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Chapter 8: Intellectual Property

Terms in this set (48)

trademark
A distinctive word, symbol, or design that identifies the manufacturer as the source of particular goods and distinguishes its products from those made or sold by others.

- At common law, the person who used a symbol or mark to identify a business or product was protected in the use of that trademark.

- by using another's trademark, a business could lead consumers to believe that its goods were made by the other business.
Statutory Protection of Trademarks
Statutory protection of trademarks and related property is provided at the federal level by the Lanham Act of 1946.
The Lanham Act of 1946
(15 U.S.C. Sections 1051-1128.)
is to reduce the likelihood that consumers will be confused by similar marks. !!!

was enacted in part to protect manufacturers from losing business to rival companies that used confusingly similar trademarks.

- incorporates the common law of trademarks and provides remedies for owners of trademarks who wish to enforce their claims in federal court.

- Many states also have trademark statutes.

- In 1995, Congress amended the Lanham Act by passing the Federal Trademark Dilution Act
Federal Trademark Dilution Act
which allowed trademark owners to bring a suit in federal court for trademark dilution.

- In 2006, Congress further amended the law on trademark dilution by passing the Trademark Dilution Revision Act (TDRA)
Trademark Dilution Revision Act (TDRA)
to state a claim for trademark dilution, a plaintiff must prove the following:

1. The plaintiff owns a famous mark that is distinctive.

2. The defendant has begun using a mark in commerce that allegedly is diluting the famous mark.

3. The similarity between the defendant's mark and the famous mark gives rise to an association between the marks.

4. The association is likely to impair the distinctiveness of the famous mark or harm its reputation.

- protect "distinctive" or "famous" trademarks (such as Rolls Royce, McDonald's, and Apple) from certain unauthorized uses even when the use is on noncompeting goods or is unlikely to confuse.
- More than half of the states have also enacted trademark dilution laws.

- A famous mark may be diluted not only by the use of an identical mark but also by the use of a similar mark.
Trademark Registration
Trademarks may be registered with the state or with the federal government.

- To register for protection under federal trademark law, a person must file an application with the U.S. Patent and Trademark Office in Washington, D.C. A mark can be registered:

1. if it is currently in commerce or

2. if the applicant intends to put the mark into commerce within six months.

- In special circumstances, the six-month period can be extended by thirty months, giving the applicant a total of three years from the date of notice of trademark approval to make use of the mark and to file the required use statement. Registration is postponed until the mark is actually used.

- During this waiting period, the applicant's trademark is protected against any third party who has neither used the mark previously nor filed an application for it.

- Registration is renewable between the fifth and sixth years after the initial registration and every ten years thereafter (every twenty years for trademarks registered before 1990).
Trademark Infringement
(used without authorization)
Registration of a trademark with the U.S. Patent and Trademark Office gives notice on a nationwide basis that the trademark belongs exclusively to the registrant.

- The registrant is also allowed to use the symbol ® to indicate that the mark has been registered.

- Whenever someone else uses that trademark in its entirety or copies it to a substantial degree, intentionally or unintentionally, the trademark has been infringed (used without authorization).

- When a trademark has been infringed, the owner has a cause of action against the infringer.

- To succeed in a lawsuit for trademark infringement, the owner must show that the defendant's use of the mark created a likelihood of confusion about the origin of the defendant's goods or services.

- The owner need not prove that the infringer acted intentionally or that the trademark was registered (although registration does provide proof of the date of inception of the trademark's use).

- The remedy most commonly granted for trademark infringement is an injunction to prevent further infringement. Under the Lanham Act, a trademark owner who successfully proves infringement can recover actual damages, plus the profits that the infringer wrongfully received from the unauthorized use of the mark. A court can also order the destruction of any goods bearing the unauthorized trademark. In some situations, the trademark owner may also be able to recover attorneys' fees.
Distinctiveness of the Mark
A central objective of the Lanham Act is to reduce the likelihood that consumers will be confused by similar marks.

- For that reason, only those trademarks that are deemed sufficiently distinctive from all competing trademarks will be protected.
- In addition, a trademark may not be derogatory to a person, institution, belief, or national symbol.

- example: A controversial issue in trademark law has to do with the use of slang terms for American Indians, such as "redskins" and "braves." Many Native Americans find the use of these names offensive.
Strong Marks
Fanciful, arbitrary, or suggestive trademarks are generally considered to be the most distinctive (strongest) trademarks.

- Because they are normally taken from outside the context of the particular product, strong marks provide the best means of distinguishing one product from another.
Fanciful trademarks
include invented words, such as Xerox for one manufacturer's copiers and Google for search engines.
Arbitrary trademarks
use common words that would not ordinarily be associated with the product, such as Dutch Boy as a name for paint.
Suggestive Trademarks
bring to mind something about a product without describing the product directly.

- example (1): "Dairy Queen" suggests an association between its products and milk, but it does not directly describe ice cream.

- example (2): "Blu-ray" is a suggestive mark that is associated with the high-quality, high-definition video contained on a particular optical data storage disc. Although blue-violet lasers are used to read blu-ray discs, the term blu-ray does not directly describe the disc.
Secondary Meaning
Descriptive terms, geographic terms, and personal names are not inherently distinctive and do not receive protection under the law until they acquire a secondary meaning.

- A secondary meaning arises when customers begin to associate a specific term or phrase, such as "London Fog," with specific trademarked items (coats with "London Fog" labels) made by a particular company.

- Once a secondary meaning is attached to a term or name, a trademark is considered distinctive and is protected. Even a color can qualify for trademark protection, such as the color schemes used by state university sports teams, including Ohio State University and Louisiana State University.Footnote
Generic Terms
are terms that refer to an entire class of products, such as bicycle and computer.

- receive no protection, even if they acquire secondary meanings.

- For instance, aspirin and thermos were originally trademarked products, but today the words are used generically.

- Other trademarks that have acquired generic use include escalator, trampoline, raisin bran, dry ice, lanolin, linoleum, nylon, and cornflakes.
service mark
essentially a trademark that is used to distinguish the services (rather than the products) of one person or company from those of another.

- For instance, each airline has a particular mark or symbol associated with its name.

- Titles and character names used in radio and television are frequently registered as service marks.
certification mark
is used by one or more persons, other than the owner, to certify the region, materials, mode of manufacture, quality, or other characteristic of specific goods or services

- protected by law

- Certification marks include such marks as "Good Housekeeping Seal of Approval" and "UL Tested."
collective mark
A mark used by members of a cooperative, association, union, or other organization to certify the region, materials, mode of manufacture, quality, or other characteristic of specific goods or services.

- Collective marks appear at the end of a movie's credits to indicate the various associations and organizations that participated in making the movie. The labor union marks found on the tags of certain products are also collective marks.
trade dress
The image and overall appearance ("look and feel") of a product that is protected by trademark law.

- a broad concept that can include all or part of the total image or overall impression created by a product or its packaging.

- The distinctive decor, menu, and style of service of a particular restaurant may be regarded as the restaurant's trade dress. Similarly, trade dress can include the layout and appearance of a mail-order catalog, the use of a lighthouse as part of a golf hole, the fish shape of a cracker, or the G-shaped design of a Gucci watch.

- trade dress is subject to the same protection as trademarks.
Counterfeit Goods
Counterfeit goods copy or otherwise imitate trademarked goods but are not genuine.

- The importation of goods bearing counterfeit (fake) trademarks poses a growing problem for U.S. businesses, consumers, and law enforcement.

- In addition to having negative financial effects on legitimate businesses, sales of certain counterfeit goods, such as pharmaceuticals and nutritional supplements, can present serious public health risks.

- Although Congress has enacted statutes against counterfeit goods (discussed next), the United States cannot prosecute foreign counterfeiters because our national laws do not apply to them.

- one effective tool that U.S. officials are using to combat online sales of counterfeit goods is to obtain a court order to close down the domain names of Web sites that sell such goods.
Stop Counterfeiting in Manufactured Goods Act (SCMGA)
enacted by congress in 2006 to combat counterfeit goods

- The act made it a crime to intentionally traffic in, or attempt to traffic in, counterfeit goods or services, or to knowingly use a counterfeit mark on or in connection with goods or services.

- Before this act, the law did not prohibit the creation or shipment of counterfeit labels that were not attached to any product. Therefore, counterfeiters would make labels and packaging bearing a fake trademark, ship the labels to another location, and then affix them to inferior products to deceive buyers. The SCMGA closed this loophole by making it a crime to traffic in counterfeit labels, stickers, packaging, and the like, whether or not they are attached to goods.
Penalties for Counterfeiting
Persons found guilty of violating the SCMGA may be fined up to $2 million or imprisoned for up to ten years (or more if they are repeat offenders).

- If a court finds that the statute was violated, it must order the defendant to forfeit the counterfeit products (which are then destroyed), as well as any property used in the commission of the crime.

- The defendant must also pay restitution to the trademark holder or victim in an amount equal to the victim's actual loss.
Trademarks apply to PRODUCTS!!
...
trade name
A name that a business uses to identify itself and its brand.

- A trade name that is the same as the company's trademarked product is protected as a trademark, and unique trade names are protected under the common law.

- Trade names may be protected as trademarks if the trade name is the same as the company's trademarked product—for example, Coca-Cola.

- Unless it is also used as a trademark or service mark, a trade name cannot be registered with the federal government.

- Trade names are protected under the common law, however.

- As with trademarks, words must be unusual or fancifully used if they are to be protected as trade names.

- For instance, the courts held that the word Safeway was sufficiently fanciful to obtain protection as a trade name for a grocery chain.
license
An agreement by the owner of intellectual property to permit another to use a trademark, copyright, patent, or trade secret for certain limited purposes. A revocable right or privilege of a person to come on another person's land.

- The party that owns the intellectual property rights and issues the license is the licensor, and the party obtaining the license is the licensee.

- A license grants only the rights expressly described in the license agreement. A licensor might, for example, allow the licensee to use the trademark as part of its company name, or as part of its domain name, but not otherwise use the mark on any products or services. Disputes frequently arise over licensing agreements, particularly when the license involves Internet uses.
patent
A property right granted by the federal government that gives an inventor an exclusive right to make, use, sell, or offer to sell an invention in the United States for a limited time.

- a grant from the government that gives an inventor the exclusive right to make, use, and sell an invention for a period of 20 years.

- Patents for designs, as opposed to inventions, are given for a 14 year period.
America Invents Act (2011)
to prove who invented an item first

- the first person to file an application for a patent on a product or process will receive patent protection.

- The period of patent protection begins on the date when the patent application is filed, rather than when the patent is issued, which can sometimes be years later.

- After the patent period ends (either 14 or 20 years later), the product or process enters the public domain, and anyone can make, sell, or use the invention without paying the patent holder.
www.uspto.gov
Web site of the U.S. Patent and Trademark Office

- provides searchable databases covering U.S. patents granted since 1976.
What Is Patentable?
"[w]hoever 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."

- to be patentable, an invention must be novel, useful, and not obvious in light of current technology.

- Plants that are reproduced asexually (by means other than from seed), such as hybrid or genetically engineered plants, are patentable in the United States, as are genetically engineered (or cloned) microorganisms and animals.
Patent Infringement
If a firm makes, uses, or sells another's patented design, product, or process without the patent owner's permission, it commits the tort of patent infringement.

Patent infringement may occur even though the patent owner has not put the patented product in commerce.

Patent infringement may also occur even though not all features or parts of an invention are copied. (To infringe the patent on a process, however, all steps or their equivalent must be copied.)

Foreign firms can apply for and obtain U.S. patent protection on items that they sell within the United States, just as U.S. firms can obtain protection in foreign nations where they sell goods.

a general rule, no patent infringement occurs under U.S. law when a patented product is made and sold in another country.
Remedies for Patent Infringement
If a patent is infringed, the patent holder may sue for relief in federal court.

The patent holder can seek an injunction against the infringer and can also request damages for royalties and lost profits. In some cases, the court may grant the winning party reimbursement for attorneys' fees and costs.

If the court determines that the infringement was willful, the court can triple the amount of damages awarded (treble damages).

In 2006, however, the United States Supreme Court ruled that patent holders are not automatically entitled to a permanent injunction against future infringing activities.

According to the Supreme Court, a patent holder must prove that it has suffered irreparable injury and that the public interest would not be disserved by a permanent injunction.

This decision gives courts discretion to decide what is equitable in the circumstances and allows them to consider the public interest rather than just the interests of the parties.

Actual damages are based on the harm caused to the copyright holder by the infringement, while statutory damages, not to exceed $150,000, are provided for under the Copyright Act.
copyright
The exclusive right of an author or originator of a literary or artistic production to publish, print, sell, or otherwise use that production for a statutory period of time.

an intangible property right granted by federal statute to the author or originator of certain literary or artistic productions.

The Copyright Act of 1976 governs copyrights.

Works created after January 1, 1978, are automatically given statutory copyright protection for the life of the author plus 70 years.

For copyrights owned by publishing companies, the copyright expires 95 years from the date of publication or 120 years from the date of creation, whichever is first.

For works by more than one author, the copyright expires 70 years after the death of the last surviving author.

Copyrights can be registered with the U.S. Copyright Office (www.copyright.gov) in Washington, D.C.

A copyright owner no longer needs to place a © or Copr. or Copyright on the work, however, to have the work protected against infringement.
Chances are that if somebody created it, somebody owns it.

copyright owners are protected against the following:

1. Reproduction of the work.
2. Development of derivative works.
3. Distribution of the work.
4. Public display of the work.
What Is Protected Expression?
Works that are copyrightable include books, records, films, artworks, architectural plans, menus, music videos, product packaging, and computer software.

To be protected, a work must be "fixed in a durable medium" from which it can be perceived, reproduced, or communicated.

Protection is automatic.

Registration is not required.

Section 102 of the Copyright Act explicitly states that it protects original works that fall into one of the following categories:

1. Literary works (including newspaper and magazine articles, computer and training manuals, catalogues, brochures, and print advertisements).
2. Musical works and accompanying words (including advertising jingles).
3. Dramatic works and accompanying music.
4. Pantomimes and choreographic works (including ballets and other forms of dance).
5. Pictorial, graphic, and sculptural works (including cartoons, maps, posters, statues, and even stuffed animals).
6. Motion pictures and other audiovisual works (including multimedia works).
7. Sound recordings.
8. Architectural works.
Section 102 Exclusions
It is not possible to copyright an idea.

Section 102 of the Copyright Act specifically excludes copyright protection for 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."

What is copyrightable is the particular way in which an idea is expressed.

Whenever an idea and an expression are inseparable, the expression cannot be copyrighted.

Generally, anything that is not an original expression will not qualify for copyright protection.

Facts widely known to the public are not copyrightable.

Page numbers are not copyrightable because they follow a sequence known to everyone.

Mathematical calculations are not copyrightable.

for the design of a useful article to be copyrightable, the sculptural features of the article (the way it looks) must be separate from the article's utilitarian (functional) purpose.
Compilations of Facts
are copyrightable

Under Section 103 of the Copyright Act, a compilation is a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.

The key requirement for the copyrightability of a compilation is originality.

The White Pages of a telephone directory do not qualify for copyright protection because they simply list alphabetically names and telephone numbers.

The Yellow Pages of a directory can be copyrightable, provided that the information is selected, coordinated, or arranged in an original way.
The "Fair Use" Exception
An exception to liability for copyright infringement is made under the "fair use" doctrine.

In certain circumstances, a person or organization can reproduce copyrighted material without paying royalties (fees paid to the copyright holder for the privilege of reproducing the copyrighted material).

Section 107 of the Copyright Act provides as follows:

T]he fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by [Section 106 of the Copyright Act], 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—

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4. the effect of the use upon the potential market for or value of the copyrighted work.
The First Sale Doctrine
section 109(a) of the Copyright Act—also known as the first sale doctrine—provides that "the owner of a particular copy or phonorecord lawfully made under [the Copyright Act], 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."

In other words, once a copyright owner sells or gives away a particular copy of a work, the copyright owner no longer has the right to control the distribution of that copy!!!!

example: Miranda buys a copyrighted book, such as The Hunger Games by Suzanne Collins. She can legally sell it to another person.
the Computer Software Copyright Act (1980_
which amended the Copyright Act to include computer programs in the list of creative works protected by federal copyright law.

Generally, copyright protection extends to those parts of a computer program that can be read by humans, such as the "high-level" language of a source code. Protection also extends to the binary-language object code, which is readable only by the computer, and to such elements as the overall structure, sequence, and organization of a program.

Not all aspects of software are protected, however. Courts typically have not extended copyright protection to the "look and feel"—the general appearance, command structure, video images, menus, windows, and other screen displays—of computer programs.
trade secret
A formula, device, idea, process, or other information used in a business that gives the owner a competitive advantage in the marketplace.

The law of trade secrets protects some business processes and information that are not or cannot be protected under patent, copyright, or trademark law against appropriation by a competitor.

information of commercial value

Trade secrets may include customer lists, plans, research and development, pricing information, marketing techniques, and production methods—anything that makes an individual company unique and that would have value to a competitor.

there are no registration or filing requirements for trade secrets, trade secret protection may be well suited for software.) Of course, the secret formula, method, or other information must be disclosed to some persons, particularly to key employees. Businesses generally attempt to protect their trade secrets by having all employees who use the process or information agree in their contracts, or in confidentiality agreements, never to divulge it.
State and Federal Law on Trade Secrets
Under Section 757 of the Restatement of Torts, those who disclose or use another's trade secret, without authorization, are liable to that other party if:

1. They discovered the secret by improper means, or
2. Their disclosure or use constitutes a breach of a duty owed to the other party.
Uniform Trade Secrets Act
which has been adopted in forty-seven states.
Economic Espionage Act
which made the theft of trade secrets a federal crime.
Trade Secrets in Cyberspace
Today's computer technology undercuts a business firm's ability to protect its confidential information, including trade secrets. For instance, a dishonest employee could e-mail trade secrets in a company's computer to a competitor or a future employer. If e-mail is not an option, the employee might walk out with the information on a flash pen drive.

A former employee's continued use of a Twitter account after leaving the company may be the grounds for a suit alleging misappropriation of trade secrets.
International Protections
1. the Berne Convention

2. the Trade-Related Aspects of Intellectual Property Rights (known as the TRIPS agreement)

3. the Madrid Protocol

4. the Anti-Counterfeiting Trade Agreement
The Berne Convention (1989)
(163)
an international copyright agreement, if a U.S. citizen writes a book, every country that has signed the convention must recognize her or his copyright in the book. Also, if a citizen of a country that has not signed the convention first publishes a book in one of the 163 countries that have signed, all other countries that have signed the convention must recognize that author's copyright. Copyright notice is not needed to gain protection under the Berne Convention for works published after March 1, 1989.
The TRIPS Agreement (1994)
(>100)
Representatives from more than 100 nations signed the TRIPS agreement in 1994.

The agreement established, for the first time, standards for the international protection of intellectual property rights, including patents, trademarks, and copyrights for movies, computer programs, books, and music.

The TRIPS agreement provides that each member country of the World Trade Organization must include in its domestic laws broad intellectual property rights and effective remedies (including civil and criminal penalties) for violations of those rights.

Generally, the TRIPS agreement forbids member nations from discriminating against foreign owners of intellectual property rights (in the administration, regulation, or adjudication of such rights). In other words, a member nation cannot give its own nationals (citizens) favorable treatment without offering the same treatment to nationals of all other member countries.
The Madrid Protocol (2003)
(86)
an international treaty that has been signed by 86 countries.

Under its provisions, a U.S. company wishing to register its trademark abroad can submit a single application and designate other member countries in which the company would like to register its mark.

The treaty was designed to reduce the costs of international trademark protection by more than 60 percent.

Although the Madrid Protocol may simplify and reduce the cost of trademark registration in foreign countries, it remains to be seen whether it will provide significant benefits to trademark owners. Even with an easier registration process, there are still questions as to whether all member countries will enforce the law and protect the mark.
The Anti-Counterfeiting Trade Agreement (ACTA) (2011)
In 2011, Australia, Canada, Japan, Korea, Morocco, New Zealand, Singapore, and the United States signed the Anti-Counterfeiting Trade Agreement (ACTA), an international treaty to combat global counterfeiting and piracy.

The members of the European Union, Mexico, Switzerland, and other nations that support ACTA are still developing domestic procedures to comply with its provisions.

Once a nation has adopted appropriate procedures, it can ratify the treaty.

Goals:
- to increase international cooperation, facilitate the best law enforcement practices, and provide a legal framework to combat counterfeiting.
- ACTA applies not only to counterfeit physical goods, such as medications, but also to pirated copyrighted works being distributed via the Internet. The idea is to create a new standard of enforcement for intellectual property rights that goes beyond the TRIPS agreement and encourages international cooperation and information sharing among signatory countries.

Border Searches"
- Under ACTA, member nations are required to establish border measures that allow officials, on their own initiative, to search commercial shipments of imports and exports for counterfeit goods. The treaty neither requires nor prohibits random border searches of electronic devices, such as laptops, tablet devices, and smartphones, for infringing content. If border authorities reasonably believe that any goods in transit are counterfeit, the treaty allows them to keep the suspect goods unless the owner proves that the items are authentic and noninfringing.
- The treaty allows member nations, in accordance with their own laws, to order online service providers to furnish information about (including the identity of) suspected trademark and copyright infringers.
The Broad Range of Trademarks and Service Marks

(((supplemental)))
Catchy Phrases—Certain brands have established phrases that are associated with them, such as Nike's "Just Do It!" As a marketing manager for a competing product, you will have to avoid such catchy phrases in your own marketing program. Note, though, that not all phrases can become part of a trademark or service mark. When a phrase is extremely common, the courts normally will not grant trademark or service mark protection to it.

Abbreviations—The public sometimes abbreviates a well-known trademark. For example Budweiser beer is known as Bud and Coca-Cola as Coke. As a marketing manager, you should avoid using any name for a product or service that closely resembles a well-known abbreviation, such as Koke for a cola drink.

Shapes—The shape of a brand name, a service mark, or a container can take on exclusivity if the shape clearly aids in product or service identification. For example, just about everyone throughout the world recognizes the shape of a Coca-Cola bottle. As a marketing manager, you would do well to avoid using a similar shape for a new carbonated drink.

Ornamental Colors—Sometimes color combinations can become part of a service mark or trademark. For example, FedEx established its unique identity with the use of bright orange and purple. The courts have protected this color combination. The same holds for the black-and-copper color combination of Duracell batteries.

Ornamental Designs—Symbols and designs associated with a particular mark are normally protected. Marketing managers should not attempt to copy them. Levi's places a small tag on the left side of the rear pocket of its jeans. Cross uses a cutoff black cone on the top of its pens.

Sounds—Sounds can also be protected. For example, the familiar roar of the Metro-Goldwyn-Mayer (MGM) lion is protected.
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