IP Survey with Shulman 2011

TRADE SECRET / PATENT / COPYRIGHT / TRADEMARK
THEORY / Freedom of contract vs. unfair competition / Limited monopoly for utilitarian works in exchange for disclosure (public good) / Limited monopoly to encourage authorship of expressive works / Based on unfair competition and deception of the consumer
SOURCE / Mostly state statutes (UTSA) /

Art. I §8
Patent Act (federal)

Art. I §8
Copyright Act (federal)

Commerce Clause
Lanham Act (federal) / state

ELEMENTS
for protection /

Information
Not generally known (Fourtek)
Commercial value and
Reasonable secrecy efforts

Subject matter = “anything under sun made by man” (Chakrabarty)
Process (Bilski M/T test)
Product (MMC)
Plant/design
Utility (specific, credible & substantial)
Statutory bars (>1 year of publication)
Exception for experimental use
Priority (you are first to reduce)
Non-obvious (Deere POSITA, secondary)
Novelty (identical public prior art) and
Disclosure (for POSITA)
Description (shows possession)
Enablement (w/out undue exp.)
Best mode (so no trade secret)

Expressive works (8 types)
Not underlying ideas or
Abstraction/merger
Functions
Useful article/separability
Of independent authorship
Individual (create/superintend)
Joint (intent) (Lee)
Work made for hire (CCNV)
Scope of employment or
Category (ICs)
Not government
Modicum of originality (Feist)
More = thick protection
Fixed in tangible medium and
Formalities (optional for validity, required to sue)

Subject matter (6 types)
Distinctiveness
Inherently (enough) if:
Arbitrary/fanciful
Suggestive
Not if:
Descriptive
Geographic
Personal name

So need secondary meaning (Zatarain’s)

Priority use in commerce and
Bona fide (Zazu)
Formalities (optional)
§43(a) if unregistered

RIGHTS / Protected from misappropriation until public disclosure / Right to exclude others from infringing (making, using, selling/offering to sell, importing) for 20 years after filing / Exclusive right to copy,

In fact (Porter)
Improper appropriation (Nichols)
Substantially similar, de minimis

distribute, derivatives (Stallone), moral rights, public performance and display for:

Individual = life + 70 years
For hire = min. of 95/120 from creation

/ Right to exclusive use of the mark in your area/field of commerce as long as you keep using it in commerce and the public does not reclaim it through genericide
CAUSE OF ACTION
(after it is established x is valid) / Misappropriation through improper:

Use
Acquisition or
Disclosure

/ Infringement if violated rights. Types:

Literal (all elements)
Non-literal (doctrine of equivalents)
SS Function, Way, Result
Contributory/inducement
Joint

/ Infringement if violated rights. Types:

Direct

Indirect
Vicarious (Grokster)
Contributory (Sony)
Respondeat superior

/ Infringement if:

Used as ® in commerce and
Likelihood of confusion (5 types) (8 factor test Sleekcraft)

Dilution for famous marks if:
1) blurring or 2)tarnishment (Dog)
DEFENSES /

Independent discovery
Reverse engineering
Observation in public

Experimental use (not for business)
Inequitable conduct (intent)
Exhaustion of patent rights (first sale)
Misuse/contributory infringement (antirust)
Reverse doctrine of equivalents (equity)
NOT independent discovery

Fair use
Purpose/character of use (Acuff)
Amount used and as % (Perfect 10)
Nature of (c) work (Harper Row)
Effect on (c) market (Texaco)
Independent creation
(Compulsory) license/consent

Fair use
Descriptive use (KP)
Nominative use (NKOTB)
Parody/comment (Mattel)
Genericness (Murphy Bed)
Functionality (TrafFix)
Abandonment (MLB, Donut)

IP Survey with Shulman 2011

------THEORY------

Compared to tangible property
Physical things are necessarily exclusive (can only be in one place at a time)
But multiple people can be in possession of IP at the same time
Theories for protecting IP:
Natural rights (Locke)
You own what you take out of the commons and mix with your labor so long as you leave enough and as good for others (proviso)
Personhood (Radin/Hegel)
Give more protection to personal property (related to your personhood) than fungible property
Moral rights downstream (European)
Utilitarian (predominant in United States)
Promotion of new and improved works (trade secret, patent, copyright)
US Const. Art. I Sec. 8 = “to promote the progress of science and useful arts”
Reward for the inventor is a secondary consideration
IP is a public good
Will be consumed by free riders and therefore not produced unless we regulate it
Integrity of the marketplace (trademark)
Want to reduce confusion and enhance incentives to improve brand reputation
Later expanded to protect against blurring and tarnishment
Required because of information asymmetry and likelihood of lemons

------TRADE SECRET------

Theory (rooted in wrongdoing)
Utilitarian = Protecting against theft of proprietary information encourages investment
Tort = Aim is to punish and prevent illicit behavior and uphold reasonable standards of commercial behavior
Tension between freedom of contract and protection against unfair competition
Source of law
State statute (Uniform Trade Secrets Act) and common law
Restatements of torts and unfair competition
Federal Economic Espionage Act
Elements for protection as a trade secret:
Information, such as:

IP Survey with Shulman 2011

Formula
Pattern
Compilation
Program

Device
Method
Technique
Process

IP Survey with Shulman 2011

A thing that embodies any of the above
NOT “know-how” (aka general skills and knowledge)

That is not generally known by those who could gain value from it
Don’t need absolute secrecy
Limited disclosures for business reasons ok (Fourtek= ok to disclose secret to 2 companies in hopes of future business so long as expert says modification was not publicly announced)
UTSA (but not CA) includes “knowable information” (i.e., readily ascertainable by proper means, aka easily and relatively cheaply)
Even if parts are known, ok if the way P put them together creates value and is not known
Perpetually protected until public disclosure that is long enough to result in it being general knowledge to the relevant people via:
Owner publishing the secret
Usually through publication of an issued patent, so must choose!
Patent = broader rights, but require meeting substantive and procedural requirements and are expensive to enforce and obtain
Trade Secret = may never expire and no filing costs, but efforts to maintain secrecy may be expensive and some things can simply not be kept secret
Owner may sell a commercial product that clearly embodies the secret
May be publicly disclosed by someone other than the owner (Religious Technology Center = Scientology can’t sue Washington Post because book was online for 10 days)
Inadvertent disclosure
But real accidents don’t end protection before the cat is out of the bag
Government agency requirements (ex. health/environmental concerns)
Is commercially valuable to the producer, considering:
Commercial advantage over competitors
Effort/money spent to develop/obtain the information
And is the subject of reasonable efforts to maintain secrecy
Consider conforming to industry standards for:
Confidentiality procedures (express or implied) (Rockwell= did not require vendors to return drawings because they may need them again, but implied duty of confidentiality so ok)
Security measures (physically inaccessible, no trespassing signs, “confidential”) (Rockwell = P considered ethical standards of vendors before sharing with them)
More efforts = more likely D obtained it improperly and secret has value
As long as there is a reasonable security program, lapses that don’t result in misappropriation don’t matter because you can always do more

Trade secret holder’s rights
Protection against misappropriation until information becomes generally known through public disclosure
Misappropriated if:
Improper use
After obtaining it from a third party with notice it was a trade secret and improperly or accidentally disclosed
Improper acquisition
Unlawful conduct or
Conduct below reasonable standard of commercial morality (DuPont = can’t fly over plant under construction because protections required to prevent it cost too much)
Or improper disclosure (i.e. in breach of a duty of confidence):
Implied by context and special relationship of partiesor
Existing confidential relationship where one trusts in and relies upon another
Did the recipient know that the disclosure was made in confidence? (Dravo= after failed acquisition, D cannot use the information obtained from P because purpose for which secrets were delivered was understood)
Arrow’s Information Paradox
Information is only valuable because it’s a secret, but D cannot be expected to pay for it unless he can see it
But don’t want to see competition b/c can’t get residual image out of your mind and you’re forever tainted if working on something similar
Express/implied contractual provision(enforced if reasonable):
Nondisclosure/confidentiality
Employee/employer-specific
Assignment
Three types of employees absent written agreements:

1.Hired to invent (w/in scope of job) so implied K = employer’s

2.Invent on employer’s time/ resources = shop right

3.Independent invention = employee’s

CA = freedom to create statute where can’t require assignment of inventions developed on own time/resources before/after job
Trailer clauses = require assigning of inventions made for a time after employment

Noncompetition
Spectrum

Test = consider whether restraint is reasonable (CTI):

1.To employer (no greater than necessary to protect employer’s legitimate biz. interests, i.e. trade secrets against competitors)

2.To employee (not unduly oppressive in curtailing efforts to earn livelihood by using professional skills)

3.From the standpoint of public policy

Non-solicitation (direct or indirect?)
Usually in negotiations, but not actually enforced
Can get around it by leaving and then others follow months later
Inevitable disclosure
Can temporarily enjoin hiring (PepsiCo= Pepsi executive going to Snapple knew about Pepsi’s upcoming marketing campaign and couldn’t help but be affected by that, so enjoined until campaign is over)
Must be more than fear of transferring general skills

Defenses
Independent discovery
Reverse engineering
Legitimate purchasers can reverse engineer to find secret (Kadant= hard to prove misappropriation when possibility of reverse engineering exists)
But secret is still protected from those who do not reverse engineer(Reingold)
Observation of the item in public use or on public display
Obtaining the trade secret from published literature
Remedies
Injunction
Until trade secret ceases to exist or
Time necessary to eliminate commercial advantage
Royalties or Damages
Possible criminal sanctions (ex. larceny, Economic Espionage Act)

------PATENT------

Theory
Limited monopoly to encourage production of utilitarian works in exchange for immediate disclosure and ultimate enrichment of the public domain (public good)
Market-driven incentive to invest in innovation
No moral entitlement
Source of law
Art. I §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”
Patent Act (federal)

Elements for protection as a patent(judged at time of invention, not filing)
Patentable subject matter (§101) BROAD
= “Anything under the sun made by man”(Chakrabarty = if you make a new bacterium then that counts b/c not nature’s handiwork)
Discovery (not protected) vs. invention (protected)
Can’t patent basic and fundamental ideas
Wrong to preempt all uses. But can patent one physical application of them(Morse = can’t patent use of electro magnetism, but can patent telegraph)
Examples: laws of nature (ex. E=MC2), physical phenomenon, and abstract ideas
Types of claims:
Utility
Process (if you can’t patent the thing itself, can patent how to make it or a new use for it)
Machine-or-transformation test (just 1 consideration), must be:
Tied to a particular machine or
Transform a particular physical article into a different state (In re Bilski= does not cover business method for hedging risk in commodities trading because not tied to a machine and only affects business relationships, not anything tangible)
Also State Street test = useful, concrete and tangible result
Product
Machine (= does something)
Manufacture (= production of articles for use)
Composition of matter (= all composite articles)
Plant (used to be ineligible)
Must be distinct, new, asexually reproducing (not bacteria)
Designs
= aesthetic appearance rather than functional features
Or improvement thereof(unlike copyright)
Novelty (§102(a))
= not preceded in identical form in the public prior art (published articles, known techniques, and marketed products)
Prior art must enable every element of what patentee is claiming
BUT inventor’s own work cannot destroy novelty (but see statutory bars…)
Public use if used in the usual course of producing articles for commercial purposes (New Railhead= D tested drill bit underground—so hidden—but since for commercial purposes still invalidates P) (Rosaire = work done by employees on prospecting for oil that is not a trade secret or mere incomplete experiment is public enough)
Statutory bars (§102(b))
= 1 year SOL for filing after public publication of invention
Usually by inventor, but can be by someone else
Purpose: to encourage inventors to file patent applications early and not benefit much before the patent clock starts running

Publication is public when:
It becomes available to at least one member of the general public (In re Hall= even one obscure publication that no one is aware of, like a thesis put in a library catalogue, counts) (Egbert = counts when inventor gives girlfriend corset-springs to wear with no obligation for secrecy and lack of control by inventor) or
It is used for a commercial purpose, even if it’s secret and only occurs once
Exception = experimental use(Pavement Co.= ok to test pavement in public for more than a year because only way to do so, did not sell it, and it was under his control)
Consider:
Necessity for public testing
Amount of control retained by the inventor
Nature of invention
Length of the test period
Degree of commercial exploitation during testing
Whether there was a secrecy obligation(ex. if you’re giving it to customers in “beta”)

Non-obviousness (§103)
= whether invention as a whole would be obvious/predictable to POSITA given prior art
Can combine references(KSR = can’t just take two good things and put them together where they work in a predictable way, so this car pedal is not patentable)
Tension between wanting broad claims and avoiding prior art
Test:(John Deere= P’s patent only has two new elements, but these crucial differences are the only effective way to fix a problem so person with ordinary skill in the art would see this was the thing to do)
What does prior art contain? (only look at reasonably pertinent prior art)
How does each reference differ from the invention?
What is the level of skill in the art?
Can a person of ordinary skill in the art make the leap?
Secondary considerations:
Commercial success/licensing, awards/praise
Long-felt need and failure by others
“Teaching away” by prior art (“it can’t be done!”)
Copying
Advances in collateral technology
Near simultaneous invention
Utility (§101) LOW BAR
= specific, credible and substantial(In re Fisher= objects of testing that offer no immediate, real world benefit are not research tools and therefore no utility)
Must be more than a mere curiosity, but amusement is enough (well defined and particular benefit to the public)
Must be presently able to do what it claims it does—not a hunting license! (ex. perpetual motion machine won’t cut it)(Brenner = can’t patent process for making a compound that you can’t define utility for yet)
But not throwaway utilities, b/c want people to keep experimenting to find greatest value
Currently morally neutral (Juicy Whip= ok to patent deceptive juice system b/c PTO is not an arbiter of trade practices)

Disclosure (§112)
= in exchange for this monopoly, you need to give us enough detail for people to use it
Types of required disclosure (that restrict claims):
Written description
= to show POSITA that inventor possessed the claimed invention as of the filing date(Gentry= description identifies the console as the only place for sofa control, so claims claiming other locations are too broad and therefore void)
Can also satisfy this with a public deposit
Enablement through specifications (summary of the inventions and drawings)
= so POSITA could carry out the invention commensurate with the scope of its claims without undue experimentation
If you claim something you can’t enable then all dependent claims are void (independent claims are severable) (Lamp Patent = description claiming all fibrous material is too vague and requires independent experiments to make it, so void)
Consider:
Prior art
Relative skill of those in the arts (ex. need not disclose software code)
Presence of direction/examples
Nature of the invention
Best Mode
= the best mode of carrying out the invention contemplated by the inventor must be disclosed to enable one of POSITA to practice it
Purpose: to prevent inventor from having a trade secret and patent at the same time
Priority (§102(g))
= first to invent, i.e. reduce to practice and not abandon (not to file, like everywhere else)
UNLESS first to conceive’s delay was justified by reasonable diligence in reducing to practice (Griffith= waiting for outside funding and a student to graduate is not reasonable diligence)
Arises in interference proceedings (§102(g)(1)). If made in the US, then can be used in infringement case (§102(g)(2))
Derivation (§102(f)) = YOU have to be the inventor and list all inventors

Patent holder’s rights(freely assignable):
Right to exclude others from infringing (negative right), aka:
Making (but buyer can repair)
Using
Selling/offering to sell
Importing
What is described in the claims
If it’s in the specification but not in the claims, then dedicated to the public
For statutory period
20 years after filing (effective after USPTO approval)
14 years for design patents