Originally published in Spring 2010
Article by John S. Paniaguas1 and Craig William Mandell2
Previously published in the DePaul Journal of Art, Technology & Intellectual Property Law
I. INTRODUCTION
There is arguably no more important asset for a company than its intellectual property. It is often the result of years of labor and millions, or even billions, of dollars in investments. It is also used to symbolize a company's reputation and good will in a market. The most recognized symbols, art, and characters in the world are often owned by some entity as intellectual property.
Like any asset, intellectual property has to be managed properly for it to attain its full value. This is especially true in high-tech industries where poor management of intellectual property rights and technology assets can result in a decrease in efficiencies and quickly set a firm behind its competitors. This article will explain the basics behind the different intellectual property legal doctrines and demonstrate how technology firms can best use these doctrines to manage and protect their intellectual property.
This article provides a brief introduction to Intellectual Property and how it can be used to strategically protect technology assets.
One objective of this article is to provide the reader with a basic working knowledge of Intellectual Property law, both within and outside of the United States. Another objective of the article is to focus on using Intellectual Property to protect so called "high technology" assets. High technology assets primarily include electronic and computer related assets. Protection of business methods is also covered since business methods span the entire spectrum of technology, including high technology. Life sciences are intentionally left outside the scope this article.
II. BACKGROUND: WHAT IS INTELLECTUAL PROPERTY?
"Intellectual property" is a term used to identify and describe a group of interrelated legal doctrines that generally provide "authors" and "inventors" exclusive property rights over their "writings" and "discoveries."3 Intellectual Property protection may stem from various doctrines, such as federal and state laws concerning patents, copyrights, trademarks, unfair competition, trade secrets, or publicity rights. This section will briefly outline the purpose behind these doctrines and illustrate the differences between each of these doctrines.
A. Policy Issues Behind Intellectual Property Rights and Protections
In the United States, intellectual property laws are designed to promote and encourage a diverse, plentiful and competitive intellectual marketplace. All U.S. intellectual property laws are drafted with this general purpose in mind. Underlying this general utilitarian purpose are two seemingly contradictory sub-policies that lawmakers must balance when drafting and enforcing intellectual property laws.
1. Expanding the Pie: Providing Incentives for Creativity
Intellectual property laws seek to promote creativity by giving authors and inventors exclusive property rights in the useful, novel, or original works.4 Such property rights provide incentives to create by allowing authors and inventors to reap the benefits of their labor or investments. For example, pharmaceutical companies would have little incentive to invest time, labor and capital into researching and developing new drugs if they were not given the opportunity to recoup, and profit, from this investment. By allowing authors and inventors to reap the benefits of their creative investments, intellectual property law encourages ingenuity, which, in turn, results in a greater variety of products and services in the marketplace.5
2. Promoting Competition
Intellectual property laws also are drafted in accordance with the laisse-faire policy of enlarging public access to new products and services.6 It may seem counterintuitive to promote competition by granting monopoly rights to authors and inventors, but such monopoly rights are typically temporary and provided in a manner that promotes public access to the protected property.
For example, U.S. patent laws only offer protection to works for twenty years after their filing date – i.e., the date the patent application is filed with the United States Patent And Trademark Office.7 After this twenty-year term, the invention enters the public domain: at this point, each member of the public is free to reproduce and use the product. Likewise, exclusive patent protections are only granted if the inventor agrees to publish the product's primary purpose, how it is used, and how it is created.8 In this way, competitors can study the new product so that they are able to (1) create a new and improved version, or (2) reproduce the product once it enters the public domain.
Intellectual property law – and in particular trademark and unfair competition law – also promotes competition by allowing companies to generate public goodwill and preventing competitors from getting ahead by using unethical business tactics. For example, trademark law grants companies exclusive rights to those symbols and indicia that signal what products are made by that company. On this basis, trademark law makes it easier for consumers to distinguish between similar products. This encourages companies to put forth the best possible product; otherwise, consumers may associate that company's trademark with another company's inferior goods or services.
B. Sources of Regulation for Intellectual Property
1. Federal Powers
Congress draws its power to create and enforce Federal copyright and patent laws from Article 1, § 8 of the U.S. Constitution.9 Meanwhile, Congress draws its power to create and enforce trademark and unfair competition laws from the Commerce Clause which gives Congress broad authority to regulate interstate commerce.10
2. State Powers
States are also given authority to pass intellectual property regulations under the Tenth Amendment of the U.S. Constitution, which sets forth that "[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States . . . ."11 As such, the states are free to provide Intellectual Property protections if they do not conflict with federal Intellectual Property regulations. All state intellectual property laws that directly conflict with federal intellectual property regulations are "prohibited" and, therefore, preempted – voided by federal law – by the U.S. Constitution's Supremacy Clause.12 For example, a plaintiff cannot receive exclusive patent-like protections to a product design under state unfair competition laws if that design is not patentable.13
III. INTELLECTUAL PROPERTY SUBGROUPS
Intellectual property law recognizes that in order to best promote the above-listed policies, different intangible works must be subject to different protections and requirements. For example, it is generally more important for utilitarian products, such as prescription drugs and business methods, to enter the public domain at an earlier time than artistic works. Thus, the patent laws provide a shorter monopoly term – only twenty years for utility patents – while the copyright laws provide a longer term – life of the author plus seventy years – because, unlike the former, copyrights do not protect functional products. This section will describe the features and requirements of the various intellectual property doctrines and explain how they conform to the policy considerations listed above.
A. Patent Law
Patent law generally imposes the most rigid requirements upon and grants the shortest monopoly terms to intellectual property owners. Federal law provides three kinds of patents for inventors: utility patents, design patents, and plant patents. This article will focus primarily on utility patents, as they are by far and away the most common type of patent issued.
First and foremost, utility patents only cover the functional aspects of an asset and provide protection for twenty (20) years from the filing date.14 In order to receive the benefits of this monopoly, inventors must agree to publish information on how to make and use the product.
For an invention to be granted patent protection it must: (1) qualify as patentable subject matter under 35 U.S.C. § 101; (2) be novel under 35 U.S.C. § 102; and (3) be non-obvious under 35 U.S.C. § 103.15 In general, a patent represents patentable subject matter if it falls within one of the following enumerated categories: (1) a process; (2) a machine; (3) an article of manufacture; and (4) a composition of matter.16 Meanwhile, the novelty requirement, set forth in § 102, makes sure that inventions already in the public domain do not get patent protection. This restriction is meant to encourage inventors to immediately patent their inventions. Specifically, Section 102(a) provides that a patent is invalid if the invention was known, used, published, or patented in this or another country before it is filed with the USPTO.17 Additionally, inventions cannot be publicly used or sold more than a year before its filing date.18
The non-obvious requirement, set forth in § 103, provides that a patent is invalid if the invention would have been obvious to a person having ordinary skill in the pertinent art as it existed when the invention was made. To make this determination, courts assess three different factual issues: (1) the scope and content of the pertinent prior art; (2) differences between the invention at issue and pertinent prior art; and (3) the degree of skill among those ordinarily skilled in the pertinent art.19
B. Copyright Law
The purpose of copyright law is to create an incentive for authors to produce artistic works by granting temporary property rights to "original works of authorship."20 Original works of authorship include: literary works (including computer software),21 musical works, dramatic works, choreographic works, pictorial works, audiovisual works, sound recordings, and architectural works.22 To receive copyright protection, a work of authorship must (1) exhibit a "modicum of creativity," (2) be fixed in a tangible medium of expression, and (3) not be functional.23
17 U.S.C. § 106 of the Copyright Act provides authors of copyrightable works the exclusive rights: (1) to reproduce the work, (2) to prepare derivative works, (3) to distribute the work, (4) to publicly perform the work,24 (3) to publicly display the work,25 and (4) for sound recordings only, to perform the work publicly through digital audio transmission.26 These rights are conferred upon the work's author by default but can be assigned or leased to other parties.27 Violation of any of these rights constitutes direct copyright infringement under 17 U.S.C. § 501 of the Copyright Act.28
Copyright exists automatically upon creation of an original work of authorship. While authors may register the works with the Copyright Office, such a registration only creates a presumption of protectability. Although registration is not required, federal copyright law offers incentives, in the form of statutory damages, attorney's fees, and a presumption of validity, to entice authors to register their works. In the end, the ultimate determination of whether a work is copyrightable is left up to the courts.
C. Trademark Law
Trademark law allows individuals and entities to develop and retain public good will in their goods and services by offering monopoly rights for source identifying marks, symbols and other indicia. The purpose of trademark enforcement is to ensure that consumers can rely on trademarks when making purchasing decisions by prohibiting competitors from using marks in a way that confuses the public about the source of the goods or services.29
1. Types of Marks
Federal trademark law is governed by the Lanham Act.30 The Lanham Act provides protection for a number of different types of marks including: (1) trademarks (source identifying marks for goods),31 (2) service marks (source identifying marks for services),32 and (3) trade dresses (includes source identifying product packaging and designs).33 To receive protection under the Lanham Act, a mark must be (1) capable of identifying the source of the product or service at issue and (2) non-functional.34
2. Distinctiveness
Whether trademark protection extends to a proposed mark is tied to the mark's distinctiveness.35 Courts classify marks according to the following four categories of increasing distinctiveness: (1) generic; (2) descriptive; (3) suggestive; and (4) arbitrary (or fanciful).36 Marks that fall into the latter two categories are automatically protected because they are "inherently distinctive" – the marks' "intrinsic nature serves to identify a particular source."37 Generic and descriptive marks, on the other hand, are not "inherently distinctive."
Descriptive marks, since they are not "inherently distinctive," are only protectable if they acquire "secondary meaning." Such secondary meaning is achieved when, in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself.38 Proof of long and continuous use of a mark in connection with a product or service in a given market or geographical area constitutes circumstantial evidence of secondary meaning.39 When determining whether a mark is descriptive or suggestive "[a] helpful rule of thumb is that if the mark imparts information directly, it is descriptive, but if it stands for an idea which requires some operation of the imagination to connect it with the goods, it is suggestive."40
Generic marks that describe the goods upon which they are used are the least distinctive and are never protectable for those goods.41 For example, "pizzeria" can never be a protectable trademark for a restaurant that merely serves pizza.42 Other examples include, "aspirin," and "yo-yo," because they qualify as generic descriptions of the goods they are used on.
3. Acquiring Ownership of a Mark
To acquire ownership of a trademark, one must be the first to use the mark in commerce and continue to use it in connection with the product or service offered.43 Thus, an individual who registers a trademark may not have complete ownership of that mark if another individual has used it first in commerce. Furthermore, the mark must be continuously used; here, a mark is "abandoned" and no longer protectable if its owner (1) discontinues use of the mark or (2) licenses the right to use the mark to third parties without adequate supervision.44
Federal or state registration is not required to own a protectable mark. Section 43(a) provides civil remedies for infringement of a valid, unprotected mark.45 However, there are advantages to having a mark registered on the United States Patent and Trademark Office's (USPTO) Principal Register. In particular, registration of a trademark provides: (1) a presumption of validity, (2) national protection against use of the mark,46 and (3) the right of assistance from the U.S. Customs Service in preventing importation of infringing products.47
4. Trade Dress
A protectable trade dress constitutes the distinctive combination of features in product packaging or designs that impact a consumer's ability to identify or distinguish the product's source.48 Unlike product packaging trade dress – which can include the color, design or artwork used in a product package – product design trade dress can never be inherently distinctive.49
A product design trade dress cannot be protected if it is functional.50 This restriction is put in place to promote competition and prevent individuals from avoiding the more stringent patent requirements for utilitarian products.51 When determining whether a product design is too functional for trade dress protection, the courts apply the following two-part test: (1) is the design essential to the use or purpose of the product or does the design affect the cost or quality of the product; if so, (2) would exclusive use of the product put competitors at a severe, non-reputational, disadvantage.52 If the answer to both questions is "yes" then the product design is too functional for trade dress protection.
D. Trade Secrets
The Uniform Trade Secrets Act defines a trade secret as "information, including a formula, pattern, compilation, program, device, method, technique, or process" that (1) derives economic value from the fact that it is not generally known or readily ascertainable; and (2) is subject to reasonable efforts to maintain its secrecy.53 If something qualifies as a trade secret under the UTSA, businesses can prevent their employees and agents from divulging trade secrets to others and prohibit competitors from misappropriating these secrets.
Since trade secret protection is perpetual, businesses often protect their intellectual property using trade secret law when the "know-how" is difficult to obtain or reverse engineer. For example, Coca-Cola is not going to seek a patent to protect for its cola formula, because such protection would require publication of the formula and only last twenty years from the filing date. Instead, Coca-Cola relies on trade secret law to protect its formula.
Acquisition of a trade secret constitutes illegal misappropriation in the following situations: (1) breach of a duty of confidence (such as a breach of a confidentiality agreement); (2) continued disclosure of a trade secret after notice of its secrecy; (3) acquisition or disclosure of a trade secret through "improper means" (such as through fraud or theft); and (4) use or disclosure of a trade secret after notice that it was acquired through improper means.54
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Footnotes
1.J.D. DePaul University College of Law (1982); B.S.E. Purdue University (1973). John is a Partner in the Intellectual Property Department of Katten Muchin Rosenman LLP where he specializes in high technology Intellectual Property strategic planning and patent prosecution. John is an Adjunct Professor of Law at DePaul College of Law where he teaches Advanced Patent Law. John has also taught introductory Patent Law at DePaul College of Law. John is the past chairman of the Center of Intellectual Property and Information Technology (CIPLIT) at DePaul College of Law and currently serves as a Director. The views set forth herein are the author's personal views and are not the views of Katten Muchin Rosenman LLP or the DePaul College of Law.
2.J.D. DePaul University College of Law (2007); B.A., University of Wisconsin – Madison (2004). Craig William Mandell practices commercial litigation, with a primary focus on intellectual property, at the Chicago law firm Hinkhouse Williams Walsh LLP (www.hww-law.com). The views set forth herein are the author's personal views and not those of Hinkhouse Williams Walsh LLP.
3.U.S. CONST. art. 1, § 8 ("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").
4.See Kewanne Oil Co. v. Bicron Corp., 416 U.S. 470, 480 (1974) ("The patent laws promote this progress by offering a right of exclusion for a limited period as an incentive to inventors to risk the often enormous costs in terms of time, research, and development."); Silvers v. Sony Pictures Entm't, Inc., 402 F.3d 881, 894 (9th Cir. 2005) (stating that the plaintiff "as the creator, is the person for whom the copyright system is designed to provide incentives for more creations").
5.Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 144 (1989) (commenting that Congress struck a balance "in the federal patent statute between encouragement of invention and free competition").
6.TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 28 (2001) ("protection for trade dress exists to promote competition"); Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1352 (Fed.Cir.1999) ("The patent and antitrust laws are complementary in purpose in that they each promote innovation and competition." ) (citation omitted); G.S. Rasmussen & Assocs., Inc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 904 (9th Cir. 1992) ("Congress has balanced innovation incentives against promoting free competition . . . ").
7.35 U.S.C. § 154 (2006) (setting forth that a patented work is protected for "a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States"); see also Brulotte v. Thys Co., 379 U.S. 29, 31 (1964) ("'The right to make, the right to sell, and the right to use 'may be granted or conferred separately by the patentee.' But these rights become public property once the 17-year period expires.") (citation omitted).
8.See 35 U.S.C. § 154.
9.U.S. CONST. art. 1, § 8, cl.8.
10.U.S. CONST. art. 1, § 8, cl. 3 (granting Congress, inter alia, the power "To regulate Commerce . . . among the several States").
11.U.S. CONST. amend X.
12.U.S. CONST. art. VI, cl 2 ("[t]his Constitution, and the Laws of the United States . . . shall be the supreme Law of the land; and the Judges in every State shall be bound thereby . . . .").
13.See Kewanne Oil Co., 416 U.S. at 480.
14.A design patent protects, for fourteen (14) years "the non-functional aspects of an ornamental design seen as a whole and as shown in the patent." PHG Techs., LLC v. St. John Cos., Inc., 529 F. Supp. 2d 852, 862 (M.D. Tenn. 2007) (citing Amini Innovation Corp. v. Anthony California, Inc., 439 F.3d 1365, 1370 (Fed.Cir.2006)).
15.Intn'l Olympic Comm. v. San Francisco Arts & Athletics, 789 F.2d 1319, 1322 n.3 (9th Cir 1986). A patent application must also satisfy various patent description requirements such as the best mode requirement that the patent "specification . . . shall set forth the best mode contemplated by the inventor of carrying out his invention." 35 U.S.C. § 112.
16.35 U.S.C. § 101 ("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 . . . .").
17.35 U.S.C. § 102(a) (setting forth that a person shall be entitled to a patent unless "the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent").
18.35 U.S.C. § 102(b) (setting forth that a person shall be entitled to a patent unless "the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States").
19.Graham v. John Deere Co., 383 U.S. 1, 17 (1966).
20.See Feist Publ'ns Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991).
21.Lotus Dev. Corp. v. Borland Intn'l., Inc., 49 F.3d 807, 813 n.5 (1st Cir. 1995).
22.17 U.S.C. § 102(a) (2006).
23.Feist Publications Inc, 499 U.S. at 361-62.
24.This right does not apply to graphic or pictorial works, sound recordings, sculptural works, or architectural works. 17 U.S.C. § 106.
25.This right does not apply to sound recordings or architectural works. Id.
26.Id.
27.17 U.S.C. § 201 (though "[c]opyright in a work protected under this title vests initially in the author or authors of the work . . . ownership of a copyright may be transferred in whole or in part by any means of conveyance or by operation of law").
28.17 U.S.C. § 501 (setting forth that "[a]nyone who violates any of the exclusive rights of a copyright owner . . . is an infringer of the copyright").
29.K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 313 (1988).
30.15 U.S.C. § 1051, et seq. The Lanham Act is a federal statute, originally enacted in 1946, that regulates the use of trademarks and prohibits a number of unethical commercial activities such as trademark infringement, trademark dilution, false advertising and false designation of origin.
31.15 U.S.C. § 1052.
32.15 U.S.C. § 1053.
33.See 15 U.S.C. § 1125.
34.See TrafFix, 532 U.S. at 28-29.
35.Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210 (2000); Retail Services, Inc. v. Freebies Publ'g, 364 F.3d 535, 538 (4th Cir. 2004).
36.Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976).
37.Samara Bros., Inc., 529 U.S. at 210 ("The courts have held that "fanciful and arbitrary" marks ['Camel' cigarettes], and 'suggestive marks' ['Tide' laundry detergent] are inherently distinctive.").
38.Id. at 210; see also Igloo Products Corp v. Brantex, Inc., 202 F.3d 814, 816 (5th Cir. 2000); E.T. Browne Drug Co. v. Cococare Prods., Inc., 538 F.3d 185, 198 (3d Cir. 2008); Quicksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 760 (9th Cir. 2006).
39.Gift of Learning, Inc. v. TGC, Inc., 329 F.3d 792, 801 (11th Cir. 2003); FS Servs., Inc. v. Custom Farm Servs., Inc., 471 F.2d 671, 673 (7th Cir. 1972).
40.PETER TOREN, INTELLECTUAL PROPERTY AND COMPUTER CRIMES, §401 at 4-3n.1 (2003) (internal quotation marks omitted); see also Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1528 (4th Cir.1984); Union Carbide Corp. v. Ever-Ready, Inc., 531 F.2d 366, 379 (7th Cir.1976).
41.Union Nat'l Bank of Tex., Laredo, Tex. v. Union Nat'l Bank of Tex., Austin, Tex., 909 F.2d 839, 844 (5th Cir.1990) ("Generic terms are never eligible for trademark protection."); A.J. Canfield Co. v. Honickman, 808 F.2d 291, 297 (3d Cir.1986) (stating that "if we hold a designation generic, it is never protectable").
42.Accord Pizzeria Uno, 747 F.2d at 1528 (stating that the term "Pizzeria" in the mark "Pizzeria Uno" must be disclaimed as unprotectable because it is generic").
43.Dep't of Parks and Recreation for Cal. v. Bazaar del Mundo, Inc., 448 F.3d 1118, 1125-26 (9th Cir. 2006).
44.15 U.S.C. § 1127.
45.15 U.S.C. §1125(a)(1) (setting forth that "any person" who "uses in commerce any word term, name, symbol, or device . . . shall be liable in a civil action by any person who believes that he or she is or likely to be damaged by such act").
46.Unregistered marks are only protected against unauthorized and confusing use of a similar mark in the same geographical market.
47.USPTO, Trademark FAQs, http://www.uspto.gov/faq/trademarks.jsp (last visited Feb. 10, 2010).
48.Samara Bros., 592 U.S. at 210.
49.Id. at 214 (holding that product designs can never be inherently distinctive because there are doubts as to whether consumers ever rely on product features to indicate source, and because of anticompetitive concerns arising out of granting perpetual trade dress protections in product designs).
50.TrafFix, 532 U.S. at 29.
51.Id.
52.Id. at 32.
53.Unif. Trade Secrets Act (UTSA) § 1(4) (amended 1985), 14 U.L.A. 538 (2005).
54.Id. at § 1(2).
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