IP Colorado Ohm Fall2011

8/3/2019 IP Colorado Ohm Fall2011

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Intro to IP Outline, University of Colorado, Ohm Fall 2011 1

School: University of Colorado Law School

Professor: Paul, OhmCourse: Introduction to IP, Fall 2011

Textbook: Merges, Menell, and Lemley's Intellectual Property in the New Technological Age (5th ed.

2010).


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Intro to IP Outline

Table of Contents

TRADE SECRET ............................................................................................................................ 3Element 1: Protectable Subject Matter ...................................................................................................................................3Element 2: Reasonable Efforts To Maintain Secrecy ......................................................................................................4Element 3: Misappropriation.......................................................................................................................................................5Defense: Reverse Engineering ....................................................................................................................................................6

TRADE SECRETS & EMPLOYEES CONTRACTS .............................................................................. 7

PATENTS .................................................................................................................................... 9

Copyright ................................................................................................................................. 17Requirements for CopyrightOriginality & Fixed ....................................................................................................... 17Excluded Subject Matter: The Idea-Expression Dichotomy ..................................................................................... 18OWNERSHIP: Works for Hire & Joint Works................................................................................................................... 19

Works Made For Hire:............................................................................................................................................................... 19Joint Works: (101): .................................................................................................................................................................. 20

INFRINGEMENT (Rights) ............................................................................................................................................................ 20RIGHT TO MAKE COPIES ......................................................................................................................................................... 21THE DISTRIBUTION RIGHT ................................................................................................................................................... 23PUBLIC PERFORMANCE & DISPLAY RIGHTS ................................................................................................................ 23

INDIRECT LIABILITY Third Party Infringement of (two-step analysis) ................................................... 24DEFENSES FAIR USE ............................................................................................................................................................ 25

TRADEMARKS .......................................................................................................................... 28DISTINCTIVENESS (The standard for protection) ........................................................................................................ 28

PRIORITY AND THE REQUIREMENT OF USE (Acquiring Ownership) .......................................................... 30INFRINGEMENT Likelihood-of-Confusion and Dilution of Famous Marks ................................................... 31DILUTION OF FAMOUS MARKS ............................................................................................................................................... 33


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TRADE SECRETS


TRADE SECRETIn General: Trade secrets are defined as information that is (1) economically valuable because it is not

generally knownand(2) is the subject of reasonableefforts to maintain secrecy. They do not grant a set ofexclusive rights like other IP, rather they protect from wrongful access. They are usually protected under statelaw, mostly based on Uniform Trade Secret Act (statutory). There is no registration of a trade secret, no agency

enforcement, and no definite term (just as long as it stays a secret).

Three ELEMENTS of a T/S claim:1. Type of info TS law meant to protect (very broad): (1)Any information that is economically

valuable because it is kept secret AND (2) Must actually be a secret2. P took reasonable precautions to maintain secrecy3. D misappropriated the information (acquired wrongfully) by (1) improper means, OR (2)

Breach of confidence

Element 1: Protectable Subject MatterA. Must be type of information TS designed to protect = confidential information that helps companies

compete in marketplace (customer lists, formula, product design, processes, business plans, and marketing

strategies, know-how, software, key contracts)

1. Valuable Informationthat deriveseconomic value from secrecy;Metallurgical: a compilationor collection of public information may be a trade secret. Even if all the individual elements arenot secrets, the way the P put them together may create independent value. (furnace modificationswere a valuable trade secret because it improved a process, making it cheaper than alternative and

better product, p.39)

2. Costs or effort to develop secret is evidence its valuable: information mustnotbe readilyascertainable by others (i.e, not valuable if could be obtained easily and relatively cheap)Lockean Labor justification: equitable underpinnings of TS law

B. AND, must actually be a secret. = Not generally known or readily ascertainable by others in the industry1. Subjective belief that a secret exist is evidence of a secret: Security measures cost money and

if P believed competitors already knew about the information involved, it would not have

incurred these cost (Metallurgical, reasonable precautions are evidence of secret: hidden frompublic view, restricted access signs, NDAs)

2. BUT,secrecy doesnotneed to be absolute. Allowed to share to a limited extent to furthereconomic interests. Factors: disclosure is sufficiently limited to maintain status as a secret if:

a. Party does not publicly release the secret (Metallurgical, only employees knew thesecret) (cf. to Patents in public domain)

b. Limited disclosure to further economic interests (Metallurgical, info shared withfurnace manufacturers as part of business transactions, by which it expected to profit:

gave license for royalty payments)

c. Confidential relationships: either explicit or implied (Metallurgical, P bears burden ofproving, and failed, but ct still found limited disclosure)

3. POLICY: Known vs. Knowable Debate (what do we mean by secrect? depends on if theunderlying theory for protecting TS is tort law or property rights ):

a. Known: ( friendly) Allows company to protect information that could have beenacquired properly, but was not. (Rohm&Hass, D memorized and sold paint formula, ctheld still a TS even though previously published)

i. Rest of Torts: even if knowable, i.e. you could have gone onto public domainrather than stealing, still will be in trouble because law is the maintenance ofcommercial morality

b. Knowable: ( friendly) once secret is readily available through public sources, it loses allprotection (UTSA)

i. Property Rights: TS is valuable, something we want to incentivize; so if itsknowable then not doing enough of what to incentivize


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TRADE SECRETS


4. Cf. Patent: TS does not require strict novelty (someone else may have already thought of it ormay be using it) only need modicum of originality to separate it from everyday commonknowledge.

a. Patentlaw meant to encourage invention thus, grants exclusive rightsb. S law meant to protect against breach of faith, thus does NOT grant exclusive rights,

rather provides remedy if secret misappropriated

C. SIX FACTORS FOR DETERMINING IF TS (Rst of Torts):1. How widely is the idea or information known outside the business?2. Who within the company knows the idea or information? (should limit disclosure to employees

on a need-to-know basis to perform job, and then get nda)

3. What measures taken to ensure info remains secret?4. How difficult would it be for others properly to acquire or duplicate info?5. How valuable is the idea or information to the claimant and its competitors?6. How much effort or money expended in developing or acquiring the info?

Element 2: Reasonable Efforts To Maintain SecrecyA. TEST: Reasonable amount of precautions under the circumstances depends on a cost/benefit analysis. P

could have taken more precautions, but at a cost. The issue is if the additional benefit in security would

have exceeded the cost.

1. Perfect security is not optimal security (Rockwell, vault, confidentiality Ks, and sign out processto keep piece part drawings secret was enough)But lax and inconsistentprecautions notsufficient to qualify for trade secret protection (ECC, even thoughinformation was not actually

known to outsiders, cts will not provide protection if company itself does not treat info as a secretvaluable enough to take measures to protect)

2. Policy: Precautionsshow secret has value and worth expense of legal remedy; TEST: cost oflitigation < precautions necessary to optimally protect c/a

3. UTSA (statutory) vs. Rest of Torts (c/law)a. UTSA= trade secret is something that is 1) not generally known; and 2) subject of

reasonable efforts to maintain secrecyb. Rest= does not require reasonable precautions; precautions are relevant as evidence of

determining if something qualifies as a secret; If value and secrecy of info is clear, might

not need evidence of specific precautions

B. POLICY: Why require reasonable steps? (depends on justification of TS protection)1. Deterrence (TS is property protected against wrongdoer): P must prove D obtained secret by a

wrongful act OR prove little probability D got through lawful meansa. Evidentiary Significance: greater the precautions taken, more likely obtained wrongfully;

b. RemedialSignificance ofefforts: if info in public domain, then P can lawfully obtainproperty if in hands of someone who committed no wrong to get it

2. Protect TS to stimulate innovation: (property protected against the world)a. Evidentiary significance: Precautions are evidence that the secret is valuable, and its

appropriate for courts to devote resources to protecting;

b. RemedialSignificance: If info was not worth enough for owner to expend resources onprotecting it, then why should the courts provide him with a remedy? (analogy toabandoned property) If the P has allowed the secret to fall into the public domain,

recovery against D would be a windfall

3. Posners Law & Economics: extravagant protection measures would hurt incentives to discovermore efficient methods (cf. Patent:precaution is costly and temporary, so not adequate substitutefor competitiveness of industry)


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TRADE SECRETS


C. FACTORS FOR REASONABLENESS1. Value of the Information: if more valuable, may require spending more to protect2. Need To Disclose Information to Exploit It: employees need to perform job duties. Reasonable

measures may require ensuring trustworthiness or NDA (Ex. if chemical formula or blueprint for

machine: Metallurgical, shared furnace modifications with manufacturer)

3. Limits on the Disclosure of the Information: was it disclosed only when necessary to furtherbusiness purposes, anddid advantages of disclosure outweigh possible risks of further disclosure

4. MeansTaken to Maintain Confidentiality When Disclosure is Made: was a NDA orconfidentiality agreement required prior to disclosure

5. Physical Limitations on Access: physical inaccessibility (fences, locked doors), restricted accessto areas, locked files (Rockwell, vault good, but ECC, informal tours, and public open house: bad)

6. Keeping Records: did they know where copies and kept record of who had access or were or wasextent of disclosure unknown (Rockwell, sign out process for piece part drawings)

7. Notice: Were Employees Informed of Restrictions?: stamping documents Confidential andstatement outlining what is considered secret Even if employees were expected to know

confidential, without explicit notice, info might seem ordinary (ECC, obligation to inform EEcertain info is secret where claimed secret is not obvious;cf. motor specs to a secret formula)

a. Confidentiality procedures signal to others info is secretb. Notice also acts as warning owner will take legal measures to enforce rightsc. Fencing = reasonable precautions are those that put infringer on notice (1st Cir requires

affirmative steps, not merely ordinary discretion)

8. Industry Standard: reasonable care compared to industry practice (ECC, where espionage wasnot common, physical security measures not reasonably needed, but where employee turnover

rate was high, NDAs and other confidentiality procedures reasonably required to reduce risk ofinadvertent disclosure)

9. Overall Security Program: (*strong supportof reasonable measures) did owner have a programin place and substantially comply with program plan? (ECC, lax and inconsistent with NDAs)

a. Inadvertent disclosures and isolated mistakes do NOT nullify reasonableness of program(Rockwell,program reasonable even though did not always enforce requirement thatdrawings be returned or destroyed)

10.Cost ofSecurity Measures: includes indirect costs beyond simply administrative and securitycosts. Restrictions reduce productive use (less happy employees, lost opportunities for more

efficient use) Determining scope of access requires company to weigh many possible risks(of

wrongful loss), costs(security measures, indirect costs) and benefits. (an overall securityprogram is strong evidence because cts are reluctant to second-guessthese company decisions)

Element 3: Misappropriation(make surehave firstestablished a existence of a TSthatcan be misappropriated andPlaintiff mustalways be

ableto identify specific information thatqualifies as TS)

A. In general: misappropriation not same as infringement (nature of the wrong is not infringing anothersexclusive right, but rather improperly gaining or exploiting access to info)

1. Misappropriation= improperly, acquiring, disclosing, or using a TS (Includes using ordisclosing a TS acquired by mistake or accident)2. NOT misappropriation: (DuPont)

a. if put in time and money to discover TS independently, orb. if holder voluntarily discloses, orc. if holder failed to take reasonable precautions (then no trade secret, and thus no

misappropriation, ECS) (lack of security does NOT need to cause disclosure bc no TS)

d. Improper means to acquire information on patented process (no TS, information inpublished patent, i.e. public domain)


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B. BY IMPROPER MEANS1. Can still be improper even if no trespass, tort, or other illegal act, or breach of confidence.

(Can be improper even if only harm caused is to the interest of the TS)

a. Includes acts that violate standards of commercial morality but are otherwise legal(DuPont, airplane spying was misappropriation of secret unpatented process because only

way P could have prevented the espionage was to construct a temporary roof over theconstruction site, too costly)

b. TortTheory: if misappropriation limited to torts, then TS law largely redundant (wouldntneed TS law bc could find protection under tort law)2. TEST: Balance type of thing done with how much it would have cost to prevent: Could

espionage have been reasonably anticipated orprevented? Link to issue of reasonable standards

of security (DuPont)a. Policy: if cost of protections required to prevent would dampen inventiveness, drawing

line at school boy tricks)

b. Note: Does not mean everything hidden from plain view is protected or that all infoobtained through any extra optical extension is forbidden

3. Evidence: Proving misappropriation (p.70)a. Circumstantial evidence of misappropriation:Holden Seeds,proved highly unlikely

hybrid seeds developed independently (genetic similarities) was sufficient even though

plaintiff could NOT prove a specific act

b. Cf. Actual Objective Evidence required: Phelan, speculation of theft based on Dsspeed entering market place was not enough

C. BYBREACHOF DUTY/CONFIDENTIAL RELATIONSHIP [review case notes]1. Confidential relationship can be established under the following circumstances:

a. An explicit agreement, orb. OR, an implied agreement: (1)person to whom the secret was disclosed knew or had

reason to know that the disclosure was intended to be in confidence, AND (2) the other

party to the disclosure was reasonable in inferring that the person consented to an

obligation of confidentiality (Rst3 Unfair Competition)

2. Where there is no express restriction or limitation, a confidential relationship will be implied ifthe D knew and understood that the information accepted wassubject to a limited purpose:(Smith v. Dravo, p.71 Plaintiff disclosed shipping crate design for one purpose only, purchasing

the business, AND D knew and understood this limited purpose (note: not a close case, ct used

language like clear)

Defense: Reverse EngineeringA. Elements of Reverse engineering = (1) obtaining a product by lawful means AND (2) working backward to

find the method by which it was developed; Reverse engineering is an affirmative defense to

misappropriation (note: so is independent invention)

1. To Rebut: P needs to prove D used improper means by showing:a. (1)D actually stole specs,OR

b. (2) reverse engineering impossible, so highly unlikely acquired by proper means (byinference)

2. Kadant, mere speculation that it would be too costly, butnot impossible, is NOT sufficient tosupport inference D actually stole TS or breached confidentiality agreement; Can NOT rely on

inference of improper means if: (1) product sold in public domain (i.e., could be lawfullyacquired) AND (2) reverse engineering was NOTimpossible:

3. BUT Data General, where P tooksignificant steps to protect secrecy of computer programsold on the open market, D may have burden to prove they had legitimate access (Ct foundmisappropriation where secret program embedded in object code, and users signed licensees

agreeing not to disclose to third-parties)


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B. RULE: Basically, If you have something that you are putting into the stream of commerce you have to dealwith this allowance for reverse engineering. There are things you can do to protect the process, but stillgotta deal (Data General)

1. Contracting around? Agreements not to reverse engineer between purchasers and sellers aresometimes enforceable (Cts split) Chicago Locks Case: locksmith went to consumers and had

them reverse engineer to acquire tumbler codes. Ct held info acquired bypropermeans becauseconsumers had legally acquired the locks and had no duty to manufacturer not to disclose. [look

this case back up]2. POLICY: Channeling Doctrine: WHY allow reverse engineering? Because it weakens TS

protection relative to patent protection

C. Typical TS Cases (EE p.445)1. Business v. Former Employee2. Employer v. Next Employer3. Business v. Former Partner or Former Potential Partner4. Inventor v. Buisness5. Business v. Competitor6. Business v. Person Who Makes Info Public

TRADE SECRETS & EMPLOYEES CONTRACTSA. RULE: (C/L) EEs know-how is not TS. (In theory, an ER generally may not inhibit the manner in

which an EE uses his general knowledge, skill, and experience, even if these were acquired during

employment.)BUT competing rights when EE know-how inextricably with ERs TS and EE has animplied duty of confidentiality to protect employers TS based on EE relationship

1. POLICY: Involves clash of rights between Companys right to protect from unfair competitionvs. an Employees freedom to pursue chosen profession) TEST: weigh equity considerationsand public policy (Issues arise when EE know-how is bound up with information that

constitutes employers competitive advantage; thus, implicates countervailing polices )

2. ex. Intangible Customer Lists: issue: client lists are protectable TS, but enjoining employeesfrom calling limits ee mobility)(88-89)

a. Compromise: draw line between ee announcing her departure and actively solicitingoldclients to follow her (

Moss Adams)b. But, if info qualifies for TS protection, an express contract will probably be enforced

according to its terms (MorLife, passage of UTSA cf to above)

B. ABSENCE OF EXPRESS AGREEMENT (NO K):1. Line between EEsgeneral knowledge and skills vs.specific inventions: EE entitled to take his

general knowledge, but cant have specific inventions (Wexler, although chief chemist, nothired to invent so allowed to take formulas he had developed to new job)

2. TEST for Inventions: c/law obligation to assign inventionsa. Hired to Invent then employer owns invention (confidential information)

b. Shop Right If EE invents on ERs time or using its resourcesi. EE owns the invention;

ii. ER compensated w/ a limited, nonexclusive right to practice inventionc. Independent Invention EE invents on own timeoutside of employment

EXPRESS AGREEMENTS (3 Types)

A. Confidentiality Agreements (NDA): Places clear explicit duty on employee not to disclose orimproperly use described confidential information; (Note: if not all recipients of confidential info sign

NDAs, may imply other recipients; are notsubject to implicitobligations of nondisclosure, ECC)

1. Maj RULE: Reasonable K restrictions enforceable even in the absence of a protectable TS (butsee freedom to create statutes);

a. RequiresConsideration: in CO: continued at-will-employment is NOT sufficientconsideration; ER will need to offer more to get EE to sign at later date)


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2. Benefits: EE may already owe an implied c/law duty of confidentiality, but the express agreement(1) strengthens any notice issues and (2) may extend protection beyond just TS (breach of K) ; (3)Also helps prove reasonable precautionary steps

B. Invention Assignments: Gives ER right to IP created by employee while employed;TrailerClauses: acontractual provision that extends assignment to cover inventions made by the employee for a certain time

after employment. Enforceable if reasonable.

C. Noncompetition Agreements: Limit circumstances in which former EEs can compete for customerswith their former Ers(Benefits: avoids having toprove EE actually stole and used TS) c/Law rule:enforceable if reasonable in scope; 4 Types Of State Regimes: (first, ASKwhat j/dto see ifenforceable)

1. (Min RULE, CA) = Invalid based on public policy: Edwards v.Arthur(91): non-competes areunenforceable (presumptively void) except under narrow statutory exceptions; (note: can

prevent EE from using your TS, just cant prevent new job)

a. Exceptions: agrmts ancillary to sale of a business (as long as reasonable)b. Policy: CA values open competition and employee mobility over protection of TS and

other IP. (Saxenian, p.100: effect of non-competes)

2. (Maj RULE, VA)= Reasonable Restraints Test: non-compete is only enforceable if it isreasonable as to duration, geographical area, and type of employment or line of business; Ctsdo not look favorably and will strictly construe against ER. ER has the burden of proving

restraint is reasonable;a. 3-PART TEST = ASK is restraint reasonable from perspective of

i. ER: Is it no greater than is necessary to protect ER?ii. EE: Not unduly oppressive on ability to earn a living?

iii. Third-Party: Sound public policy?b. CTIv. SoftwareArtisans(96): upheld an agreement that prevented EE from competing

w/ ERanywhere in theUSfor 12 months as reasonable (even though no TS or copyrightinvolved) because ER had offices, clients, or prospects in many states throughout country

i. When an EE has access to confidential and TS information crucial to thesuccess of the ERs business, the ER has a strong interest in enforcing acovenant not ot compete because other legal remedies often prove inadequate.

ii. Gateway v. Kelley: Older agreement invalid when company later adopted a lessrestrictive noncompetition provision, because it suggest the older, broader onewas not necessary to protect its interests

iii. ModernEnviron: Invalid where prevented working for a competitor in anycapacity, rather than specifying particular positions ee couldnt take

3. New York = limits enforceability of non-compete agreements to situations where TS are likelyto be used or disclosed if employee is allowed to compete (ReedRoberts)

4. CO = usually are voidexcept in for executives and managers. (professional staff) 8-2-113D. Doctrine Of Inevitable Disclosure OfTs: PepsiCo v. Redmond Pepsi successfully sued to enjoin D,

its former GM, from taking a job at Quaker. Ct held that Pepsi met burden of proving more than just thatskilled employees were taking their skills elsewhere.

1. RULE: A former EE may be enjoined from taking a new job if:a.

(1) He knows the former ERs TS;b. (2) His new job duties are so similar to former position it would be difficult for him notto rely on or use those trade secrets; and

c. (3) The former EE or his new ER cannot be relied on to avoid using the TS2. Policy: (theres something about TS law) Once a TS is disclosed cant take it back, thus an

injunction is required here to fill the gap in TS law (Ct rejected the new employers arg to let himwork for us and wait to see if he discloses, then youll have a c/a for sure)

E. Nonsolicitation Agreements = NO actionable wrong is committed by a competitor who solicits or hiresaway his competitors EEs who are notunder contract, so long as the inducement to leave is not

accompanied by unlawful action.


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PATENTS


PATENTSA. Patent Basics

1. Right created by patent ownership: owner of a patent can prevent others from making, using,selling, offering for sale, or importing (make, use, or sell) the product or process of the patent.

a. NOTE: A patent holder does NOT have the exluscive right to make, use, sell, offer, andimport the invention. Rather,she has the right to exclude others from doing thosethings, not necessarily the right to do them herself.

2. Duration: 20 years from when inventor first sent in his application ( then enters pub domain)3. Negative right: a patent is a negative right and does not by itself authorize the patent owner to

make, use, or sell the product (e.g. a patented drug must still get authorization from the FDA)

4. Blocking patents: the holder of an improvement patent has right to exclude everyone, includingholder of broad patent, from using improvement, but is also barred from the use of theimprovement herself

5. Envelope right: a patent is the only type of IP that a party only owns when the government hasawarded the right (by sending an envelope with the official patent document)

6. Jurisdiction: all patent appeals cases go to Ct of Appeals for the Fed Circuit (created in 19 82)7. Some definitions:

a. Patent examiners:people who work at the Patent and Trademark Office (PTO)b. Patent agents: people who work for law firms doing patent workc. Patent bar: specialized bar that agents and examiners must passd. Patent prosecution: the process of trying to get a patent approved (1 to 4 year process,

average of 2.77 years)

B. TheoriesBehind Patent Law1. Utilitarian: patent law provides an incentive tofuture inventors to create inventions by

promising them a temporary, exclusive right to make, use, or sell their inventions.

2. Economic theory: inventions are public goods that will be under-produced by the markets.Patent law makes inventions private property, ensuring that the market will produce them in moreefficient amounts from societys perspective.

C. 5 Requirements for a Valid Patent: Patent applicants must demonstrate each of five elements:1. Patentable subject matter2. Novelty3. Utility4. Nonobviousness (most important: the ultimate condition of patentability)5. Enablement

Elements of Patentability (5 req for a valid patent)

A. Patentable Subject Matter (4 categories): 101: any process, machine, manufacture, composition ofmatter, or improvement thereof

1. Processa. Business method patents: are permissible, but not if the business method is in fact an

abstract idea (B

ilski, energy hedging is an abstract idea and therefore NO

Tpatentable,SCt refuses to say categorically unpatenable)

i. Examples:Benson (algorithm for converting binary abstract idea), Flook(method of monitoring catalytic conversion, more limited in application than

benson abstract idea),Diehr(method of monitoring rubber curing with a

computer process, b/c it was an application of a law of nature to a new process)

b. Machine or transformation test: an invention is a process and thus patentable subjectmatter if it is tied to a particular machine or if it transforms something into a differentstate or thing (Bilski: a clue or important example)


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i. Not exclusive test: The machine or transformation test is one test, but not theonly test, to determine whether an invention is a process for 101 purposes;

better forindustrialage, might not be so good forinformation age

c. State Street test: an invention is a process only if it leads to a useful, concrete, andtangible result. Maybe not good law anymore afterBilski, but not explicitly overruled.(Breyers concurrence says it's a bad test that has led to absurd patents)

d. Stevens Bilskiconcurrence:business methods should not be patentable because theyare not processes, they were not historically patentable subject matter, and they are notwithin constitutinal purpose of patent law to promote the useful arts because there are

other incentives to create new business methods (first mover, trade secret, efficiency)

e. Preemption &Underlying Policy of patent law: the things which are worth the publicembarrassment of an exclusive patent must outweight the restrictive effect of the limited

patent monopoly Interpret to determine not only what is protected, but also what is

free for all to use

i. Ask: considering process as a whole, does it perform a function with the patentlaws were designed to protect (e.g., transforming or reducing an article to adifferent state or thing).

2. Machine3. Manufacture: might includegenetically engineered bacteria (Chakrabarty, p. 134)4. Composition of matter: includes genetically engineered bacteria (

a. Chakrabarty, genetically engineered bacteria used to treat oil spills patentable becausewas nonnaturally occuring; A product of human ingenuity having a distinctive name,character, and use: A new bacterium w/ different characteristics from any found innature; Potential for significant utility; Not natures handiwork but his own, p. 134)

5. or improvement thereofa. NON-PATENTABLE subject matter: includes laws of nature, physical phenomena,

and abstract ideas.

i. NOTE that Chakrabartys bacteria was not a physical phenomena because itwould not have happened without his intervention (cf.FunkBros, a previouslyunknown natural phenomenon unique combination of bacteria for nitrogen

fixation is NOT patentable,beacuase it was a handiwork of nature: servedends nature originally provided and act independently of any effort of the

patentee, note case, p. 142)

b. RULE: if an invention does NOT fall within one of the three exceptions, then most likelyit is patentable subject matter, statutes categories a broad (Chakrabarty, p. 134)

c. Purification exception to the product of nature doctrine: (gene patents) the gene as itoccurs in nature is NOT patentableBut an isolatedorpurifiedform of the gene is not a

product of nature and substance may be patentable (not just the process of extracting it) iffor all practical purposes it creates a new thing (Parke-Davis, isolated and purified

adrenaline extract is patentable, p. 142)

d. New commercial and therapeutic things: even if substance occurs in nature (genes,hormones, or other chemicals), the purified form more likely to be patentable subject

matter if it is a new thing commercially andtherapeutically, (a corollary to thepurification exception Parke-Davis, p. 142)

e. Moral neutrality: courts do not evaluate the morality of patenting living things or DNAsequences. (gruesom parade of horribles is a policy issue for Congress, Chakrabarty)


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B. Novelty: if an invention is anticipated in the prior art it cannot be patented;1. Invention must be new= (1) must be new when she invented it ; and (2) even if she was first to

invent, once invention becomes public knowledge, she has 1 yr. to file an appliation (old law)

a. THEORY: Patent Law is Great Quid pro quo: Trade off: We give you this 20 yr.monopoly (might not be best for economics) but we do so because you are giving us thisgreat thing: knowledge of your invention If its not novel then trade off falls apart

i. Thus, its not infringement for people to read and try to understand your patent2. Defining prior art (all things published or in public use)

a. Old law: Two ways invention was not novel:i. Use or knowledge: if the invention was known or used by others in the US, it

cannot be patented. (strong corroboration requirement: proved with photos ordocumentation witnesses and oral evidence alone not enough for clear andconvincing standard, Flowertree).

1. use need not be obvious or even accessible to the public to qualify aspublic use, the nonsecret use of a claimed process in the usual courseof producing articles for commercial purposes is a public use.

(Rosaire, use of a process by a few engineers in Nowhere, Texas wasa public prior use, where done openly i.e. he didnt swear everyoneto secrecy and no efforts to conceal from public, p. 210)

2. Secret or experimental prior uses: but, if the only prior use of aninvention was secret or experimental, the invention is still novel

for 102 purposes.

ii. Printed document category: if the invention was patented or described in aprinted publication in the US or a foreign country, it cannot be patented (onlypublic documents count).

iii. But did NOT require absolute novelty: nonpublic use, invention used in anothercountry, or written about w/o publishing woud NOT bar a patent

b. New Law: 102(a): Classifies Prior Art as items patented, described in a printedpublication, or in public use, on sale, or otherwise availableto the public (removed:known or used by others)

i. Expands the scope of potential prior art: If the claimed invention was otherwiseavailable to the public before its effective filing date, it is not novel (with

exceptions, see below)

ii. Catch-all phrase: what does it mean to be otherwise available to the publiciii. On sale and in public use activities no longer limited to the USiv. A third-party application will count as prior art as of its effective filing date once

that application is published or patented 102(a)(2)

3. Reason for novelty requirement: w/o a novelty requirement, we would limit the use of existinginventions and shrink the sphere of public knowledge (relates to basic policy rationale for patents)

4. Critical Date: Invention date effectivefilingdate: removes all verbs to figure out who wasfirst to invent: (lowers litigation costs); Also removed known or used by others in this country:

makes patentees happy: doesnt matter anymore if someone else knew about it; cant sit onknowledge and try to invalidate patent;

a. Known or used otherwise available to the public (What does it mean forknowledge to be available?)

5. Inherency Doctrine: references in prior art also include elements that, although not expresslystate, are necessarily present in the product or process; BUT doctrine limited: a process will not

be anticipated when it occurred only as an accidental and unwitting by-product in someprevious process (Tilghman; but see Ansonia in reading notes)


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PATENTS


C. Utility: an invention must be useful in order to be patented;1. Minimal obstacle: denied only if an invention has absolutely no practical utility (Satisfied

even if only works in an experimental setting and has no proven use in the field, but must actually

work, mightbe useful not enough, Brennan)

2. No hunting licenses: the utility requirement requires that an inventor know the usefulness ofhis invention at the time of application. That is, an inventor cannot patent an invention inanticipation of future usefulness. (Manson, steroid whose homologue was useful but whose own

use had not been identified not patentablenor was the process: until you establish that hesteroid itself is useful for something, a process that creates a product without utitlity is notsufficient p. 167)

a. Other uses: have to show utility but doesn't have to be the fundamental utility; Even if ause that you didnt contemplate arises from the patented process, its still yours even if

much more valuable then you imagined

b. Blocking patents issue: courts are wary of awarding patents to inventions with broadapplicability, such as chemicals, that could be used to block the use of the invention inother contexts (Manson) (e.g. leather treatment substance used to treat AIDS)

3. Substantially useful requirment: an invention must be substantially useful to be patentable. Aninvention used merely to identify something else for which the use has not been identified is not

patentable (In reFisher, EST to identify presence of gene not substantially useful, p. 172)

a. Dissenting argument: ESTs are like microscopes, plus denying patents will makeinventors rely on trade secrets, which are not as good for society.

4. Moral utility: even if purpose is to deceive consumers may nonetheless meet utility requirement,as long as benefit is functional in nature (not only aesthetic or descriptive qualities). (Juicy Whip,

swirly fluid not same as what was dispensed, still useful, making something look like somethingelse. Go to other govt areas if you think this is fraud or to health inspector if you think unsanitary)

D. Non-obviousness(103)1. NEW LAW = 103 Obviousness: Whether the claimed invention as a whole would have been

obvious at the time the invention was made before the effective filing date of the claimedinvention to a person having ordinary skill in the art to which the claimed invention pertains.

Patentability shall not be negated by the manner in which the invention was made..

a. No patent if claimed invention and the prior art are such that the claimed invention as awhole would have been obvious before the effective filing date of the claimed inventionto a person having ordinary skill in the art

b. Considers obviousness as of the effective filing date, not at time invention was made2. Underlying Policy: Things which are worth the public embarrassment of an exclusive patent

must outweigh the restrictive effect of the limited patent (Thomas Jefferson)

a. Jefferson: Patent monopoly was not a natural right; rather it was a reward, andinducement, to bring forth new knowledge Problem: Need to develop some way to

weed out those inventions which would not be disclosed or devised but for theinducement of a patent.

3. Analysis for obviousness(John Deere, slight variation on plow shanks design obvious, p. 235) a.

Step 1. Con

sider the

Scope and content of the prior art

.b. Step 2. Differences between the prior art and the claims at issue

i. whats the problem faced, (e.g. comp clam shell case issue of fastenining and sizerestraints: prior art included cabinets and hinges)

c. Step 3. Level of ordinary skill in the arti. (e.g. would a programmer have found this obvious attime of filing?)

ii. When should PHOSITA be able to put multiple pieces of prior art together?d. Step 4. Consider the three secondary considerations (p.265)

i. Commercial successii. Long-Felt but unsolved needs

iii. Failure by Others


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PATENTS


4. Danger of hindsight bias: the court must evaluate what the PHOSITA would have thoughtbefore seeing the invention in question.

5. Combining references: asks if a researcher who is aware of all the prior art would think to createclaimed invention; ok to analyze combination of ideas from different sources of prior art ;

a. Under 102 (novelty), if a prior art reference does not disclose all the parts of aninvention, it does not anticipate the application and is thus does not a bar

b. However, under 103, a single reference doesn't need to disclose entire invention to bar apatent6. KSR International: an invention that does no more than combine the teachings of prior art into

one new invention is likely to be obvious and not patentable (KSR, adjustable pedal with sensor

on support structure was obvious because it did no more than combine two earlier teachings, p.247). If an invention is predictable based on the prior art, it is likely to be obvious and not

patentable (KSR).

a. TSM test: the old test for obviousness held that an invention was nonobvious if therewere no prior teaching, suggestion, or motivation. KSR finds this test too restrictive and

not the ONLY test, though it is still useful and was not overruled.

b. Person of ordinary creativity: in deciding whether combining prior teachings wasobvious, courts should consider a PHOSITA to be a person of ordinary creativity as well,

notan automaton (cts have flexibility)(KSR, a person of ordinary creativity will lookbeyond the primary purpose of prior art to ways that ordinary art can be adapted to new

purposes)

c. Obvious to try: sometimes a demonstration that a combination of prior art wasobvious to try will be sufficient to demonstrate obviousness (KSR)

E. Enablement: the invention must be described sufficiently that a person trained in the relevant art canreplicate the invention (not covered in class)

F. Statutory Bars to Patents(old)1. NOTE: statutory bars are conceptually distinct from the novelty requirement. Statutory bars are a

loss of right provision that can bar a patent applicant from obtaining a patent because of theapplicants own actions (though others actions can bar him, as well).

2. RULE: (102b) a patent application will be denied if, more than one year prior to theapplication date, the invention

a. was patented in another countryb. was described in aprinted publication, in the US or another country

i. Even an obscure publication will count, as long as it is public (In re Hall,German PhD thesis, p. 216). Also, general library practices will be relied upon to

determine the date the publication was available (In re Hall).

c. or, was known,publicly used, orsold in the US.i. Even limited public uses known by only a few people count (Egbert, public use

where allowed a close friend to wear an invented corset under her clothing, for

some years, p. 220).

d. But NOT experimental uses by the inventor undertaken for purposes of testing theproduct, even if it has public aspects, Elizabeth v. American)

3. Reason for statutory bars: to avoid detrimental reliance i.e. it would be detrimental if othersrelied on an invention before it was patented and then the patentee could sue these others forinfringement


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PATENTS


New Patent Reform: The America Invents Act (AIA)

y NOVELTY: 102. Conditions for patentability; novelty and loss of right to patent: A person shall beentitled to a patent unless

(a)(1) the invention was known or used by others in this country, or2

patented or described in a printedpublication in this or a foreign country,

4or in public use, on sale, or otherwise available to the public

3

before the invention thereof by the applicant for patent the effective filing date of the claimed invention,1

or

(b) 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, or

1. Critical Date: Invention date effectivefilingdate;o Also removes all verbs to figure out who was first to invent: Lowers litigation costs

2. Removed known or used by others in this country: makes patentees happy: doesnt matter anymoreif someone else knew about it; cant sit on knowledge and try to invalidate patent;

o Known or used otherwise available to the public (What does it mean forknowledge to be available?)

3. in public use, or on sale used to be in (b) now that statutory bar section is removed; also added onsale and otherwise available to the public

o Used to be two ways of telling patentee their invention was not novel: Someone knew about it in this country before you invented Someone published this before you invented

o But had (b): once in public knowlege had a grace period of a year: (usually referred tosomething the inventor did; grace period gave them time to raise funds)

4. Publication always applied to foreign, but now Public Use on Sale or otherwise available to thepublic are also world wide

y (b) EXCEPTIONS: for 1 yr. allowed to disclose this thing without destroying novelty of your inventiono What does disclosure mean since its not defined?Patentees NOT happy: had this clear 1 yr. of

things could do like public use or put on sale; now what?

o Whole point of the year was commercialization (meet with VC, etc.), now may lose novelty*TestNote: notgoingto askhow law changed, goingto askhow to apply; Needto master whatwe did and why to seehowitwill affectcase law: Understand who is happy: Patentee orPossibleInfringor?Note: remove verbs -> patentees happy;

add verbs: infringers happy

A. Novelty 102(a): Classifies Prior Art as items patented, described in a printed publication, or in publicuse, on sale, or otherwise availableto the public (see under novelty above)

B. Exceptions 102(b): Narrower Grace Period Disclosures made 1 yr. or less before effective filing datewill NOT count as prior art if: By the inventor; Derived from the inventor, or After the inventor had already

publicly disclosed However, key term disclosure is undefined and it is unclear whether exception

applies to all types of prior art including on sale activities

C. Patent Races and First-to-File: Patent awarded to first to file a patent app; (Likely result in moreprovisional patent apps)

1. Eliminates current 102(g) and issues in determining who was first-to-invent (such asinterferences, and questions of conception, diligence, reduction to practice, abandonment,

suppression, and concealment

2. However, allows for a derivation action in civil court when the first-filer derived their claimedinvention from another 291

a. Only allowed when patent office issues two patents that claim same inventionb. Problem: doesnt define derived; if broad = copyright doctrines

D. No PriorUse Rights:1. Under new law, a prior user potentially liable for infringement2. Under old law, if a prior user is sued for infringement could invalidate patent by claiming he was

actually first to invent


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PATENTS


Patent Infringement and Claim Construction

A. Claim interpretation/claim construction1. De novo review: claim construction is a matter of law and is reviewed de novo by the Federal

Circuit (Phillips, p. 270). (Phillips dissent: this makes the trial court like a file clerk. Litigants canhave a Markman hearing before trial to determine claim construction.)

2. Claim construction defined: the process of determining the meaning and scope of a patent.3. Intrinsic evidence: a court should rely primarily on intrinsic evidence when doing claim

construction (Phillips, baffles as defined within application is the applicable meaning, p. 270).Intrinsic evidence includes the claim itself, the specification (i.e. the entire patent application),

and the prosecution history (in that order) (Phillips).

a. PHOSITA: the relevant point of view is that of the PHOSITA, so intrinsic evidence ismore relevant than extrinsic evidence.

b. The patentee is free to be his own lexicographer. (Phillips)4. Extrinsic evidence: a court should only look to extrinsic evidence if intrinsic evidence is not

helpful. Extrinsic evidence includes dictionaries, encyclopedias, and treatises. (Phillips).

B. Literal Infringement1. All elements rule: in order for an accused invention to literally infringe a patent, the accused

invention must contain each element of a patents claim (Larami, super-soaker did not contain allelements of patented device, p. 295)

a. First step: break up the patent claims into elements (however it makes sense to do so)b. Second step: compare the elements of the patent and the accused device. The accused

device must contain each element of the patent in order to infringe it literally (the accusedproduce MAY have more elements or features than the patent and still infringe it)

c. Comprising versus consisting: consisting limits a patent to the specifiedelements, but comprising gives a patent protection against devices that infringe each

element and then adds features.

C. Doctrine of equivalents1. Function, way, results test (triple identity test): if each element of an accused device

performs substantially the same function in substantially the same way to obtain the same result,

the accused device infringes the patent (p. 300)

a. First step: break up the patent claims into elementsb. Second step: compare the elements of the patent and the accused device. If the accused

device meets the triple identity test for each element of the patent, the accused deviceinfringes the patent.

2. Rationale behind the doctrine of equivalents:a. Increase incentives for inventors if devices that were substantially equivalent did not

infringe, the incentives for inventors would be lower.

b. Old moral justification non-literal infringement by unscruptulous people could destroypatent protections.

D.E. [SECTION BREAK]


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COPYRIGHT


CopyrightELEMENTS OF

1. Grants owners of2. Original works (expression, not ideas) of authorship (independent creation)3. Fixed in a tangible medium of expression4. Exclusive rights to copy, prepare derivative works, distribution, public performance & displayINFRINGEMENT: must prove both: 1) Ownership of a valid ; and 2) copying of constitutent elements of thework that are original

Requirements for CopyrightOriginality & FixedA. Originality (2 prong test)requires that the authors work demonstrate both: (1) Independent creation by

the author (basically means did not copy); AND (2) a modicum of creativity: requires only a trivialvariation on something already in existence, doesnt need to be nonobvious but cannot be so mechanical or

routine as to require no creativity whatsoever (don't want judges being arbiters of taste) 102

1. Policy Rationale: (originality is constitutionally, art I, s.8, and statutorily required); all aboutbalance: focus is on benefit to the public: want to enhance public domain to inspire others

2. NOT copyrightable even if independently created, b/c not original (why? Dontwantto lock upfundam

e

nt

al building blocks, dont

confuse

and

TM

)a. Short phrases such as names, titles, and slogansb. Familiar symbols or designsc. Mere variations of typographical ornamentation, letter or coloringd. Mere listings of ingredients or contents

3. Compilations Of Facts: Facts are not copyrightable but compilations of facts are if there issufficient selection,coordination, and arrangementof uncopyrightable facts in an original way?

(doesnt have to presented in an innovative or suprising way) (Feist, alphabetical arrangment andselection lacked modicum of creativity. It expended sufficient effort to make directory useful

but not enough creativity to make it original)

4. Database Problem &Utility (sweat works): assembling info is costly but may not becopyrightable underFeistbecause really hard to create a copyrightable database that is useful and

in a way that competitors would still want contract law fills in gaps in IP lawa. arg for protecting: lockean labor theory, economic (need incentive to compile data),

fairness (unjust enrichment theory)

b. arg againstprotecting: conflicts with basic premise of copyright law (protectingcreativity); danger of monopoly and wasted resources (would lock up facts)

5. Maps: always have to sacrifice something when flatten. (Peters projection world map based onland mass: intellectual creativity in underlying mathematical formula) (Mason, TX maps original

in two ways: (1) sufficient creativity in selection, coordination and arrangement of the facts thatthe map depicts; and (2) graphic artistry was itself sufficient)

6. Photos: can copyright if enough creativity in f-stop choices, composition, etc.7. ThinCopyright: sometimes a court will give an auther that only demonstrates a modicum of

creativity a thin copyright, which means protection does not extend very far

B. Fixed in a Tangible Medium of Expression: a work is not copyrighted until fixed and thus is also notinfringed until it is fixed; broad requirement and includes any medium now known or later developed. A

work is fixed in a tangible medium of expression if: (1) sufficiently permanent or stable to permit the

work to becommunicated for a period of more than transitory duration,AND (2) By or under the

authority of the author[see class hypos];

1. Broadcast: if a work consisting of sounds or images (or both) that are being transmitted, thework is fixed, if a fixation is being made at the same time as the transmission

2. Fundamental distinction between: (1) original work which is the product of authorship AND(2) the material objects in which it can be embodied (ex, a book is a particular kind of copy,

not the work of authoriship)


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COPYRIGHT


Excluded Subject Matter: The Idea-Expression DichotomyA. Excluded Subject matter = Copyright does not protect ideas, or the functional aspects of a work:

procedure, process, system, or method of operation 102(b)1. Three types of unprotectable ideas:

a. The general concept,b. the functional principles orsolutions, orc. the building blocks (basic plot or character outlines)

2. Non-original elements are not protected.Even expressive elements that necessarily followfromthe unprotected ideas are also unprotected. ASK: are there alternative ways to implement thefunctional purpose of the work? (Baker v. Selden)

a. Scenes faire Doctrine: elements may be unprotected if they are commonly found inworks of that genre (ex. cop shows)

3. Merger Doctrine: (idea that constrains expression) Descriptions largely dictated by thesystems they describe are unprotected. If there are extremely limited number of ways of

expressing idea then idea behind workmerges with expression and no copyright.a. Limits protection to theextentofthe relevant idea. (Others are only allowedto copy

what is necessary to usethat idea)

b. Morrissey v. Procter & Gamble(1st Cir 1967)(460)(sweepstakes): Rules of asweepstakes competition setting forth how the competition operates are unprotected;

Policy: If gave copyright protection to explanation, effect would to give one competitorexclusive rights to hold such sweepstakes competition)

4. Functional Aspects: (may be patentable) Does the element have a utilitarian function? Statutorycategories: Is it aprocedure, process, system, or method of operation?

a. Is it necessary to copy the element to implement an unprotected idea? Scope of protectiondepends on how broadly the unprotected idea is defined

b. Need for competitors to copy?: Increases efficiency? Is the element an industry standardor necessary for compatibility with other works?

B. Hands Levels of Abstraction Test (p.446) (levels of generality) List things from most specific to mostgeneral and at one point draw a line: everything above is copyrightable and below is not (bumblebee pin: Pwants line drawn very low: so copyright on all insect pins; D wants as high up as possible)

1. Where to draw the line between idea & expression? Finding balance: is it fair for plaintiff totie up for number of years (policy of balancing & public access to ideas) (Baker: reasoned byanalogy andexamples)

a. POLICY Q: we want to keep ideas public domain, and we wantfunctional aspects(keep inventions, systems, and processes) in patent law; (Channeling Doctrine = Rule

that one form of IP ends and other form begins, thus if you want to stop people from

using a new system that is patent law) (Baker)

2. Baker v. Selden, p.442 (blank forms): P had copyright on book explaining an accounting syst(system unprotected as functional) Book contained an essay explained how system worked andforms to implement it. Forms used to implement accounting system unprotected because

necessary to use the unprotectedsystem. Preventing copying of the forms would have effect of

protecting the system.

a. blank forms arevery close to the pure ideab. Note: Even the detailed explanatory essay in Bakercould be unprotected (if ct found it is

necessary to the idea depends on level of abstraction)


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COPYRIGHT


OWNERSHIP: Works for Hire & Joint WorksA. WHO ISTHE AUTHOR? 201(a): Copyright vests initially in the author of the work. She may transfer

any or all of her rights. Gen Rule is that the actual creator of the work is the author. (Note: Rules assigningownership are gap-filling rules. Thus, only come into play if parties have noteffectively addressedthe issue)

1. POLICY= Reduce transaction costs and holdout problems in large compilation works likemovies (work for hire preassigns a work to ER from moment of creation and avoids the need to

negotiate assignment agreements)

a. Contract Law & Termination Rights = As a substitute for work for hire status, ifwork does not fall within one of the 9 statutory categories, parties are free to assigncopyright interest through contracts. However, not a perfect substitute because authors

cannot assign away inalienable right to terminate transfers down the road

b. Only way assignees can avoid this termination is to show copyright vested in theirname ab initio (from the beginning). Which can only be done if the work falls withindefinition of work made for hire (meaning, if there was no work for hire doctrine, an

employee who assigned rights to ER br K would still have ability to terminate later)

2. Shop Rights (1976 Act) = Congress rejected Shop Right proposal where employer would haveright to use to extent necessary for regular business employee would retain all other rights (like

patents and TS) in favorof full ER rights

a. T

eacherE

xception: Idea that universities cant claim ownership of a professors work.But, no textual support in 1976 act

b. NO copyright for works of the US government3. INDIVIDUAL WORKS: Factors: If more than one person claims to be the author:

a. Who initiated the work?b. Who Contributedoriginal creative expression,c. Who Controlledtheproduction of the workd. Whom do theparties consider the author?e. Whom third parties recognized as author?

Works Made For Hire:If work is a work made for hire, employer presumed to be the author and, unless the parties expressly agree

otherwise, owns the copyright. (Work-for-Hire: Legal fiction that it wasnt human beings that authored thebook, it was the company that employed them)

1. RULE: 101. Two types of works made for hire:a. IfEmployee AND work prepared within scope of employment, OR

b. IfIndependent Contractor (1) certain works specially ordered or commissioned (9categories) AND (2) parties expressly agree in writing that it's a work made for hire.

2. STEP 1: Was the work specially ordered or commissioned (independent contractor)?a. Did the parties sign a work made for hire agreement

b. AND Does the work fall within one of the 9specific categories?i. Contribution to a collective work,

ii. Part of a motion picture or other audiovisual work,iii.

Translation,

iv. Supplementary work,v. Compilation,

vi. Instructional text,vii. Test, or Answer material for a test, or

viii. Atlasc. IfNO express agreement in writing or not one of the above types, then can NOT be a

work for hire unless (1) hired party can be classified as an employee AND (2) workwas done withinscope ofemployment


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COPYRIGHT


3. STEP 2: Was work done by an EMPLOYEE? (Controllingthe artistandthe work is NOTenough foremployee status to make the work a work made for hire, CCNV)

a. FACTORS: To determine if hired party is an EMPLOYEE underagency law, consider:(focus on relationship between hired andhiring parties; not on the relationship between

the hiring party and the product)i. Does hiring party have the right to control how the product is accomplished?

ii. Whose tools were used?iii. Where is work located? (hiring partys place of business? or hirees home?)iv. What is the duration of the relationship between the parties?v. Does the hiring party have the right to assign additional projects?

vi. How much discretion does artist have overwhen and how long he works?vii. Method ofPayment? (ex. salary vs. paid on completion?)

viii. What role did the hired party have in hiring and paying assistants?ix. Is the work part of hired partys regular business?x. Employee benefits and tax treatment of hired party

b. CCNVv. Reid, (SCt 1989)(489)CCNV conceived idea of homeless nativity scene anddirected enough of sculptors effort so that he produced what they, not he, wanted, but ctheld sculptor was an independent contractor; not an employee and no written agreement.

not a work made for hire:

i. Factors against EE status= (1) Sculptor is a skilled occupation , (2) He suppliedhis own tools and worked in his own studio w/o daily supervision (3) Contractwas only for2 months and CCNV had no right to assign other tasks (4) He hadcomplete freedom in deciding when and how long to work (5) K pricepayable upon completion cf to a salary

4. STEP 3: If employee, was work done withinSCOPE OF EMPLOYMENT?a. Is work within the type he was employed to perform?

b. Does it occur substantially within the authorized time and space limits?c. Is the purpose, at least in part, is to serve the employer?

Joint Works: (101):

Tenancy in common: if a work is found to be a joint work, the coauthors own it in tenancy in common, which

means they have equal claims to the profits from it (key motivation inLee courts holding)for a work to be ajoint work and owned by two authors/artists as tenants in common, there must be:

1. A copyrightable work: some courts say that each authors contribution must be independentlycopyrightable, but Posner has said that sometimes this is not necessarily true (comic book case)

2. Two or more authors: each person must actually be an author which requiresthat(Aalmuhammed v. Lee, Islam expert not a coauthor because Lee was in control, p. 497)

a. Control: each author must superintend the work by exercising control (most important)b. Share intent: each author must share objective manifestations of a shared intent to be a

coauthor with the other coauthor

c. Audience appeal: the audience appeal of the work must be based on the contributions ofboth authors and the share of each in its success cannot be separately appraised.

3. The authors intend that their contributions be merged into inseparable or interdependentparts of a unitary whole: This prong is relatively easy to satisfy (A v.Lee)

INFRINGEMENT (Rights)

A. 17 U.S.C. 106. Exclusive Rights of Copyright Owners:1. To make copies2. Prepared derivative works3. Distribute to public4. Public Performance & Display5. Digital Audio Transmission


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COPYRIGHT


RIGHT TO MAKE COPIES106(1): Broad right, not limited to exact reproduction. Owner has right to prevent others from making exact orsubstantiallysimilar reproductions by any means now known or later developed

A. INFRINGEMENTAnalysis = Must prove: (1) Copying-in-fact AND (2) Improper Appropriation (issuesof facts particularly well suited for a jury)

B. STEP 1: Did D ACTUALLYCOPYfrom Ps work rather than develop independently?1. Direct Evidence= (easy case) eyewitness testimony, Ds admission, distinctive flaws; usuallyhard to prove so need circumstantial proof2. Circumstantial Proof of Copying = SLIDING SCALE TEST: = ACCESS + SIMILARITIES

(similarity judged on a sliding scale + objective criteria)

a. (Understanding Tip: Substantial Similarities Probative Similarities: tending toprovecopying, irrespective of whether copying infringed Ps copyright)

3. Arnstein v. Porter(2nd Cir. 1946) p.521 Although similarities alone are insufficient to provecopying, sufficient evidence of access to survive summary judgment: work had sold a millioncopies and been played on the radio created an issue of fact regarding access. Thus, jury should

decide if story is credible (Facts: P claims evidence of access b/c someone broke in and stole his

music, but offers no evidence it was actually the D.)

NO EVIDENCE OF ACCESS ACCESS

NO SIMILARITIESno infringement

no infringement (no amount

of access sufficient)

SIMILARITIES (2nd

Cir): (may infer copied dont need to prove access) must be so

strikingly similarthat its impossible D developed independently

(Repp, phantom of opera song)

(7th

Cir):Cant inferbased on speculation. Need enough evidence

for a reasonable possibility of access (Selle, even if strikingly similar,

doesnt prove D copied P, both could have copied from public

domain, Bee Gees song)

Burden Shifting Presumption (7th

Cir, Posner): can infer copied (and

access) if strikingly similar and not to anything in public domain. Can

rebut by disproving access or showing independent creation.

Question of fact for jury to

decide if works sufficiently

similar to prove D copied

(may use dissection

analysis and expert

testimony that independent

creation unlikely)

4. SubconsciousCopying: Dont need knowledge or bad faith to find D copied-in-fact. Chiffons v.George Harrison: infringement even though D did not deliberately reproduce. While neither

phrase is novel (or uncommon), experts at trial agreed pattern of juxtaposing four repetitions of

each short phrase is highly unique. (Lawyer TIP: to reducing risk of infringement, return

unopened submissions and keep clean rooms)

5. Proof OfCopying By Deliberate Error OrCommon Mistake = Original work may haveminor errors or misspellings, whether put there deliberately (Feist) or by mistake. similar errors in

both help prove copied

C. STEP 2: ILLICITI COPYING: If establish copying ASK did the D appropriate sufficient protectedmaterial to violate owners rights?

1. In general: Infringement by reproducing it in whole or in anysubstantial part,and byduplicating it exactly or by imitation or simulation. Wide departures may still be infringement as

long as the authors expression rather than merely his ideas are taken.a. There is NO bright-line rule for how similar a work has to be to be a copyright

violation. (Nicholas)Can be an illicit coping even if did not copy literal text, but thetwo works must be substantially similar

2. Subjective Standard (ordinary observer): Substantial Similarity is judged from the perspectiveof the ordinary observer (the eyes and ears of the trier of fact); Dissection & expert testimonyare irrelevant


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COPYRIGHT


a. Some courts have narrowed to impressions of Target Audience for the work (BlueBoxFactorycourt allowed expert evidence about how cabbage patch dolls would be

perceived by children)

3. Nichols v. Universal(2nd Cir. 1930) p.527: as long as a D only takes the uncopyrightableelements of a plaintiff's work, the two works will NOT besubstantiallysimilarenough toconstitute copyright infringement.Nichols wrote a play about a Jewish family living in NewYork. Universal made a movie about a Jewish family living in NY: NO infringement. Although

the two plays shared a number of the same themes and the general plot, the similarities tended tobe general things, universal concepts, and stereotypical characters. There was nothing unique to

Nichols' play that was found in Universal's movie

a. Scenes A Faire Doctrine: General Concepts or ideas are not copyrightable. Cantcopyright some general plot outline like father who disapproves of daughters fianc

4. TEST: Two Part Analysis (Disputed Issue in analysis Does the fact finder compare the twoworks as a wholeoronly thoseelements thatare protectable?)

a. Objective Test = to determine protected elements, analytically dissect objectivemanifestations of creativity (plots, themes, dialoue, mood, setting, pace, sequence,characters) in Ps work.

b. Subjective Test = trier of fact takes purely subjective prospective and determineswhether the Ds work improperly appropriates protected expression

5. THRESHOLD =How much mustbetaken? Depends on the nature of the work: even a smallamt of the original, if it is qualitatively significant, may be sufficient to be an infringement

a. Fragmented Literal Similarity:cases where D has copied a distinct literal element ofPs work and incorporated it into a larger work of his own

b. ANALYSIS: issue in each case will depend on whether the similarity relates to matterwhich constitutes a substantial portion ofplaintiffs work not whether it is a substantial

portion of defendants work

c. Claim that infringment is such a little one is no defense; But, if the similarity is only asto nonessential matters, then should not find a substantial similarity

6. SLIDING SCALE & VIRTUAL IDENTITY TEST: more similarity is required when lessprotectable matter is at issue; If copyright is thin works must be virtually identical (i.e.,

if work involves unprotectable elements or if the range of creative expression is limited)(Incredible Technologies, screen displays for two golf video games)

a. Maps vs. Elegantly written biography: Because fact-based works differ as to the relativeproportion of fact and fancying, amt of similarity required for infringement differs

7. DE MINIMIS DOCTRINE: (the law does not concern itself with trifles) Applied where thecopying is so trivial as to fall below the quantitative threshold of substantial similarity (butdont

forget if its qualitative important, wontapply de minimis)

a. Digital Sampling (mash ups) copyright act bars application ofde minimisdoctrine;thus copying even a single note could be infringement (digital sampling is literalcopying of existing sound recordings)BridgeportMusic (6

th Cir): sound recording

owner has the exclusive right to sample his own recording.based on rt to prepare

derivative work in which actual sounds fixed in the recording are rearranged, remixedi. However, this does not prevent another from duplicating the sound of another

recording as long as it consists ofentirely independent fixation (basically, yousimulate sounds just cant use the actual recording)

ii. POLICY: bright line rule (get a license or do not sample) eases enforcementbut does not stifle creativity because a well functioning market exists and artist

are free to record their own riff


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THE DISTRIBUTION RIGHT

A. Owner has right to distribute, through sale or other means, either the original or subsequent copies. Limitedby First Sale Doctrine and Importation Right - 106(3)

1. LIMITATIONS on Distribution Righta. First Sale Doctrine 109(a): (aka the exhuastion principle) Copyright holder cannot

restrict subsequent resale or distribution by a purchaser of a particularly lawful copy.(Purchaser may not copybut may resell, lease, donate, etc.)

i. 109(b): Congress limited first sale doctrine by prohibiting rental ofphonorecords and computer programs for profit, because feared primary effect

was to encourage piracyb. Importation Rights: different prices in different national markets. holder has right to

prohibit commercial importation into US of works acquired abroad (Exceptions: worksfor govt use; personal use; and scholarly, educational, or religious purposes)

2. POLICY: Why have a right to distribute that is limited by first sale doctrine? Allows authorsto controlfirstpublication (ex. book release date); Easier to find & sue infringers: allows them to

sue the distributors rather than actual infringers.

B. First Sale & Derivative Works: (ArtTiles) Right to transfer applies only to the particular copy of the bookwhich was purchased. The mere sale of the book does not transfer the copyright holders right to preparederivative works.

C. License vs.Sale (Software Marketing):labeling product as a license rather than a sale and arguing thatfirst sale doctrine doesnt apply. RULE: A single payment giving the buyer an unlimited period in

which it has a right to possession is a sale (Softman Products v. Adobe: first sale doctrine superseeded the

EULA: software distributor lawfully acquired bundled products and then later sold unbundled in violation of

the terms of an End User Licensing Agreement (EULA).

1. FACTORS for a Sale rather than Licensea. Temporally unlimited possession;

b. Absence of time limits on copy possession;c. Unitary Pricing and payment schemes;d. Subsequent transfer not prohibited and doesnt require permission;e. Principal purpose of use restrictions is to protect intangible copyrightable

subject matter and not to preserve prop interests in individ program copies2. PromotionalCopies = notice label stating Promotional Use Only-Not for Sale on free copies

does not create a license that is not subject to the first sale doctrine. (UMG v. Augusto Heldthe economic realities of such distribution make it equal to a sale or gift.

a. FACTORS: (1) the effective passage of title, (2) UMG does not expect to regainpossession of the goods, and (3) absence of a recurring benefit to UMG

PUBLIC PERFORMANCE & DISPLAY RIGHTS

A. 106(4)(5): PERFORMANCE (moving) vs. DISPLAY (still) distinction determines scope of exclusiveprotections (First sale is a defense to distribution and display rts only; not relevant to infringement ofperform right)

1. Performance= any physical act taken to make a work perceivable to the viewer or cause a workto be reproduced (even in a transient form that does not create a "copy)

a. Requires some communicativeelement to be infringement (ex. mere act of input into acomputer would not appear to be a performance)

2. Display = Owner of a particular copy is entitled to display it publicly, either directly or by theprojection of no more than one image at a time, to viewers present at the place where the copy is

located. (thus, displaying artwork in a gallery w/o authorization is ok)

B. PUBLIC?(1) When at a public place or if not public place, then any where a substantial number ofpeople outside of family and friends is gathered; or(2)Iftransmitto public (whether the members ofpublic receive it in the same place or in separate places and at the same time or different times.)


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INDIRECT LIABILITY Third Party Infringement of (two-step analysis)

A. STEP 1: Did the direct infringer actually infringe? (DO NOT SKIP THIS STEP: do copy analysisabove and consider any defenses) (Sony, no direct infringement because time-shifting fair use, so third party

liability. Is rest of case just dicta?)

B. STEP 2: Is there a way to extend liability to third party?(three possible theories) (Basic doctrinederived from tort common law and also patent law analogies)

1. Respondeat Superior: an employer could be liable for its employees infringing activities whileon the job, as long as the employee was acting within the scope of his employment (even if acts

were not expressly authorized or were against orders. based on traditional agency law principles.)

2. Vicarious Liability: (requires more control)a. even if NO knowledge, still liable for acts of others if:

i. Control: have right and ability to supervise (can control infringing conduct)ii. Direct Financial Interest: profit from infringing activity

b. Dance HallOwner: YES, playing of music was for profit of owner (entrance fees, etc.)Even if orchestra was under a K that made them an independent contractor

c. BUTNOTLandlord/Tenant:just getting fixed rent not direct enough financial interest.Ability to evict probably not sufficient ability to supervise (see Perfect10, visa creditcard transactions)Note: want to show no right to control direct infringers actions, so

dont tell tenant not to infringe

3. Contributory Infringement: (requires more knowledge) (Sony)a. can be liable for acts of others if:

i. Knowledge of infringing activity,ii. AND induce, cause, or materially contribute to infringing conduct (requires

taking an active step)b. Electronics store that sold blank tapes and made available both copyrighted works and a

coin-operated Make-A-Tape system was contributorily liable for acts of customers

c. Policy: copyright owner has exclusive right to authorize (cong. intent in house report)C. Cf. Cases noteSonyis about when you can impute culpable intent (cant infer as a matter of law just from

distributing a product that is widely used for legit purposes);Groksteris about proving intent to induce, i.e.,

when you have actualevidence of intent

1. Sony v Universal, p.587 (capable ofsubstantial noninfringing uses): Sony not liable for sellingcopying equipment that others used to make infringing copies because VCRs widely used for non-infringing uses like time-shifting. (% of infringement cf. to fair uses) Merelyselling a staplearticle of commerce capable ofsubstantialnon-infringinguses is NOTsufficient for

contributory infringement. (Grokster, Cannot infer culpable intent as a matter of law just from a

products uses or characteristics. need active step to induce)

a. H: Merely distributing copying equipment did NOT cause, materially contribute, orinfluence direct infringement (constructive knowledge is not enough)

i. No Sony EE had eitherdirect involvementwith infringing activities ordirectcontactwith purchasers who infringed

ii. Sony advertisement did not influence or encourage direct infringersb. Test derived from patent law which expressly holds not liable if sell item suitable for

substantial non-infringing use. Sony ct changed suitable capable: wants to coverboth present and possible future non-infringing uses

i. Policy: if found contributory infringementthen basically saying product is w/inpatentees monopoly. Analogy to, dont want to extend beyond limited rts.

ii. Some broadcasters WANTED users to timeshift. Court found that otherbroadcasters had no right to stop these authorized uses

c. Balancing Test: if adequate protection requires the court to go beyond actual duplicationto the products that make copying possible must balance: (1) Copyright holders legit


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demand for effective, not merely symbolic, protection;(2) AND, The rights of others tofreely engage in substantially unrelated areas of commerce

2. Grokster, (inducement liability): unlike napster, no centralized server or indexing system. Onlyway assisted users infringement was by providing them with the decentralized peer-to-peer

software. UnderSony rule, did not actually induce, cause, or materially contribute toinfringement. Ct created new intent to induce rule: Proof of intent to induce infringementmay be shown through evidence and third-party can still be liable even ifdevice is capable of

substantialnoninfringinguses. (Note distinction: Dont have to take affirmative steps topreventinfringement; just cant induceinfringement.)

a. Evidence of Intent: To be liable must havepurposeful, clearexpression or otheraffirmative steps taken to foster infringement (intent to induce & acts of inducement)

i. Need more intent than mereknowledge for distributor to be liableii. Ordinary acts incident to distribution NOT enough (tech support, product

updates)

b. Factors: evidence of inducement based on combination of factors (none alone sufficient)i. Attempt to capture Napster audience by offeringproduct assuccessor(similar

design and name, unpublished ads for OpenNap; metatags sent request to site)ii. No attempt to developfilteringtools to diminish infringing activity (but NO

affirmative duty to filterbasing liability on this would be crushing b/c too

difficult)iii. Business model depended on infringement(Advertising revenue dependent on

high volume of infringement)

c. Note: model is filessharednot files traded (purely trading particular copies could belegal under first sale defense)

DEFENSES FAIR USE Analyze only in respectto directuser/infringer. The statute does not define fair use and analysis is so fact-

specific that you can never tell if it's a fair use unless all four factors are exactly on point with a prior case (fairuse = right to hire a lawyer)

A. In general: Fair Use 107 Affirmative Defense to infringement.1. FavoredUses = (in preamble, p. 593) If issue falls within one of these favored uses, then more

likely fair use, but not dispositive either way (i.e., favored use may not qualify as fair use and visversa) still look to 4 factors

a. Criticism and Commentb. News Reportingc. Teaching (including multiple copies for class use),d. Scholarship or Research

2. Four Factor Test (in brief):(1) Purpose and Character of the use(2) Nature ofCopyrighted work(3) Amount and substantiality of the portion used(4) Effect upon the market

3. First Amend & Policy Rationale: fair use exception rooted in the First Amendment and used toencourage infringements that society likes and thinks is important (Ct rejects a 1st amend

exception for news & public figures.1st amend protections are already embodied in Copyright

laws idea/expression dichotomy. No need to expand: Policy: if we say no in public figures,then we would see no more public biographies)


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B. FOUR FACTORS For Fair Use: not exclusive list (know by numb) 1 & 4 will usually determinethe case1. Purpose and character of the use, - (D-Focused) including whether such use is of a commercial

nature or is fornonprofiteducational purposes

a. News reporting (+): often a fair use (Harper, D could have freely copied facts andaccomplished favored use of reporting without taking protected expression)

b. Commercial (-) vs. Non-profit uses(+): commercial uses presumptively not fair uses(this Sony quote)(Kinkos, coursepacks not fair use because Kinkos was a for profit)

i. Public Benefit: additional factor relevant in Sony ct focused on public benefit,and survey of how users used VCRs for time-shifting

ii. TEST: Amt of broader public benefit vs. Private economic rewards directlyacquired from commercial exploitation of copyrighted material. (Texaco,although weak link to commercial gain and immediate goal of research serves a

broader public purpose, was still simply another factor of production fordeveloping profitable products.)

c. Archival Purposes:(-) were copies made for same basic purpose one would normallyseek to obtain the original? (Sony, time-shifting not archival 70% of shows only watchedonce) (Texaco, copies superseded original: main purpose was archival: the ability to

give numerous scientists own copy based on Ds purchase)

d. TransformativeUse: (+) Does the secondary use add something new, with a furtherpurpose or different character? (Texaco, if dominant purpose had been to transform copyinto a more useful format that more easily used in the lab, i.e., less bulky or to preventdamage to the original).(Campbell, 2Live Crew parody of pretty woman)

i. TEST: Sliding scale: More transformative the new work is, less other factorsmat

IP Colorado Ohm Fall2011

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