Intellectual Property Fall 2010 Professor MacLeod I. Foundations of Intellectual Property a. The Sources and Limits of IP Law i.

United States Constitution 1. Article 1, Section 8: The Congress shall have power . . . a. cl. 3: To regulate Commerce with foreign Nations, and among the several states, and with the Indian Tribes . . . (this is where Congress gets the power to regulate trademarks) b. cl. 8: To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries . . . (this is where Congress gets the power to regulate patents and copyrights). c. . . . This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, and Thing in the Constitution or Laws of any State to the Contrary notwithstanding . . . 2. This is a grant and a limitation of authority. b. Policies and Problems in IP i. Policies 1. Welfare maximization 2. Freedom of Expression 3. Privacy 4. Democracy 5. Fairness 6. Liberty 7. Individual Autonomy ii. IP is a non-exclusive resource; challenge is to create protections for whatever rights authors, artists, inventors, etc. 1. Must create exclusions. iii. IP is entirely a creation of law, unlike real and personal property. 1. IP would not exist but for the positive law; IP doesnt exist in nature. 2. Utility: for the greatest good, we want to encourage ideas. iv. Problems: 1. Inappropriability: Once given out, creator is deprived of all exclusive use. 2. Indivisibility: Not detracted from others benefit, everyone benefits. v. Eldred v. Ashcroft (2003) 1. Challenge to the Copyright Term Extension Act (CTEA); Congress extended the term of copyrights to life plus 70 years and applies to new and existing works. 2. Petitioners argue: This violates the limited time language of the Copyright Clause because Congress can just keep extending time. a. Court says: No. Limited time means within fixed certain bounds; does not mean unalterable. b. Court is going to defer to Congress to interpret their own language. 3. Petitioners also throw in a First Amendment argument, but Court finds that the CTEA does not implicate the First Amendment. Why? a. Content-neutral restriction b. Fair Use exception c. The Nature and Functions of IP Law 1

II.

i. The principal object of IP law in the United States is to ensure consumers a wide variety of intellectual goods at the lowest possible price. ii. Copyrights, Patents, and Trademarks . . . Oh my! 1. Copyrights a. Copyright attracts investment to the production and distribution of literary and artistic works by promising authors and artists exclusive rights for a limited period. 2. Patents a. Patent law uses property rights to stimulate private investment in new, useful, and non-obvious technologies. a. Purpose 1. Incentive to invent 2. Stimulates further capital investments 3. Encourages early public disclosure 4. Promotes beneficial exchange of products 3. Trademarks a. Trademark law encourages businesses to invest in the names and slogans that signify the source of their goods and services by prohibiting competitors from using the same symbols on their own wares. a. Purpose 1. Recognition (think Nike) 2. Signal to consumers logo, slogan 3. Facilitate and enhance consumer decisions: high quality product sells for more, lower quality for less. State Law of Intellectual Property a. Rights in Undeveloped Ideas i. Sellers v. American Broadcasting Co. (11th Cir. 1982) 1. Courts will permit recovery for a misappropriation of an idea or theory if: a. The idea is novel; b. The idea is in a concrete form; and c. The defendant makes use of the idea. ii. Theories of Protection 1. Lueddecke v. Chevrolet Motor Co. (8th Cir. 1934) a. The brought this action to recover on an alleged implied contract on the part of the companies to pay the reasonable value of an idea and suggestion which he alleges he furnished to them. b. When a voluntarily divulged his mere idea and suggestion, whatever interest he had in it became common property, and, as such, was available to the s. 2. Nadel v. Play-By-Play Toys & Novelties, Inc. (2nd Cir. 2000) a. brought this action against for breach of contract, quasi contract, and unfair competition. 3. Notes a. Property. In the first place we are not persuaded that the idea communicated in the letters of the was a novel and useful idea in which could successfully assert a property right. Lueddecke. a. Idea submitters rarely succeed on a property theory. Any expression of an idea that is sufficiently novel and concrete to qualify for protection as property could probably also qualify under one of the more developed and traditional IP systems, such as trade secrets or patent law. b. Express Contract. He had thought of nothing new, and had therefore no property right to protect which would make his idea a basis of consideration for anything. Lueddecke. 2

c. Quasi Contract. If, in fact, the defendants did derive benefit from the plaintiffs ideas . . . nevertheless, they are not indebted to the plaintiff because they did not offer to make any agreement to pay for such mere suggestion as the plaintiff made . . . Lueddecke. a. There is a claim in quasi-contract for undeveloped ideas, as long as: 1. There is novelty to the buyer; 2. The idea is sufficiently concrete to be useful; and 3. If there is evidence of: a. Contract agreement b. Reliance d. Novelty and Concreteness. The words novel and concrete appear in virtually all idea cases and have assumed almost talismanic significance. a. Novel. Nadel listed several factors for the trial court to consider in determining whether the submitted idea was novel: the ideas specificity, commonality, uniqueness, and commercial availability. b. Concreteness. The law shies away from according protection to vagueness, and must do so especially in the realm of ideas with the obvious dangers of a contrary rule. Hamilton National Bank v. Belt c. A finding that the idea is novel and concrete will not guarantee recovery, even if other required contract elements are found. For the submitter to recover, the court must also find that the recipient used the idea in its concrete form. d. Damages. The theory of action pursued will determine the measure of damages for the idea appropriation. If an express contract is proved, its terms on compensation will govern. For a factually implied contract, the measure will be what the defendant is presumed to have agreed to pay, or the reasonable value of the idea. If recovery is based on quasi-contract, recovery will be measured by the defendants unjust enrichment its actual profit from the use of the idea. b. Unfair Competition i. Background 1. The historical core of unfair competition law is passing off. a. Intent to deceive was the traditional gravamen of passing off. b. Passing off protects the first to use the mark in connection with goods or services against a competitors use of the mark that confuses consumers. 2. While unfair competition today is often a supplement to federal trademark law, it also remains a significant doctrine in its own right. 3. Some aspects of unfair competition law have been codified, but much of the doctrine remains decisional. a. Unfair competition remains largely a matter of state law, but the Lanham Act contains an unfair competition provision (43(a)). 4. Unfair Competition Restatement rejects the recognition of exclusive rights in intangible trade values. But there is a list of specified exceptions including trade secrets, the right of publicity, and conduct that is actionable . . . under federal or state statutes, or as a breach of contract, or as an infringement of common law copyright as preserved in federal copyright law. ii. Theories of Protection 1. Misrepresentation a. The misrepresentation branch of unfair competition law deals with the situation in which a businesss use of a deceptive or misleading representation in marketing its goods or services is likely not only to deceive consumers, but also to injure a competitors commercial interests. 3

a. When such misrepresentations relate to the source of the goods or services, the passing off branch of unfair competition law regulates them. b. When the deceptive representation relates to the qualities or characteristics of goods or services, the unfair competition claim sounds in misrepresentation. b. Statutory provisions on false or deceptive advertising, at both the state and federal levels, may also address misrepresentations as to the qualities and characteristics of goods and services. c. Restatement of the Law Third, Unfair Competition a. Makes the likelihood of commercial detriment to the plaintiff and element of the cause of action for misrepresentation, and defines likely commercial detriment to require a reasonable basis for believing that the representation has caused or is likely to cause a diversion of trade from the other or harm to the others reputation or good will. 2. Misappropriation a. Attaches to use that is generally novel and sufficiently concrete to be useful. b. Elements: a. Plaintiff generates the information at a cost; b. The information is time sensitive; c. A defendants use of the information constitutes free riding on the plaintiffs efforts; d. The defendant is in direct competition with a product/service offered by the plaintiff; and e. The free riding on plaintiff reduces the incentive to produce the product that its quality/existence is in doubt. c. Board of Trade of City of Chicago v. Dow Jones & Co. (Ill. 1983) d. International News Service v. Associated Press (1918) a. Drawing on common law principles of unfair competition, the Supreme Court condemned both forms of piracy and ruled as a matter of federal common law that, as between the competing news agencies, AP possessed a quasi-property in the news it had gathered that INS could not lawfully appropriate as its own. c. Trade Secrets i. A trade secret is used in business and is any formula, pattern, device, or compilation of information used for an advantage over competitors who do not know it. ii. Trade Secrets Generally 1. Protect ideas prior to the patent stage; 2. Protects ideas in development; 3. No registration scheme; 4. No fixed term; 5. More fragile more easily disclosed; 6. Facilitates business commerce can enter into contractual relationships because the information will remain secret. iii. Legal Definition of Trade Secret 1. Secrecy: The subject matter involved must, in fact, be a secret. a. [M]atters of general knowledge in an industry cannot be appropriated by one as his secret. b. If all one needs to do is to look up in a standard source, the information is not a trade secret. 2. Valuable 3. Value from Secrecy: Information gets its value because it is not generally known. 4

4. Protection: One must take reasonable efforts to protect the secret in order to get trade secret protection. a. What Qualifies for TS Protection? a. Scientific and technical ideas b. Business plans c. Customer lists d. Negative Information (something that doesnt work) iv. Theory of Protection 1. Metallurgical Industries Inc. v. Fourtek, Inc. (5th Cir. 1986) a. Combinations of things can be secret, even if the elements themselves are not secret. 2. E. I. DuPont deNemours & Co. v. Christopher (1970) a. One who discloses or uses anothers trade secret, without a privilege to do so, is liable to the other if: (1) he discovered the secret by improper means, or (2) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him (Rest. of Torts, 757). b. One may use his competitors secret process if he discovers the process by reverse engineering applied to the finished product; one may use his competitors process of he discovers it by his own independent research; but one may not avoid these labors by taking the process from the discoverer without his permission at a time when he is taking reasonable precautions to maintain its secrecy. a. To obtain knowledge of a process with spending time and money to discover it independently is improper unless the holder voluntarily discloses it or fails to take reasonable precautions to ensure its safety. 3. Reverse Engineering a. Individuals who have not violated a confidential relationship with the trade secret owner and who have not appropriated the secret improperly are free to replicate and use the secret subject matter. b. This freedom extends to reverse engineering, a technique by which the product of a secret formula or process is analyzed, first to retrace the steps essential to its creation and then to recreate the formula or process itself. c. Courts have said that reverse engineering is a fundamental public policy good, but you must obtain the product on the open market. 4. Independent Discovery a. Like reverse engineering, independent discovery of information that another party holds as a trade secret is not actionable. 5. Third Party Liability a. The Uniform Trade Secrets Act section 1(2) seeks to accommodate the interests of the good faith purchaser who becomes aware of the improper appropriation only after acquiring a business or assets, by defining actionable misappropriation to include an individuals disclosure or use of a trade secret knowing, or having reason to know that is was acquired by improper means or, before a material change of position, knowing or having reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake. v. Limits of Protection 1. Personal Interests a. Wexler v. Greenberg (1960) a. Legally enforceable ways to protect personal interests? 1. Trade Secrets (in rem): demonstration of novelty as to all 2. Preventing unfair competition (quasi-property; in personam): Some value against seller or buyer 2. PepsiCo, Inc. v. Redmond (7th Cir. 1995) 5

a. Novelty and value as between who and whom? b. Inevitable Disclosure: a. Knowledge: A former employee knows the employers trade secrets; b. Similar Job Duties: The former employees new job duties are so similar or related to his old duties that it would be impossible for him not to rely upon or use the plaintiffs trade secrets. c. Cannot rely upon former employee or new employer: The former employee or his new employer cannot be relied upon (because of bad faith, ignorance, carelessness, etc.) to avoid using the trade secret. c. Remedy: Injunction (can be enjoined in advance of the disclosure) a. The doctrine of inevitable disclosure is harsher than non-compete agreements because the injunction is not necessarily time-limited (although Redmond could go back to court and ask that the injunction be dissolved once the information is no longer useful or relevant). b. To receive a trade secret injunction, the employer usually has to prove that the employee is in fact using or about to use the trade secret. d. One who discloses a trade secret is liable if: a. The secret was discovered by improper means and b. There is a breach of confidence. 3. Reed, Roberts Associates, Inc. v. Strauman (Ct. of Appeals NY, 1976) a. Non-competition agreements (restrictive covenants) are enforceable if they are reasonable. a. What is reasonable? Look to employers interest, employees interest, and public policy 1. Employers Interest: Must be narrowly tailored to serve that interest; only what is necessary to protect the employers legitimate interest. a. Time limit: 5 years is too long, but 6 months will be enforced. b. Scope: Cant say cant work as lawyer, but can say cant work in this area of law. c. Geographic Scope: Assumes a world where business is local. 2. Employees Interest a. Is the non-compete agreement so broad as to deny the employee livelihood? Cannot be unreasonably burdensome to the employee. 3. Public Policy a. Anti-Trust issues; cannot be harmful to the public. b. To enforce a NCA by injunction, employer need only show that the employee is in a position to use the trade secret. 4. Shop Rights a. As a general rule, absent an express contract between employer and employee allocating rights to inventions made by the employee in the course of his employment, all rights to the invention belong to the employee. a. Two exceptions virtually swallow this general rule: 1. If the employee was specifically hired to engage in research and development, courts will imply an agreement that rights to his inventions belong to the employer. 6

III.

d. Right of Publicity i. An individual has the right to control his name/likeness in a commercial context; this right is violated by an unauthorized exploitation of the likeness for commercial purposes. ii. What is protected? Name, picture, voice, context, etc. iii. Policy Considerations Behind Right of Publicity 1. The ROP vindicates the economic interests of celebrities, enabling those whose achievements have imbued their identities with pecuniary value to profit from their pain. 2. The ROP fosters the production of intellectual and creative works by providing for the financial incentive for individuals to expend the time and resources necessary to produce them. 3. The ROP serves both individual and societal interests by preventing what our legal tradition regards as wrongful conduct: unjust enrichment and deceptive trade practices. iv. Elements: 1. Commercial Context; 2. Image/Identity used in an identifiable way 3. A will violate the ROP only if it appropriates those elements that identify the to the public. v. Theory of Protection 1. Carson v. Heres Johnny Portable Toilets, Inc. (6th Cir. 1983) a. Several factors to balance in determining whether a likelihood of confusion exists among consumers of goods involved in a 43 (a) action: a. Strength of Ps mark; b. Relatedness of goods; c. Similarity of marks; d. Evidence of actual confusion; e. Marketing channels used; f. Likely degree of purchaser care; g. Ds intent in selecting the mark; h. Likelihood of expansion of the product lines. 2. White v. Samsung Electronics America, Inc. (9th Cir. 1992) a. Common law right of publicity cause of action may be pleaded by alleging: a. Ds use of Ps identity; b. The appropriation of Ps name or likeness for Ds advantage; c. Lack of consent; and d. Resulting injury. vi. Limits of Protection 1. Comedy III Productions, Inc. v. Gary Saderup, Inc. (CA 2001) a. Rested limitation of protection on the right of publicity not on the statutory text, but on the First Amendment. Federal Law of Intellectual Property a. Jurisdiction and Courts i. Federal and State Jurisdiction 1. Section 1338 of the Judicial Code defines the jurisdiction of federal district courts over federal IP actions and over certain state law claims connected to federal IP actions. a. 1338(a) gives federal district courts original jurisdiction over any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights, and trademarks. 7

2. If the employee was not hired specifically for R & D but made the invention during work hours, or with the use of his employers equipment or materials, the employer obtains a shop right, essentially an irrevocable, non-exclusive license to practice the invention.

b. This jurisdiction is exclusive of the courts of the states in patent, plant variety protection and copyright cases. District courts share their jurisdiction with state courts in trademark cases. 2. Arising Under Jurisdiction a. An action arises under the Copyright Act if and only if: a. The complaint is for a remedy expressly granted by the Act, e.g., a suit for infringement or for the statutory royalties for record reproduction, or b. Asserts a claim requiring construction of the Act. . or c. At the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim. T.B. Harms Co. v. Eliscu (1964). b. Well-Pleaded Complaint a. In deciding whether an action arises under the Patent, Copyright, or Trademark Acts, courts will honor the well-pleaded complaint. b. If the complaint alleges the elements required for an infringement action or makes a claim requiring the construction of the federal statute, federal jurisdiction will lie under 1338(a). 1. Client must prove he would have prevailed but for negligence, therefore requiring construction of the statute and under federal jurisdiction. 3. Supplemental (Including Pendent) Jurisdiction a. 1338(b) tailors the general doctrine of pendent jurisdiction to the specific contours of IP litigation. b. Under 1367(c), a district court may decline to exercise SJ if: a. The claim raises a novel or complex issue of state law, b. The claim substantially predominates over the claim or claims over which the district court has original jurisdiction; c. The district court has dismissed all claims over which it has original jurisdiction, or d. In exceptional circumstances, there are other compelling reasons for declining jurisdiction. c. On what authority does Congress regulate Trademarks? a. Patents and Copyrights come from Article I, Section 8 b. Trademarks come from the Commerce Clause. 1. Consumer is the nexus for Interstate Commerce. 2. Trade Secrets are not included because they are not being sold. ii. Court of Appeals for the Federal Circuit 1. Federal Courts Improvement Act (FCIA) of 1982 created a 13th court of appeals, the United States Court of Appeals for the Federal Circuit. This court merges the Court of Customs and Patent Appeals and the Court of Claims. a. FCIA gives the CAFC exclusive jurisdiction over appeals from district courts decisions in patent and plant variety protection cases. b. The principal reason for the creation of the CAFC was to eliminate a persistent disparity in patent law standards. b. Trademark Law i. Introduction 1. Federal Lanham Act of 1946: Essentially the first federal trademark statute of general applicability. a. Trademark Law Revision Act of 1988 materially altered the premises and provisions of the Lanham Act.

b. Federal TM Dilution Act, 109 Stat. 985, added to the Lanham Act protections against the dilution of famous marks, following the lead of many states that had adopted antidiltuion measures. 2. Rationale for Trademark Law: a. Consumer protection against deception b. Unfair competition c. Promote investments in brand quality 3. Two legal doctrines: Both claims address essentially the same injuries: the injury to consumers who get a product different from the one they expected, and the injury to producers. a. Passing Off: The starting point was the common law of deceit b. Trademark Infringement ii. Theories of Protection: Passing Off 1. William R. Warner & Co. v. Eli Lilly & Co. (1924) a. The Calculus of Passing Off: Unfair competition law seeks to accommodate the interest of businesses in choosing and investing in symbols that will capture their good will and the interest of consumers in being free from confusion about the source of goods and services, by protecting (a) the first to use a name, brand, or other symbol in connection with the sale of goods or services against (b) any competitor who subsequent use of the symbol (c) confuses, or is likely to confuse, consumers believing that the first user, rather than the competitor, is the source of the goods or services. iii. Requirements for Protection 1. Use and Use in Commerce a. Introduction a. The 1988 Revision Act substantially loosened the use requirement by allowing trademark registration applications to be made upon a showing of a bona fide intention to use the mark. b. Ways to Register a Mark a. Applications Based on Use. As amended, the Lanham Act generally treats applications based on use in the same way that it treated them before the 1988 amendments. Examiners in the Patent and Trademark Office will review the application for compliance with the statutory formalities and determine whether registration of the mark is barred on any of the grounds specified in section 2 of the Lanham Act, 15 U.S.C.A. 1052. 1. 1051 (a): TM actually used in commerce 2. Benefits: a. Constructive notice ( 1072) b. Prevents cancellation after 5 years ( 1065) c. Prima facie evidence of validity in use ( 1115(a)); conclusive evidence of validity after 5 years ( 1115(b)) d. Nationwide mark (Senior v. Junior User) e. Incontestability ( 1115 (b)) after 5 years of registration (akin to concept of quiet title): Once the mark is registered and there are no objections, the registrant may petition to have the mark declared incontestable. i. But incontestable marks may be challenged on the basis of (1) disparaging marks; (2) geographically misdescriptive; (3) functionality. 9

ii. However, incontestable status gives a TM holder the right to be protected from challenges on the ground that the mark lacks secondary meaning. b. Applications Based on Intent to Use. 1. 1051 (b): Intent to Use application a. Does not vest until bona fide use in commerce, but filing constitutes constructive use of the mark is later used in commerce (priority date is date of filing) b. What is a sufficient bona fide use to establish trademark ownership and priority? i. Quantity and continuity of sale ii. Consumer purchases iii. Business of the mark owner iv. Quality control v. A distinguishing mark vi. Intent vii. Profit or loss viii. Advertising ix. Test market c. No Registration For: 1052(a) a. Deceptive Marks 1. Test: a. The term misdescribes the character, quality, functionality, or composition of goods b. If so, will purchaser believe the misdescription? c. If so, will the misdescription affect the decision to purchase? b. Geographically misdescriptive Marks: 1. Test: a. Mark has a geographic connotation b. Wrongful association c. Mark has material affect on a consumers decision to buy the product. d. Blue Bell, Inc. v. Farah Mfg. Co. (5th Cir. 1975) a. Issue: Which party established prior use of the mark in trade; definition of the term use. b. A trademark is a symbol (word, name, device or combination thereof) adopted and used by a merchant to identify his goods and distinguish them from articles produced by another. c. Ownership of a mark requires a combination of both appropriation and use in trade. 1. Accrues when goods bearing the mark are placed on the market. d. The exclusive right to a trademark belongs to one who first uses it in connection with specified goods. e. Use adequate to establish appropriation remains to be decided on the facts and evidence showing: 1. Adoption 2. Use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark. 10

e. WarnerVision Entertainment, Inc. v. Empire of Carolina, Inc. (2nd Cir. 1996) 2. Distinctiveness and Related Statutory Standards a. 15 U.S.C.A. 1052 b. Security Center, Ltd. v. First National Security Centers (5th Cir. 1985) a. Issue: (1) Whether the plaintiff has a protectable property right in the name it seeks to defend from use by others; (2) Infringement, as judged by likelihood of confusion. b. Spectrum of Distinctiveness: 1. Arbitrary/Fanciful: No description of good/ inherently distinctive and gets the highest protection; something that is either made up (e.g. Exxon) or something that exists in the world, but has nothing to do with the product (e.g. Apple Computers) 2. Suggestive: Mark suggests something about the product (e.g. Coppertone sun tan lotion); inherently distinctive 3. Descriptive: Mark that describes some attribute of the product (e.g. Joes Crab Shack); descriptive terms may or may not be protectable. a. Test for descriptive v. suggestive mark: A mark is suggestive if and only if it requires some leap of imagination to get from the trademark term to the product. b. No protection unless secondary meaning 4. Generic: Simply describes the product itself (e.g. soap/hand soap). c. Trademark by Which the Goods of the Applicant May Be Distinguished From the Goods of Others a. King-Seeley Thermos Co. v. Aladdin Industries, Inc. (2nd 1963) b. Notes: 1. Bayer Co. v. United Drug Co. (SDNY 1921): Just because a term has become generic as to the general public does not mean it has become generic. 2. 15 U.S.C.A. 1064 (3) 3. Selchow & Righter v. McGraw-Hill (2d Cir. 1978): Publication of The Complete Scrabble Dictionary might render the SCRABBLE trademark generic and plaintiff had demonstrated the possibility of irreparable injury. 4. Illinois High School Assn v. GTE Vantage Inc. (7th Cir. 1996): Held that plaintiff, which had since the 1940s used the trademark March Madness to identify its high school basketball tournament, but failed to control media use of the phrase since the 1980s to designate the NCAAs Final Four championship, could not later stop use of March Madness by the NCAA or its licensees. c. Trademark Abandonment: There are 2 distinct tests for trademark abandonment. 1. Abandonment Through Nonuse: Section 45 of the Lanham Act, 15 U.S.C.A. 1127, provides that a mark shall be deemed to be abandoned [w]hen its se has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of 11

abandonment. Use of a mark means bona fide use of that mark made in the ordinary course of trade, and not merely to reserve a right in a mark. 2. Abandonment Through Loss of Distinctiveness: Section 45 of the Lanham Act also defines abandonment to include the situation where any course of conduct of the owner, including acts of omission as well as commission, causes the mark to become the generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark . . . 3. Consequences of Abandonment: A finding of abandonment implies that the mark is in the public domain and that the marks owner no longer has any rights in the mark. d. Deceptive . . . Matter a. In re Budge (Fed. Cir. 1988) 1. Section 2 (a) of the Lanham Act; 15 U.S.C.A. 1052 (a): Bars registration of a mark which [c]onsists of or comprises . . . deceptive . . . matter . . . 2. Three Part Test (In re Shapely, Inc.) a. Whether the term is misdescriptive as applied to the goods; b. If so, whether anyone would be likely to believe the misrepresentation, and c. Whether the misrepresentation would materially affect a potential purchasers decision to buy the goods. b. Deceptive and Deceptively Misdescriptive 1. Deceptively misdescriptive marks can be registered upon proof of secondary meaning under section 2(f); deceptive marks can never be registered. 2. If mark meets the 3 part test, it is deceptive; if it has the first two characteristics, but not the third, it is only deceptively misdescriptive. e. Confusing Similarity to Prior Marks a. In re N.A.D., Inc. (Fed. Cir. 1985) 1. Concurrent Registration: The Trademark Law Revision Act of 1988 amended the proviso of Lanham Act section 2(d), 15 U.S.C.A. 1052 (d), dealing with concurrent registrations f. Merely Descriptive or Deceptively Misdescriptive a. Application of Sun Oil Co. (CCPA 1970) g. Primarily Geographically Deceptive or Deceptively Misdescriptive a. In re California Innovations, Inc. (Fed. Cir. 2003) 3. Statutory Subject Matter a. Types of Marks a. Trademarks and Services Marks 1. Service Marks: A mark used in the sale of advertising of services to identify or distinguish the services of one person for the services of another. b. Certification Marks and Collective Marks 1. Collective Marks: a. They signify no more than mere membership in the association or collection. 2. Certification Marks 12

b. Content a. Qualitex Co. v. Jacobson Products Co., Inc. (1995) 1. Issue: Whether the Lanham Act permits the registration of a trademark that consists, purely and simply, of a color. a. We conclude that, sometimes, a color will meet ordinary legal trademark requirements. 2. Color cannot be inherently distinctive, but it can be descriptive and protectable if it has acquired secondary meaning; color over time could come to signify the brand. iv. Administrative Procedures 1. Examination a. After obtaining and reviewing a trademark search, a prospective registrant will file an application to register the mark on the Principal Register. b. The initial procedures will be the same whether the application is a use application under 15 U.S.C.A. 1051 (a) or an intent-to-use application under 15 U.S.C.A. 1051 (b). After reviewing the application for compliance with the statutory formalities, the examiner will determine whether registration is barred on any of the grounds specified in section 2 of the Lanham Act, 15 U.S.C.A. 1052. c. If the examiner concludes that the mark qualifies for registration, she will approve it for publication in the Official Gazette. a. If no one successfully files an opposition within 30 days of publication in the Gazette, a registration will issue in the case of use applications, and a notice of allowance will issue in the case of an intent-to-use application, 15 U.S.C.A. 1063 (b). d. If the examiner rejects the application, the applicant can amend the application to meet the examiners objections or, if he disagrees with the examiner, can file a response rebutting the grounds for rejection. If these efforts fail and the mark is finally rejected, the applicant can appeal to the Trademark Trial and Appeal Board, 15 U.S.C.A. 1070. 2. Inter Partes Proceedings a. Oppositions: Opposition proceedings, conducted by the TTAB under 15 U.S.C.A. 1067, gives competitors and other potentially injured parties the opportunity to object to registration of a mark. a. To be heard, the opposer must file its opposition within 30 days of the marks publication in the Official Gazette. b. To prevail, the opposer must demonstrate that it is likely to be damaged by the marks registration ( 1063) and the mark is not entitled to registration under the terms of the Act ( 1052). b. Concurrent Use Proceedings: If the applicants trademark search revealed an earlier, localized use of the same or similar mark by someone 13

a. Signify a representation about the goods themselves by someone other than the producer of the goods, even if that representation is only that those particular goods are produced in a particular region, or that they are identified in a particular way. b. May be cancelled under either of two circumstances: (1) not used exclusively as a certification mark, and any use made of it is other than for certification; and (2) registrant does not control its use by taking reasonable steps to avoid misleading the public.

else, the applicant could initiate a concurrent use proceeding to limit his registration to territories not yet occupied by the earlier user. a. The Commissioner may issue concurrent use registrations upon determining that the confusion, mistake, or deception is not likely to result from the continued use by more than one person of the same or similar marks under conditions and limitations as to the mode or place of use of the marks or the goods in connection with which such marks are used. 15 U.S.C.A. 1067. c. Cancellation: 15 U.S.C. 1064 authorizes cancelation of Principal Register registrations upon petition by any person who believes that he is or will be damaged . . . by the registration of a mark on the principal register. a. Registration may be cancelled within 5 years on any ground that would have barred registration initially. 3. Renewal: Even after the Trademark Law Revision Act introduced the intent-touse application, trademark rights mainly turn on use. a. The Lanham Act does not impose a fixed term, but does require registrants periodically to confirm their use of the mark. b. 15 U.S.C. 1058 imposes the first checkpoint for confirming use by requiring that the registrant file, six years after the marks registration, an affidavit listing the goods or services recited in the registration for which the mark is being used in commerce. a. The statute further provides that certificates of registration shall remain in force for 10 years, renewable indefinitely for successive ten year terms upon payment of the prescribed fee and the filing of a written application. 15 U.S.C. 1058, 1059. 4. Appeals a. The Trademark Trial and Appeal Board hears appeals from ex parte trademark examiner decisions refusing registration. The Board is also the initial forum for inter partes proceedings oppositions, concurrent use, interferences, and cancellations. b. The Commissioner of Patents and Trademarks hears appeals from trademark examiner decisions rejecting a registrants affidavit under 1058, or a petition for renewal under 1059. 5. Incontestability and Immunity from Cancellation a. Incontestability: Codified in 1065, 1115 (b). v. Rights and Remedies 1. Rights (15 U.S.C. 1057(b), 1060, 1072, 1114-1115, 1125 (c)) a. Geographic Boundaries a. United Drug Co. v. Theodore Rectanus Co. (1918): The general rule is that, as between conflicting claimants to the right to use the same mark, priority of appropriation determines the question. But the reason for the rule is that purchasers have come to understand the mark as indicating the origin of the wares, so that its use by a second producer amounts to an attempt to sell his goods as those of his competitor. 1. The reason the rule does not extend to a case where the same trade-mark happens to be employed simultaneously by two manufacturers in different markets separate and remote from each other, so that the mark means one thing in one market, an entirely different thing in another. It would be a perversion of the rule of priority to give it such application in our broadly extended country that an innocent party who had in good faith employed a trademark in one State, and by the use of it had built up a trade 14

there, being the first appropriator in that jurisdiction, might afterwards be prevented from using it, with consequent injury to his trade and good-will, at the instance of one who theretofore had employed the same mark but only in other and remote jurisdictions, upon the ground that its first employment happened to antedate that of the first-mentioned trader. b. Dawn Donut Co. v. Harts Food Stores, Inc. (2d Cir. 1959) 1. Zone of Expansion Doctrine 2. Concurrent Use: Application of Beatrice Foods, Co.: As a general rule in concurrent use proceedings between two applicants, the senior user in entitled to a registration covering the entire United States, less the area in which the junior user has established territorial rights. 3. Trademark cannot be assigned in gross that is, apart from the assignors business, assets, or goodwill. b. Product and Service Boundaries a. Generally 1. The fundamental protection that the Lanham Act offers to the owner of a registered mark is against any other party making unauthorized use of the mark, or an imitation thereof, in commerce in connection with the sale, offering for sale, distribution, or advertising of any goods or services if that use is likely to cause confusion, or to cause mistake, or to deceive. 15 U.S.C. 1114 (1). 2. Whether a s use of the same or similar mark will infringe the trademark owners mark will depend in part on the goods or services with which the parties use the mark. 3. In modern trademark law, the question of whether a s rights in its mark extend to any particular good or service is generally a function of the multiple-factor tests that all federal courts use to decide whether a s use of the mark is likely to cause confusion. a. One important factor in those tests is the similarity, relatedness, or proximity of the parties products. b. c. Dilution Under State Law 1. Mead Data Central v. Toyota (2d Cir. 1989) a. Similarity in the marks must be substantial before the doctrine of dilution may be applied. In this case, the court held that only that the marks must be very or substantially similar and that, absent such similarity, there can be no viable claim of dilution. b. Two elements for Dilution: i. s mark must possess a distinctive quality capable of dilution; and ii. must show likelihood of dilution. iii. NEED NOT show either competition between the products or services or a likelihood of confusion as to the source of the goods or services. c. This court has defined dilution as either: 15

i. The blurring of a marks product identification; or ii. The tarnishment of the affirmative associations a mark has come to convey. d. Tarnishment can be applied in two ways: i. Applied broadly, the prohibition encompasses any unauthorized use of the mark in any context, commercial or noncommercial, that diminishes the marks positive associations. ii. Applied narrowly, the prohibition encompasses only unauthorized commercial uses of the mark in connection with shoddy goods or with goods that lack the prestige associated with the mark. e. Judge Sweet (concurring): In his view, blurring sufficient to constitute dilution requires a case-bycase factual inquiry focused on six judiciallyrecognized factors: i. Similarity of the marks; ii. Similarity of the products covered by the marks; iii. Sophistication of consumers; iv. Predatory intent; v. Renown of the senior mark; vi. Renown of the junior mark. d. Dilution Under Federal Law 1. Moseley v. V Secret Catalogue, Inc. (2003) a. 15 U.S.C. 1125 provides a remedy for the dilution of famous marks. That amendment, known as the Federal Trademark Dilution Act, describes the factors that determine whether a mark is distinctive and famous, and defines the term dilution as the lessening of the capacity of a famous mark to identify and distinguish goods or services. b. Confusion leads to immediate injury, while dilution is an infection, which if allowed to spread, will inevitably destroy the advertising value of the mark. H.R. Rep. No. 104-374 (1995). c. To establish dilution of a famous mark under the Federal Act requires proof that: i. a D has made use of a junior mark sufficiently similar to the famous mark to evoke in a relevant universe of consumers a mental association of the two that; ii. has caused; iii. actual economic harm to the famous marks economic value by lessening its former selling power as an advertising agent for its goods or services. d. The FTDA includes two exceptions to dilution: i. It allows fair use of a registered mark in comparative advertising or promotion, and 16

2. Limitations on Rights a. Limitations on Trademark Infringement a. KP Permanent Makeup, Inc. v. Lasting Impression (1995) 1. A party raising the statutory affirmative defense of fair use to a claim of trademark infringement does not have a burden to negate any likelihood that the practice complained of will confuse consumers about the origin of the goods or services affected. 2. 15 U.S.C. 1115 (b)(4) codifies the elements of the fair use defense. b. NKOTB v. News America Publishing (9th Cir. 1992) 1. Nominative Fair Use Test: a. First, the product or service in question must be one not readily identifiable without use of the trademark; b. Second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and c. Third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. 2. Parody & Satire: Fair Use a. How do you know if the use is parodic or satirical and not infringing? i. Must be dissimilar in connotation and overall impression. 3. Limitations on Dilution a. Mattel, Inc. v. MCA Records, Inc. (9th Cir. 2002) a. The FTDA has three exemptions: comparative advertising, news reporting and commentary, and non-commercial use. b. Non-Commercial Use: This refers to a use that consists entirely of non-commercial, or fully constitutionally protected, speech. 1. This includes speech such as parody, satire, editorial, or other forms of expression that are not part of a commercial transaction. 4. Remedies a. 15 U.S.C. 1111, 1114, 1116-1120, 1124 b. Maltina Corp. v. Cawy Bottling Co. (5th Cir. 1980) a. Infringement Remedies: 1. Injunction (15 U.S.C. 1114, 1116) a. If an equitable relief is appropriate, the court will award it first. Only after equitable remedies have been exhausted will the court turn to monetary awards. 2. Damages (15 U.S.C. 1117); Types: a. Loss of Sales/ Net Profits b. Economic injury to trademark owners goodwill and reputation. 17

ii. That non-commercial use of a mark shall not constitute dilution. e. Proof of actual harm means more than a mere mental association of the two marks and, even though it may be difficult to prove, that is not a reason for dispensing with proof of actual harm as an essential element of a statutory violation.

3. Profits ( 1117); Types: a. Trademark owners loss of profits (same thing as loss of sale, which is why you are entitled to one or the other under 1117). b. Unjust enrichment (infringers profits); accounting to enable trademark owner to prove damages. b. Burden: 1. Proving Sale () 2. Proving Deductions () 5. Secondary Liability a. Hard Rock v. Concession Serv. (7th Cir. 1992) a. If a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorily responsible for any harm done as a result of the deceit. b. Willful blindness is equivalent to actual knowledge for purposes of the Lanham Act. To be willfully blind, a person must suspect wrongdoing and deliberately fail to investigate. vi. Infringement 1. 15 U.S.C. 1114, 1121 2. Pikle-Rite Co. v. Chicago Pickle Co. (N.D. IL 1959) 3. Primary Liability ( 1114, 1121) a. Is the allegedly infringing mark likely to cause confusion? b. Is the allegedly infringing mark sufficiently similar as to cause confusion? 4. McGregor-Doniger v. Drizzle a. For trademark infringement, consider these factors when determining likelihood of confusion: a. Strength of the mark; b. Similarity of the marks; c. Product proximity; d. Quality of s product; e. Bridging the gap will the ever enter the product market of the . f. Actual Confusion; g. Good faith; h. Sophistication of buyers. c. Lanham Act 43 (a): The Case of Trade Dress d. 15 U.S.C. 1125 e. anything inherently functional is not protectable under the Lanham Act f. Two Pesos v. Taco Cabana, Inc. (1992) i. Trade Dress is the total image of the business. It involves the total image of a product and may include features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques. 1. In this case, trade dress includes the shape and general appearance of the exterior of the restaurant, the identifying sign, the interior kitchen floor plan, the dcor, the menu, the equipment used to serve food, the servers uniforms and other features reflecting on the total image of the restaurant. ii. Trade dress cannot be reduced to its components, the combination thereof would require secondary meaning iii. Taco Cabana did not register its trade dress iv. Use in commerce determines the senior user v. Trade dress is protectable if it is either inherently distinctive or has obtained a secondary meaning. 18

Distinctiveness is required for both registered and unregistered trademarks. fanciful here trade dress is an informational device, just like a trademark doesnt guarantee that a business is going to succeed, only concerned about whether it will signal to that certain business 5. registration of trade dress gives you all the same protections as when you register a trademark; puts others on notice, prima facia evidence...etc vi. Congress has left this open to the cts. to determine g. Walmart v. Samara Brothers i. trade dress product design MUST HAVE SECONDARY MEANING ii. product design cannot be inherently distinctive so it would require secondary meaning to be protectable iii. questions to ask the jury: (1) is it inherently distinctive?; (2) does it have secondary meaning? iv. when the trade dress is the design itself it is inherently FUNCTIONAL UNTIL it acquires secondary meaning h. trade dress protection is broader than trademark protection i. TrafFix Devices, Inc. v. Marketing Displays i. There is an important limitation on the protectability of trademarks and trade dress: the functionality doctrine. 1. This doctrine states that an applicant may patent, but not trademark the functional features of a product. 2. What features are functional? a. Functional features are those which are essential to the use and purpose of the article and are not related to reputation or identity. A party claiming trade dress protection bears the burden of proving that the trade dress is not functional. IV. Patent Law a. Generally i. Must be novel, useful, and non-obvious. 1. 35 U.S.C. 101 authorizes patents for: a. Process: Protects method of creating the product b. Plant 161 c. Design 171 d. Product: Protects the product itself a. Machine: has moving, interactive parts b. Manufacture: has no moving parts c. Composition 1. Any non-natural composition can constitute a manufacture or composition for purposes of 101. 2. Other information: a. One cannot patent a system that depends for operation on human intelligence alone; must add something of value to the normal professional practice. b. Even if individual parts are not patentable, the sum of the parts may be patentable. c. A business method may be patentable if: a. It is tied to a particular machine or apparatus OR b. It transforms article n to a different thing AND c. It is not merely an abstract idea. ii. What does a patent application consist of? 1. 35 USC 112 a. Specification: describes the invention and the manner and process of making and using it. b. Claim: establishes the boundaries of the property owners exclusive rights; you can have more than one claim in a patent application. 19

1. 2. 3. 4.

b. Novelty and Statutory Bars: 35 U.S.C. 102 i. Patent must be denied if the invention was anticipated (a) if the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent... 1. Applies to identical prior art; not novel if anticipated by identical prior art. ii. Two ways to prove anticipation by identical prior art: 1. Enables one skilled in the art to reduce invention to practice; prior disclosure must be publicly accessible (this is a question of fact that depends on the totality of circumstances). 2. Invention is in public use or on sale for more than one year prior to the patent application. a. 102(b): On Sale a. Ready for patenting (but need not be reduced to practice); b. Commercial offer for sale b. NOT a public use if the use is to test the device before commercial use, even if there is some incidental benefit to the public. c. 103: Obviousness i. Obviousness is a question of fact. 1. Primary Considerations: a. Scope and content of prior art b. Differences from the prior art c. Level of ordinary skill in relevant prior art. 2. Secondary Considerations a. Commercial success b. Long-felt, but unsolved, needs c. Failure of others 3. Factual determination rests on 2 major questions: a. Whether claimed invention as a whole would have been obvious; b. Reviewing court must ask whether the improvement from the combination of prior art elements is more than the predictable use of the prior art elements according to their established functionality. d. Priority of Patents i. 102 (g): Priority accrues at the time of creation unless the invention is abandoned, suppressed, or concealed. 1. In the absence of deliberate suppression or concealment, too long a delay merely raises a legal inference of suppression and resumption of activity on the innovation can be evidence of priority. ii. Whoever files first has the presumption of validity. 1. If you want to contest this validity, file an interference action under 103(g) and produce evidence. a. Invention is a two-step process: a. Conception: Whether the inventor had an idea that was definite and permanent enough that one skilled in the art could understand it; inventor has specific, settled idea or a particular solution to the problem at hand. b. Reduction to practice b. Priority is assigned to the first to conceive. c. For subject matter to anticipate or act as a statutory bar, it must have been reduced to practice or be complete. e. America Invents Act (AIA) Does away with section 102(g). First to file is the new rule. Criticisms are that big corporations will dominate little guys. i. Can join multiple defendants only if: 1. The claim alleges joint and several liability, or the claim arises out of the same T/O. 2. The claim entails questions of fact that are common to all defendants 20

V.

Copyright Law a. Generally i. Copyright protection extends to any original work of authorship fixed in any tangible medium of expression. ii. 17 U.S.C. 102 (a): list of copyrightable material; this list is not exhaustive 1. Literary works 2. Musical Works, including any accompanying words 3. Dramatic works, including any accompanying music 4. Pantomimes and choreographic works 5. Pictorial, graphic, and sculptural works 6. Motion pictures and other audiovisual works 7. Sound recordings 8. Architectural works iii. Copyright statute protects ONLY expressions, not ideas. iv. Under 17 U.S.C. 102(b), one cannot obtain a copyright protection for any idea, procedure, process, system, method of operation, concept, principle, or discovery. v. Originality is required for copyright protection, but anticipation is not. Therefore, a copyrighted work need not be novel or non-obvious. vi. Protection will extend to any compilation work that results from any amount of originality. 1. Any amount will suffice, but protection will only extend to the components that are original to the author, such as decisions about compilation and arrangement, but will not extend to the information itself. 2. Copyright protection will not extend to non-original matters, such as facts, that the author has amassed through the sweat of his brow. vii. Joint Works: Multiple authors may have a joint work if they intend their contributions to be merged into inseparable or interdependent parts of a unitary whole. 1. Collaboration alone is not sufficient. This requirement has been interpreted to mean that the parties must have intended two things: a. For their contributions to be merged b. To make all contributors authors. a. A contributor qualifies as an author only if his contribution would be a copyright on its own. 2. Assembly of separate and independent works, not a unitary whole, is a collective work. a. Collective work is a subset of compliation. 3. Work made for hire vests the copyright in the party who did the hiring. a. A work is made for hire if it is either: a. Prepared by an employee in the scope of his employment, (question of employment under 101 (1) is determined by the general common law of agency) OR b. Specially ordered or commissioned for one or more of the purposes listed in 102 (2). viii. Because copyright contains both in speech protections, content neutral burdens on speech are reviewed on a rational basis standard. 1. One example is the idea/expression dichotomy. ix. Another protection built into Copyright Protection Act is the Fair Use doctrine. 1. The Pair Use doctrine permits copying for purposes such as comment, news reporting, teaching, scholarship, or research ( 107). 2. This does not include a use that supersedes that of the original. a. Otherwise, four factors listed in 107 determine which uses are fair and that is a question of fact: a. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; 21

b. Infringement i. Copyright infringement consists of two elements: 1. Copying 2. Wrongful appropriation ii. Copying 1. Unless the original work and the allegedly infringing work are identical, copying is a question of fact. 2. Absent direct evidence of copying, copying can be inferred by two types of circumstantial evidence: a. Access: Inferred from availability b. Similarity a. Identity: Copying as a matter of law b. Strikingly Similar: established is there exists no explanation for the similarity other than copying; copying as a matter of law, but this only gets you half way there. c. Substantially similar: Would the average lay observer recognize the alleged copy has having been appropriated from the copyrighted work? This is a question of fact. iii. Wrongful Appropriation 1. There is no rightful appropriation of you copy an entire copyrighted work 2. Either: a. Completely identical: This is WA as a matter of law OR b. Substantial similarity AND not a fair use. 3. Copying is NOT a wrongful appropriation IF: a. Material is not protected b. Copying is not substantial c. Copying constitutes a fair use c. Secondary Liability i. Attaches to someone who is either vicariously or contributorily liable for infringement. 1. Vicarious requires control, but not knowledge. a. Liable if: a. Supervises and controls the conduct of the infringing party b. has a financial interest in activity. 2. Contributory requires knowledge, but not control. a. Liable if: a. has knowledge of infringement b. materially contributes to it.

b. the nature of the copyrighted work; c. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and d. the effect of the use upon the potential market for or value of the copyrighted work. b. That a wprk is unpublished is a fact weighing against fair use, but it is not dispositive. c. Commerical purpose is a factor, but is not alone dispositive. d. Substantiality of the infringement for the purpose of 107 is measured both quantitatively and qualitatively, and is measured against copyrighted work, not the infringing work.

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