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Intro to Intellectual Property
GENERAL IP
Patent:
Must be (1) novel, (2) non-obvious, (3) utility, (4) description of product / process
- If so get right to exclude others for up to 20 years from application
- Must be issued by PTO
- Fear of injunction makes the patent valuable
Copyright:
Must be (1) creative (music, writing, etc), (2) non-functionality,
- Lasts for the life of author + 75 yrs or 95 yrs if institutional author
- Rights begin immediately at time of fixation / recording
o Need registration to get rights to court & statutory damages
Infringement: (1) Evidence of copying (access)
(2) Substantial Similarity (sameness)
Defenses: - Fair Use
TRADE SECRET PROTECTION
Introduction
Elements of a trade secret suit:
(1) presence of a trade secret by definition – secret and valuable
(2) Misappropriation
(3) Π took reasonable precautions to protect the secret.
Theory
Property Rights – Trade Secrets are property and should be protected as tangible property, so as to encourage further investment in such information (utilitarian theory)
Tort Law – A violator of trade secret laws should be punished for acting in bad faith and violating the confidence of their relationship with the plaintiff.
Subject Matter
Defining Trade Secrets p. 34
- No requirement of novelty or non-obviousness
Uniform Act: “Trade Secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Current trend is to protect by trade secret any valuable information
- Show current commercial value of the secret
- Show a cost in developing the secret or process
Metallurgical Industries
Information must be secret – not generally known to all
Restatement of Torts – factors in determining if a trade secret exists
1. Extent to which the information is known outside the Π’s business
2. Extent to which it is known by employees and others involved in business
3. Extent of measures taken by the claimant to guards the secrecy of the information
4. Value of the information to the business and its competitors
5. Amount of effort or money expended by the business in developing the info
6. Ease or difficulty with which the information could be properly acquired or duplicated by others.
Reasonable Efforts to Maintain Secrecy
- Physical Enforcement (bouncer, cameras) will make a better case of a trade secret
- Rockwell – Better case if:
1. Don’t tell lots of people
2. Make sure others cannot find information – walls, encryption
3. Confidentiality agreements with any disclosures
- Look to the industry standard for how to maintain secrecy
- During discovery proceedings, Π must notify Δ that information is confidential to demonstrate its trade secret value
Disclosure of Trade Secrets
- Public disclosure of a trade secret destroys its protection forever
1. By publication in a journal or otherwise
2. By selling a commercial product that embodies (and fully discloses) a readily apparent secret
3. By someone other than the trade secret owner
4. Inadvertently – by accidentally being left in public view
5. As required by a government agency – Monsanto Case
Misappropriate of Trade Secrets
Uniform Act: Will be misappropriation if taken
(1) by improper means OR
(2) where taking involves a material breach of confidence.
- Generally requires that the violator acquired the secret wrongfully.
Improper Means
Uniform Act: “Improper means” includes theft, bribery, misrepresentation, breach, or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” – common law standards are fluid depending on technology, etc.
DuPont v. Rolfe Christopher
- Using a helicopter to photograph an under-construction factory is improper means
- Action need not be a trespass, other illegal conduct, or a breach of a confidential r’ship
- improper means are “means that fall below the generally accepted standards of commercial morality and reasonable conduct.”
- Documented independent development of the process is ok means.
Confidential Relationship
- Even if obtained properly, a trade secret can be misappropriated if it is used improperly
- generally these relationships are formed by a written confidentially agreement
Smith v. Dravo
- a confidential agreement can be implied from the nature of the parties’ relationship
Restatement (Third) – There is a confidential relationship if:
(a) the person made an express promise of confidentiality prior to the disclosure of the trade secret;
(b) the trade secret was disclosed to the person under circumstances in which the relationship between the parties to the disclosure or the other facts surrounding the disclosure justify the conclusions that, at the time of the disclosure,
(1) the person 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.
Reverse Engineering
- Buying a product, and taking it apart to see how it works is not “improper means”
- Manufacturer could protect himself by selling each product w/ a “no peek” clause
Chicago Lock
- California courts allow trade secrets to be discovered by “fair and honest means”
Departing Employees
- Employer may not inhibit the manner in which an employee uses his or her knowledge, skill, and experience – even if these were acquired during employment.
- Employee cannot divulge trade secrets gained during the confidential ER / EE relationship
Non-compete Agreements – are enforced if reasonable in protecting ER’s interest, and not unreasonable restraint on EE.
Wexler v. Greenberg
To win against an ex-employee, the employer must show:
(1) a protectible trade secret; and
(2) a legal basis upon which to sue, either a covenant or a confidential relationship.
“trailer clauses” (agreements to assign rights of EE’s inventions to ER) are treated to the same analysis as non-competes
Agreements to Keep Secret
Warner-Lambert (Listerine Case)
- A license of a trade secret is enforceable as written if clear, and unambiguous, even after the trade secret has been discovered. – this law is the opposite if patent had been at issue.
Remedies
Uniform Act:
Sec. 2: (a) injunction against violator, (2) forced royalty payments, (3) affirmative acts of protection
Sec. 3: (a) damages for actual loss by misappropriation or unjust enrichment, (2) double treble damages if misappropriation is willful and malicious
Sec. 4: Attorney’s fees if either side acts with bad faith or willful and malicious misappropriation.
- Injunctions will usually last for as long as it would’ve taken Δ to reverse engineer
- Problem of determining the appropriate time.
TRADEMARKS AND TRADE DRESS
Introduction p. 557 - 65
Purpose: to reduce information and transaction costs by assuring customers know the nature and quality of a product before the purchase
Theory: TM act as tort protection against misappropriation of goodwill and consumer deception.
Protects investment in (1) creating the mark, (2) advertising, (3) product costs
Now protected under state common law and Lanham Act (1946)
What can be protected
How to prove protectibility (ex. Harley engine roar):
(1) Public associates mark with the source (Π)
(2) The mark has no function – product could be as good (better) if mark not used.
(3) The mark suggests (through secondary meaning) the Π and not any other
Economics
Trademarks, Trade Names, Service Marks
Lanham Act: TM includes “any word, name, symbol, or device, or any combination thereof – (1) used by a person, or (2) which a person has a bona fide intention to use in commerce, and applies to register on the principal register established by this Act, to identify and distinguish his or her goods, through a unique product from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.”
Service Marks are defined identically to TM, except they refer to service not a product.
Trade Names – are names that identify the company themselves, and are not available for registration.
Color, Fragrance, Sounds
- Shapes, sounds, fragrances, and colors can all be TMs under the Lanham act def.
Qualitex 115 S.Ct. 1300
- TM rights are available for a particular color, alone.
- color is a descriptively distinctive mark, w/ secondary meaning, and is not functional
- Δ’s assertion of color depletion is not a problem
- if there are too few available colors, then the color would be a functional competitive advantage
- Δ can still argue that the color is functional, so TM is invalid
Crescent Tool
- The “look and feel” of the product is protectible as a trademark.
Hand: TM is violated if the public is motivated to buy the product b/c of the TM source. Δ needs only to distinguish its product from the Πs.
Certification and Collective Marks
- generally used by trade associations or other groups to identify a group of goods
- like French makers of sparkling wine – Champagne
- Franchising agreements
- Have the same rights as ordinary TM
Trade Dress and Product Configurations
- the design and packing of materials OR
- The product configuration if it serves the same source-identifying function as the TM
- Can be protected w/o registration like TMs or under §43(a) see p. 577.
Establishment of Trademark Rights
- protection awarded to those who were first to use the distinctive mark in service.
D.C. Comics
- There must be a public association b/w mark and source to maintain TM rights
- TM rights end when there is no association
Distinctiveness
- TM must be distinctive to gain protection
- Marks in the 1st two categories (arbitrary / fanciful and suggestive) and “inherently distinctive”, and receive automatic protection.
1. Arbitrary / Fanciful (ex. Exxon, Kodak)
- TM bears no relationship whatsoever to the product it describes
- Are always protected
2. Suggestive (ex. Coppertone)
- TM suggests a product in people’s minds
- Are always protected
3. Descriptive (ex. Quiet-Cool)
- TM that directly describes something about the product or service in connection with which it is used as a mark
- Need secondary meaning to get protection –
- Exists when buyers associate a product with a single (though anonymous) source
- Public need not know the identity, only that the product comes from a single source
- Generally shown by evidence of advertising expenditures, consumer surveys, commercial success of the product, and attempts at imitation.
- Secondary meaning must be established at the time the junior user infringes to have claim
- Some courts (2nd Cir.) do not require secondary meaning if there are other equitable factors favoring the TM owner.
Zatarain’s (5th Cir. 1983)
TM is descriptive under the following factors:
(1) If the dictionary defines the TM in a similar sense.
(2) if standing alone it conveys info as to the characteristic of product
(3) If competitors would need to use the term to describe their product
(4) If other companies have actually used the TM in their product
“Fish-fry” has accumulated secondary meaning in the particular market.
4. Generic (ex. aspirin, cellophane)
- Marks are so associated with a particular product class that they have become the natural way to refer to that type of product
- Never get TM protection
Distinctiveness of Trade Dress and Product Configuration
Two-Pesos (S.Ct. 1992)
Trade Dress for product packaging can be inherently distinctive (i.e. arbitrary / fanciful or suggestive) and would not need secondary meaning to be given TM protection.
- trade dress still must be non-functional and distinctive under §43(a)
Wal-Mart (S. Ct. 2000)
Product design trade dress will only be distinctive, and attain protection under §43(a), upon a showing of secondary meaning – distinguishes itself from Two Pesos
- if the trade dress is ambiguous b/w product design and product packaging, the dress should be considered product design and required to show secondary meaning.
Priority
In general, the senior user of a protected mark can bring an action against a junior user of the same mark.
Use is determined by who is first to “use in commerce” under §45(a) TM definition.
Zazu v. L’Oreal
L’Oreal won the fight as first user
- L’Oreal had applied to register and put product on nationwide market before ZHD applied for registration – L’Oreal “used in commerce” first by nationwide marketing
- §43(a) gave TM rights when owner had “intent to use,” before even actual use
- At common law – TM rights granted at use of mark in association with a good or service
Brookfield v. West Coast
- same arguments in cyberspace (not discussed in class)
Trademark Office Procedures
Principle Register benefits to TM holder:
1. nationwide constructive use – prevents anyone else in entire country from using TM right
2. possibility of becoming incontestable after 5 years
3. Right to bring a federal claim w/o grounds for federal issue or diversity
4. Right to bar importation of infringements at customs
5. May recover attorney’s fees and treble damages if willful.
Supplemental Register befits to TM holder:
1. Allows TM status in other countries, even if no TM rights in U.S
2. Gives no other advantages beyond common law.
Grounds for Refusing Registration
- a number of grounds are cited in Lanham §2
- Including: (a) immoral, deceptive, or scandalous matter, (b) the flag of U.S. or other, (c) a name of another person, (d) any already registered mark, (e) is merely descriptive, is geographical primarily, geographically misdescriptive, a surname, or functional.
- Those under (e) can get approval w/ secondary meaning.
Hargo (Washington Redskins)
Court cancels TM registration b/c Π showed that mark may disparage Native Americans
- Still hold common law rights, just no registration
In re Nantucket
- the mark is not “primarily geographically deceptively misdescriptive”.