INTELLECTUAL PROPERTY CORE

I. Introduction ................................................................................................................................................ 1 A. Philosophical Basis for Intellectual Property ............................................................................................ 1 B. Overview of U.S. and international Intellectual Property Legal Systems ................................................. 1 II. Trade Secrets............................................................................................................................................... 3 A. Defining Trade Secrets ............................................................................................................................. 3 Uniform Trade Secret Act - 1(4) (RCW 19.108 in Washington) ........................................................ 3 Torts 757 comment b (Restatement of the Law) ............................................................................. 3 Unfair Competition 39 (Restatement of the Law (Third)) ................................................................ 4 18 USC 1831. ECONOMIC ESPIONAGE (on behalf of a foreign entity) ............................................. 4 B. Reasonable Measures .............................................................................................................................. 4 C. Disclosure of Trade Secrets; Non-Disclosure Agreements ....................................................................... 5 How Trade Secrets get out there: ....................................................................................................... 5 Residuals Clause: ................................................................................................................................. 6 D. Trade Secrets and Employees (Modern Mobility) .................................................................................... 6 NDA and some issues: ......................................................................................................................... 6 Covenants Not to Compete and some issues: Reasonableness .......................................................... 6 Assignment of Inventions Clauses ...................................................................................................... 6 Non-Solicitation Agreement ............................................................................................................... 6 Inevitable Disclosure looking at the UTSA Section 2(a) ................................................................... 7 E. Proper and Improper Means of Discovery ............................................................................................... 7 "Misappropriation" means UTSA 1(2): ............................................................................................. 7 Liability for Disclosure or Use of Another's Trade............................................................................... 8 Improper ............................................................................................................................................. 8 Breach of Confidentiality .................................................................................................................... 9 Proper means include: AKA Defenses to Misappropriation................................................................ 9 F. Remedies ................................................................................................................................................ 10 Injunctive Relief ................................................................................................................................ 10 Damages - USTA ................................................................................................................................ 10 Punitive Damages and Attorneys Fees............................................................................................. 10

III. Patents .................................................................................................................................................. 11 A. Patentable Subject Matter ..................................................................................................................... 11 B. Novelty and Statutory Bars .................................................................................................................... 12 Conception ........................................................................................................................................ 13 Reduces to Practice (RTP) = .............................................................................................................. 13 Diligence............................................................................................................................................ 13 AIA ..................................................................................................................................................... 14 C. Utility ...................................................................................................................................................... 14 D. Non-obviousness .................................................................................................................................... 16 1: Prior Art: scope and content (different from Novelty a bit) ......................................................... 16 2: Differences between the Prior Art and the Claims at Issue .......................................................... 17 3: PHOS in the pertinent Art ............................................................................................................. 17 Obvious or Not? ................................................................................................................................ 18 E. Disclosure, proof of possession .............................................................................................................. 18 35 USC 112 paragraph 1.................................................................................................................... 18 Written Description .......................................................................................................................... 18 Enablement ....................................................................................................................................... 19 Best Mode: ........................................................................................................................................ 19 F. Patent Rights and Claim Interpretation .................................................................................................. 19 35 U.S.C. 271 Infringement of patent. .............................................................................................. 19 Claim Writing: ................................................................................................................................... 19 Claim Interpretation.......................................................................................................................... 20 Cannons of Claim Interpretation ...................................................................................................... 20 G. Non-Utility Patents ................................................................................................................................. 20 Section 112, paragraph 6 .................................................................................................................. 20 H. Infringement; Doctrine of Equivalents ................................................................................................... 20 Literal Infringement .......................................................................................................................... 20 Doctrine of Equivalents ..................................................................................................................... 21 Prosecution History Estoppel ............................................................................................................ 22 Reverse Doctrine of Equivalents ....................................................................................................... 24 Indirect Infringement ........................................................................................................................ 24 I. Defenses ................................................................................................................................................. 24 Invalidity............................................................................................................................................ 24 Experimental Use .............................................................................................................................. 24 Inequitable Conduct.......................................................................................................................... 25 Exhaustion of Patent Rights .............................................................................................................. 25 Patent Misuse ................................................................................................................................... 25 J. Remedies ................................................................................................................................................ 26 Injunctive Relief ................................................................................................................................ 26 Damages ........................................................................................................................................... 26 Willful Infringement .......................................................................................................................... 27

IV.Trademarks .............................................................................................................................................. 28 A. Protectable Subject Matter .................................................................................................................... 29 Cases ................................................................................................................................................. 29 Qualitex v. Jacobson (1995) Color ........................................................................................ 29 Zatarain's, Inc. v. Oak Grove Smokehouse, Inc., (5th Cir. 1983) Descriptive Fish-Fri ........... 29 Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 US 205 - Supreme Court 2000 ............... 30 Source Identifying Function .............................................................................................................. 30 Trade Dress ....................................................................................................................................... 30 Taco Cabana v. Two Pesos, Inc. (1991) inherently distinctive?? REaLLy?!?!TOTALITY ......... 30 Distinctiveness; Categories of Marks ................................................................................................ 31 GENERIC TERM ......................................................................................................................... 31 DESCRIPTIVE TERM .................................................................................................................. 32 SUGGESTIVE TERM ................................................................................................................... 32 ARBITRARY OR FANCIFUL TERMS ............................................................................................. 32 Unprotectable Symbols..................................................................................................................... 32 B. Establishing Trademark Rights ............................................................................................................... 33 Use .................................................................................................................................................... 33 Registration ....................................................................................................................................... 33 C. Ownership .............................................................................................................................................. 34 Priority .............................................................................................................................................. 34 Zazu Designs v. L'Oreal, S.A.(7th Cir. 1992) .............................................................................. 34 Assignment ....................................................................................................................................... 35 Loss of Right ...................................................................................................................................... 35 D. Standard Infringement ........................................................................................................................... 36 1: Ownership of a Valid Mark ........................................................................................................... 36 2: In Commerce ................................................................................................................................. 36 3: The Alleged Infringer Use .............................................................................................................. 36 4: The Mark or a Similar Symbol ....................................................................................................... 36 5: In Connection with selling or marketing of Goods or Services; AND ............................................ 36 6: Likelihood of Confusion, Mistake, or Deception (gets an injunction) ........................................... 36 A: Necessary Showing of Confusion ......................................................................................... 36 B: Factors for Determining Likelihood Confusion .................................................................... 36 E. False Designation of Origin and False Descriptions Forbidden 43(a) ............................................. 37 False Advertising ............................................................................................................................... 37 Cybersquatting .................................................................................................................................. 37 F. Dilution ................................................................................................................................................... 37 THE CLAIM......................................................................................................................................... 38 Definition of Elements ...................................................................................................................... 38 Exclusions, Defenses ......................................................................................................................... 38 G. Defenses ................................................................................................................................................. 38 Parody ............................................................................................................................................... 39 Louis Vuitton Malletier S.A. v. Haute Diggity Dog Chewy Vuitton! Parody, and DILUTION 39 Genericide ......................................................................................................................................... 39 Murphy Bed v. Interior Sleep Systems - GENERICIDE .............................................................. 39 Functionality ..................................................................................................................................... 39 TrafFix v. Marketing Displays Necessary Element, Patent Trademark ............................ 39 Naked Licensing ................................................................................................................................ 39 Fair Use ............................................................................................................................................. 39 Mattel v. MCA Records Come on Barbie, Lets Go Party! .................................................. 39 KP Permanent Make-Up, Inc. v. Lasting Fair Use does not require Confusion analysis ....... 40 H. Remedies ................................................................................................................................................ 41 Lindy Pen Co v. Bic Fair Use does not require Confusion analysis ....................................... 41 Big O Trie Dealers, Inc v. Goodyear analysis ........................................................................ 41

V. Copyright................................................................................................................................................... 43 A. Copyrightable Subject Matter ................................................................................................................ 43 17 U.S.C. 102 (a) - PROTECTABLE ................................................................................................... 43 Feist Publications v. Rural Telephone Service Co., Inc. (1991) The ORIGINAL Phone Book .... 43 17 U.S.C. 102 (b) NOT PROTECTABLE .......................................................................................... 44 Baker v. Selden (1879)- Bigger Better Bookkeeping; IDEA-EXPRESSION DICHOTOMY .......... 44 Lotus Dev. Corp. v. Borland Intl, Inc. (US 1996)- Software, METHOD OF OPERATION .......... 44 Morrissey v. Procter & Gamble, (1st Cir. 1967) LIMITED NUMBER OF EXPRESSIONS ........... 45 Brandir International, Inc. v. Cascade Pacific Lumber Co.(2d Cir. 1987) BIKE RACK ............. 45 17 U.S.C. 103 (a) Infringing Works Not Protectable .................................................................... 46 17 U.S.C. 105 Government Works NOT protectable ................................................................... 46 B. Copyright Ownership.............................................................................................................................. 46 Term of Copyright ............................................................................................................................. 46 Who is the original Author?: ............................................................................................................. 46 Community for Creative Non-Violence v. Reid ........................................................................ 47 Aalmuhammed v. Lee .............................................................................................................. 47 Transfers ........................................................................................................................................... 48 Termination Right ............................................................................................................................. 49 C. Exclusive Rights ...................................................................................................................................... 49 Arnstein v. Porter Is there infringement? Access, Substantial Similarity, TO the JURY! ....... 49 Nichols v. Universal Pictures Corporation ................................................................................ 50 Reproduction Rights.......................................................................................................................... 51 Sony and Grokster .................................................................................................................... 51 Adaption Right .................................................................................................................................. 51 Anderson v. Stallone ............................................................................................................. 51 Distribution Right .............................................................................................................................. 52 Performance Right ............................................................................................................................ 52 Display Right ..................................................................................................................................... 52 D. Fair Use; Other Limitations on Exclusive Rights ..................................................................................... 52 Fair Use ............................................................................................................................................. 52 Harper & Row, Publishers v. Nation Enterprises, 471 U.S. 539 (1985). ................................... 53 Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994) Satire Bad, Parody GoodReally?! ...... 53 Blanch v. Koons ........................................................................................................................ 55 First Sale ............................................................................................................................................ 55 Compulsory License for Nondramatic Musical Works ...................................................................... 56 Limitations on Computer Programs .................................................................................................. 56 Other Limits on Exclusive Rights ....................................................................................................... 56 Defenses Other ................................................................................................................................. 56 E. Contributory Infringement and Vicarious Liability ................................................................................. 56 Sony v. Universal City Studios, Inc. .......................................................................................... 56 Grokster v. MGM ..................................................................................................................... 56 F. Remedies ................................................................................................................................................ 58 Copyright Infringement and Remedies ............................................................................................. 58 Property Like ..................................................................................................................................... 58 Liability .............................................................................................................................................. 58

I.

Introduction

Is the plaintiff using its IP to attack related, but unprotected material? -Bike Rack, Selling of Parody,

A. Philosophical Basis for Intellectual Property

The Types of Intellectual Property: -not created with a large amount of foresight -the types have large gaps where material may simply lack protection -the alternative truth is that many materials are subject to multiple protections First Principles: -I.P. protections too weak; open piracy -I.P. protections too strong; limiting public health aims -Locke; added value -Hegel; personhood, reputation, good will -Utilitarianism; investment, order, incentives -Social Planning: William Fisher; think of the society you want, then build the framework that will create it. -A priori: John Rawls, from behind the veil of ignorance - CONTROL What deserves Intellectual Property protections? -the line between Abstract Ideas and Procedures, Mixtures, et cetera -the bell curve example, whether its students or judges

B. Overview of U.S. and international Intellectual Property Legal Systems

1) Foreign Infringement a) NTP v. RIM (CAFC 2005) i) System and Method claims (1) At least one step of the method took place in Canada (2) Email routing system ii) Compare 35 USC 271(a) and 35 USC 271(f)(1) (1) GENERAL: the infringement has to occur in the country (2) EXCEPTION: an intent to infringe abroad iii) Injunction vs. Public Policy; can we shut down blackberry?! iv) Importance of claim drafting b) Eolas v. Microsoft (CAFC 2005) i) Foreign sales 1

c) Microsoft v. AT&T (U.S. 2007) i) Golden Masters ii) In Europe, they made copies of AT&Ts golden master iii) HELD: copying occurring in Europe not within the U.S.s reach 2) International Intellectual Property a) World Intellectual Property Organization (WIPO) Comparative Patent Law THE UNITED STATES REST OF THE WORLD First to Invent* First to File Grace period Absolute Priority
--Publication** --Public use --Sale

Few prior user rights* No opposition Best mode

More Prior User Rights Post-grant opposition No best mode

b) The America Invents Act i) Patent Law Reform, prepare for change!

II.

Trade Secrets

Information Workers, Non-Disclosure Agreements (NDAs), Exit Interviews Theoretical Basis for Trade Secrets: -Property: Locke sort of idea -Tort: regulates through risk of criminal and civil liability-Contract: NDAs, terms of employment (work for hire vs. oncontract) -Unfair Competition Law: anti-trust, the FTC as the referee in a grand boxing match

A. Defining Trade Secrets

A modicum of secrecy beyond public information Uniform Trade Secret Act - 1(4) (RCW 19.108 in Washington) "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process*, that: (i) derives independent economic value1, actual or potential, from not being generally known2 to, and not being readily ascertainable by proper means3 by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

*intended to include the concept of know-how

Torts 757 comment b (Restatement of the Law) 1) continuously used in ones business that gives its owner (NOT single, ephemeral events) 2) an opportunity to obtain an advantage over competition who do not know or use it 3) so long as the information was in fact a secret. Metallurgical Industries, Inc. v. Fourtek, Inc., 790 F.2d 1195 specs for furnace Held: Zinc-recovery furnace design company, who was a former employee of a bankrupt company that initially dealt with appellant's trade secrets in order to build a furnace for the appellant. The court concluded that the inferences from the facts, construed favorably to appellant, were that appellant wished only to profit from its secrets in its business dealings, not to reveal its secrets to the public.

Indicators of Value: value to plaintiffs business, expert testimony, development costs, licensing (willingness of others to pay), security costs, improper acquisition (they really wanted the information). Even negative value, such as the knowledge that a line of research is unfruitful, counts. 2 The generally known standard refers to the subgroup of persons that would typically know such information, like chemical engineers, programmers, and the like. 3 Something is readily ascertainable is the information is available relatively easily and cheaply, such as in a trade journal.

Unfair Competition 39 (Restatement of the Law (Third)) A trade secret is any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.
The definition of "trade secret" contains a reasonable departure from the Restatement of Torts (First) definition which required that a trade secret be "continuously used in one's business." The broader definition in the proposed Act extends protection to a plaintiff who has not yet had an opportunity or acquired the means to put a trade secret to use. The definition includes information that has commercial value from a negative viewpoint, for example the results of lengthy and expensive research which proves that a certain process will not work could be of great value to a competitor. Cf. Telex Corp. v. IBM Corp., 510 F.2d 894 (CA10, 1975) per curiam, cert. dismissed 423 U.S. 802 (1975) (liability imposed for developmental cost savings with respect to product not marketed). Because a trade secret need not be exclusive to confer a competitive advantage, different independent developers can acquire rights inthe same trade secret. Comments to Uniform Trade Secrets Act 1(4).

18 USC 1831. ECONOMIC ESPIONAGE (on behalf of a foreign entity)

(a) In General. Whoever, intending or knowing that the offense will benefit any foreign government, foreign instrumentality, or foreign agent, knowingly (1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret; (2) without authorization copies, duplicates, sketches, draws, photographs, downloads, uploads, alters, destroys, photocopies, replicates, transmits, delivers, sends, mails, communicates, or conveys a trade secret; (3) receives, buys, or possesses a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization; (4) attempts to commit any offense described in any of paragraphs (1) through (3); or (5) conspires with one or more other persons to commit any offense described in any of paragraphs (1) through (3), and one or more of such persons do any act to effect the object of the conspiracy, shall, except as provided in subsection (b), be fined not more than $500,000 or imprisoned not more than 15 years, or both. (b) Organizations. Any organization that commits any offense described in subsection (a) shall be fined not more than $10,000,000.

B. Reasonable Measures
Reasonable security measures are themselves indicative of a trade secret and its value. Types of Measures Guidelines, Trainings Passwords Access Logs Physical Access Restrictions need to know basis NDA NDA as an element of other contracts Network Access Cover things up (just plain cloth) Stamping of Documents; Signage Beware Cleaning Staff

Determining Reasonableness NOT Cost Prohibitive (Posners argument) Industry Standards Commensurate with the Secrets value Common Sense (What might actually keep the information a secret?) Facts and Circumstances Overuse of a measure devalues its purpose Rockwell Graphic Systems, Inc. v. DEV (1991) Summary Judgment, Reasonable Measures Held: Summary judgment is rarely if ever appropriate for determining whether measures were reasonable Facts: Plaintiff, a manufacturer of newspaper printing presses and supplier of parts, sued Defendant Corporation, a competing manufacturer, and defendant president, a former employee of plaintiff, for misappropriation of trade secrets Reasoning: the mere fact that plaintiff gave piece part drawings to vendors who made parts for plaintiff did not forfeit trade secret protection IMAX Corp. v. Cinema Technologies (1998) IMAX, duty to protect specifications Held: the proprietor of an IMAX movie theater had a duty to IMAX to protect the specifications of the projector as trade secrets from a competitor who was attempting to reverse engineer the IMAX technology

C. Disclosure of Trade Secrets; Non-Disclosure Agreements

How Trade Secrets get out there: Publishing (which destroys trade secret status), Embedded into a product on the open market (which creates the possibility of reverse engineering); exception is computer programs, because clever engineer can figure out the code (decompiling); solution is terms of agreement aka click-wrap Independent Creation Inadvertent Disclosure To Governments, for the purpose of health and safety Warner-Lambert Pharmaceutical Co. v. John J. Reynolds, Inc. (1959) Royalties, Listerine Held: plaintiff could not escape that obligation simply because the secret was discovered by a third party or by the general public. Facts: contract provided that inventor would receive periodic royalty payments, at specified amounts, for as long as plaintiff manufactured and sold the antiseptic compound. Third party leaked the information, so the plaintiff wished to quit paying royalties on something that was no longer a trade secret. Reasoning: the plain language of the contract defined and stipulated that the royalties would be paid, independent of the contingency of disclosure. 5

Residuals Clause: -tactics: how they are used, for what purposes, time lag,

D. Trade Secrets and Employees (Modern Mobility)

NDA and some issues: -does the employee receive consideration for signing one? -cannot restrict information that an employee or partner already knew? Covenants Not to Compete and some issues: Reasonableness Because proving misappropriation can be difficult to prove. Duration, Geographic Scope, Type of Work Restrained 1) Is the restraint no greater than necessary to protect the legitimate business interests of the employer? 2) Is the restraint unduly harsh and oppressive in curtailing the employees legitimate efforts to earn a livelihood? 3) Is the restraint contrary to sound public policy? Washington: Breach of contract damages, liquidated damages, and lost profit are recoverable in Washington. Perry v. Moran, 111 Wash.2d 885, 766 P.2d 1096 (Wash., 1989). California: Business & Professions Code 16601 creates an exception permitting lawful noncompete agreements for company owners. A new section 16602.5 also applies to members of limited liability companies. It applies when a shareholder "sells" their stock to another for valuable consideration. (Hilb, Royal & Hamilton Ins. Services v. Robb (1995) 33 Cal.App.4th 1812, 1824-1825.) The typical scenario is when a shareholder sells or disposes of their stock. Assignment of Inventions Clauses -general rule: if hired for that purpose, belongs to employer; if not hired for that purpose, then belongs to the employee but the employer has a shop right. Non-Solicitation Agreement Business to Business: no poaching Business to Employee: no soliciting customers for employment Holdover, Trailer Clauses Regulations, Employee Handbooks Prevention: Keep Employees Happy!!!

Inevitable Disclosure looking at the UTSA Section 2(a) Settlement possibility, looking for other places an employee could fit in the receiving company. PepsiCo, Inc. v. Redmond. (7th Circuit) Inevitable Disclosure All Sport Gatorade4 Held: Redmond estopped from working for Quaker Oats (maker of Gatorade) Facts: Former PepsiCo employee, William Redmond, who left that employ to go to work for the Quaker Oats Company (also sued), manufacturer of Gatorade, a competitor to Pepsis All Sport. Redmond, in his employ with PepsiCo, had access to many company trade secrets and confidential information. There was no allegation, however, that he or Quaker used or intended to use that knowledge. Reasoning: Language of UTSA Section 2(a), threat of disclosure

E. Proper and Improper Means of Discovery

"Misappropriation" means UTSA 1(2):
(i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (ii) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who had utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use5; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of his [or her] position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

The principle behind this doctrine is that an employee with knowledge of a former employers trade secrets would inevitably disclose the same to the new employer since the nature of the new job would lead to such disclosures, given that the new and old employers were competitors. And given the inevitability of such disclosures, the former employer was not limited to sitting around and waiting until there was an actual or even threatened use of those trade secrets before the former employer could seek legal redress. Under this doctrine, that former employer could prevent the employee from taking that job and prevent the new employer from hiring the employee merely because the employee had such knowledge that would inevitably be disclosed. The doctrine, which has been adopted in some, but not all states, finds a coherent expression in a case out of the 7th Circuit, PepsiCo, Inc. v. Redmond. That case involved a former PepsiCo employee, William Redmond, who left that employ to go to work for the Quaker Oats Company (also sued), manufacturer of Gatorade, a competitor to Pepsis All Sport. The case also involved other drink beverages in which the 2 companies competed. Redmond, in his employ with PepsiCo, had access to many company trade secrets and confidential information. There was no allegation, however, that he or Quaker used or intended to use that knowledge. http://www.ivanhoffman.com/inevitable.html. 5

Smith v. Dravo (1953) Business up for Sale; No Purchase, but Trade Secrets used

Liability for Disclosure or Use of Another's Trade Restatement of the Law Torts 757. One who discloses or uses another's trade secret, without a privilege to do so, is liable to the other if: (a) he discovered the secret by improper means, or (b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or (c) he learned the secret from a third person with notice of the facts that it was a secret and that the third person discovered it by improper means or that the third person's disclosure of it was otherwise a breach of his duty to the other, or (d) he learned the secret with notice of the facts that it was a secret and that its disclosure was made to him by mistake Improper E.I. Du Pont de Nemours & Co. v. Christopher, (431 F.2d 1012). Business Morality Held: Standard of means which fall below the generally accepted standards of commercial morality and reasonable conduct." Restatement of Torts 757, comment f at 10 (1939). Du Pont at 1016. Flyover though not illegal, was immoral and therefore improper. Time, Place, and Circumstances. Facts: Reasonable Measures taken to cover the factory during its construction, but the ROOF was not covered. Reasoning: The Supreme Court of that state has declared that "the undoubted tendency of the law has been to recognize and enforce higher standards of commercial morality in the business world." No productive work to gain the knowledge (really just free-riding) "f. Improper means of discovery. The discovery of another's trade secret by improper means subjects the actor to liability independently of the harm to the interest in the secret. Thus, if one uses physical force to take a secret formula from another's pocket, or breaks into another's office to steal the formula, his conduct is wrongful and subjects him to liability apart from the rule stated in this Section. Such conduct is also an improper means of procuring the secret under this rule. But HN7means may be improper under this rule even though they do not cause any other harm than that to the interest in the trade secret. Examples of such means are fraudulent misrepresentations to induce disclosure, tapping of telephone wires, eavesdropping or other espionage. A complete catalogue of improper means is not possible. In general they are means which fall below the generally accepted standards of commercial morality and reasonable conduct." Restatement of Torts 757, comment f at 10 (1939).

Breach of Confidentiality Smith v. Dravo (1953) Business up for Sale; No Purchase, but Trade Secrets used Held: Misappropriation because circumstances in which information was revealed gave rise to an implied duty of confidentiality. Facts: Smith had a great business idea but passed away (patent applications essentially inventing modern freight practices), followed by interest to buy the business expressed by Dravo. Dravo does not purpose the business, but then makes similar Reasoning: NDA is not the only way to establish a confidential relationship.

Proper means include: AKA Defenses to Misappropriation

1. Discovery by independent invention; 2. Discovery by "reverse engineering", that is, by starting with the known product and working backward to find the method by which it was developed. The acquisition of the known product must, of course, also be by a fair and honest means, such as
purchase of the item on the open market for reverse engineering to be lawful; Kadant, Inc. v. Seeley Mach., Inc., (244 F. Supp. 2d 19 (N.D.N.Y 2003)) Trade secret law does not offer protection against discovery by so-called reverse engineering. However, the term "reverse engineering" is not a talisman that may immunize the theft of trade secrets. The relevant inquiry is whether the means to obtain the alleged trade secret were proper or "honest," as opposed to being obtained by virtue of a confidential relationship with an employer. Reverse engineering a product to determine its design specifications is therefore permissible so long as the means used to get the information necessary to reverse engineer is in the public domain, and not through the confidential relationship established with the maker or owner of the product. HN 38. General debate around whether parties should be allowed to contract against reverse engineering. Just reverse engineer in Europe.

3. Discovery under a license from the owner of the trade secret; 4. Observation of the item in public use or on public display; 5. Obtaining the trade secret from published literature.

F. Remedies
Injunctive Relief An attempt to return the trade secret holder to the position they would have been in, but for the misappropriation. Preliminary or Permanent TRO Until Public Knowledge

Damages - USTA Actual losses (restitution) + Defendants wrongful profits (unjust enrichment) + ongoing royalty any overlap = Misappropriation Damages Punitive Damages and Attorneys Fees Willful and Malicious may justify treble damages (likely double) as well as attorneys fees.

10

III.

Patents

MAKE, USE, Patents are the opposite of trade secrets, in that disclosure for the public good gives the discloser monopoly rights for a limited time. Research by Solow -most economic growth is driven by (1) R&D and (2) education Research by Romer -investments in R&D do not decrease their returns to scale (not subject to diminishing returns) Aristotle rejected the patent system because he believed it would cause change The Congress shall have the power to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries Art. I section 8

A. Patentable Subject Matter

Patentable: 35 U.S.C. 101 Inventions patentable. Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. Process (covers methods): use patent, sequence of steps may be crucial, product-by-process Product (cover tangibles): machine, manufacture, composition of matter, isolations or purifications, product-by-process, living organisms (e.g. cancer mouse) Plant Design (non-functional) Un-patentable: Laws of Nature, Physical Phenomena, Discoveries, Abstract Ideas, Printed Matter Inventions useful solely in connection with atomic weapons, violations of ordre publique (the public conscious), Immoral inventions (Lowell v. Lewis (C.C.D. Mass 1817; Judge Story)), Inventions involving or taking place within the human body Diamond v. Chakrabarty (U.S. 1980) bacteria which metabolizes crude oil Held: Statutory subject matter is anything under the sun that is made by man; fall within the category of composition of matter Facts: Recombined various parts of bacteria Reasoning: If Congress could predict all that would be invented and then patented, then we would not need the patent office 11

Funk Brothers v. Kalo (U.S. 1948) Held: Combining bacteria is no more than the discovery of some of the handiwork of nature and hence it is not patentable Facts: Mixed bacteria for the purpose of cultures. Parke-Davis v. Mulford (1911 Judge Learned Hand) purified adrenaline has new uses Held: After removal and purification, adrenalin became for every practical purpose a new thing commercially and therapeutically. That was a good ground for a patent. Facts: Removing adrenalin completely from tissues; Reasoning: does new things once completely isolated. State Street v. Signature business methods patentable Facts: Numbers in, Numbers out; but the process had practical utility Bilski v. Kappos (2010) method for hedge-funding Held: Not patentableMachine Transformation test is not the ONLY test! Reasoning: because (1) represents machine (2) no transformation of matter One or the other in order to patentable, but the SCOTUS said this isnt the only test! LabCorp v. Metabolite (U.S. 2005) checking blood compared against a chart Held: Refused to answer; called certiorari premature. Mayo v. Prometheus (2010) forthcoming! To answer this blood methodology issue

B. Novelty and Statutory Bars

101 new and useful 103 and 102 language Judged by date of invention, until the America Invents Act Anticipation 102(a)(e) was already in public use (including secret use for commercial purposes) or had been published Reference Beware Publication (ANYWHERE)! Presentation! Unpatentable, even if unaware of the reference. Public access sufficient to constitute a bar, no need to be widespread. Includes undisclosed patents pending review by USPTO Prior Art the inherency doctrine; new process for making old product is patentable, but new uses of an old product do not elude the prior art preclusion Anticipates every element of the proposed patent must be in a single previous patent in order to anticipate Critical Date Is the patent anticipated as of the the date of invention

12

Priority Derivation

102(g) 102(f) 102(b)6 102(c) 102(g) 102(d)

Loss of Right Abandonment Concealment Foreign

another inventor had priority; could be lost for lack of reasonable diligence in prosecuting the patent learned of the invention from someone else. Not entitled to a patent if a fully operable conception of the invention is communicated to the applicant. once an invention becomes public use or on sale (in U.S.), the inventor has year to file her application. conceal, suppress, or hide precludes patentability must file in the U.S. within one year of filing elsewhere

Experiment

is protected, but public use tends to be broad

Conception The conception of a species counts as conception of an entire genus Reduces to Practice (RTP) = Physical embodiment or performance Complete embodiment RTP of one species counts as conception of an entire genus Diligence Actual activity or a legitimate excuse during the entire relevant period Priority based on date of invention; Xc, Yc, Yrtp, Xrtp, was the diligence continuous through Y Griffith v. Kanamaru (CAFC 1987) Griffith took a break, diligence broken? Held: Kanamaru gets the patent because the Griffith took a break (because he was waiting for grant money and help from the right post-doctoral fellow). Facts:
for a patent on an aminocarnitine compound

Other nations patent regimes are less forgiving on this point than the US.

13

In re Hall Dissertation is Prior Art

AIA Section 102(g) will be eliminated: (g)(1) during the course of an interference conducted under section 135 or section 291, another inventor involved therein establishes, to the extent permitted in section 104, that before such person's invention thereof the invention was made by such other inventor and not abandoned, suppressed, or concealed, or (2) before such person's invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it. In determining priority of invention under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

C. Utility
General: Utility means more than a mere curiosity, a scientific process exciting wonder yet not producing physical results, or a frivolous or trifling article not aiding in the progress nor increasing the possession of the human race. -Prof. William Robinson Specific: an invention must actually perform its intended function. Beneficial or Moral: Lowell v. Lewis (C.C.D. Mass 1817; Judge Story) Held: Patents lack utility if used to poison people, or to promote debauchery, or to facilitate private assassination.

14

Juicy Whip v. Orange Bang (CAFC 1999) Swirly Juice Machine Held: Patentable! Patent office does not consider issues of morality. Facts: The machine shows this swirling juice above a fountain that is actually florescent poison, while the machine serves juice from a box below. Reasoning: Argument against (not holding) is that this is deceptive. Moral, Immoral is for Congress to decide, and as of yet they have not made morality an element of patentability. Improvement over the prior art. Brenner v. Manson (SCOTUS 1966) A Protein without a Purpose (that is, USE) Held: The Utility being patented must be KNOWN. Facts: Basically, Manson came up with the process to make the steroid, but didn't have the foggiest idea what the steroid could possibly be used for. Therefore his invention wasn't useful. Reasoning: Goes to the underlying policy for requiring utility: progress of society, incentivizing research. In re Fisher (CAFC 2005) Fragment of a gene, which can find the Whole gene Held: EST (fragment gene) not patentable, its just a hunting license which would hurt downstream research. Dissent: The line is more towards knowing what something does. 2001 PTO Utility Examination Guidelines Inventions must have 1. Specific Utility: the utility is related to the claimed inventive aspects 2. Substantial Utility (no throw-away utility) 3. Credible Utility: an operable function. Inspired by worries of the tragedy of the anti-commons One Use to get the patent to Exclude Every Use. Patent Utility does not equal FDA Utility Different standard for Utility for different technologies: yes, no, why, how? Patents are kept away from the Human Body.

15

D. Non-obviousness
Measured by the PHOSITA who has encyclopedic knowledge of all prior art. This sections headings come from the case Graham v. Hohn Deere Co., 383 U.S. 1 (1966) Spring loaded shank for plow Held: Quantum of difference to warrant patentability? Balance the headings. Held that was obvious. Facts: Previous patent, patented improvements, but ultimately his own previous patents shot him in the foot. 1: Prior Art: scope and content (different from Novelty a bit) Obviousness is judged from the point of view from a PHOSIA against prior art that is reasonably pertinent based on whether the reference falls, within the field of the inventors endeavor. In re Paulsen (30 F. 3d 1475, 1481 (2004)). In the inventing process, what are similar endeavors (as in, toothbrushes and hairbrushes probably face similar issues)? If inventors work together or companys collaborate, the prior art of the involved member will not prejudice patentability In re Kubin Obvious-to-try
To be clear, Kubin does not hold that an invention that was "obvious to try" was necessarily obvious under Section 103(a). Going forward, however, the question in this long-running debate will be "when is an invention that was obvious to try nevertheless nonobvious?" (quoting In re OFarrell, 853 F.2d 894 (Fed. Cir. 1988). Kubin revives the O'Farrell analysis of obvious to try and carves-out two factual situations where obvious-to-try analysis should not apply. (1) Throwing darts versus a finite number of Identified, predictable known options: In such circumstances, where a defendant merely throws metaphorical darts at a board filled with combinatorial prior art possibilities, courts should not succumb to hindsight claims of obviousness. The inverse of this proposition is succinctly encapsulated by the Supreme Courts statement in KSR that where a skilled artisan merely pursues known options from a finite number of identified, predictable solutions, obviousness under 103 arises. 550 U.S. at 421. (2) Exploring new technology versus improving known and predictable technology: [An] impermissible obvious to try situations occurs where 'what was obvious to try was to explore a new technology or general approach that seemed to be a promising field of experimentation, where the prior art gave only general guidance as to the particular form of the claimed invention or how to achieve it.' (Quoting O'Farrell). Again, KSR affirmed the logical inverse of this statement by stating that 103 bars patentability unless the improvement is more than the predictable use of prior art elements according to their established functions.

16

Application: In this case, the court finds that neither of the O'Farrell exceptions apply. The invention is old-school biotech: isolating and sequencing a human gene that encodes for a protein. People do this in high school now, and the application explicitly states that the DNA and Protein sequence may be obtained through "conventional methodologies known to one of skill in the art." Likewise, the protein in question had already been identified and the prior art suggested that the protein plays an role in human immune response.

In re Dembiczak -

2: Differences between the Prior Art and the Claims at Issue Option 1: There is a new element to the Patent, not in the prior art. Would the missing element have been obvious to a PHOSIA? Option 2: All elements are somewhere in the prior art (not any one patent), which is more likely. Is the combination of the elements obvious to a PHOSIA? 3: PHOS in the pertinent Art Factors to consider in who this person is: 1. Types of problems encountered in the art 2. Prior art solution to those problems 3. Rapidity with which innovations are made 4. Sophistication of the technology 5. Educational level of active workers in the field

17

Obvious or Not? Technical, Economic, and Motivational perspectives. Again, PHOSITA Secondary factors courts have looked at: 1. Commercial Success (or was it just marketing) 2. Long-felt but unresolved need (e.g. trade journal suggests it) 3. Failure of others 4. Industry Acquiescence 5. Copying (others are copying the patent in question) 6. Unexpected results or properties of claimed invention 7. Skepticism of experts KSR v. Teleflex, (U.S. 2007) Computerized Pedal Held: TSM is just one of many tests. Obvious development! Facts: Teaching Suggestions Motivations!

E. Disclosure, proof of possession

Specification must include: Written description of the invention sufficient to Prove that the inventor had possession of the claimed invention as of priority date Enable a PHOSITA to carry out the claims without resort to undue experimentation 35 USC 112 paragraph 1 The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode (enablement) contemplated by the inventor of carrying out his invention. Written Description Actual reduction (constructive reduction) to practice, description of invention in possession, symbolic representations, or deposit of the invention (which happens with biological patents which are beyond current understanding in a sense). Gentry Gallery v. Berkline (CAFC 1998) [claims] may be no broader than the supporting disclosure Ariad v. Eli Lilly (CAFC 2010; en benc) SPECIFIC written description 1. Since its inception, this court has consistently held that 112, first paragraph, contains a written description requirement separate from enablementwhich we now affirm 2. Specifically, the description must clearly allow persons of ordinary skill in the art to recognize that [the inventor] invented what is claimed. 3. No categorical claims, only specifics. 18

Enablement Must describe the to the public how to use and make the invention. Judged with respect to a PHOSITA Each and every claimed embodiment must be enabled. The Incandescent Lamp Patent (US 1895) Some failure rate is acceptable Without undue experimentation by a PHOSITA: quantity of experimentation, amount of direction presented, nature of invention, state or prior art, . OTHERS, get creative litigator! Best Mode: statutory requirement, doesnt have to be only, doesnt have to be explicit (AIA, still requires Best Mode, but failure no longer triggers invalidity) Judged not by PHOSITA, but by the subjective belief of the patent submitter. If element makes for the best mode, it must be disclosed. best mode itself doesnt apply to each element, if there is another source for the element

F. Patent Rights and Claim Interpretation

35 U.S.C. 271 Infringement of patent. (a) Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. (b) Induces infringement (c) contributory infringement (d) activities by patent owner that do not limit infringement (e) apply for FDA approval of a generic version of patented drug (f) exportation of components to make infringement (g) importation of product produced elsewhere Claim Writing: 1. Preamble 2. Transition Phrase a. Open: comprising, including, containing, mixture b. Closed: consisting of c. Ambiguous: consisting essentially of, having, is 3. Body (list of elements) Standard cannons of interpretation are used by the court to interpret a patent, which in turn determines its scope and decides whether there is literal infringement. The meaning of a word within in a patent should be driven largely by its use in the patent.

19

Claim Interpretation Phillips v. AWH Corp (CAFC 2005)(en benc) Interpretive Sources: Intrinsic Evidence: claim language, ordinary meaning, other claims, claims in related patents Patent Specification: can point away from ordinary or dictionary meaning Prosecution History: Patentees negotiation with PTO over claim nmeaning binding Extrinsic Evidence: Permissible if intrinsic evidence not dispositive, sources can be dictionaries, encyclopedias, treatises, experts Cannons of Claim Interpretation 1. -Where intrinsic evidence unambiguously sets out claim scope, it controls 2. -There is a heavy presumption in favor of the ordinary meaning of claim language 3. -General and technical dictionaries can be used to determine ordinary meaning 4. -A claim term may be read with reference to the specification but a limitation/expansion from the specification should not be read into the claim 5. -If possible, a claim should be construed to encompass a disclosed embodiment of the invention 6. -Claims should be construed to uphold their validity unless their clear language shows otherwise 7. -Where a claim is susceptible to a broad and narrow construction, the narrow should be adopted 8. -The presumption of claim differentiation may be overcome by intrinsic and relevant extrinsic evidence

G. Non-Utility Patents
Section 112, paragraph 6 Means plus Function Claims "An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof."

H. Infringement; Doctrine of Equivalents

Literal Infringement Equivalent in both the trees and the forest. Literal Infringement: Explicit or inherent infringement of each element Larami Corp. v. Amron, 27 US.PQ.2d 1280 DETACHABLE V. THEREIN Supersoaker. Held: (deciding the countersuit) Does the SUPERSOAKER infringe Claim 1 of the Esposito patent? No. To infringe a claim of a patent the product in question must infringe all elements of the claim. Here the SUPERSOAKER's water chamber is 20

external, which does not meet the "chamber therein" element of Claim 1. Does the SUPERSOAKER infringe Claim 10 of the Esposito patent? No. The SUPERSOAKER, with its external reservoir, cannot be said to contain an arrangement "along the same axis." Facts: Plaintiff Larami manufactured a line of patented SUPERSOAKER water guns that stored water under pressure in an external, detachable reservoir and shot water by releasing a valve. Larami sued defendants Alan Amron and Talk To Me Products, Inc., and defendants counter-sued for infringement of a patent assigned to them by Gary Esposito. Most of the claims of Esposito's patent described using electricity to produce lights and sounds in a water gun, but Claim 1 described a toy with "an elongated housing [case] having a chamber therein for a liquid [tank], a pumpfor building up an appreciable amount of pressure in said chamber for ejecting a stream of liquid therefrom an appreciable distance substantially forwardly of said toy." The Esposito patent also included Claim 10 describing an arrangement of a tank, air pump and outlet nozzle along the same axis.

Doctrine of Equivalents In the United States, the doctrine of equivalents analysis is applied to individual claim limitations, not to the invention as a whole.[1] The legal test, articulated in Warner-Jenkinson Co. v. Hilton Davis Chem. Co. (1997), is whether the difference between the limitation in the accused device and the limitation literally recited in the patent claim is "insubstantial." One way of determining whether a difference is "insubstantial" or not is called the "triple identity" test. Under the triple-identity test, the difference between the limitation in the accused device and the limitation literally recited in the patent claim may be found to be "insubstantial" if the limitation in the accused device: 1. 2. 3. 4. It performs substantially the same function In substantially the same way To yield substantially the same result as the limitation literally recited in the patent claim. See Graver Tank & Manufacturing Co. v. Linde Air Products Co., (1950).

In the United States, the doctrine of equivalents is limited by prosecution history estoppel. Under prosecution history estoppel, if the patentee abandoned through an amendment to the patent application certain literal claim coverage (e.g., by narrowing the literal scope of the patent claim), then the patentee is estopped from later arguing that the surrendered coverage is insubstantially different from the literally claimed limitation.[2] Other more arcane limitations such as the ensnarement defense tend to be more difficult to apply.[3] The United States also has a statutory equivalents doctrine that is codified in 35 U.S.C. 112 6, which extends to structural equivalents. However, while the doctrine of equivalents for 6 21

extends to technological equivalents developed after the issuance of a claim, the structural equivalents of 6 only extends to equivalents available at issuance and disclosed in the application.[4] Winans v. Denmead (U.S. 1853) Historical Beginning Held: ___ Facts: ___ Graver Tank v. Linde Air (U.S. 1950) Held: Look at literal infringement first. Triple Identity Test: Function, Way, Result Facts: ___ Warner-Jenkinson v. Hilton Davis (U.S. 1977) Held: All elements rule. Apply the Triple Identity Test ELEMENT BY ELEMENT

Prosecution History Estoppel If an amendment is made to an application during prosecution to narrow a claim in order to preserve patentability, then the patentee is estopped from claiming infringement on the unamended patent. Festo v. Shoketsu (U.S. 2002) Prosecution history estoppel Foreseeability criterion. Held: Does modification because of patentability concerns during the patent process provide a complete bar to the patentee against claiming infringement through equivalents because of procedural history estoppel? No. Although a patentee by modifying a patent in response to patentability concerns explicitly gives up claims of equivalents in the modified material, the estoppel bar is flexible rather than rigid. "After amendment, as before, language remains an imperfect fit for invention." The burden is still on the patentee to show that the equivalents are not excluded by estoppel in the modification. "The patentee must show that at the time of the amendment one skilled in the art could not reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent." Rehabilitates doctrine of equivalents. Unforeseeable. At the moment of application, there are some things about the area of technology that are unimaginable and therefore beyond patent drafting expectations. Unforeseeable protected by the Doctrine of Equivalents. Facts: Petitioner Festo Corporation patented magnetic rod-less cylinders for moving objects in a conveying system, devices now used "in machinery as diverse as sewing equipment and the Thunder Mountain ride at Disney 22

World." During the patent process, Festo modified the patents in response to the PTO's objections regarding patentability and prior art, adding a limitation that the inventions contain a pair of sealing rings with a lip on each side. KF: Respondents SMC later began using a similar device with a two-way lip on the cylinder, putting it outside the literal claim of the Festo patents. Johnson & Johnson Associates Inc., v. R.E.S. Aluminum substrates, Foreseeable Steel Johnson & Johnson applied for a patent on method for printing circuit boards. o The specification said that a number of materials could be used as the substrate, but the claims only talked about using aluminum for a substrate. RES began manufacturing very similar circuit boards that used steel as a substrate. Johnson & Johnson sued for infringement. o Johnson & Johnson argued that the differences between steel and aluminum were very minor, and so it was infringing via the Doctrine of Equivalents. The Doctrine of Equivalents says that a product or process that does not literally infringe upon the express terms of a patent claim may nonetheless be found to infringe if there is an equivalence between the elements of the accused product or process and the claimed elements of the patented invention. o RES argued that when Johnson & Johnson willfully limited their patent to aluminum, they dedicated any unclaimed substrates (like copper) to the public. That's known as the Dedication Doctrine, which basically says that anything disclosed in the specification but not claimed must be meant to be dedicated to the public. See Maxwell v. J. Baker, Inc. (86 F.3d 1098 (1996)), and YBM Magnex, Inc. v. Int'l Trade Comm'n (145 F.3d 1317 (1998)). The Trial Court found for Johnson & Johnson. RES appealed. o The Trial Court found that the Doctrine of Equivalents applied. The Appellate Court reversed. o The Appellate Court found that the Dedication Doctrine was good law, and that it was mean to discourage patent applicants from presenting a broad disclosure in the specification and then filing narrow claims to stop the USPTO from examining the broad claims that could have been claimed by the broad specification. o The Court found that in order for the Dedication Doctrine to apply there has to be multiple distinct embodiments in the specification where only one is claimed, not a single broad embodiment with a narrower claim. So, follow Maxwell where there were two different ways to tie shoes together but Maxwell only claimed one, don't follow Magnex where there was a broad range of a chemical disclosed in the specification, but only a narrow range claimed. o The Court noted that if an inventor makes a broad claim that gets struck down and they are forced to settle for a narrow claim, things in the denied claim are not considered dedicatedlike the things they didn't claim at all. See Graver Tank v. Linde Air Products Co. (339 U.S. 605 (1950). 23

The Court looked at the wording of Johnson & Johnson specification, which explicitly said that steel and nickel could be used as a substrate. Since Johnson & Johnson had disclosed those materials, but never claimed them, they must have meant to dedicate them to the public. Therefore the Dedication Doctrine applies and Johnson & Johnson cannot assert the Doctrine of Equivalents against RES. In a concurrence it was argued that the Dedication Doctrine is really nothing more than a foreseeability argument. Clearly Johnson & Johnson foresaw the use of steel since they talked about it. Since the Doctrine of Equivalents is mostly limited to unforeseeable differences, Johnson & Johnson shouldn't be allowed to apply it against RES.

Reverse Doctrine of Equivalents Never been upheld by the CAFC. Equitable doctrine invented by courts to avoid finding infringement. Indirect Infringement 1. Active Inducer: inducing another to infringe 2. Contributory Infringement: purchasing and then using to-order parts which infringe Bard v. Advance Cardiovascular (U.S. 1990) sell of catheter for method patent, (intent?) Held: section 271(b): actively and knowingly aiding and abetting anothers direct infringement. Summary: If there is sufficient evidence of non-infringing uses than summary judgment is not appropriate in contributory infringement action. Factual issue is whether the catheter could be used for more than just coronary angioplasty, making summary judgment inappropriate. Water Technologies v. Calco (U.S. 1988) Held: While proof of intent is necessary, direct evidence is not required. Global-Tech v. SEB (U.S. 2011) Held: Willful Blindness vs. Actual Knowledge.

I. Defenses
35 USC 287(c) Protection for medical practitioners for medical activities Invalidity Attack the underlying validity of the original claim, especially in looking for new references. Experimental Use Truly Narrow Exception The Federal Circuit held that experimental use protects only actions performed for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry. 24

Interesting point here about user innovations. For example, think of the app market with smart phones. It can truly be beneficial to all parties to allow experimentation on a patented product. Example of when NOT to enforce a patent.

Inequitable Conduct Duty of Candor Inequitable conduct renders the entire patent either invalid, unenforceable, or both! Kingsdown Medical Consultants v. Hollister (Fed. Cir. 1988) Summary: Gross negligence, in and of itself, is not enough for a finding "intent to deceive" during the patent prosecution process Exhaustion of Patent Rights Implied license and First Sale, Once an item has been sold involving the patented technology, the owner of the physical product is allowed to make repairs. Its a matter of repair in contrast to reconstruction. These concepts also limit post-sale control of the article or product. Quanta Computers, Inc. v. LG Electronics, Inc. (U.S. 1990) Held: Because the doctrine of patent exhaustion applies to method patents, and because the License Agreement authorizes the sale of components that substantially embody the patents in suit, the exhaustion doctrine prevents LGE from further asserting its patent rights with respect to the patents substantially embodied by those products. Patent Misuse Motion Picture Patents Co. V. Universal Film Manufacturing Company Et Al. Held: Cannot tie other products to licensing a patent Congress softened this holding with 271 (d) section 4, allowing nonstaples to be tied to a license. Other Patent Misuses: Licensing: refusal to license, making a license conditional (to acquisition of another patent, purchase of another product), non-metered license, grant-back clause, field-of-use restrictions. Patent Suppression Patent Misuse versus Antitrust: they are different, one not implying the other Not patent misuse to refuse to license a patent Considerations of market power

25

J. Remedies
Injunctive Relief 1) Patent as Property rule a) caveat ebay v. MercExchange (U.S. 2006), to get an injunction it used to be automatic for patent law, but now is subject to this analysis: (1) Irreparable injury (2) Inadequacy of damages (3) Balancing the hardship of injunction on either party (4) Public Interests. 2) Policy a) Polaroid v. Kodak (D. Mass. 1985) i) the public policy (cue prong 4) at issue in patent cases is the protection of rights secured by valid patents b) Vitamin v. WARF (9th Cir 1944) i) Health related Patent 3) Preliminary Injunction a) Z4 Technologies v. Microsoft (E.D. Tex. 2006) i) Injunction factors 4) Permanent Injunction a) Foster v. American (2nd Cir. 1974) i) Compulsory License (1) Liability Rule Damages 1) Patent as liability rule 2) Polaroid v. Eastman (D. Mass. 1990) a) [The] law requires a careful assessment of all market influences when determining lost profit or reasonable royalty. 3) Reasonable Royalty (the floor for Patent damages) a) Panduit v. Stahlin (6th Cir. 1978) i) Hypothetical negotiation b) Georgia Pacific v. U.S. Plywood (S.D.N.Y. 1970) 4) Lost Profits (hard to prove) a) Panduit v. Stahlin (6th Cir. 1978) i) Four-factor test for lost profits (1) Royalties received ii) Lost profits available if there are no adequate substitutes b) Price Erosion i) Grain Processing v. American Maize CAFC 1999) c) Market Share rule 26

i) State v. Mor-Flo (CAFC 1995) d) Lost sales of unpatented components or products e) Post-expiration sales Willful Infringement 1) Pre-Knorr-Bremse a) Upon notice of infringement, alleged infringer had an obligation to seek a patent opinion b) Willful infringement triggers treble damages c) Upon judgment of infringement, willfulness implied by i) Negative patent opinion letter ii) No patent opinion letter iii) Withholding patent opinion letter under attorney-client privilege 2) Knorr-Bremse v. Dana (CAFC 2004) 3) In re Seagate Technology (CAFC 2007)

27

IV.

Trademarks

1) Valid Mark a) Protectable Subject Matter b) Distinctive i) Classification (1) Inherently Distinctive (Suggestive, Arbitrary, Fanciful) (2) Secondary Meaning (Descriptive) (3) Generic c) Use i) Actual Use ii) Intent-to-Use iii) Registration d) Famous Mark? 2) Infringement? OR a) False Designation of Origin? OR b) Dilution 3) Defense? a) Fraudulent Registration b) Abandonment c) Use of the Mark to Misrepresent the Source d) Fair Use; as an individuals name or descriptive term (e.g. fish-fry penumbra) e) Rights of a Junior User of a mark subsequently registered by a Senior User f) Violations of Antitrust Laws g) Mark is Functional h) Equity, including Laches, Estoppel, Acquiescence i) Nominative Use (product cant be identified without the mark; e.g. Boston Marathon) j) Parody (only in some courts) First Principles INDICATION OF SOURCE IMPROVED TRANSACTION COSTS GOOD WILL COMPETITION SURVEYS MEASURE USE

28

A. Protectable Subject Matter

A mark must be a word, name, symbol, or device, or any combination thereof. 15 USC 1127 Types of: Trademarks, Service Marks, Trade Dress, Collective Marks, Certification Marks Cases Qualitex v. Jacobson (1995) Color Held: The Lanham Act permits the registration of a trademark that consists, purely and simply, of a color - provided that it has acquired secondary meaning in the market. Facts: Petitioner Qualitex Company has for years colored the dry cleaning press pads it manufactures with a special shade of green-gold. After respondent Jacobson Products (a Qualitex rival) began to use a similar shade on its own press pads, Qualitex registered its color as a trademark and added a trademark infringement count to the suit it had previously filed challenging Jacobson's use of the green-gold color. Qualitex won in the District Court, but the Ninth Circuit set aside the judgment on the infringement claim because, in its view, the Lanham Trademark Act of 1946 does not permit registration of color alone as a trademark. Why is trade mark protection better than just trade dress? Trademark law helps the holder of a mark in many ways that "trade dress" protection does not. See 15 U.S.C. 1124 (ability to prevent importation of confusingly similar goods); 1072 (constructive notice of ownership); 1065 (incontestible status); 1057(b) (prima facie evidence of validity and ownership). Thus, one can easily find reasons why the law might provide trademark protection in addition to trade dress protection. Zatarain's, Inc. v. Oak Grove Smokehouse, Inc., (5th Cir. 1983) Descriptive Fish-Fri Held: Plaintiff Zatarain's has a trademark for "Fish-Fri" but not "Chick-Fri" batters. Oak Grove began marketing "fish fry" and "chicken fry" batters, so Zatarain's sued for trademark infringement. Fish-Fri had developed secondary meaning based on sales, advertising, and length and manner of use, whereas the Chick-Fri was a newer product. "Proof of secondary meaning is an issue only with respect to descriptive marks; suggestive and arbitrary or fanciful marks are automatically protected upon registration, and generic terms are unprotectable even if they have acquired secondary meaning." Is the Mark descriptive? 1. Using the dictionary meaning test, "Fish-Fri" means frying fish. 2. Under the "imagination test," "[i]t simply does not require an exercise of the imagination to deduce that 'Fish-Fri' is used to fry fish." 29

3. Other manufacturers (competitors need test) would likely use the name to describe fish-frying batters have actually used the term for some time.
In assessing a claim of secondary meaning, the major inquiry is the consumer's attitude toward the mark. The mark must denote to the consumer "a single thing coming from a single source," Coca-Cola Co. v. Koke Co., 254 U.S. 143, 146, 41 S.Ct. 113, 114, 65 L.Ed. 189 (1920); Aloe Creme Laboratories, 423 F.2d at 849, to support a finding of secondary meaning. Both direct and circumstantial evidence may be relevant and persuasive on the issue. Surveys and proof of Marketing Efforts.

Does Oak Grove have a fair use right to use the trademark? Held Yes. "Although the trademark is valid by virtue of having acquired a secondary meaning, only that penumbra or fringe of secondary meaning is given legal protection. Zatarain's has no legal claim to an exclusive right in the original, descriptive sense of the term; therefore, Oak Grove and Visko's are still free to use the words 'fish fry' in their ordinary, descriptive sense, so long as such use will not tend to confuse customers as to the source of the goods." Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 US 205 - Supreme Court 2000 Held: We hold that, in an action for infringement of unregistered trade dress under 43(a) of the Lanham Act, a product's design is distinctive, and therefore protectible, only upon a showing of secondary meaning. The judgment of the Second Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion. Source Identifying Function -A symbol does not have to identify the exact source, but rather must distinguish a source from other sources in the market. -Must create a separate and distinct commercial impression as an indicator of source for consumers in order to be a mark.

Trade Dress Trade dress was defined in the Taco Cabana, Inc. v. Two Pesos, Inc. case (1991) as the total image of the business Types of: Product Design (assumed NOT inherently distinctive, requires secondary meaning), Product Packaging (assumed inherently distinctive), Tertium Quid (no effing idea) Taco Cabana v. Two Pesos, Inc. (1991) inherently distinctive?? REaLLy?!?!TOTALITY The totality of functional elements to create something non-functional; up to the jury 1. Functionality: rather non-functionality is the test, must be also be a combination
a. Since the Court would not protect individual functional elements, Two Pesos was free to copy a few functional elements. However, Two Pesos was barred from duplicating the entire combination of the elements that creates Taco Cabanas overall image.

30

2. Distinctiveness: ...capable of identifying products or services as coming from a specific source... a. The court ruled Taco Cabanas trade dress did contain descriptive elements. The totality of the
dress was not merely descriptive, but also inherently distinctive.

3. Secondary meaning: It exists when the public recognizes the source of the product or image, rather than the product itself. (cannot overcome functionality aspects) a. Two Pesos argued that the holder of a protected trade dress that did not have secondary meaning b.
had an unfair advantage. The Court disagreed and concluded that no statutory reason existed to place a time-limit on acquiring secondary meaning. This ruling is important because it represents enhanced protection by increasing the likelihood of a new business obtaining protection of its image.

4. Likelihood of confusion: similarity between the trade dresses exists, the products are similar, and the products in question are sold to the same market through similar media channels.
a. Ownership, overall image, functionality, distinctiveness, identifying infringements.

Distinctiveness; Categories of Marks In evaluating the distinctiveness of a mark under 2 (and therefore, by analogy, under 43(a)), courts have held that a mark can be distinctive in one of two ways. First, a mark is inherently distinctive if "[its] intrinsic nature serves to identify a particular source." Ibid. In the context of word marks, courts have applied the now-classic test originally formulated by Judge Friendly, in which word marks that are "arbitrary" ("Camel" cigarettes), "fanciful" ("Kodak" film), or "suggestive" ("Tide" laundry detergent) are held to be inherently 211*211 distinctive. SeeAbercrombie & Fitch Co. v. Hunting World, Inc., 537 F. 2d 4, 10-11 (CA2 1976). Second, a mark has acquired distinctiveness, even if it is not inherently distinctive, if it has developed secondary meaning, which occurs when, "in the minds of the public, the primary significance of a [mark] is to identify the source of the product rather than the product itself." Inwood Laboratories,Inc. v. Ives Laboratories, Inc., 456 U. S. 844, 851, n. 11 (1982).[*] Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 US 205 - Supreme Court 2000. The Consumer Reaction Test: would the reasonable consumer look at the mark and know the product or service? Abstraction Better Protection. Was something in the mark part of what the consumer was seeking in purchasing the product or service? GENERIC TERM is "the name of a particular genus or class of which an individual article or service is but a member." Vision Center, 596 F.2d at 115; Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir.1976). A generic term connotes the "basic nature of articles or services" rather than the more individualized characteristics of a particular product. American Heritage, 494 F.2d at 11. Generic terms can never attain trademark protection. William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 528, 44 S.Ct. 615, 616, 68 L.Ed. 1161 (1924);Soweco, 617 F.2d at 1183; Vision Center, 596 F.2d at 115. Furthermore, if at any time a registered trademark becomes generic as to a particular product or service, the mark's registration is subject to cancellation. Lanham Act 14, 15 U.S.C. 1064(c) (1976). Such terms as aspirin and cellophane have been held generic and therefore unprotectable as trademarks. See Bayer Co. v. United Drug Co., 272 F. 505 (S.D.N.Y.1921) (aspirin); DuPont Cellophane Co. v. Waxed Products Co., 85 F.2d 75 (2d Cir.1936) (cellophane). 31

DESCRIPTIVE TERM "identifies a characteristic or quality of an article or service," Vision Center,596 F.2d at 115, such as its color, odor, function, dimensions, or ingredients. American Heritage, 494 F.2d at 11. Descriptive terms ordinarily are not protectable as trademarks, Lanham Act 2(e)(1), 15 U.S.C. 1052(e)(1) (1976); they may become valid marks, however, by acquiring a secondary meaning in the minds of the consuming public. See id. 2(f), 15 U.S.C. 1052(f). Examples of descriptive marks would include "Alo" with reference to products containing gel of the aloe vera plant, Aloe Creme Laboratories, Inc. v. Milsan, Inc., 423 F.2d 845 (5th Cir.1970), and "Vision Center" in reference to a business offering optical goods and services, Vision Center, 596 F.2d at 117. As this court has often noted, the distinction between descriptive and generic terms is one of degree. Soweco, 617 F.2d at 1184; Vision Center, 596 F.2d at 115 n. 11 (citing 3 R. Callman, The Law of Unfair Competition, Trademarks and Monopolies 70.4 (3d ed. 1969)); American Heritage, 494 F.2d at 11. The distinction has important practical consequences, 791*791 however; while a descriptive term may be elevated to trademark status with proof of secondary meaning, a generic term may never achieve trademark protection. Vision Center, 596 F.2d at 115 n.11. SUGGESTIVE TERM suggests, rather than describes, some particular characteristic of the goods or services to which it applies and requires the consumer to exercise the imagination in order to draw a conclusion as to the nature of the goods and services. Soweco, 617 F.2d at 1184;Vision Center, 596 F.2d at 11516. A suggestive mark is protected without the necessity for proof of secondary meaning. The term "Coppertone" has been held suggestive in regard to sun tanning products. See Douglas Laboratories, Inc. v. Copper Tan, Inc., 210 F.2d 453 (2d Cir.1954). ARBITRARY OR FANCIFUL TERMS bear no relationship to the products or services to which they are applied. Like suggestive terms, arbitrary and fanciful marks are protectable without proof of secondary meaning. The term "Kodak" is properly classified as a fanciful term for photographic supplies, see Eastman Kodak Co. v. Weil, 137 Misc. 506, 243 N.Y.S. 319 (1930) ("Kodak"); "Ivory" is an arbitrary term as applied to soap. Abercrombie & Fitch, 537 F.2d at 9 n.6.

Unprotectable Symbols until they acquire secondary meaning, Surnames, Geographic References. Deceptively Mis-descriptive Marks: Likely to Cause Confusion with an Existing Mark: Functional Matter: essential to the use or purpose of the device, affects the cost or quality of the device, or exclusive use by one seller would put competitors at a significant nonreputation-related disadvantage. Primarily Geographically Deceptively Mis-descriptive Marks: materially deceptive to consumers Suggesting False Connection: Immoral or Scandalous Matter: 32

Disparaging Marks: litigation is ongoing on whether WASHINGTON REDSKINS falls into this category Government Symbols: Names or Likenesses of Individuals: is the person well known enough that consumers would interpret the name or likeness as an endorsement?

B. Establishing Trademark Rights

Use GOODS: must have the trademark on goods which are sold or transported SERVICE: must be displayed or in advertisements Prior use of the mark does not count against the owner, but reduced use can be a consideration in the infringement analysis. The use must be bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. 15 USC 1127. IN COMMERCE: defined as all commerce which may lawfully be regulated by Congress Demonstrate a continuing effort to establish the ark as a source identifier. Registration Supplemental vs. Primary Register Benefits of: filing constitutes constructive use, nationwide in effect. prima facia evidence of the validity of the registered mark and of registration o the mark. 15 USC 1111. Greater remedies. Necessary for incontestability. Yields constructive notice of ownership. Broader protection against unauthorized importation. Owner may use (which was already the case with unregistered mark). It will show up in searches by others. Intent-to-use application: bona fide intent to use, cannot just sit to retain the option of use, only establishes a priority date (only bona fide use allows an owner to enforce a mark), The application requirements: 15 USC 1051, applicants domicile and citizenship, date of first use, date of first use in commerce, the goods or services connected to the mark, drawing of the mark, verified statement to truth of applications contents, that applicant is the actual owner of the mark, and that no other person has a right to use such mark in commerce. Then the process and back-and-forth with the examining attorney of the USPTO begins, including disclaimers by the applicant for generic elements of the mark. Incontestability: essentially, after five years, the registrant does not need to show secondary meaning.

33

C. Ownership
15 USC 1055. OWNERSHIP FOLLOWS CONTROL OF USE Priority Actual Use: is the use required to support registration. The priority date will still be the date of use as opposed to any subsequent date of filing. Registration is not however, necessary to establish priority ***Descriptive Marks have the priority date of when the mark attained secondary meaning. Constructive Use: is established by the date of an intent-to-use application. 15 USC 1051 (b)(1) A person who has a bona fide intention, under circumstances showing the good faith of such person, to use a trademark in commerce may request registration of its trademark on the principal register hereby established by paying the prescribed fee and filing in the [PTO]. Analogous Use: advertising, trade publications, or other marketing.

Zazu Designs v. L'Oreal, S.A.(7th Cir. 1992) Held: Do ZHD's sale of hair products under the ZAZU name before L'Oreal's registration give it national trademark rights? Held: No. "Only active use allows consumers to associate a mark with particular goods and notifies other firms that the mark is so associated. But use sufficient to register a mark that soon is widely distributed is not necessarily enough to acquire rights in the absence of registration. The Lanham Act allows only trademarks 'used in commerce' to be registered. 15 U.S.C. 1051(a)." Here selling a few products to friends in other states was not enough to provide national trademark protection absent registration. Does L'Oreal's knowledge of ZHD's intention to create hair products prevent it from using the ZAZU name? Held No; to hold otherwise would penalize entities for gathering knowledge and "ignorance would be rewarded." Intent establishes no right to a mark; only use does. "Because the mark was not registered for use in conjunction with hair products, any knowledge L'Oreal may have had of ZHD's plans is irrelevant." Facts: Comair, a United States licensee of L'Oreal in France, wanted to market hair coloring products. L'Oreal hired Wordmark to come up with a name, and it suggested ZAZU. L'Oreal searched and found that Riviera Slacks, Inc. held a federal trademark registration for the name for clothing; L'Oreal paid Riviera Slacks $125,000 for a covenant not to sue if L'Oreal used the name. L'Oreal also found Zazu Hair Designs (here "ZHD"), a hair salon in Hinsdale, Illinois which had registered the trade name as a service name in Illinois. L'Oreal repeatedly called and visited to see if the salon 34

sold hair products; ZHD stated that it did not, but intended to do so. L'Oreal applied for a federal registration on June 12, 1986 after having shipped some of its ZAZU product across state lines to be able to make the federal application. Unbeknownst to L'Oreal, ZHD had started selling some hair products to its customers in the store and had shipped some samples to friends in Texas and Florida. Reasoning: In finding that ZHD'S few sales secured rights against the world, the district court relied on, which hold that a single sale, combined with proof of intent to go on selling, permit the vendor to register the mark. But use sufficient to register a mark that soon is widely distributed is not necessarily enough to acquire rights in the absence of registration. (fails to distinguish de minimus use and de minimus intent) Cudahay: By ordering lots of bottles and making sales to customers, many of whom came from out of state, ZHD had more than de minimis use. L'Oreal knew of ZHD's intent, so it acted out of bad faithit paid Riviera Slacks to preclude its acting on its intention, after all, and clothing is a lot farther from hair products than is a hair salon. "A service mark can be infringed by its use on a closely related product."

Dissent

Assignment Must be in a signed writing. Will the transferee deliver substantially the same product to consumers, such that use of the mark by the transferee will not mislead consumers? Courts in finding an assignment invalid may enjoin the transferee from enforcing the mark, or consider the mark abandoned. Loss of Right INTENT TO ABANDON: Use Discontinued with Intent Not to Resume Use: vague, conditional plans to resume using a mark are insufficient to overcome the assumption of intent not to resume. Loss of Rights Through Mark Becoming Generic: public perception of a category, rather than good. When marketing efforts are TOO effective. Other Ways to Lose Significance as a Mark: loss of significance (if licensing mark for use by another, you need to make sure that the licensee will meet the standards for which the mark has stood), Permitting widespread infringement (especially if some are licensees and others are not) can constitute abandonment,

35

D. Standard Infringement
1: Ownership of a Valid Mark Valid Mark? Incontestable status? Section A of Trademarks pretty much covers this. 2: In Commerce As broad as Congress power to regulate interstate commerce, even advertising has counted. 3: The Alleged Infringer Use This sense of the word use is broader than the one required to establish Trademark rights, but still must somehow be used to indicate source. 4: The Mark or a Similar Symbol Must actually use the mark, circular yes, but just imagine that the relevant consumer would also get puns and references. 5: In Connection with selling or marketing of Goods or Services; AND The goods or services need to be materially similar to those of the allegedly infringed mark. 6: Likelihood of Confusion, Mistake, or Deception (gets an injunction) A probability (not mere possibility) of confusion, LOOKS AT BOTH MARKS A: Necessary Showing of Confusion 1. Implied Endorsement, 2. Initial Interest Confusion (using anothers mark as a foot-in-the-door technique), 3. Post-Sale Confusion (like impressing your friends with a fake rolex), 4. Reverse Confusion (making the first product seem like a knock-off of the second to market) B: Factors for Determining Likelihood Confusion 1. Strength of Plaintiffs Mark 2. Degree of Similarity between the Marks: SIGHT, SOUND, MEANING 3. Proximity of the products in the marketplace 4. Likelihood that the prior owner will bridge the gap, expand the product brand 5. Actual Confusion (GETS YOU DAMAGES) 6. Defendants good faith in adopting its own mark 7. Quality of Defendants product 8. Care and Sophistication of the Relevant Consumers AMF INC. v. Sleekcraft Boats, (9th Cir. 1979) Slickcraft and Sleekcraft, Likelihood Confusion Held: 1954 Slickcraft is using this name until 1969. Sleekcraft was new starting in late 1968. Appellate court overturned the federal court looking the above 8 factors. What about intent? As a matter of infringement, its usually just strict liability. Matters in 36

determining remedies. Remedy here is to begin labeling more clearly. Limited Remedy Court jury-rigs a limited remedy. Sleekcraft was required to use its logo on all advertising, design, and products.

E. False Designation of Origin and False Descriptions Forbidden 43(a) and other forms of infringement
Lanham Act Section 43(a) Protects registered and unregistered marks (1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

False Advertising

Cybersquatting

F. Dilution
Starts with the Famous Mark and looks to what elements of it are being diluted. Subject to the principles of equity, the owner of a famous mark . . . shall be entitled to an injunction against another person who . . . commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury. dilution protection law aims to protect sufficiently strong trademarks from losing their singular association in the public mind with a particular product --Wikipedia

37

THE CLAIM (1) plaintiff owns a famous mark that is distinctive; (2) defendant has commenced using a mark in commerce that allegedly is diluting the famous mark; (3) similarity between the defendants mark and the famous mark gives rise to an association between the marks; and (4) association is likely to impair the distinctiveness of the famous mark OR likely to harm the reputation of the famous mark. Definition of Elements
FAMOUS MARKS ONLY: A mark is "famous" when it is "widely recognized by the general

consuming public of the United States as a designation of source of the goods or services of the marks owner." dilution by blurring: as the "association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark." Id. 1125(c)(2)(B). dilution by tarnishment as the "association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark." Id. 1125(c)(2)(C).

Exclusions, Defenses (A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source (aka a parody cannot be TMed itself!!!) for the persons own goods or services, including use in connection with (i) advertising or promotion that permits consumers to compare goods or services; or (ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. (B) All forms of news reporting and news commentary. (C) Any noncommercial use of a mark.

G. Defenses
1. Fraudulent Registration 2. Abandonment 3. Use of the Mark to Misrepresent the Source 4. Fair Use; as an individuals name or descriptive term (e.g. fish-fry penumbra) 5. Rights of a Junior User of a mark subsequently registered by a Senior User 6. Violations of Antitrust Laws 7. Mark is Functional 8. Equity, including Laches, Estoppel, Acquiescence 9. Nominative Use (product cant be identified without the mark; e.g. Boston Marathon) 10. Parody (only in some courts) 38

Playmate of the Year could refer to herself as such based on Fair Use. Parody Louis Vuitton Malletier S.A. v. Haute Diggity Dog Chewy Vuitton! Parody, and DILUTION Held: "'just enough of the original design to allow the consumer to appreciate the point of parody,' but stop well short of appropriating the entire marks that LVM claims." Through a detailed analysis of likelihood of confusion factors, the court emphasized differences in the parties' marks and marketing to support its affirmation of the lower-court decision. Genericide A generic term is one for which the primary significance to the relevant consuming public is to identify; Poor Xerox!! Evidence: third-party generic use of the term, dictionaries, media use Murphy Bed v. Interior Sleep Systems - GENERICIDE Held: necessary to refer to the product.

Functionality TrafFix v. Marketing Displays Necessary Element, Patent Trademark Held: 1) Essential to the functioning of the product 2) Effect on cost or quality. 3) put competitors at a disadvantage? those two springs are necessary to make the spring-up sign, for a purchaser to have faith that the product will do what it is supposed to.

Naked Licensing Don Donuts v. Held: ..

Fair Use Could be 1st amendment, can be right to DESCRIBE, Mattel v. MCA Records Come on Barbie, Lets Go Party! Held: TITLE: titles are not usually indicative of a source but rather what the subject matter of the art, ARTISTIC RELEVANCE allows fair use. DILUTION: It is dilutive, but fair use exception. Protected as a NONCOMMERCIAL SPEECH, it is the artistic speech which is then being sold. Barbie Girl is protected as a parody under the trademark 39

doctrine of nominative use and under the First Amendment to the U.S. Constitution NB: Parody must be of the mark being played on. A Dr. Suess style poem cannot be used to make fun of airplane food, because otherwise its just being used to initial interest KP Permanent Make-Up, Inc. v. Lasting Fair Use does not require Confusion analysis NB: Plaintiffs burden is to show likelihood of confusion. Held: The Court ruled that a defendant in a trademark infringement action raising the affirmative defense of fair use has no independent burden to negate the likelihood of consumer confusion. Both respondent Lasting Impression I, Inc. (Lasting) and petitioner KP Permanent Make-Up, Inc. (KP) have used the phrase "micro color" or its variants in marketing their products. Lasting registered with the U.S. Patent and Trademark Office the trademark "Micro Colors" in white letters within a black square. After KP produced advertising with the term "microcolor" in a large, stylized typeface, Lasting demanded that KP stop using the term, claiming it infringed its trademark. KP sued Lasting in the U.S. District Court for the Central District of California, seeking a declaratory judgment that its language did not infringe the mark, and Lasting counterclaimed, claiming KP had infringed it. The District Court, finding that KP had used the mark only descriptively and had employed the term before KP registered the mark, concluded that KP had made out the affirmative defense of fair use of the mark, and, without considering the issue of the likelihood of consumer confusion, entered summary judgment in favor of KP on Lasting's counterclaim. The U.S. Court of Appeals for the Ninth Circuit reversed, holding that the District Court erred in granting summary judgment on the fair use defense without considering the issue of consumer confusion. The Supreme Court granted KP's petition for certiorari to resolve a disagreement among the courts of appeals on the significance of the issue of consumer confusion to the defense of fair use.

FACTS:

40

H. Remedies
General Rule in most circuits now is that lost profits do not require willful infringement (intent). Lindy Pen Co v. Bic Fair Use does not require Confusion analysis ISSUE: Is Bic infringing Lindys Auditor mark? Held: We remand the case to the district court with instructions to enter an order enjoining Bic from using the word "Auditor's" on or in connection with its pens. We additionally instruct the district court to order an accounting and to award damages and other relief as appropriate. Even if a customer realized at the time of delivery that the pens delivered were not the pens supposedly ordered, the customer might decide not to bother to return and exchange the pens at that late stage. INITIAL INTEREST CONFUSION CITE!!! See Park 'N Fly, 782 F.2d at 1509 (where marks are virtually identical, services provided are identical, and marketing channels are convergent, there is a likelihood of confusion despite no evidence of actual confusion, weak mark, and no intent to capitalize).

Big O Trie Dealers, Inc v. Goodyear analysis Finally, Goodyear challenges the jury's verdict awarding Big O $2.8 million in compensatory damages and $16.8 million in punitive damages. Goodyear contends Big O failed to prove either the fact or the amount of damages. Big O asserts the evidence supporting the fact of damages falls into two categories: (1) Goodyear's enormous effort to adopt, use, and absorb Big O's trademark virtually destroyed Big O's ability to make any effective use of its "Big Foot" trademark and (2) Goodyear's false statements that "Bigfoot" was available only from Goodyear created the appearance of dishonesty and wrongful conduct by Big O thereby harming its reputation within the trade and with the public. We agree with the district court that there is sufficient evidence to support the jury's finding of the fact of damages. COST OF FIXING INFRINGEMENT Big O also asserts the evidence provided the jury with a reasonable basis for determining the amount of damages. Big O claims the only way it can be restored to the position it was in before Goodyear infringed its trademark is to conduct a corrective advertising campaign. Big O insists it should be compensated for the advertising expenses necessary to dispel the public confusion caused by Goodyear's infringement. Goodyear spent approximately $10 million on its "Bigfoot" advertising campaign.[1] Thus, 41

Big O advances two rationales in support of the $2.8 million award: (1) there were Big O Tire Dealers in 28 percent of the states (14 of 50) and 28 percent of $10 million equals the amount of the award; and (2) the Federal Trade Commission generally orders businesses who engage in misleading advertising to spend approximately 25 percent of their advertising budget on corrective advertising and this award is roughly 25 percent of the amount Goodyear spent infringing on Big O's trademark.

42

V.

Copyright A. Copyrightable Subject Matter

17 U.S.C. 102 (a) - PROTECTABLE (a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories: Feist Publications v. Rural Telephone Service Co., Inc. (1991) The ORIGINAL Phone Book Held: copyrightextend[s] only to those components that are original to the author NOT infringement to snag a list of names and numbers simply arranged alphabetically.
ORIGINAL WORK HURDLE 1) Independently created by the author; AND 7 2) demonstrate a modicum of creativity. DERIVATIVE WORK HURDLE 1) Transformative

Authorship: scope is very broad, but does exclude everyday conversation and behavior, purely mechanical works, words and short phrases, a persons identity, and works with no human author. Fixed Medium: the moment of attachment of copyright protection. AUTHORIZED FIXATION

(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; and (8) architectural works.

Beyond slavish copying

43

17 U.S.C. 102 (b) NOT PROTECTABLE (b) In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work. Baker v. Selden (1879)- Bigger Better Bookkeeping; IDEA-EXPRESSION DICHOTOMY Held: this was the first U.S. Supreme Court case to fully explain this doctrine, holding that exclusive rights to the "useful art" (in this case bookkeeping) described in a book was only available by patent; the description itself was protectable by copyright. In Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 556 (1985), the Supreme Court stated that "copyright's idea/expression dichotomy 'strike[s] a definitional balance between the First Amendment and the Copyright Act by permitting free communication of facts while still protecting an author's expression.'" No Disclosure, No Examination (by the PTO), The object of the one is explanation; the object of the other is use. Lotus Dev. Corp. v. Borland Intl, Inc. (US 1996)- Software, METHOD OF OPERATION FACTS: Borland released a spreadsheet product, Quattro Pro, that had a compatibility mode in which its menu imitated that of Lotus 1-2-3, a competing product. None of the source code or machine code that generated the menus was copied, but the names of the commands and the organization of those commands into a hierarchy were virtually identical. Quattro Pro also contained a feature called "Key Reader," which allowed it to execute Lotus 1-2-3 keyboard macros. In order to support this feature, Quattro Pro's code contained a copy of Lotus's menu hierarchy in which each command was represented by its first letter instead of its entire name. PROC: The First Circuit reversed the district court's decision, agreeing with Borland's legal theory that considered the menu hierarchy a "method of operation." The court agreed with the district court that an alternative menu hierarchy could be devised, but argued that despite this, the menu hierarchy is an un-copyrightable "method of operation." Lotus petitioned the United States Supreme Court for a writ of certiorari. The Supreme Court affirmed the circuit court's opinion in a 4-4 anonymous tie vote, with Justice Stevens recusing. Lotus's petition for a rehearing by the full court was denied. By the time the lawsuit ended, Borland had sold Quattro Pro to Novell, and Microsoft's Excel spreadsheet had emerged as the main challenger to Lotus 1-2-3.

HELD:

44

The Lotus decision establishes a distinction in copyright law between the interface of a software product and its implementation. The implementation is subject to copyright. The public interface may also be subject to copyright to the extent that it contains expression (for example, the appearance of an icon). However, the set of available operations and the mechanics of how they are activated are not copyrightable. This standard allows software developers to create original clones of copyrighted software products without infringing the copyright. Morrissey v. Procter & Gamble, (1st Cir. 1967) LIMITED NUMBER OF EXPRESSIONS HELD: Plaintiff Morrissey created a set of rules for a promotional sweepstakes contest, and defendant Procter & Gamble took those rules, changed a few words, and used them in their own sweepstakes. Are sweepstakes rules copyrightable subject matter? Held Aldrich: No. Although in general the exact expression of an idea is copyrightable, a subject can be so narrow that it "necessarily requires" one of a small number of forumlations to express. The expressions of such narrow subjects are not copyrightable, as they would effectively allow cornering the market on those subjects. "We cannot recognize copyright as a game of chess in which the public can be checkmated." Here sweepstakes rules can only be be described in a limited number of expressions, as is therefore not protectable by copyright. Brandir International, Inc. v. Cascade Pacific Lumber Co.(2d Cir. 1987) BIKE RACK CONCEPTUAL SEPARABILITY. CANNOT FUNTIONAL ASPECTS USEFUL ARTICLE. Story: Sculpturewhen a friend, G. Duff Bailey, a bicycle buff and author of numerous articles about urban cycling, was at Levine's home and informed him that the sculptures would make excellent bicycle racks. Held: Brandir designed a sleek new metal bike rack. The racks were featured in design magazines and won an award from the Industrial Designers Society. Cascade began copying the bike racks. Brandir sued for copyright infringement. Cascade argued that Brandir could not copyright the bike racks because they weren't works of art, they were utilitarian, and utilitarian items (aka useful articles) are not copyrightable. The Trial Court found for Cascade. Brandir appealed. The Appellate Court affirmed. The Appellate Court looked to 17 U.S.C. 101 and found that works with utilitarian features are only copyrightable to the extent that the design features "can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article." This separablity can be either physical or conceptual. The Court interpreted 101 to mean that, "if design elements reflect a merger of aesthetic and functional considerations, the artist aspects of a work cannot be said to be conceptually separable from the utilitarian elements. Conversely, where design elements can be identified as reflecting the 45

designer's artistic judgment exercised independently of functional influences, conceptual separability exists." Basically, the courts must look at the features of a work and decide if the creator chose those features for design reasons or aesthetic reasons. 17 U.S.C. 103 (a) Infringing Works Not Protectable protection for a work employing pre-existing material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully 17 U.S.C. 105 Government Works NOT protectable Legal document? Necessary to follow the law? Would the work exist if money couldnt be recouped?

B. Copyright Ownership
Term of Copyright

Who is the original Author?: 1) Individual Works a) copyright vests with fixation b) Who was in charge? That Titanic example 2) Made for Hire a) Prepared in scope of employment; OR i) Sub-question Employment: employee or independent contractor? (1) Hiring partys right and actual control over means and methods of production (2) Source of instruments and tools (3) Location of production (4) Duration of relationship (5) Whether Hiring party can assign or delegate additional tasks (6) Hiring partys say over when and how long to work (7) Method of payment (8) Hiring partys role is hiring and paying assistants (9) Whether work is a regular part of Hiring partys business (10) Whether Hiring party is a business (11) Provision of employee benefits (12) The tax treatment of the hired party. ii) Sub-question Scope: a little bit of Agency law (1) Whether the work is of the type that EE is employed to perform (2) Work occurs substantially within authorized work hours; AND (3) Works purpose, at least in part, is to serve the employer.

46

Community for Creative Non-Violence v. Reid 490 U.S. 730 (1989) Held: CCNV wanted a sculpture to illustrate the plight of the homeless. They contracted with a sculptor named Reid to make the sculpture. CCNV paid for the materials, but Reid donated his time. CCNV provided input on what the sculpture was to entail, but Reid retained significant creative control. Eventually the sculpture was finished and CCNV paid $15k. However, when they announced plans to take the sculpture on a multi-city tour, Reid refused to give up possession of it, and filed a certificate of copyright registration. Reid argued that he was a co-author of the sculpture. CCNV argued that they paid for the sculpture and were the ones who directed its creation. Therefore Reid's contribution did not make him a co-author since it was just work for hire. Procedure: Trial Court found for Reid. CCNV appealed. The Trial Court found that the sculpture was a work for hire under 17 U.S.C. 101(1) because CCNV was the motivating force behind the sculpture's production. The Appellate Court reversed. CCNV appealed. The Appellate Court found that Reid was not an employee of CCNV, but instead was an independent contractor. Therefore it did not meet the definition of a work for hire under 101(1) (works prepared by an employee). Note that Reid could not have been covered by 101(2) (works prepared by an independent contractor), because under that clause the parties must "expressly agree in a written instrument signed by them that the work shall be considered a work made for hire." The US Supreme Court affirmed. b) The Work is: i) Specially ordered or commissioned; AND ii) Falls into one of the nine categories; AND iii) The parties sign an agreement designating it to be a work made for hire iv) NB: at a minimum, a party is likely entitled to an implied license 3) Joint Authors Thomas v. Larson about the musical RENT a) Each author contributed copyrightable expression; AND b) Each author intended to be a joint author when the work was created. Aalmuhammed v. Lee 202 F3d 1227 (9th Cir. 1999) Aalmuhammed was an expert on Malcolm X. He was hired by Lee to be a consultant for a movie about Malcolm X. Aalmuhammed suggested script revisions, offered direction to some actors, and helped with editing. When the movie was released, the credits listed Aalmuhammed as a technical consultant. He wanted to be considered a co-author, so he sued.

47

Aalmuhammed argued that his contributions to the film were significant enough to make the work a joint work. The Trial Court found for Lee. Aalmuhammed appealed. The Appellate Court affirmed. The Appellate Court looked to 17 U.S.C. 101 and noted that in order to be a co-author of a joint work, a person must "make an independently copyrightable contribution" to the whole work. The Court found that Aalmuhammed's contributions to the work were enough to be independently copyrightable. However, the Court found that Aalmuhammed was not an author. The Court looked to Burrow-Giles Lithographic Co. v. Sarony (111 U.S. 53 (1884)), which held that an author (of a photograph) is "the person who has superintended the arrangement, who has actually formed the picture by putting the person in position, and arranging the place where the people are to be - the man who is the effective cause of that." The Court found that Aalmuhammed was not 'superintending' anything. He was working for Lee, the movie's director. Lee controlled all aspects of the movie. In addition, there was never an intent on the part of Lee or the movie's producers to make Aalmuhammed a co-author. It was strictly work for hire. The Court noted that even Lee was under contract with the movie studio in a work for fire arrangement and so was not even an author himself. It would be absurd to find that Aalmuhammed was author when Lee was not. The Court found that it was good public policy to restrict the definition of author. Otherwise people like Lee would never consult others because they'd be worried about losing control of the rights. That would make the arts less accurate and interesting. 4) Collective Works a) look to definition in 17 USC 101 b) rights in collective work limited to that work and revision i) What constitutes a revision is a likely point of litigation. Ownership of a copy of the copyright is not ownership of the copyright. Transfers 1) Selling the Copyright a) Transfer defined broadly in 17 USC 101 b) Requires writing 17 USC 204(a) c) Recordation with US Copyright Office. 17 USC 301(d). First to File system! 2) Exclusive Licenses a) Requires writing 3) Nonexclusive Licenses 4) Open Source Licenses and Creative Commons 48

a) General Public License (GPL) i) because permission to use the code is conditioned on compliance with the license. Jacobsen v. Katzer b) Creative Commons Restrictions i) Non-Commercial Use ii) No Derivative Works iii) Share Alike any new work carries with it the licensing terms of the first Termination Right 17 USC 203, lets reconsider things after 35 years

C. Exclusive Rights
To establish infringement, plaintiff must show: 1) Ownership of a valid copyright; 2) Copying of constituent elements of the work that are original; balancing of: a) ACCESS to the allegedly infringed work b) SUBSTANTIALLY SIMILAR to the allegedly infringed work i) Objectively: element by element, expert testimony, et cetera ii) Subjectively: hunch, overall artistic slant, 8 3) Was the copying improper? Arnstein v. Porter Is there infringement? Access, Substantial Similarity, TO the JURY! 154 F.2d 464 (2d Cir. 1946) Arnstein was a songwriter who had published a number of popular songs. He claimed that another songwriter named Porter had plagiarized some of his songs. He sued for copyright infringement. Arnstein argued that Porter had 'stooges' fooling Arnstein around and had even ransacked his apartment and stole some of his unpublished songs! Porter argued that he had never heard any of Arnstein's songs and that he came up with his songs himself (aka independent creation). The Trial Court found for Porter in summary judgment. Arnstein appealed. The Trial Court found that Porter's songs were not substantially similar. The Court relied on the testimony of expert witnesses about the similarity of the songs. The Appellate Court reversed and remanded. The Appellate Court found that generally, there are two elements to establishing infringement: There must be evidence that the defendant had access to the copyrighted work. There must be evidence that the works are substantially similar. The Court found that whether two songs were substantially similar enough to constitute copyright infringement was a matter of fact for a jury to decide. So they remanded the case for a jury trial.
8

Different circuits balance this differently, but the objective and subjective overlay is fairly common

49

Nichols v. Universal Pictures Corporation Judge Learned Hand, writing for the Court, noted that protection of literature cannot be limited to the exact text, or else an infringer could get away with copying by making trivial changes. The question then is whether the part taken was 'substantial'. However, it is impossible to set a firm boundary demarcating the line between work and ideas, he said, stating, "her copyright did not cover everything that might be drawn from her play; its content went to some extent into the public domain." In this case, there was no infringement, as the ideas that are copied are really universal concepts and stock characters. Characters not protectable: If Twelfth Night were copyrighted, it is quite possible that a second comer might so closely imitate Sir Toby Belch or Malvolio as to infringe, but it would not be enough that for one of his characters he cast a riotous knight who kept wassail to the discomfort of the household, or a vain and foppish steward who became amorous of his mistress. These would be no more than Shakespeare's "ideas" in the play, as little capable of monopoly as Einstein's Doctrine of Relativity, or Darwin's theory of the Origin of Species. It follows that the less developed the characters, the less they can be copyrighted; that is the penalty an author must bear for marking them too indistinctly. Abstraction Test: But when the plagiarist does not take out a block in situ, but an abstract of the whole, decision is more troublesome. Upon any work, and especially upon a play, a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out. The last may perhaps be no more than the most general statement of what the play is about, and at times might consist only of its title; but there is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his "ideas," to which, apart from their expression, his property is never extended. (emphasis added). . If the defendant took so much from the plaintiff, it may well have been because her amazing success seemed to prove that this was a subject of enduring popularity. Even so, granting that the plaintiff's play was wholly original, and assuming that novelty is not essential to a copyright, there is no monopoly in such a background. Though the plaintiff discovered the vein, she could not keep it to herself; so defined, the theme was too generalized an abstraction from what she wrote. It was only a part of her "ideas."

50

Reproduction Rights Sony and Grokster Bad Facts: Making money from advertisement, Luring consumers from Napster, Attempting to sell ads to copyright holders themselves, Unlike Sony, Groksters money is dependent on use of the program for infringement as opposed to purchase of the program itself. Leading to the induced Adaption Right Derivative Works: Sequels, Spin-offs, Same work in a new medium, Anderson v. Stallone unprotect-able b/c derivative work of other copyright. NOT TRANSFORMATIVE Facts: , Stallone, is a famous actor who starred in and wrote the scripts for Rocky I, II, & III. In 1982, informed the press that he intended to write a fourth movie and was thinking about making it based off of world events, the Cold War, and maybe having it involve a United States fighter going to Russia to fight the Russian Red. In June 1982, after viewing Rocky III, , who had no connection to the previous movies or the , wrote a treatment entitled Rocky IV. The treatment incorporated the characters that created in the previous movies. (who is an attorney and was accompanied by an attorney) met with MGM executives to discuss the possibility of his treatment being used as the basis for the Rocky IV script. The studio executives suggested that he sign a release to relieve MGM from liability stemming form use of the treatment. In April 1984, requested compensation for the alleged use of his treatment in the forthcoming Rocky IV movie. In July 1984, discussed his script on the Today Show. felt that was discussing the story that he had written. completed the Rocky IV script in October 1984 and the film was released in November 1985. Issue: Was the script and eventual movie a copyright infringement on the treatment that he had written before wrote the script? In order for a to win a copyright infringement claim, must prove that he owns the copyright and that the copied the s copyrighted work. No. The court concluded that the s script and movie did not infringe any copyright protection of the Rocky IV treatment. Thus, the court granted the s motion for summary judgment.

Rule:

Holding:

51

Reasoning:

The court granted the motion for summary judgment based on two separate grounds. First, the court said that the treatment is an infringing work that is not entitled to copyright protection. Second, the court said that Rocky IV is not substantially similar to treatment, and no reasonable jury could find that Rocky IV is a picturization of script. The court reasoned that the characters in the Rocky movies are some of the most recognizable and one of the most highly delineated groups of characters in modern American cinema. Also, the court said that the interrelationships between the characters are the central parts of all of the movies. The court thus concluded that the Rocky characters are delineated so extensively that they are protected from bodily appropriation when taken as a group and transposed into a sequel by another author. The court also stated that did not put forth any evidence to rebut the s showing that Rocky characters are so highly delineated that they warrant copyright protection. Next, the court found that the characters were so highly developed and central to the movie that they constituted the story being told. The court came to this conclusion because the movies revolve around the characters, their development, and their relationships and does not revolve around intricate plots or story lines. The court said that the same evidence which supports the findings of delineation of the characters supports the findings that the characters are the story being told. The court concluded that since owns the copyrights for the first three Rocky movies, he has the exclusive right to prepare derivative works and that treatment is an unauthorized derivative work and that actually infringed copyright.

Distribution Right Importation Right: The Grey Goods Problem Performance Right Very broad! Display Right

D. Fair Use; Other Limitations on Exclusive Rights

Fair Use 107. Limitations on exclusive rights: Fair use Notwithstanding the provisions of sections 106 and 106A [17 USC 106 and 106A], the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include-52

1. purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; 2. nature of the copyrighted work; 3. amount and substantiality of the portion used in relation to the copyrighted work as a whole; AND 4. effect of the use upon the potential market for or value of the copyrighted work. The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors. Harper & Row, Publishers v. Nation Enterprises, 471 U.S. 539 (1985). Facts: The Nation Magazine got a copy of President Gerald Fords autobiography just prior to its publication date. The Nation then included a verbatim quotation of President Fords thoughts at the time of pardoning Nixon. 300 of 200,000 words, but the crux of the work. Reasoning: Unpublished, key factor against fair use | News is favored fair use, but was also commercial use | The Nation could reported and copied unprotected facts, but chose to use protected expression | The portion taken was the heart of the work | Specific harm was shown with Times cancellation of its prepublication excerpts.

Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994) Satire Bad, Parody GoodReally?! The weird argument: why didnt you choose this other song? Only Allusion, not parody. Facts: The members of the rap music group 2 Live CrewLuther Campbell, Fresh Kid Ice, Mr. Mixx and Brother Marquiscomposed a song called "Pretty Woman," a parody based on Roy Orbison's rock ballad, "Oh, Pretty Woman." The group's manager asked Acuff-Rose Music if they could license Roy Orbison's tune for the ballad to be used as a parody. Acuff-Rose Music refused to grant the band a license but 2 Live Crew nonetheless produced and released the parody. The lower court rejected fair use and the Supreme Court reversed and remanded, demanding a more nuanced analysis (ouch!). Is the parody more likely to be fair use than a parody that simply took material to freeride on the efforts of others? Reasoning: Parody must borrow from the original | Parody was transformative | Criticism and comment is highly protected fair use The Court on remand wanted a finding of whether there was a showing of market harm, did the rap version decrease the potential licensing value of the original?

53

Procedure:

Almost a year later, after nearly a quarter of a million copies of the recording had been sold, Acuff-Rose sued 2 Live Crew and its record company, Luke Skyywalker Records, for copyright infringement. The District Court granted summary judgment for 2 Live Crew, holding that its song was a parody that made fair use of the original song under 107 of the Copyright Act of 1976 (17 U.S.C. 107). The Court of Appeals reversed and remanded, holding that the commercial nature of the parody rendered it presumptively unfair under the first of four factors relevant under 107; that, by taking the "heart" of the original and making it the "heart" of a new work, 2 Live Crew had taken too much under the third 107 factor; and that market harm for purposes of the fourth 107 factor had been established by a presumption attaching to commercial uses. When looking at the purpose and character of 2 Live Crew's use, the Court found that the more transformative the new work, the less will be the significance of the other three factors. The court found that, in any event, a work's commercial nature is only one element of the first factor enquiry into its purpose and character, quoting Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417. The Supreme Court found the Court of Appeals analysis as running counter to this proposition. Justice Souter then moved onto the second 107 factor, "the nature of the copyrighted work", finding it has little merit in resolving this and other parody cases, since the artistic value of parodies is often found in their ability to invariably copy popular works of the past. The Court did find the third factor integral to the analysis, finding that the Court of Appeals erred in holding that, as a matter of law, 2 Live Crew copied excessively from the Orbison original. Souter reasoned that the "amount and substantiality" of the portion used by 2 Live Crew was reasonable in relation to the band's purpose in creating a parody of "Oh, Pretty Woman". The majority reasoned "even if 2 Live Crew's copying of the original's first line of lyrics and characteristic opening bass riff may be said to go to the original's 'heart,' that heart is what most readily conjures up the song for parody, and it is the heart at which parody takes aim." The Supreme Court then looked to the new work as a whole, finding that 2 Live Crew thereafter departed markedly from the Orbison lyrics, producing otherwise distinctive music. Looking at the final factor, the Supreme Court found that the Court of Appeals erred in finding a presumption or inference of market harm (such as there had been in Sony). Parodies in general, the Court said, will rarely substitute for the original work, since the two works serve different market functions. While Acuff-Rose found evidence of a potential "derivative" rap market in the very fact that 2 Live Crew recorded a rap parody of "Oh, Pretty Woman" and another rap group sought a license to 54

1) //SONY

2)

3)

4)

record a rap derivative, the Court found no evidence that a potential rap market was harmed in any way by 2 Live Crew's parodic rap version. In fact, the Court found that it was unlikely that any artist would find parody a lucrative derivative market, noting that artists "ask for criticism, but only want praise." Blanch v. Koons Issue: [t]he question is whether Koons had a genuine creative rationale for borrowing Blanchs image, rather than using it merely to get attention or to avoid the drudgery in working up something fresh. Jeff Koons, an appropriation artist, created a collage entitled Niagara which depicts four pairs of womens legs with the feet pointing downwards superimposed over images of confections with a grassy field and Niagara Falls in the background. In his collage, one of the sets of legs in the painting was originally part of a photograph taken by a professional fashion and portrait photographer, and published in Allure magazine in 2000. Koons described his work as using popular images for commentary on the social and aesthetic consequences of mass media. The work was commissioned by Deutsche Bank and the Guggenheim Museum. Courts will not find a transformative use when the defendant has done no more than find a new way to exploit the creative virtues of the original work. However, in this case, Niagara passes the transformative test almost perfectly because Koons changed the original copyrighted pictures colors, the background against which it is portrayed, the medium, the size of the objects pictured, their details. Also, and crucially, Koonss painting had an entirely different purpose and meaning as part of a massive painting commissioned for exhibition in a German art-gallery space. parody v. satire: parody needs to mimic an original to make its point, and so has some claim to use the creation of its victims imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing.

Facts:

Reasoning:

Dicta:

First Sale 17 USC 109 the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord. Limits regarding Sound Recordings 55

Limits regarding Computer Software Importation Compulsory License for Nondramatic Musical Works Limitations on Computer Programs Other Limits on Exclusive Rights Defenses Other 1. Independent Creation and Expression: at the same time 2. License and/or Consent: 3. Inequitable Conduct: fraud in the course of registration 4. First Amendment: used to say that there never was infringement, but doesnt protect infringing expression. Might be effective toward fair use 5. Immoral, Illegal, Obscene: not really that big of a deal, because who cares?

E. Contributory Infringement and Vicarious Liability

Sony v. Universal City Studios, Inc. The question is thus whether the Betamax is capable of commercially significant noninfringing uses. In order to resolve that question, we need not explore all the different potential uses of the machine and determine whether or not they would constitute infringement. Rather, we need only consider whether on the basis of the facts as found by the District Court a significant number of them would be noninfringing. Moreover, in order to resolve this case we need not give precise content to the question of how much use is commercially significant. For one potential use of the Betamax plainly satisfies this standard, however it is understood: private, noncommercial time-shifting in the home. It does so both (A) because respondents have no right to prevent other copyright holders from authorizing it for their programs, and (B) because the District Court's factual findings reveal that even the unauthorized home time-shifting of respondents' programs is legitimate fair use. Authorized Time-Shifting Unauthorized Time-Shifting Grokster v. MGM For the same reasons that Sony took the staple-article doctrine of patent law as a model for its copyright safe-harbor rule, the inducement rule, too, is a sensible one for copyright. We adopt it here, holding that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. We are, of course, mindful of the need to keep from trenching on regular commerce or discouraging 56

the development of technologies with lawful and unlawful potential. Accordingly, just as Sony did not find intentional inducement despite the knowledge of the VCR manufacturer that its device could be used to infringe, 464 U. S., at 439, n. 19, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or discourage innovation having a lawful promise. Three features of this evidence of intent are particularly notable. First, each company showed itself to be aiming to satisfy a known source of demand for copyright infringement, the market comprising former Napster users. StreamCast's internal documents made constant reference to Napster, it initially distributed its Morpheus software through an OpenNap program compatible with Napster, it advertised its OpenNap program to Napster users, and its Morpheus software functions as Napster did except that it could be used to distribute more kinds of files, including copyrighted movies and software programs. Grokster's name is apparently derived from Napster, it too initially offered an OpenNap program, its software's function is likewise comparable to Napster's, and it attempted to divert queries for Napster onto its own Web site. Grokster and StreamCast's efforts to supply services to former Napster users, deprived of a mechanism to copy and distribute what were overwhelmingly infringing files, indicate a principal, if not exclusive, intent on the part of each to bring about infringement. Second, this evidence of unlawful objective is given added significance by MGM's showing that neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software. While the Ninth Circuit treated the defendants' failure to develop such tools as irrelevant because they lacked an independent duty to monitor their users' activity, we think this evidence underscores Grokster's and StreamCast's intentional facilitation of their users' infringement.[12] Third, there is a further complement to the direct evidence of unlawful objective. It is useful to recall that StreamCast 940*940 and Grokster make money by selling advertising space, by directing ads to the screens of computers employing their software. As the record shows, the more the software is used, the more ads are sent out and the greater the advertising revenue becomes. Since the extent of the software's use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is infringing.[13] This evidence alone would not justify an inference of unlawful intent, but viewed in the context of the entire record its import is clear. The unlawful objective is unmistakable. 57

F. Remedies
Chapter 5 Copyright Infringement and Remedies
501. 502. 503. 504. 505. 506. 507. 508. 509. 510. 511. Infringement of copyright Remedies for infringement: Injunctions Remedies for infringement: Impounding and disposition of infringing articles Remedies for infringement: Damages and profits Remedies for infringement: Costs and attorney's fees Criminal offenses Limitations on actions Notification of filing and determination of actions Repealed1 Remedies for alteration of programming by cable systems Liability of States, instrumentalities of States, and State officials for infringement of copyright 512. Limitations on liability relating to material online 513. Determination of reasonable license fees for individual proprietors 2

Property Like a. Injunctive relief b. Infringing goods seized and impounded Liability c. Compulsory licensing d. (lack of moral rights) e. $$$$$$$$$ i. MIN: $200 for an innocent infringer ii. MIN: $750 for non-innocent infringer iii. MAX: $30,000 for non-innocent infringer iv. MAX: $150,000 for willful infringer

58