Chapter 15 Business Intellectual Property

WHAT CAN A BUSINESS OWN? INTANGIBLE PROPERTY RIGHTS

Intangible property
Forms of intangible property include patents, copyrights, trademarks, trade names,
trade dress, and trade secrets. The protections for these types of property rights
come from federal laws, international treaties, and common law rights of action for
the damage to or taking of these forms of intangible property.

PATENTS
Patents are a type of legal monopoly obtained by filing certain information and
forms with the US Patent Office.
The Types and Length of Patents
There are three forms of patents:
1. Utility or function patents cover machines, processes and improvements to
existing devices. 20-year protection.
2. Design patents those that protect the features of a product. 14-year
protection.
3. Plant patents are obtained by those who develop new forms of plants and
hybrids. 20-year protection.
What You Can Patent: Patentability
An idea is patentable only if it is nonobvious, novel, and useful; and the idea must
be reduced to some tangible form. New discoveries of existing matter are not
patentable, but developing a process to extract that new matter for other use would
be.
Business methods patents have been an area of judicial controversy. These types of
patents, often called junk patents, are distinguishable from those patents that are
granted for a business method tied to a machine or step-by-step process for
recycling or physical production.
What a Patent Does
During these exclusive rights period of 14 and 20 years, the patent holder has the
sole rights to profits on sales.
Anyone who sells or uses a patented product or process without the consent of the
patent holder has committed patent infringement.

The Remedies for Patent Infringement

There are two types of remedies available for patent infringement: monetary
damages and injunctions. Injunctions can be temporary, as when the court orders a
halt to production or use whilst it determines whether a patent is valid. However,
there is also the possibility of a permanent injunction, one that stops the other party
from using the process or product for the life of the patent because the injury to the
patent holder is so great that money damages are insufficient compensation.

COPYRIGHTS
What Is a Copyright and What Does It Protect?
Patents protect inventors. Copyrights protect authors of books, magazine articles,
plays, movies, songs, dances, recording, architectural designs, broadcasts,
photographs, computer programs, and so on. Ideas cannot be copyrighted, but the
way an idea is expressed can be. Under the Computer Software Copyright Act
of 1980, all software can be copyrighted, whether it is written in ordinary language
(source code) or machine language (object code).
A copyright gives the holder of the copyright the exclusive right to sell, control or
license the copyrighted work. A copyright exists automatically for works created
after 1989.
How Long Does a Copyright Run?
The initial period of protection for copyrights (established in 1790) was for 14 years,
with the right of renewal for another 14 years. In 1831, the protection period
increased to 28 years with renewal rights for another 14 years. In 1976, the time
increased to 50 years with no renewal.
Under the Sonny Bono Copyright Extension Act of 1998, copyrights were increased
to run for the life of the creator plus 70 years. If the work produced was done by an
employee of a business, the business then registers the copyright. These types of
business copyrights run for 120 years from the time of creation or 95 years from
publication of the work, whichever is shorter.
Rights of a Copyright Holder
A copyright holder has control over the use of the created work. That control
includes control over reproduction, distribution, public performances, derivative
works, and public displays. Some copyright holders assign or license these rights to
others in exchange for royalties.

Rights of Copyright Holders and the Internet

Technology has created new issues in copyright infringement, particularly in
the areas of copyrighted software and music, with the availability of digital
technology. As a result, music producers and software developers added
protection technology to their copyrighted products and lobbied for a change
in copyright law, which came with the Digital Millennium Copyright Act
(DMCA) in 1998. This act criminalizes the circumvention of protection
technology in order to make copies of copyrighted materials.
Fair Use and Copyrights
Fair use is occasional and spontaneous use of copyrighted materials for
limited purposes. Fair use also allows instructors to reproduce a page or chart
from a copyrighted work to use in the classroom; and copies of book pages
can be made for research purposes.

Trademarks

What are trademarks?

Trademarks are words, names, symbols, designs, or devices that businesses
use to identify their products or services. To be protected, a trademark must
have some distinctiveness. There are categories for distinctiveness including
fanciful, descriptive, arbitrary, or acquired distinctiveness.
What are Legal Protections for Trademarks?
The Lanham Act of 1946 is a federal law passed to afford businesses
protection of their trademarks. This law is really a protection of a companys
goodwill. A trademark becomes associated with that company and is used as
a means of identifying that companys goods and services. The Lanham Act
assures the right to retain that unique identification.
Trade Names
Not all commonly used terms, however, are generic because they may be
trade names. Use of a trade name without the registered owners
permission is infringement. The owner of the trade name can seek injunctive
relief to stop the use of the trade name.
What Are the Rights When a Trademark or Tradename is Misused?
In 1995, Congress passed the Federal Trademark Dilution Act, a statute
that permits recovery and injunctions for dilution of distinctive trademarks.
The purpose of the law was to prevent others from capitalizing on the
recognition, familiarity, and reputation of a distinctive trademark. This statute
protects the trademark owner who can establish confusion, that is, that
buyers assumed that were purchasing goods or services with the trademark
and from the company who owns that trademark.
Trade Dress
A more recent and critical aspect of the Lanham Act is the concept of trade
dress. Trade dress consists of the colors, designs, and shapes associated
with a product.

Cyber Infringement
Companies also have the right to stop Internet sales that are not by authorized
distributors.

Cybersquatting
Cybersquatting is registering sites and domain names that are deceptively
or confusingly similar to existing trademarks that belong to others. The
remedies available include injunctions to stop use of the name, forfeiture of
the name, and recovery of money damages and costs of litigation.
The Internet Corporation for Assigned Names and Numbers (ICANN)
has been the provider of arbitration services for disputes between trademark
owners and Internet sites.

TRADE SECRETS
What Are Trade Secrets?
Trade secrets are lists of information, formulas, and even data that businesses
compile for use in the marketplace, with customers, or in securing contracts. A
trade secret is anything that gives the business a competitive edge and that is not
known generally or by competitors.
How Are Trade Secrets Protected?
Trade secrets are protected by business keeping them secret. The information
should have controlled access and should be available only to those within the
business who have reason to know or need to use the information.
Most companies have employees sign nondisclosure agreements so that should
they leave their employment they would be subject to suit for breach of contract if
they took the information with them.
Uniform Trade Secrets Act (UTSA) is an act that was drafted and passed to eliminate
the common-law remedies that relate to the appropriation of trade secrets by
current and former employees.
Criminal Penalties for Theft of Trade Secrets
The Industrial Espionage Act of 1996 makes it a felony to copy, download, upload,
fax, or otherwise communicate trade secrets of US companies to benefit anyone
other than the owner of that information.

INTERNATIONAL INTELLECTUAL PROPERTY ISSUES

Patent Protection

The period for patent protection varies from country to country. Procedures for
obtaining patents also vary significantly from country to country. For example, many
countries hold opposition proceedings as part of the patent process. The process
includes publishing the description of the patent, and inviting the public to study the
description and possibly oppose the granting of a patent.
Trademark Protection
The 1891 Madrid Agreement (updated in 1989) provides for the Madrid Protocol,
which is the central registration through the International Bureau, which is part of
the World Intellectual Property Organization (WIPO) in Geneva, Switzerland.
Registrations with the bureau are effective for five years in all member countries
unless one of the members objects to the trademark registration, in which case the
registration is not effective in that country.
Many countries have permitted the unauthorized use of trademarks in an effort to
develop local economies. These countries permit the production of knock-of
goods, which are goods that carry the trademark or trade name of a firms product
but are not actually produced by that firm. A costly problem for trademark holders is
the gray market. Manufacturers in foreign countries are authorized to produce a
certain amount of goods, but many foreign manufacturers exceed their licensed
quota and dump the goods into the market at a much lower price and thereby
reduce the trademark owners market.
Copyrights in International Business
The purpose of the Berne Convention was to establish international uniformity in
copyright protection. The convention was signed on September 9, 1986, and
became effective in the United States on March 1, 1989.

ENFORCING BUSINESS PROPERTY RIGHTS

Product Disparagement
When an untrue statement is made about a business product or service, the
defamation is referred to as disparagement and is either trade libel (written) or
slander of title (oral). These business torts occur when one business makes untrue
statements about another business, its product, or its abilities the elements for
disparagement follow:
1. False statement about a business product or about its reputation, honesty, or
integrity.
2. Publication

3. Statement that is directed at a business (in many cases, businesses are

considered public figures, and the statement must be made with malice and
the intent to injure that business)
4. Damages
Palming Of
Palming of, one of the oldest unfair methods of competition, occurs when one
company sells its product by leading buyers to believe it is really another
companys product.
Misappropriation
The tort of misappropriation is a form of protection for a business whose trade
secrets are taken without authorization. Misappropriation is conversion of a trade
secret for self-benefit or the benefit of a new employer.