, radio, television Lectures, sermons, addresses Poems Musical compositions and sound recordings Films, cartoons, travelogues Maps Paintings, drawings, sculpture, jewelry, glassware, tapestry Photos, slides, filmstrips Greeting cards, postcards Architectural models and drawings

19. 17 - 19 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Registration of Copyrights Must be an original work Register with U.S. Copyright Office Registration –Permissive –Voluntary –Effected at any time during term of copyright No longer required to use © or word “copyright”

20. 17 - 20 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Sonny Bono Copyright Term Extension Act of 1998 Grants copyright terms to: – 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 After copyright expires, work enters public domain

21. 17 - 21 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Copyrighting Software Computer Software Copyright Act of 1980 –Added computer programs as tangible writings –Grants automatic copyright protection Semiconductor Chip Protection Act of 1984 –Protect hardware components –Mask Work Act

22. 17 - 22 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Copyright Infringement Occurs when a party copies a substantial and material part of the plaintiff’s copyrighted work without permission. Successful plaintiff may recover: –Profit –Damages –Order requiring impoundment and destruction –injunction

23. 17 - 23 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman NET Act Criminalizes copyright infringement –Cannot willfully infringe copyright –Retail value of copyrighted work must exceed $1000 –One year imprisonment –Fines of up to $100,000

24. 17 - 24 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 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.

25. 17 - 25 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Protected Uses: 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. Reproduction of a work in a legislative or judicial proceeding. 4. Incidental reproduction of a work in a newsreel or broadcast of an event being reported. 5. Brief quotation in a news report. 6. Reproduction by a teacher or student of a small part of the work to illustrate a lesson.

26. 17 - 26 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Digital Millennium Copyright Act Prohibits unauthorized access to copyrighted digital works by circumventing wrapper or encryption technology. Prohibits manufacturer and distribution of methods for circumventing wrapper or encryption technologies. Some exceptions allowed. Imposes both civil and criminal penalties.

27. 17 - 27 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Lanham Trademark Act Establishes the requirements for obtaining a federal mark Protects marks from infringement Trademarks are registered with the U.S. PTO

28. 17 - 28 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Lanham Trademark Act, continued 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.

29. 17 - 29 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Registration of Trademarks Mark may be registered if it was in use in commerce. Can be registered six months prior to use –Will lose mark if not used within six months Marks may be opposed by third parties

30. 17 - 30 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Marks That Can Be Trademarked Trademark –Distinctive mark, symbol, name, word, motto, or device that identifies the goods of a particular business. e.g., Xerox, Coca-Cola Service Mark –Distinguish the services of the holder from those of its competitors. e.g., United Airlines, Weight Watchers

31. 17 - 31 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Marks That Can Be Trademarked (continued) Certification Mark –Certify that goods and services are of a certain quality or originate from particular geographical areas. e.g., “Florida” oranges, “Napa Valley” wines Collective Mark –Used by cooperatives, associations, and fraternal organizations. e.g., Boy Scouts of America

32. 17 - 32 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 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 U.S. PTO.

33. 17 - 33 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 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” –When an ordinary term has become a brand name.

34. 17 - 34 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Trademark Infringement The owner of a mark can sue a third party for the unauthorized use of a mark. The owner must prove that: –Defendant infringed the plaintiff’s mark by using it in an unauthorized manner –Use likely to cause confusion, mistake, or deception

35. 17 - 35 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Trademark Infringement, continued Successful plaintiff can recover: Profits Damages to business and reputation Order for destruction Injunction

36. 17 - 36 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman 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. Name becomes descriptive rather than distinctive.

37. 17 - 37 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Federal Dilution Act of 1995 Marks are a valuable property right that should not be eroded, blurred, tarnished, or diluted in any way by another. Protects famous marks from dilution. Use by other party must be commercial. Use must cause dilution of distinctive quality of mark

38. 17 - 38 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Internet Individuals and businesses use the Internet –Electronic mail –Web sites Stored on servers operated by ISPs Viewed through browsers

39. 17 - 39 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Domain Names Each web site identified by unique domain name Names must be registered Yearly fee Valuable property right

40. 17 - 40 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman Electronic Communications Privacy Act Federal crime to intercept “electronic communication” while in transit, stored on router or server, or after receipt Provides for criminal penalties Injured party may bring action for civil damages

41. 17 - 41 © 2007 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman International Protection Paris Convention –Protect patents and trademarks Berne Convention –Protects copyrights WIPO Copyright Treaty –Protects copyrights of computer programs WIPO Phonogram Treaty –Gives performers and producers exclusive right to broadcast, reproduce, and distribute performances