Attached chapter 14  we are using case 14-1: Toys “R” Us, Inc. v. Canarsie Kiddie Shop, Inc.

Read and understand the case. Show analysis and reasoning and make it clear you understand the material. 

Must incorporate the concepts of the chapter  to show your reasoning. 

Must use the case analysis format and Dedicate at least one heading to each outline topic.

2 pages due NO LATER than Wednesday 12PM EST!!! 

Chapter Fourteen Intellectual Property

Introduction to Intellectual Property

Intellectual property consists of the fruits of one’s mind. The laws of intellectual property protect property that is primarily the result of mental creativity rather than physical effort. This category includes trademarks, patents, trade secrets, and copyrights, which are discussed in that order in this chapter.

Trademarks

A 

trademark

 is a distinctive mark, word, design, picture, or arrangement used by a seller in conjunction with a product that tends to cause the consumer to identify the product with the producer. Even the shape of a product or package may be a trademark if it is nonfunctional.

trademark

A distinctive mark, word, design, picture, or arrangement used by the producer of a product that tends to cause consumers to identify the product with the producer.

Critical Thinking About The Law

1. In 

Chapter 13

 you studied real and personal property. Why might the legal rules for intellectual property be different in any fashion from the rules for real and personal property?

Clue: Consider the different attitudes we might have toward the results from thinking and the output from physical exertion.

2. Some argue that intellectual property should be available for everyone once it is produced by someone’s mind. What ethical norm underlies this attitude toward sharing mental output?

Clue: Should a person benefit because her mind creates an idea that other minds, for some reason, did not produce?

3. If an idea becomes a legal source of great wealth for a person, what information about the “discovery” would cause you to be more supportive of protecting the property right to the fruits of the discovery?

Clue: The play and movie Amadeus suggest that Mozart’s brilliant compositions resulted more from his genius than from any hard work on his part.

Table 14-1 Types of Marks Protected Under The Lanham Act

1. Product trademarks: marks affixed to a good, its packaging, or its labeling. 2. Service marks: marks used in conjunction with a service. 3. Collective marks: marks identifying the producers as belonging to a larger group, such as a trade union. 4. Certification marks: marks licensed by a group that has established certain criteria for use of the mark, such as “UL Tested” or “Good Housekeeping Seal of Approval.”

Even though the description of a trademark is very broad, there has still been substantial litigation over precisely what features can and cannot serve as a trademark. A sound (NBC’s three chimes and Metro-Goldwyn-Mayer Corporation’s roaring lion), a scent (plumeria blossoms on sewing thread and yarns), and even a color (green-gold of Qualitex dry-cleaning press pads) have all been found to constitute trademarks, because they distinguish the goods as unique and serve to identify their source.

Even phrases can be trademarked. For example, in 2014, Seattle Seahawks running back Marshawn Lynch filed a trademark for the phrase, “I’m just here so I won’t get fined,” the phrase he used to answer over 20 questions on Super Bowl XLIX media day. He trademarked the phrase to use on items in his Beast Mode apparel line. In 2013, he had trademarked the phrase “About that action BOSS,” a phrase from his only Superbowl XLVII interview, to be used for a similar purpose.

A trademark used intrastate is protected under state common law. To be protected in interstate use, the trademark must be registered with the U.S. Patent Office under the Lanham Act of 1947. Several types of marks, listed in 

Table 14-1

, are protected under this act.

If a mark is registered, the holder of the mark may recover damages from an infringer who uses that mark to pass off its own goods as those of the mark holder. The mark owner may also obtain an injunction prohibiting the infringer from using the mark. Only the latter remedy is available for an unregistered mark.

To register a mark with the Patent Office, one must submit a drawing of the mark and indicate when it was first used in interstate commerce and how it is used. The Patent Office conducts an investigation to verify these facts and will register a trademark as long as it is not generic, descriptive, immoral, deceptive, the name of a person whose permission has not been obtained, or substantially similar to another’s trademark.

It is sometimes difficult to determine whether a trademark will be protected, and once the trademark is issued, it is not always easy to predict when a similar mark will be found to infringe upon the registered trademark. The following case demonstrates a typical analysis used in a trademark-infringement suit.

 Case 14-1 Toys “R” Us, Inc. v. Canarsie Kiddie Shop, Inc.

District Court of the Eastern District of New York 559 F. Supp. 1189 (1983)

Beginning in 1960, Plaintiff Toys “R” Us, Inc., sold children’s clothes in stores across the country. The firm obtained a registered trademark and service mark for Toys “R” Us in 1961 and aggressively advertised and promoted its products using these marks. In the late 1970s, Defendant Canarsie Kiddie Shop, Inc., opened two children’s clothing stores within two miles of a Toys “R” Us shop and contemplated opening a third. The owner of Canarsie Kiddie Shop, Inc., called the stores Kids “r” Us. He never attempted to register the name. Toys “R” Us sued for trademark infringement in the federal district court.

Judge Glasser

In assessing the likelihood of confusion and in balancing the equities, this Court must consider the now classic factors.

1. Strength of the Senior User’s Mark

“[T]he term ‘strength’ as applied to trademarks refers to the distinctiveness of the mark, or more precisely, its tendency to identify goods sold under the mark as emanating from the particular, although possibly anonymous, source.” A mark can fall into one of four general categories, which, in order of ascending strength, are: (1) generic; (2) descriptive; (3) suggestive; and (4) arbitrary or fanciful. The strength of a mark is generally dependent both on its place upon the scale and on whether it has acquired secondary meaning.

A generic term “refers, or has come to be understood as referring to the genus of which the particular product is a species.” A generic term is entitled to no trademark protection whatsoever, since any manufacturer or seller has the right to call a product by its name.

A descriptive mark identifies a significant characteristic of the product, but is not the common name of the product. A mark is descriptive if it “informs the purchasing public of the characteristics, quality, functions, uses, ingredients, components, or other properties of a product, or conveys comparable information about a service.” To achieve trademark protection a descriptive term must have attained secondary meaning, that is, it must have “become distinctive of the applicant’s goods in commerce.”

A suggestive mark is one that “requires imagination, thought, and perception to reach a conclusion as to the nature of the goods.” These marks fall short of directly describing the qualities or functions of a particular product or service, but merely suggest such qualities. If a term is suggestive, it is entitled to protection without proof of secondary meaning.

Arbitrary or fanciful marks require no extended definition. They are marks which in no way describe or suggest the qualities of the product.

The Toys “R” Us mark is difficult to categorize.

The strength of the plaintiff’s mark must be evaluated by examining the mark in its entirety. . . . I agree that the Toys “R” Us mark serves to describe the business of the plaintiff, and in this sense is merely descriptive. This descriptive quality, however, does require some “imagination, thought, and perception” on the part of the consumer since the plaintiff’s mark, read quite literally, conveys the message, “we are toys,” rather than “we sell toys.”

Whether the “leap of imagination” required here is sufficient to render the mark suggestive rather than descriptive is a question with no clear-cut answer. Such an absolute categorization is not essential, however, since the defendants concede that through the plaintiff’s marketing and advertising efforts the Toys “R” Us mark has acquired secondary meaning in the minds of the public, at least in relation to its sale of toys. Such secondary meaning assures that the plaintiff’s mark is entitled to protection even if it is viewed as merely descriptive. Because I find that through the plaintiff’s advertising and marketing efforts the plaintiff’s mark has developed strong secondary meaning as a source of children’s products, it is sufficient for purposes of this decision to note merely that the plaintiff’s mark is one of medium strength, clearly entitled to protection, but falling short of the protection afforded an arbitrary or fanciful mark.

2. Degree of Similarity between the Two Marks

[T]he key inquiry is . . . whether a similarity exists which is likely to cause confusion. This test must be applied from the perspective of prospective purchasers. Thus, it must be determined whether “the impression which the infringing [mark] makes upon the consumer is such that he is likely to believe the product is from the same source as the one he knows under the trademark.” In making this determination, it is the overall impression of the mark as a whole that must be considered.

Turning to the two marks involved here, various similarities and differences are readily apparent. The patent similarity between the marks is that they both employ the phrase, “R” Us. Further, both marks employ the letter “R” in place of the word “are,” although the plaintiff’s mark uses an inverted capitalized “R,” while the defendants generally use a non-inverted lower case “r” for their mark.

The most glaring difference between the marks is that in one the phrase “R” Us is preceded by the word “Toys,” while in the other it is preceded by the word “Kids.” Other differences include the following: plaintiff’s mark ends with an exclamation point, plaintiff frequently utilizes the image of a giraffe alongside its mark, plaintiff’s mark is set forth in stylized lettering, usually multi-colored, and plaintiff frequently utilizes the words, “a children’s bargain basement” under the logo in its advertising.

I attach no great significance to the minor lettering differences between the marks, or to the images or slogans usually accompanying the plaintiff’s mark. . . . While the marks are clearly distinguishable when placed side by side, there are sufficiently strong similarities to create the possibility that some consumers might believe that the two marks emanated from the same source. The similarities in sound and association also create the possibility that some consumers might mistake one mark for the other when seeing or hearing the mark alone. The extent to which these possibilities are “likely” must be determined in the context of all the factors present here.

3. Proximity of the Products

Where the products in question are competitive, the likelihood of consumer confusion increases. . . . [B]oth plaintiff and defendants sell children’s clothing; . . . the plaintiff and defendants currently are direct product competitors.

4. The Likelihood That Plaintiff Will “Bridge the Gap” 

“[B]ridging the gap” refers to two distinct possibilities: first, that the senior user presently intends to expand his sales efforts to compete directly with the junior user, thus creating the likelihood that the two products will be directly competitive; second, that while there is no present intention to bridge the gap, consumers will assume otherwise and conclude, in this era of corporate diversification, that the parties are related companies. . . . I find both possibilities present here.

5. Evidence of Actual Confusion 

Evidence of actual confusion is a strong indication that there is a likelihood of confusion. It is not, however, a prerequisite for the plaintiff to recover.

6. Junior User’s Good Faith 

The state of mind of the junior user is an important factor in striking the balance of the equities. In the instant case, Mr. Pomeranc asserted at trial that he did not recall whether he was aware of the plaintiff’s mark when he chose to name his store Kids “r” Us in 1977.

I do not find this testimony to be credible. In view of the proximity of the stores, the overlapping of their products, and the strong advertising and marketing effort conducted by the plaintiff for a considerable amount of time prior to the defendants’ adoption of the name Kids “r” Us, it is difficult to believe that the defendants were unaware of the plaintiff’s use of the Toys “R” Us mark.

The defendants adopted the Kids “r” Us mark with knowledge of plaintiff’s mark. A lack of good faith is relevant not only in balancing the equities, but also is a factor supporting a finding of a likelihood of confusion.

7. Quality of the Junior User’s Product 

If the junior user’s product is of a low quality, the senior user’s interest in avoiding any confusion is heightened. In the instant case, there is no suggestion that the defendants’ products are inferior, and this factor therefore is not relevant.

8. Sophistication of the Purchasers 

The level of sophistication of the average purchaser also bears on the likelihood of confusion. Every product, because of the type of buyer that it attracts, has its own distinct threshold for confusion of the source or origin.

The goods sold by both plaintiff and defendants are moderately priced clothing articles, which are not major expenditures for most purchasers. Consumers of such goods, therefore, do not exercise the same degree of care in buying as when purchasing more expensive items. Further, it may be that the consumers purchasing from the plaintiff and defendants are influenced in part by the desires of their children, for whom the products offered by plaintiff and defendants are meant.

9. Junior User’s Goodwill 

[A] powerful equitable argument against finding infringement is created when the junior user, through concurrent use of an identical trademark, develops goodwill in their [sic] mark. Defendants have not expended large sums advertising their store or promoting its name. Further, it appears that most of the defendants’ customers are local “repeat shoppers,” who come to the Kids “r” Us store primarily because of their own past experiences with it. In light of this lack of development of goodwill, I find that the defendants do not have a strong equitable interest in retaining the Kids “r” Us mark.

Conclusion on Likelihood of Confusion

[T]he defendants’ use of the Kids “r” Us mark does create a likelihood of confusion for an appreciable number of consumers.

In reaching this determination, I place primary importance on the strong secondary meaning that the plaintiff has developed in its mark, the directly competitive nature of the products offered by the plaintiff and defendants, the plaintiff’s substantially developed plans to open stores similar in format to those of the defendants’, the lack of sophistication of the purchasers, the similarities between the marks, the defendants’ lack of good faith in adopting the mark, and the limited goodwill the defendants have developed in their mark.

*

Judgment for the Plaintiff, Toys “R” Us.

Critical Thinking About The Law

Legal reasoning and decision making almost always entail a reliance on tradition. In Case 14-1, the court’s deference to tradition is especially strong. In applying the “classic factors” to the case, the court judges the present case on the basis of the way in which an allegedly similar earlier case was judged.

The implications of relying on tradition in legal reasoning are quite significant. The questions that follow will help you to consider this significance more deeply.

1. To demonstrate your ability to recognize reasoning by analogy, identify the implicit analogy that pervades the court’s reasoning in Case 14-1.

Clue: Consider the source of the “classic factors.”

2. What important piece of missing information hinders your ability to make a sound critical judgment about the appropriateness of the court’s reasoning?

Clue: Refer to your answer to Question 1; it is directly related to this question.

The potential for consumer confusion seems to be a very important consideration in a trademark-infringement case. In the Dentyne Ice chewing gum case, the court ruled that there was little possibility for consumer confusion between “Dentyne Ice” and “Icebreakers” because Dentyne was a common household name; thus, Dentyne did not infringe on Nabisco’s trademark.

Applying the law to the facts . . 

Your roommate cannot find a summer job. He decides that he is going to make money instead by selling silkscreened T-shirts that have a picture of an upside down “swoosh” underneath the words “JUST DONE IT.” He asked your opinion of his proposed business venture. What do you tell him?

Trade Dress

The term 

trade dress

 refers to the overall appearance and image of a product. Trade dress is entitled to the same protection as a trademark. To succeed on a claim of trade-dress infringement, a party must prove three elements: (1) the trade dress is primarily nonfunctional; (2) the trade dress is inherently distinctive or has acquired a secondary meaning; and (3) the alleged infringement creates a likelihood of confusion.

trade dress

The overall appearance and image of a product that has acquired secondary meaning.

The main focus of a case of trade-dress infringement is usually on whether or not there is likely to be consumer confusion. For example, in a 1996 case, Tour 18, Limited, a golf course, copied golf holes from famous golf courses without permission of the course owners.

1

 In copying a hole from one of the most famous courses in the country, Harbour Town Hole 19, the defendant even copied the Harbour Town Lighthouse, which is the distinctive feature of that hole. In its advertising, Tour 18 prominently featured pictures of this hole, including the lighthouse. The operator of the Harbour Town course sued Tour 18 for trade-dress infringement. The court found that there was infringement and made Tour 18 remove the lighthouse and disclaim in its advertising any affiliation with the owner of the Harbour Town course.

1 

Pebble Beach Co. v. Tour 18, Ltd. 942 F. Supp. 1513 (S.D. Tex. 1996).

Trade-dress violations occur over a wide range of products. Two very different examples of trade-dress infringement include Bubba’s Bar-B-Q Oven v. Holland Co.,

2

 and Two Pesos v. Taco Cabana.

3

 In the first case, Bubba’s had almost exactly copied the physical appearance of Holland Company’s very successful gas-fired barbecue grill, which the court found to be trade-dress infringement. In the second case, the court found that Taco Cabana’s trade dress consisted of “a festive eating atmosphere having interior dining and patio areas decorated with artifacts, bright colors, paintings and murals”; “a patio that has interior and exterior areas with the interior patio capable of being sealed off from the outside patio by overhead garage doors”; a stepped exterior of the building that has “a festive and vivid color scheme using top border paint and neon stripes”; and “bright awnings and umbrellas.”
*
When Two Pesos opened a series of competing Mexican restaurants that mimicked those features almost exactly, the court found Two Pesos guilty of trade-dress infringement.

2 

175 F.3d 1013; Docket No. 98-1029 (4th Cir. 1999).

3 

112 S. Ct. 2753 (1994).

A claim of trade-dress infringement is often accompanied by a claim of trademark infringement. For example, the Chippendale’s name is protected as a trademark, and their dancers’ costume—cuffs and a collar—is protected as trade dress. Chippendale’s sued a European gaming machine manufacturer who had made and distributed “Chickendale’s” slot machines featuring dancing chickens wearing cuffs and collars. The case settled in 2010 with Chippendale’s receiving a cash settlement and the transfer of the mark Chickendale’s to them.

4

4 

Chippendales USA, LLC v. Atronic Americas, LLC, Civ. No. 03-904 (D.N.J.), as reported at Chippendale’s website. Accessed April 20, 2010 at http://www.chippendales.com/company/victories.php.

Technology and the Legal Environment Trademarks and Domain Names

If a business has a very strong trademark, what better domain name to have than that trademark? Unfortunately, the same trademark may be owned by two companies selling noncompeting goods, yet there can be only one user of any single domain name.

Domain names are important because they are the way people and businesses are located on the Web. A domain name is made up of a series of domains separated by periods. Most websites have two domains. The first-level domain, the one that the address ends with, generally identifies the type of site. For example, if it is a government site, it will end in gov. An educational site will end in edu, a network site in net, an organization in org, and a business in com or biz. These top-level domain names are the same worldwide.

Until recently, these top-level domain names had to be in Latin language script. However, as of mid-2010, four countries (Egypt, the Russian Federation, Saudi Arabia, and the United Arab Emirates) have been authorized to use their own non-Latin language scripts in the top-level domain portion of their Internet address names.

The second-level domain is usually the name of whoever maintains the site. For a college, for example, it would be an abbreviation of the college, as in bgsu. Businesses generally use their firm name or some other trademark associated with their product, because that name will obviously make it easier for their customers to find them.

So, how does a firm go about securing a domain name that reflects its trademark? The Internet Corporation for Assigned Names and Numbers (ICANN) is the nonprofit corporation that is responsible for coordinating technical Internet functions, including the management of the domain name system. ICANN has accredited a number of companies, called registrars, to issue domain names to the public and place their owners’ information on the registry. Network Solutions, Inc. (NSI), which is funded by the National Science Foundation, was the first registrar, but has now been joined by several other firms. A list of ICANN-accredited registrars can be found at http://www.icann.org/en/registrars /accredited-list.html.

Anyone seeking to register a domain name should contact one of these registrars and provide the necessary contact information so that a domain name can be issued. A registrant must now state in its application that the name will not infringe on anyone else’s intellectual property rights, that the name is not being registered for an unlawful purpose, that statements in the registration agreement are complete and accurate, and that the domain name will not be knowingly used in violation of any law. Registrars have the flexibility to offer initial and renewal registrations in 1-year increments, for up to 10 years.

Domain names may be cancelled or transferred when a complaint is filed with ICANN and the dispute is resolved against a registrant in an administrative proceeding held in accordance with the Uniform Domain Name Dispute Resolution Policy. Claims subject to dispute resolution include allegations that your domain name is confusingly similar to a trademark or service mark in which the complainant has rights and that your domain name has been registered and is being used in bad faith.

5

5 

ICANN Uniform Domain Name Dispute Resolution Policy, available at www.icann.org/udrp /udrp-policy-24oct99.htm.

Some firms have tried to get the domain name they desire by going to another country. That alternative is certainly a possibility. Many countries, however, require that a firm be incorporated within their borders before it can gain the right to the domain name there. Also, an additional problem is that trademark law relating to domain names is even more unclear abroad.

For the new entrepreneur, the best advice is to try to simultaneously apply for federal trademark protection and register the domain name; for those not yet on the Web, the sooner you get your domain name, the more likely you are to get the name you want. Moreover, if you feel that your mark is being violated by another’s domain name, you may want to sue them for infringement, because the unauthorized use of another’s trademark in a domain name has been found to be illegal. You may, however, be in for quite a fight, because this is a new area of the law.

Federal Trademark Dilution Act of 1995

Under the Lanham Act, trademark owners were protected from the unauthorized use of their marks on only competing goods or related goods where the use might lead to consumer confusion. Consequently, a mark might be used without permission on completely unrelated goods, thereby potentially diminishing the value of the mark. In response to this problem, a number of states passed trademark dilution laws, which prohibited the use of “distinctive” or “famous” trademarks, such as McDonald’s, even without a showing of consumer confusion.

In 1995, Congress made similar protections available at the federal level with the Federal Trademark Dilution Act (FTDA). Trademark dilution occurs through either “blurring” or “tarnishment.” Blurring occurs when the distinctiveness of the famous mark is reduced by its association with a similar mark. For example, in 2011, the Trademark Trial and Appeal Board found that the use of the mark “JUST JESU IT” would cause dilution by blurring of Nike’s “JUST DO IT” mark. Tarnishment occurs when someone uses a mark in a way that causes the famous mark to be linked with an inferior quality product or an unwholesome category of products. For example, using candyland.com for a child pornography site constituted dilution by tarnishment of Hasbro’s trademarked “Candyland” for its children’s board game.

6

6 

Hasbro Inc. v. Internet Entm’t. Grp., Ltd.

In one of the first cases decided under the FTDA, the court said that the protection available under this act extended not just to identical marks but also to similar marks. In that case, Ringling Brothers–Barnum & Bailey challenged Utah’s use of the slogan “The Greatest Snow on Earth” as diluting its famous slogan, “The Greatest Show on Earth.” In denying Utah’s motion to dismiss because the slogans were not identical, the court said that the marks need not be identical to dilute a famous mark. In the case below the plaintiff alleged both trademark infringement and trademark dilution.

 Case 14-2 Victor Moseley and Cathy Moseley et al., dba Victor’s Little Secret v. V Secret Catalogue, Inc. et al.

Supreme Court of the United States 537 U.S. 418, 123 S. Ct. 1115 (2003)

Petitioners, Victor and Cathy Moseley, own and operate an adult novelty store named “Victor’s Secret” in a strip mall in Elizabethtown, Kentucky. An army colonel saw an advertisement for the store and thought petitioners were using a reputable trademark to promote unwholesome merchandise, so he sent a copy of the advertisement to respondents, the corporations that own the Victoria’s Secret trademarks. These corporations operate more than 750 Victoria’s Secret stores and spent more than $55 million advertising their brand in 1998.

Respondents asked petitioners to discontinue using the name, and they responded by changing the store’s name to “Victor’s Little Secret.” Respondents then filed a lawsuit containing four separate claims for (1) trademark infringement, alleging that petitioners’ use of their trade name was “likely to cause confusion and/or mistake”; (2) unfair competition, alleging misrepresentation; (3) “federal dilution” in violation of the FTDA; and (4) trademark infringement and unfair competition in violation of the common law of Kentucky. The dilution count was premised on the claim that petitioners’ conduct was “likely to blur and erode the distinctiveness” and “tarnish the reputation” of the Victoria’s Secret trademark.

Finding that the record contained no evidence of actual confusion between the parties’ marks, the district court concluded that “no likelihood of confusion exists as a matter of law” and entered summary judgment for the Moseleys on the infringement and unfair competition claims. With respect to the FTDA claim, however, the court ruled for V Secret Catalogue, and the Moseleys appealed. The Sixth Circuit affirmed, finding that respondents’ mark was “distinctive” and that the evidence established “dilution” even though no actual harm had been proved.

Justice Stevens

The Victoria’s Secret mark is unquestionably valuable and petitioners have not challenged the conclusion that it qualifies as a “famous mark” within the meaning of the statute. Moreover, as we understand their submission, petitioners do not contend that the statutory protection is confined to identical uses of famous marks, or that the statute should be construed more narrowly in a case such as this.

The District Court’s decision in this case rested on the conclusion that the name of petitioners’ store “tarnished” the reputation of respondents’ mark, and the Court of Appeals relied on both “tarnishment” and “blurring” to support its affirmance. Petitioners have not disputed the relevance of tarnishment, presumably because that concept was prominent in litigation brought under state antidilution statutes and because it was mentioned in the legislative history. . . . Indeed, the contrast between the state statutes, which expressly refer to both “injury to business reputation” and to “dilution of the distinctive quality of a trade name or trademark,” and the federal statute which refers only to the latter, arguably supports a narrower reading of the FTDA.

The relevant text of the FTDA provides that “the owner of a famous mark” is entitled to injunctive relief against another person’s commercial use of a mark or trade name if that use “causes dilution of the distinctive quality” of the famous mark. This text unambiguously requires a showing of actual dilution, rather than a likelihood of dilution.

This conclusion is fortified by the definition of the term “dilution” itself. That definition provides:

“The term ‘dilution’ means the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of—

“(1) competition between the owner of the famous mark and other parties, or

“(2) likelihood of confusion, mistake, or deception.”

The contrast between the initial reference to an actual “lessening of the capacity” of the mark, and the later reference to a “likelihood of confusion, mistake, or deception” in the second caveat confirms the conclusion that actual dilution must be established.

Of course, that does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved. . . . We do agree, however, with that court’s conclusion that, at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution. As the facts of that case demonstrate, such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement for dilution under the FTDA. For even though Utah drivers may be reminded of the circus when they see a license plate referring to the “greatest snow on earth,” it by no means follows that they will associate “the greatest show on earth” with skiing or snow sports, or associate it less strongly or exclusively with the circus. “Blurring” is not a necessary consequence of mental association. (Nor, for that matter, is “tarnishing.”)

The record in this case establishes that an army officer who saw the advertisement of the opening of a store named “Victor’s Secret” did make the mental association with “Victoria’s Secret,” but it also shows that he did not therefore form any different impression of the store that his wife and daughter had patronized. There is a complete absence of evidence of any lessening of the capacity of the Victoria’s Secret mark to identify and distinguish goods or services sold in Victoria’s Secret stores or advertised in its catalogs. The officer was offended by the ad, but it did not change his conception of Victoria’s Secret. His offense was directed entirely at petitioners, not at respondents. Moreover, the expert retained by respondents had nothing to say about the impact of petitioners’ name on the strength of respondents’ mark.

Noting that consumer surveys and other means of demonstrating actual dilution are expensive and often unreliable, respondents and their amici argue that evidence of an actual “lessening of the capacity of a famous mark to identify and distinguish goods or services” may be difficult to obtain. It may well be, however, that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proved through circumstantial evidence—the obvious case is one where the junior and senior marks are identical. Whatever difficulties of proof may be entailed, they are not an acceptable reason for dispensing with proof of an essential element of a statutory violation. The evidence in the present record is not sufficient to support the summary judgment on the dilution count, and the judgment is therefore reversed.
*

Judgment reversed for Petitioners.

Applying the law to the facts . . 

Louis Vuitton Malletier is a well-known producer of luxury luggage, purses, leather goods, and accessories, and has several widely recognized registered trademarks for Louis Vuitton, the monogram LV, and designs that combine the LV mark with images of stars, flowers, and circles. They also have a limited line of luxury pet accessories, such as collars and leashes, that they sell at their upper-end boutiques, at prices ranging from $200 to $1,600. They sell no dog toys. Haute Diggity Dog produces and sells a line of pet chew toys and beds with names parodying elegant, high-end products with names such as Chewy Vuitton and Dog Perignon. The chew toys are in the shape of the product they are parodying, so they sell a chewy plastic handbag with the monogram CV and the name Chewy Vuitton on it. These products are primarily sold in pet shops for around $20. If Louis Vuitton wanted to try to stop Haute Diggity Dog from selling these products, how would he attempt to do so? What defenses would Haute Diggity Dog raise? What do you think the outcome of this dispute would be?

Patents

Patents

 are used to protect inventions, which are defined by the patent office as including any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof; designs for an article of manufacture; asexually reproduced plants; or living material invented by a person. For patent protection to be granted, certain criteria must be satisfied (

Table 14-2

). First, the object of the patent must be novel, or new. No one else must have previously made or published the plans for this object. The second criterion is that it be useful, unless it is a design patent. It must provide some utility to society. The final criterion is that it be nonobvious. The invention must not be one that the person of ordinary skill in the trade could have easily discovered.

patent

Grants the holder the exclusive right to produce, sell, and use a product, process, invention, machine, or asexually reproduced plant for 20 years.

Table 14-2 Criteria for a Patent

· Novel · Useful · Nonobvious

While the criteria for a patent may seem straightforward, it is not always easy to determine whether something is patentable. One issue that has been very controversial since the 1990s is whether business methods should be patentable. The United States Supreme Court had the opportunity to make a definitive ruling on this matter in 2010, and while in the particular case they did not allow a patent on the business method, they did not categorically find that business methods could not be patented. The uncertainty of this area is clear by the fact that when the case was decided, while all the justices agreed that the subject matter of the case was not patentable, there were three separate opinions with no single opinion garnering a majority of the justices’ support.

 Case 14-3 Bilski v. Kappos

United States Supreme Court 130 S. Ct. 3218 (2010)

Petitioners filed an application to obtain a patent for a claimed invention that explains how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. The key claims were claim 1, which describes a series of steps instructing how to hedge risk, and claim 4, which places the claim 1 concept into a simple mathematical formula. The remaining claims explain how claims 1 and 4 can be applied to allow energy suppliers and consumers to minimize the risks resulting from fluctuations in market demand. The patent examiner rejected the application on the grounds that the invention was not implemented on a specific apparatus, merely manipulated an abstract idea, and solved a purely mathematical problem.

The Board of Patent Appeals and Interferences agreed and affirmed. The Federal Circuit, in turn, affirmed. The en banc court rejected its prior test for determining whether a claimed invention was a patentable “process” under the Patent Act, i.e., whether the invention produced a “useful, concrete, and tangible result,” and held instead that a claimed process is patent eligible if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. Concluding that this “machine-or-transformation test” is the sole test for determining patent eligibility of a “process” under § 101, the court applied the test and held that the application was not patent eligible. The U.S. Supreme Court agreed to hear the appeal.

Justice Kennedy

Section 101 specifies four independent categories of inventions or discoveries that are patent eligible: processes, machines, manufactures, and compositions of matter. In choosing such expansive terms, . . . Congress plainly contemplated that the patent laws would be given wide scope . . . Congress took this permissive approach to patent eligibility to ensure that “ ‘ingenuity should receive a liberal encouragement.’ ”

This Court’s precedents provide three specific exceptions to § 101’s broad principles: “laws of nature, physical phenomena, and abstract ideas.” While these exceptions are not required by the statutory text, these exceptions are consistent with the notion that a patentable process must be “new and useful.” . . .

The § 101 eligibility inquiry is only a threshold test. Even if a claimed invention qualifies in one of the four categories, it must also satisfy “the conditions and requirements of this title. Those requirements include that the invention be novel, nonobvious, and fully and particularly described.”

The present case involves an invention at issue that is claimed to be a “process” under § 101. Section 100(b) defines as a “process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”

Under the Court of Appeals’ formulation, an invention is a “process” only if: “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” . . . This Court has “more than once cautioned that courts ‘should not read into the patent laws limitations and conditions which the legislature has not expressed.’ ”

. . . Any suggestion in this Court’s case law that the Patent Act’s terms deviate from their ordinary meaning has only been an explanation for the exceptions for laws of nature, physical phenomena, and abstract ideas.

This Court has not indicated that the existence of these well-established exceptions gives the Judiciary carte blanche to impose other limitations that are inconsistent with the text and the statute’s purpose and design. Concerns about attempts to call any form of human activity a “process” can be met by making sure the claim meets the requirements of § 101.

The Court of Appeals incorrectly concluded that this Court has endorsed the machine-or-transformation test as the exclusive test. . . .

This Court’s precedents establish that the machine- or-transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible “process.”

It is true that patents for inventions that did not satisfy the machine-or-transformation test were rarely granted in earlier eras, especially in the Industrial Age, . . . But times change. Technology and other innovations progress in unexpected ways. For example, it was once forcefully argued that until recent times, “well-established principles of patent law probably would have prevented the issuance of a valid patent on almost any conceivable computer program.” A categorical rule denying patent protection for “inventions in areas not contemplated by Congress . . . would frustrate the purposes of the patent law.”

The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age—for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. As numerous amicus briefs argue, the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.

. . . In searching for a limiting principle, this Court’s precedents on the unpatentability of abstract ideas provide useful tools. . . . [T]he Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under § 101.

Finally, even if a particular business method fits into the statutory definition of a “process,” that does not mean that the application claiming that method should be granted. In order to receive patent protection, any claimed invention must be novel, § 102, nonobvious, § 103, and fully and particularly described, § 112. These limitations serve a critical role in adjusting the tension, ever present in patent law, between stimulating innovation by protecting inventors and impeding progress by granting patents when not justified by the statutory design.

Petitioners seek to patent both the concept of hedging risk and the application of that concept to energy markets. . . . Rather than adopting categorical rules that might have wide-ranging and unforeseen impacts, the Court resolves this case narrowly on the basis of this Court’s decisions in Benson, Flook, and Diehr, which show that petitioners’ claims are not patentable processes because they are attempts to patent abstract ideas. Indeed, all members of the Court agree that the patent application at issue here falls outside of § 101 because it claims an abstract idea.
*

Affirmed.

As technology develops, the patent law faces increasing challenges. While the high court has upheld the patentability of a genetically engineered, living bacterium that is capable of breaking down crude oil,

7

 in 2014, the Supreme Court held that a naturally occurring segment of DNA that has been isolated is not eligible for patent protection.

8

7 

Diamond v. Chakrabarty, 447 U.S. 303 (1980).

8 

Association for Molecular Pathology v. Myriad Genetics, 133 S. Ct. 2107 (2014).

Once a patent is issued, it gives its holder the exclusive right to produce, sell, and use the object of the patent for 20 years. The holder of the patent may license, or allow others to manufacture and sell, the patented object. In most cases, patents are licensed in exchange for the payment of royalties, a sum of money paid for each use of the patented process.

The only restriction on the patent holder is that he or she may not use the patent for an illegal purpose. The two most common illegal purposes would be tying arrangements and cross-licensing. A 

tying arrangement

 occurs when the patent holder issues a license to use the patented object only if the licensee agrees also to buy some nonpatented product from the holder. 

Cross-licensing

 occurs when two patent holders license each other to use their patents only on the condition that neither licenses anyone else to use his or her patent without the other’s consent. Both of these activities are unlawful because they tend to reduce competition.

tying arrangement

A restraint of trade wherein the seller permits a buyer to purchase one product or service only if the buyer agrees to purchase a second product or service. For example, a patent holder issues a license to use a patented object on condition that the licensee also agrees to buy nonpatented products from the patent holder.

cross-licensing

An illegal practice in which two patent holders license each other to use their patented objects only on condition that neither will license anyone else to use those patented objects without the other’s consent.

To obtain a patent, one generally contacts an attorney licensed to practice before the U.S. Patent Office. The attorney does a patent search to make sure that no other similar patent exists. If it does not, the attorney fills out a patent application and files it with the Patent Office. The Patent Office evaluates the application, and, if the object meets the criteria already described, a patent is issued.

In 2011, Congress passed the America Invents Act, which changed the U.S. patent system in a number of ways, the most important being how the patent office resolves a situation where the first to file for the patent was not the first to invent the object of the patent. Prior to the Act, the first to invent, assuming adequate records to substantiate the invention, would receive the patent, whereas now the patent goes to the first to file. This change brings us in line with what is done in Japan and Europe. The Act also made changes in the reexamination process to allow discovery requests during the process and makes it easier and less expensive for small businesses and entrepreneurs to file for patents.

Once the patent is issued, the holder may bring a patent-infringement suit in a federal court against anyone who uses, sells, or manufactures the patented invention without the permission of the patent holder. A successful action may result in an injunction prohibiting further use of the patented item by the infringer and also an award of damages. Sometimes, however, the result of the case is that the holder loses the patent. This loss would occur when the alleged infringer is able to prove that the Patent Office should not have issued the patent in the first place.

Unfortunately, despite the seemingly careful process for awarding patents, many patents are issued for ideas that are neither new nor nonobvious, or are overly broad, covering ordinary computing processes that should never have been patented. So-called patent trolls—companies that have no intention of ever using the patents they hold for any manufacturing or creative purpose—buy up these overly broad and vague patents, and then send threatening letters out to people and companies whom they argue are infringing on their patents. They threaten litigation if the party doesn’t agree to pay them a licensing fee. Even though the trolls’ claims are usually baseless, many companies or individuals will go ahead and pay the fee to avoid what they know will be costly and lengthy litigation.

One of these so-called trolls, a company called Lodsys, targets small app developers, telling them that their in-app purchasing technology, which is generally provided by Apple or Google, infringes on Lodsys’s patent. The company has filed a lawsuit against small app developers. Apple has intervened in the case, arguing that the license it obtained from the former owner of the patent covered its app developers’ use of the technology. Google has sought to have the patent reexamined on grounds that the patent isn’t valid. But these actions take years, and no one knows how many small app developers are being threatened by Lodsys.

9

9 

Patent Trolls, Electronic Freedom Foundation. Accessed April 15, 2015 at https://www.eff.org /issues/resources-patent-troll-victims.

There is widespread concern that these patent trolls are abusing the patent system and may be harming the very innovation the system is supposed to encourage. In fact, a study in 2014 revealed that roughly 67 percent of the patent claims filed that year were by nonpracticing entities, parties who buy up others’ intellectual property and then sue anyone they think may be “infringing” on the patents.

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 President Obama issued five patent reform executive orders during 2014 in an attempt to address this issue by, among other strategies, requiring the Patent and Trademark Office to stop issuing overly broad patents and requiring patent applicants to provide more details about what invention they are claiming.

11

 At the time this book went to press, Congress was considering bipartisan legislation designed to make it harder for these patent trolls to operate.

12

10 

Analee Newitz, “Google Attempts to Fight Patent Trolls with a Pretty Dubious Strategy.” Accessed May 2, 2015 at http://gizmodo.com/google-attempts-to-fight-patent-trolls-by-buying-pat-1700413270.

11 

David Kravitz, “History Will Remember Obama as the Great Slayer of Patent Trolls,” Wired. Accessed May 5, 2015 at http://www.reuters.com/article/2015/02/05/us-congress-patents -usa-idUSKBN0L92X720150205.

12 

Diane Bartz, “House Takes up Bill Designed to Fight Patent Trolls,” Reuters. Accessed May 4, 2015 at http://www.reuters.com/article/2015/02/05/us-congress-patents-usa-idUSKBN0L92X720150205.

A common dilemma facing an inventor is whether to protect an invention through patent or trade-secret law. If the inventor successfully patents and defends the patent, the patent holder has a guarantee of an exclusive monopoly on the use of the invention for 20 years, a substantial period of time. The problem for the inventor is that once this period is over, the patented good goes into the public domain and everyone has access to it. There is also the risk that the patent may be successfully challenged and the protection lost prematurely.

Trade-secret law, in contrast, could protect the invention in perpetuity. This method is described in the next section.

Trade Secrets

A 

trade secret

 is a process, product, method of operation, or compilation of information that gives a businessperson an advantage over his or her competitors. Inventions and designs may also be considered trade secrets. A trade secret is protected by the common law from unlawful appropriation by competitors as long as it is kept secret and comprises elements not generally known in the trade. Businesses usually try to protect their trade secrets by having employees with access to trade secrets sign nondisclosure agreements.

trade secret

A process, product, method of operation, or compilation of information used in a business that is not known to the public and that may bestow a competitive advantage on the business.

Competitors may discover the “secret” by any lawful means, such as reverse engineering or by going on public tours of plants and observing the use of trade secrets. Discovery of the secret means there is no longer a trade secret to be protected.

Under common law, to enjoin a competitor from continuing the use of a trade secret, or to recover damages caused by the use of the secret, a plaintiff must prove that:

1. a trade secret actually existed;

2. the defendant acquired it through unlawful means, such as breaking into the plaintiff’s business and stealing it or securing it through misuse of a confidential relationship with the plaintiff or one of the plaintiff’s present or former employees; and

3. the defendant used the trade secret without the plaintiff’s permission.

Economic Espionage Act

Trade secrets are also protected under the Economic Espionage Act. Under Section 1832 of the Act, an individual who misappropriates a trade secret related to a product produced for interstate commerce, with the knowledge or intent that the misappropriation will harm the owner of the trade secret, may be subject to a prison term of up to 10 years; an organization convicted under the section may be fined up to $5 million. The misappropriation of trade secrets with the knowledge that the secret will benefit a foreign power may lead to individual prison sentences of up to 15 years per offense and fines for organizations of up to $10 million under Section 1831.

Copyrights

Copyrights

 protect the expression of creative ideas. They do not protect the ideas themselves but only their fixed form of expression. Copyrights protect a diverse range of creative works, such as books, periodicals, musical compositions, plays, motion pictures, sound recordings, lectures, works of art, and computer programs. Titles and short phrases may not be copyrighted.

copyright

The exclusive legal right to reproduce, publish, and sell the fixed form of an expression of an original creative idea.

There are three criteria for a work to be copyrightable (

Table 14-3

). First, it must be fixed, which means set out in a tangible medium of expression. Next, it must also be original. Finally, it must be creative.

Table 14-3 Criteria for a Copyright

· Fixed form · Original · Creative

A copyright arises under common law when the idea is expressed in tangible form, and is protected for the life of its creator plus 70 years, or, if the owner is a publisher, for 95 years after the date of publication or 120 years after creation, whichever occurs first.

Applying the law to the facts . . 

Lucky Break Wishbone designed wishbones using graphite electrodes to make them smooth and “attractive and sleek.” They were thinner in the arms and more rounded on the edges than actual wishbones. The company then copyrighted, produced, and sold these wishbones. Sears subsequently started producing and selling similar wishbones. When Lucky Break sued them for copyright infringement, Sears claimed that the wishbones did not qualify for copyright protection. Who do you think should win? Why?

Under the common law of copyright, any infringer may be enjoined from reproducing a copyrighted work. For the creator to be able to sue the infringer to recover damages arising from the infringement, however, the copyrighted work must be registered. One may register a work by filing a form with the Registrar of Copyright and providing two copies of the copyrighted materials to the Library of Congress. Originally, publication of the work had to be accompanied by a notice of copyright, such as, in the case of printed works, for example, the word “copyright” and the symbol © or the abbreviation “copr.,” followed by the first date of publication and the name of the copyright owner. While this notice is no longer required, it is still a good idea because it informs the public that the work is protected by copyright, identifies the copyright owner, and shows the year of first publication. It also ensures that in an infringement suit, the infringer cannot claim innocent infringement as a defense to reduce damages.

Statutory damages of up to $30,000 per infringement or $150,000 per willful infringement plus attorney fees are available only if the work was registered either prior to the infringement or within 90 days of the first publication of the work. Copyright holders may alternatively seek actual damages and the defendant’s profits on the copyrighted works.

Fair Use Doctrine

A source of controversy involving copyrighted works is application of the 

fair use doctrine

. This doctrine provides that a portion of a copyrighted work may be reproduced for purposes of “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarships, and research.” When deciding whether the use is fair, the court looks not only at the purpose of the use, but also at the amount of the work that is used and whether the use has any impact on the commercial value of the copyrighted work.

fair use doctrine

A legal doctrine providing that a portion of a copyrighted work may be reproduced for purposes of “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarships, and research.”

Under a broad conception of fair use, parody is also protected, but it is difficult to know when the author has taken so much of the original that the court will find infringement and not fair use. For example, in 2001, the estate of the author of Gone with the Wind sought an injunction to block the publication of The Wind Done Gone. The author of the second text said it was a parody of the former book and a portrayal of life in the Old South from a black point of view. The estate of the author of Gone with the Wind, however, claimed that the second book was an illegal sequel that infringed on the older work, citing the book’s direct taking of characters, character traits, scenes, settings, physical descriptions, and plot from the copyrighted novel, as well as its appropriation of direct quotes from the novel.

13

13 

Mitchell & Joseph Reynolds Mitchell v. Houghton Mifflin Co., 58 U.S.P.Q.2d 1652 (2001).9

The district court initially granted the injunction, but on appeal, the higher court overturned the district court’s decision, claiming that the injunction was an unlawful prior restraint of speech under the First Amendment. The court looked at the record and did not believe that the plaintiffs had made a strong enough case that (1) there was a substantial likelihood that the plaintiffs would prevail on the merits, (2) the plaintiffs would suffer irreparable harm if the injunction were not granted, (3) the threatened injury to the plaintiff outweighed that to the defendant, and (4) the granting of the injunction would be in the public interest, which are the necessary prerequisites for the granting of a preliminary injunction.

The Wind Done Gone went on sale on June 28, 2001, with the following words encircled on its cover: “An Unauthorized Parody.” The estate of the author of Gone with the Wind eventually settled in 2002 with the author of The Wind Done Gone and her publishers. The appellate court accurately predicted that the plaintiffs would not find success on the merits. Had the plaintiffs succeeded, however, they would have been entitled to a permanent injunction and, most likely, damages in the amount of the profits made from the infringing work.

Copyrights in the Digital Age

The Copyright Act of 1976 was created well before the digital age. When that act was passed, the drafters did not even consider the potential implications of the Internet for copyright protection. However, as use of the Internet became widespread, copyrighted material immediately began to appear all over the Internet; copyrighted materials such as written works and pictures were transferred online and copied numerous times in violation of the spirit of copyright law. However, no laws existed to directly regulate such acts. Today, copyrighted material such as videos, movies, songs, and music videos are all frequently uploaded or transferred online, and our copyright laws have evolved to address these activities.

One of the first problems legislators had when addressing copyrighted material and the Internet was how to define whether a “copy” of something was created. Legislators determined that once material was downloaded into a computer’s memory or RAM, the material was officially “copied.”

14

14 

Peak Computer, Inc. v. MAI Systems Corp., 991 F.2d 511; 1993 U.S. App. LEXIS 7522 (9th Cir. 1993).

Another related issue is, “What constitutes the performance of copyrighted material?” This issue arises because the copyright holder has the exclusive right to perform the copyrighted work publicly. The United States Supreme Court addressed this issue in the following case.

 Case 14-4 American Broadcasting Company, Inc. et. al. v. Aereo, Inc.

United States Supreme Court 134 S. Ct. 2498 (2014)

Aereo developed a subscription service whereby subscribers, for a fee, could view broadcast television shows over the Internet or on their mobile devices. Aereo did not own the copyright in those works nor did it hold a license from the copyright owners to perform those works publicly.

Aereo’s system was composed of servers, transcoders, and thousands of dime-sized antennas housed in a central warehouse. To watch a show currently being broadcast, the subscriber would go to Aereo’s website and select that program. Then one of Aereo’s servers would select an antenna for the use of the subscriber during that show. The server would save the data in a subscriber-specific folder on Aereo’s hard drive, and once several seconds of programming had been saved, the server would stream the saved copy of the show to the subscriber over the Internet. Alternatively, the subscriber could request that the show be streamed at a later time.

The broadcast networks and cable companies who were required by law to pay a fee to rebroadcast network content believed Aereo was violating copyright law by broadcasting copyrighted materials, so they filed a lawsuit against Aereo, arguing that Aereo infringed their copyrighted material because Aereo’s streams constituted public performances. The District Court denied their request for a preliminary injunction. Plaintiffs appealed, and the Second Circuit affirmed the lower court’s decision, finding that Aereo’s streams to subscribers were not “public performances,” and thus did not constitute copyright infringement. Plaintiffs once again appealed.

Justice Breyer

. . . This case requires us to answer two questions: First, in operating in the manner described above, does Aereo “perform” at all? And second, if so, does Aereo do so “publicly”?

. . . In Aereo’s view, it does not perform. It does no more than supply equipment that “emulate[s] the operation of a home antenna and digital video recorder (DVR). Like a home antenna and DVR, Aereo’s equipment simply responds to its subscribers’ directives. So it is only the subscribers who ‘perform’ when they use Aereo’s equipment to stream television programs to themselves.”. . . [W]hen read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo’s performs.

History makes plain that one of Congress’ primary purposes in amending the Copyright Act in 1976 was to overturn this Court’s determination that community antenna television (CATV) systems (the precursors of modern cable systems) fell outside the Act’s scope. . . . In 1976 Congress amended the Copyright Act . . . [and] enacted new language that erased the Court’s line between broadcaster and viewer, in respect to “perform[ing]” a work. The amended statute clarifies that to “perform” an audiovisual work means “to show its images in any sequence or to make the sounds accompanying it audible.”. . . Under this new language, both the broadcaster and the viewer of a television program “perform,” because they both show the program’s images and make audible the program’s sounds.

. . . Congress also enacted the Transmit Clause, which specifies that an entity performs publicly when it “transmit[s] . . . a performance . . . to the public.” . . . The Clause thus makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers’ ability to receive broadcast television signals. . . .

. . . Congress further created a new section of the Act to regulate cable companies’ public performances of copyrighted works. . . . Section 111 creates a complex, highly detailed compulsory licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcasts . . .

Congress made these three changes to achieve a similar end: to bring the activities of cable systems within the scope of the Copyright Act. . . .

This history makes clear that Aereo is not simply an equipment provider. Rather, Aereo, and not just its subscribers, “perform[s]” (or “transmit[s]”). Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach. . . . . We conclude that Aereo is not just an equipment supplier and that Aereo “perform[s].”. . .

Next, we must consider whether Aereo performs petitioners’ works “publicly,” . . . . Under the Clause, an entity performs a work publicly when it “transmit[s] . . . a performance . . . of the work . . . to the public.” . . . Aereo denies that it satisfies this definition. It reasons as follows: First, the “performance” it “transmit[s]” is the performance created by its act of transmitting. And second, because each of these performances is capable of being received by one and only one subscriber, Aereo transmits privately, not publicly. Even assuming Aereo’s first argument is correct, its second does not follow. . . .

We assume arguendo that Aereo’s first argument is correct. . . . So under our assumed definition, Aereo transmits a performance whenever its subscribers watch a program. But what about the Clause’s further requirement that Aereo transmit a performance “to the public”?

. . . The fact that each transmission is to only one subscriber, in Aereo’s view, means that it does not transmit a performance “to the public.” In terms of the Act’s purposes, these differences do not distinguish Aereo’s system from cable systems, which do perform “publicly.” . . . [T]he Clause suggests that an entity may transmit a performance through multiple, discrete transmissions. That is because one can “transmit” or “communicate” something through a set of actions.

The Transmit Clause must permit this interpretation, for it provides that one may transmit a performance to the public “whether the members of the public capable of receiving the performance . . . receive it . . . at the same time or at different times.” § 101. Were the words “to transmit . . . a performance” limited to a single act of communication, members of the public could not receive the performance communicated “at different times.” Therefore, in light of the purpose and text of the Clause, we conclude that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes. . . .

Moreover, the subscribers to whom Aereo transmits television programs constitute “the public.” Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other.

In sum, having considered the details of Aereo’s practices, we find them highly similar to those of the CATV systems. . . . And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act. Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service. We conclude that those differences are not adequate to place Aereo’s activities outside the scope of the Act. For these reasons, we conclude that Aereo “perform[s]” petitioners’ copyrighted works “publicly,” as those terms are defined by the Transmit Clause.
*

Reversed, in favor of American Broadcasting Company, Inc. et.al.

Software and the Copyright Act of 1976

 The first digitally related amendment to the Copyright Act of 1976 was for software. In 1980, the Computer Software Copyright Act was passed by Congress. This amendment was made in response to computer technology. The act declared that computer software was material that could now be protected with a copyright.

15

 Subsequently, courts have determined that other parts of computer software that can be copyrighted are the language that humans can read and coded language, as well as the general framework or organization of computer software and programs.

16

15 

Pub. L. No. 95-517 (1980), amendment to 17 U.S.C. §§ 101, 117.

16 

Stern Electronics v. Kaufman, 669 F.2d 852; 1982 U.S. App. LEXIS 22489 (2d Cir. 1982).

The No Electronic Theft Act of 1997

 In 1997, President Clinton signed into law a law that would impose criminal penalties on individuals who intentionally distributed copies of copyrighted materials over the Internet without authorization from the copyright holder, regardless of whether such individuals received profits for these actions. Such an individual could be fined up to $250,000 and imprisoned for up to 5 years.

An interesting result of the No Electronic Theft (NET) Act was its effect on the application of fair use doctrine to materials copied on the Internet. This doctrine had formerly protected individuals who made copies for certain uses that were not for profit. The NET Act instead outlawed any distribution or copying of copyrighted material over the Internet regardless of profits or profit-making intent.

The Digital Millennium Copyright Act

 In October 1998, the Digital Millennium Copyright Act (DMCA) was passed by Congress and signed into law by President Clinton. The DMCA, similar to the NET Act, aimed to protect copyrights in the digital age. Specifically, the DMCA

17

 states that the act of evading anti-piracy technologies included in software, including DVDs and CDs, is a crime. However, such activities are permitted if one is involved with and working on behalf of a nonprofit library, educational institution, archive, or other such entity. The DMCA also forbids creation or sale of a device that can crack codes to allow one to copy any kind of software. Certain exceptions apply to this provision, too, one example being encryption research.

17 

Among other sites, the text of the DMCA is available from UCLA at http://www.gseis.ucla.edu /iclp/dmca1.htm.

*
 Toys “R” Us, Inc., v. Canarsie Kiddie Shop, Inc., District Court of the Eastern District of New York 559 F. Supp. 1189 (1983).

*
 Two Pesos, Inc. v. Taco Cabana, Inc. (91-971), 505 U.S. 763 (1992).

*
 Bilski v. Kappos, United States Supreme Court 130 S. Ct. 3218 (2010).

*
 Bilski v. Kappos, United States Supreme Court. 130 S. Ct. 3218 (2010). http://www.supremecourt .gov/opinions/09pdf/08-964 .

*
 American Broadcasting Company, Inc., et. al. vs. Aereo, Inc. United States Supreme Court 134 S. Ct. 2498 (2014).

*
 RealNetworks, Inc. v. DVD Control Copy Association, Inc., et al.

United States District Court for the Northern District of California 641 F. Supp. 2d 913 (2009)

.

Internet service providers were given some protection from copyright- infringement claims, because these providers simply transmit information and do not produce or intentionally distribute it. Colleges and universities are also protected if they act as service providers. However, service providers are required to take down or cease transmission of information if the information is reported to be an infringement of a copyright. Also, any website continually casting music over the Internet must have licensing agreements with the record companies or other copyright holder.

Finally, the DMCA demanded that the Register of Copyrights help Congress determine how long-distance education via the Internet can be appropriately conducted to avoid copyright infringement.

Every three years, the Librarian of Congress and the Copyright Office entertain proposed exemptions to the DMCA. From the consumer’s standpoint, one of the more exciting requests for an exemption came from the Electronic Frontier Foundation, who requested that “jailbreaking,” hacking any phone’s operating system to allow consumers to run any app on the phone they choose. Apple opposed the requested exemption, arguing that the DMCA protects the copyrighted encryption built into the bootloader that starts up the iPhone OS operating system. The Copyright Office disagreed with Apple and found that a copyright owner might try to restrict the programs that can be run on a particular operating system, but copyright law is not the vehicle for imposing such restrictions.

In 2010, in addition to allowing the jailbreaking exemption, The Librarian of Congress and Copyright Office also allowed exemptions for the breaking of DVD encryption by professors, students, and documentary makers so the clips can be used for education and commentary.

File-Sharing Networks and Technologies

 A major issue in the courts arose over file-sharing technologies. Basically, a type of software was created that enabled individuals to make the size of a music file extremely small and thus, able to be easily transmitted to someone else’s computer. In other words, music files could be simply and rapidly distributed to many different people.

As a result of such technology, file-sharing websites popped up that facilitated this peer-to-peer networking. Peer-to-peer networking is made possible when many personal computers are connected to a network hosted online, and all of the files in those personal computers can be shared with others without the files actually being hosted on the Internet website.

Web hosts such as Napster began to facilitate peer-to-peer networks, which were violating music copyrights on a grand scale. Basically, such websites were facilitating the act of transferring copyrighted material from one individual to another without any permission from the copyright holder.

Eventually, in 2005, the Supreme Court determined that certain file-sharing Web hosts had the intent to violate copyright law, and therefore hosts of file- sharing and networking sites could be liable for the distribution of copyrighted material, even though the hosts were only indirectly liable for the actions of their users.

It was only a matter of time, as technology improved, before not just music files, but also movie files started to be copied and distributed without permission. The following case illustrates the legal system’s response to technology designed to enable people to copy movies.

 Case 14-5 RealNetworks, Inc. v. DVD Control Copy Association, Inc. et al.

United States District Court for the Northern District of California 641 F. Supp. 2d 913 (2009)

RealNetworks is a media company that produces and sells software called RealDVD. The software enables people to make copies of DVDs they have purchased. In 2009, the company sued the DVD Control Copy Association of America and seven movie studios in pursuit of a legal declaration that its DVD copying software did not breach the DMCA. RealNetworks claimed that its software was only intended for people to make “backups” of DVDs that they had already purchased themselves.

The association and the movie studios disagreed, claiming that although the DMCA did permit RealNetworks’ initial access to the copyrighted material, it did not protect the company’s granting access to the material to additional individuals without any consent from the copyright owners. Furthermore, the software enables individuals to save copyrighted content to a computer hard drive or a portable drive, which deactivates any protection in the technology of the actual DVD.

Judge Marilyn Hall Patel

DMCA’s anti-circumvention and anti-trafficking provisions establish “new grounds for liability in the context of the unauthorized access of copyrighted material.” . . . There is nothing that limits the number of times a physical DVD can be copied using either [RealNetworks’ products] Vegas or Facet, however. A DVD could be passed around a dormitory, office, or neighborhood and copied on any Facet box or any computer using Vegas. . . . Plaintiff must then show that Real [Network]’s RealDVD products are either: (a) primarily designed or produced for the purpose of circumventing technological measures that effectively control access to a copyrighted work; (b) have only a limited commercially significant purpose or use other than to circumvent such technological measures; or (c) marketed for use in circumventing such technological measures. These are disjunctive clauses. The court need look no further than the first enumerated condition to find that the Studios are likely to prevail on the Section 1201(a)(2) claim. As defined in Section 1201(a), “to ‘circumvent a technological measure’ means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner.” 17 U.S.C. § 1201(a)(3)(A). CSS is a “technological measure” that effectively controls access to copyrighted DVD content and RealDVD permits the access of that content without the authority of the copyright owner. RealDVD products are designed primarily for circumvention of that technology, as Real has admitted its intent upon initial development was to create a software product that copies DVDs to computer hard drives so that the user does not need the physical DVD to watch the content. This unauthorized access infringes the Studios’ rights because it entails accessing content without the authority of the copyright owner, as discussed.
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Judgment for the Defendant.

The court agreed with the association and determined that the software did in fact violate the DMCA, for the reasons given in its opinion, and granted the association and studios a preliminary injunction that banned RealNetworks not only from selling the software, but also from licensing it to any other company. This decision effectively altered the digital technology and copyright laws for the future.

Global Dimensions of Intellectual Property Law

The primary international protection for intellectual property is offered through multilateral conventions and treaties. The major treaty on intellectual property is the Trade Related Aspects of International Property Rights (TRIPS), which is administered through the World Trade Organization (WTO). The WTO administers a multitude of trade treaties. On a regular basis, the member states convene to renegotiate the treaties. In the Uruguay Round of negotiation (1986–1994), intellectual property rights became a major issue for developed countries such as the United States and the European Union. TRIPS was the agreed-upon solution.

TRIPS is the most comprehensive intellectual property treaty to date. Previous agreements have included the Berne Convention of 1886, the Universal Copyright Convention, the Paris Convention of 1883, and the Patent Cooperation Treaty. These treaties covered various aspects of intellectual property, but they did not have universal membership, and not all parties had signed all versions of the various conventions. TRIPS must be signed and adhered to by all WTO members, numbered at 159 as of March 2013. There are also 25 observer countries that must begin negotiations to join the WTO within 5 years of becoming observers.

TRIPS begins by ensuring equal protection through its national treatment policy (domestic and foreign products must be treated the same) and its most- favored-nation policy (every member nation must be treated the same). TRIPS expands the copyright protection in the Berne Convention to include computer programs and rental rights, and continues to protect against unauthorized copying of written and recorded creations. TRIPS defines trademark and protects trademarks for both goods and services. TRIPS also has a protection category of geographical indications, to protect names such as “Champagne,” and “Tequila,” which refer to origin of the product and indicate special characteristics.

Under TRIPS, industrial designs must be protected for at least 10 years, and patents must be protected for at least 20 years. There are several exceptions to the patent requirements, allowing a country to deny a patent to prevent the commercial exploitation of something dangerous to public order or morality. Countries also have the right not to patent different processes, such as surgical methods. Furthermore, countries are also permitted to issue compulsory licenses to force production of a patented product while protecting the patent holder’s rights.

The protection for integrated circuit layout designs has not yet come into force. Trade secrets and other undisclosed information are protected as long as a reasonable attempt was made to keep the information secret.

TRIPS allows governments the right to curb anticompetitive licensing contracts under certain circumstances. The governments must enforce the intellectual property rights with their national laws. TRIPS provides standards for intellectual property laws and punishments.

TRIPS entered into force on January 1, 1995. Member countries, based on their level of development, had different amounts of time to comply with TRIPS. Developed countries had a year to comply, whereas less-developed countries had 6 years to comply, and least-developed countries had 11 years to comply. Some of those deadlines have been extended. China has changed its intellectual property laws to come into compliance with TRIPS, although enforcement is still lacking. In summary, TRIPS provides strong protection of intellectual property rights through its near-universal membership and the WTO’s ability to enforce treaties.

Summary

The primary forms of protected intellectual property are trademarks, copyrights, patents, and trade secrets. Unlike most property, which is protected by state law, the first three forms of intellectual property are protected by federal statutes. These statutes set forth the criteria for establishment of a valid trademark, copyright, or patent, and permit the holders of intellectual property rights to sue for infringement or misuse of their protected property.

Intellectual property is protected internationally primarily through treaties such as TRIPS, which is enforced by the WTO.

Review Questions

1. 14-1 How does trademark infringement differ from trademark dilution?

2. 14-2 Explain the different types of marks that are protected under the Lanham Act.

3. 14-3 What factors would lead a person to choose patent protection over trade-secret protection, and vice versa?

4. 14-4 Explain the four factors that are relevant to a determination of whether the fair use doctrine is available as a defense.

5. 14-5 Explain the relationship between a tying arrangement and cross-licensing.

6. 14-6 How is trade dress different from a trademark?

Review Problems

1. 14-7  Matt creates a small doughnut shop called DoGos. He uses the term DoGo surrounded by three concentric blue circles on all packaging. He starts selling his specialty DoGo doughnuts in local grocery stores, and soon develops a strong customer base, although he never sells the product outside of the state of Ohio. After five years of increasing business, he notices a sudden dropoff in sales. He soon discovers that a competitor is producing a similar product, but at a lower price, packaged in almost identical packaging, but with the name DoGoos inside the three concentric blue circles. Matt finds out who the producer of DoGoos is and sends him a request that he change his product name and packaging. Simon, the producer of DoGoos, refuses, saying that because Matt has no trademark, his signature packaging has no protection. Explain why Simon either is or is not correct.

2. 14-8  Grover creates a machine that enables a manufacturer to make screws with 50 percent less waste than the industry norm. He patents his process and then decides to license the patent to Markham Manufacturing for a small royalty fee and a promise that Markham will buy a key ingredient needed to produce the screws from Grover. Is there anything wrong with this contract?

3. 14-9  Plaintiffs created an original screenplay and copyrighted it before trying to pitch it to a major motion picture producer, who rejected the screenplay. That same company, five years later, produced a major motion picture with the same basic theme that the plaintiffs had pitched, but the plot, mood, setting, and pace of the two works were different. Do you think the plaintiffs had a case for copyright infringement?

4. 14-10  Thrifty Inn decides to open a motel along an interstate that will provide cheap lodging. It calls the motel Sleep McCheap. McDonald’s seeks to enjoin Thrifty Inns from using the name, claiming that it violates the McDonald’s trademark as well as the McStop trademark that McDonald’s has for its one-stop business that provides cheap food, cheap lodging, and cheap gas. Will the injunction be granted? Why or why not?

5. 14-11  Amerec Corporation developed a secret, unpatented process for producing methanol and built a special plant where it was going to use this process. The Christophers were hired by a competitor of Amerec to take aerial photographs of the construction. Amerec sued the photographers for misappropriation of trade secrets. What defenses might the Christophers raise? Would these be successful?

6. 14-12  Professor Kendall wants students to read three articles from a recently published journal. The professor, who is concerned about the students’ expenditures for books, photocopies the articles and places them on reserve. The publisher of the journal sues the professor for copyright infringement. What defense will the professor raise? Would this defense be successful?

Case Problems

1. 14-13  Jerry Seinfeld’s wife, Jessica Seinfeld, was sued for copyright infringement and plagiarism over her cookbook, Deceptively Delicious, by Missy Chase Lapine. Lapine is the author of The Sneaky Chef, a cookbook with a concept similar to Seinfeld’s. Both cookbooks are based on sneaking healthy ingredients into food prepared for children so that children will inadvertently eat foods they otherwise would be opposed to. The goal of both cookbooks is for children to eat more healthfully. Lapine wrote her cookbook in 2007; Seinfeld’s came out in 2008. Seinfeld argued that many cookbooks have a goal not only to help individuals eat healthier, but to get children to eat healthier.

Lapine later added a count to her complaint, stating that Jerry Seinfeld launched a verbal attack on her by calling her a “wacko” during a guest appearance on David Letterman’s TV show. How do you think the judge ruled with respect to the plaintiff’s claims of copyright infringement? Do you think the idea of sneaking healthy foods into children’s meals is so obscure that Seinfeld was indeed guilty of plagiarism and copyright infringement? Missy Chase Lapine v. Jessica Seinfeld et al., 2010 U.S. App. LEXIS 8778 (2d Cir., Apr. 28, 2010).

2. 14-14  In 2009, Capitol Records sued Jammie Thomas-Rasset for damages after she was found liable for copyright violations when she illegally downloaded 24 songs off the Internet. Apparently, in addition to downloading the songs, Thomas- Rasset was involved in a peer-to-peer network and was additionally allowing Capitol’s songs to be downloaded from her computer to other individuals’ computers. In other words, Thomas-Rasset was distributing copyrighted material without permission from the holder of the copyrights. Ultimately, Capitol Records was suing for monetary damages. An award of $2 million (in response only to the 24 songs) was the expected decision of the court. However, Thomas-Rasset argued that $2 million was an excessive award for the copyright infringement of 24 songs. How do you believe this case was decided? Why do you think so? Capitol Records Inc. et al. v. Jammie Thomas-Rasset, 2010 U.S. Dist. LEXIS 5049 (D. Minn. 2010).

3. 14-15  Five major media studios and entertainment companies (“the Studios”) held copyrights on Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, Universal City Studios Productions, LLLP, Columbia Pictures Industries, Inc., and Warner Bros. Entertainment, Inc. The Studios filed suit against Hotfile Corp. and one of its founders, Anton Titov, who were owners of an offshore technology company that provided online file storage devices. Plaintiff Studios alleged that the defendants’ customers “abused its system by sharing licensed materials belonging to the Studios,” and that the defendants were subsequently liable. The Studios argued that the defendants’ website was designed to encourage users to engage in piracy, “complete with a system of financial incentives that fosters infringement.” The defendants claimed to have been unaware of infringement that transpired on its system. How do you think the court ruled in this case? What evidence would the court need to rule in favor of the plaintiffs? Disney Enters. v. Hotfile Corp., 2013 U.S. Dist. LEXIS 172339 (S.D. Fla. 2013).

4. 14-16  Plaintiffs American Beverage Corporation (“ABC”) and Pouch Pac Innovations, LLC (“PPi”) brought suit against defendants Parrot Bay and Smirnoff brands for infringing the design and trade dress used for frozen cocktail mixtures produced by the plaintiffs. Specifically, plaintiffs allege that they patented a “pouch” design for frozen cocktails, which was later used by the defendants. The appearance of the plaintiffs’ patented design is an “hourglass shape when viewed from the front, a wedge shape when viewed from the side, and a lenticular shape when viewed from the bottom.” The defendants alleged that they sought a shape and size similar to that of the plaintiffs’ “pouch” design because it is typical for companies in the beverage industry “to use the same or similar serving format” as their competitors. The plaintiffs’ trade-dress infringement claim was brought pursuant to the Lanham Act. For the plaintiffs to obtain a preliminary injunction on a Lanham Act claim, what factors should the court have considered? Do you think the court ruled in favor of the plaintiffs? Why? Am. Bev. Corp. v. Diageo N. Am., Inc., 936 F. Supp. 2d 555 (W.D. Pa. 2013).

5. 14-17  In August 2000, plaintiff obtained a copyright registration for an original screenplay of fictional material entitled “The Challenge.” She sent a copy to Disney, along with a cover letter containing additional story elements and asking the company to consider producing it. The company never returned her copy of the screenplay and never responded to her letter.

Subsequently, the plaintiff alleged that Disney’s motion picture Cars infringed on her copyrighted script for The Challenge. The Challenge involved an off-road racer getting lost in the desert, and Cars involved a stock car getting separated from his friends, getting lost, and then getting stuck in a small town in the desert. Both drivers were young kids who were eventually mentored by older drivers. The driver in the former movie faces dangers like dehydration and exposure to the elements, whereas the other driver simply is stuck in a small town from which he wishes to leave. Thus the trial court found the plots are not significantly similar.

The works share themes of self-reliance and the importance of friendship and teamwork, themes often predominate stories of competition. The additional themes of “the importance of giving back to the community” and “important life lessons can come from unexpected people” are present in Cars but are absent from “The Challenge.”

Both shows are set “in a desert” according to the plaintiff, although “The Challenge” is in the actual desert, whereas Cars is in a town surrounded by a desert. Further, outside of the scenes that include the desert, Cars is set at two large racetracks while “The Challenge” is set in a rough neighborhood, a school, and the main character’s home and work. Thus, the trial court found no substantial similarity when comparing the settings in the two stories. Because the trial court found a lack of substantial similarity, they dismissed the case. Do you think the appellate court disagreed? Why or why not? Campbell v. Walt Disney Co., 718 F. Supp. 2d 1108 (N.D. Cal. 2010).

6. 14-18 In August 2014, plaintiff, who sold his photographic work online, sued defendants for copyright infringement. Specifically, the owner of the online photos alleged that the defendants had obtained those photos without the owner’s consent, and placed one of the photographs on a commercial Internet website operated by the defendants. After the defendants ignored a letter by the plaintiff demanding that the online photos be taken down, the plaintiff filed this suit seeking $30,000 in damages. The owner also alleged that the defendants’ conduct constituted a willful violation of his copyrights. The court considered the following factors in determining whether a damages remedy existed: the infringer’s state of mind; the expenses saved by the infringer; the revenue lost by the copyright holder; the deterrent effect on the infringer and third parties; the infringer’s cooperation in the case; and the attitude and conduct of the parties. Based on the allegations stated above, do you believe that these factors merit a damages reward of $30,000? In whose favor do you believe the court ruled? Explain your reasoning. Oppenheimer v. Holt, No. 1:14-CV-000208-MR, 2015 WL 2062189 (W.D.N.C. May 4, 2015).

Thinking Critically about Relevant Legal Issues A Question under TRIPS

When TRIPS came into effect, many member states had to change their intellectual property laws. Additionally, any states joining the WTO had to comply with TRIPS, which prompted many other countries to change their intellectual property laws. Most developing countries were given a longer time period to come into compliance with TRIPS than was required for developed countries, but for many developing countries that time period has recently ended. One of these countries is India.

India’s previous patent laws covered a manufacturing method, rather than the finished product, so Indian companies were taking patented products, making them a different way, and selling them as generics. This legal treatment was a major problem for pharmaceutical companies. India sold huge numbers of generic pharmaceuticals in Africa, primarily HIV/AIDS medications, denying the pharmaceutical companies their royalties.

It is very important for patents for HIV/AIDS medication to be upheld. Although it might at first seem unfair to charge more than a generic company would for a medication, it is crucial to realize that the generic company did not have to invest in the research and development of the drug. Although the drug may not cost as much as the name-brand price to produce, the research and development, clinical trials, and salaries of everyone involved in the process of creating new medication must be accounted for in the price of the medication. What is really unfair is allowing a generic company to take advantage of the hard work done by the original company.

Perhaps more importantly, patents provide incentive for pharmaceutical companies to continue to create new and better drugs. With the expansion of HIV/AIDS and the tolerance that patients build up to drugs, it is necessary for pharmaceutical companies to come up with new treatments. Without the incentive from patents, innovation would slow, a result more detrimental to the treatment of HIV/AIDS than paying the true cost for medications.

Enforcing patents on HIV/AIDS drugs fairly reimburses the pharmaceutical companies for their work in research and development and helps patients by ensuring innovations in the form of new medications.

1. What are the issues and conclusion of this essay?

2. What ethical norms drive the author’s reasoning?

3. Ask and answer the critical thinking question that you believe reveals the main problem with the author’s reasoning.

4. Write an essay about this issue with a different conclusion.

Clue:  What alternate definitions of the primary ethical norm might change the conclusion?

Assignment

On The Internet

To demonstrate your knowledge of the various types of marks, search the Web and find two examples of each of the following types of marks: product mark, collective mark, service mark, and certification mark. Provide the citation for the Web page, copy the mark, and explain how you know it fits under that category of marks.

On The Internet

· www.copyright.gov The U.S. Copyright Office gives information about copyrights, as well as directions on how to copyright your own work.

· www.uspto.gov This is the website of the U.S. Patent and Trademark Office.

· www.wipo.int This is the home page of the World Intellectual Property Organization.

· www.intelproplaw.com The Intellectual Property Law Server provides useful information on patent, trademark, and copyright intellectual property. The many links at this site contain laws, articles, and cases of interest.

· www.icann.org This site is the home page for the Internet Corporation for Assigned Names and Numbers, where you can find information about domain name ownership.

For Future Reading

· Christiansen, Linda. “Mickey Mouse Still Belongs to Disney: The Supreme Court Upholds Copyright Extension.” Journal of the Academy of Marketing Science 32 (2004): 212.

· Jacobs, Hannah. “Searching for Balance in the Aftermath of the 2006 Takings Initiatives.” Yale Law Journal 116 (2007): 1518.

· Hovenkamp, Herbert. “Symposium on Antitrust and IP: Consumer Welfare in Competition and Intellectual Property Law.” Competition Policy International 9 (2013): 53.

· Magid, Julie Manning, Anthony D. Cox, and Dena S. Cox. “Quantifying Brand Image: Empirical Evidence of Trademark Dilution.” American Business Law Journal 43 (2006): 1.

· Masur, Jonathon. “Raising the Stakes in Patent Cases.” Georgetown Law Review 101 (2013): 637.

· McJohn, Stephen. “Top Tens in 2012: Patent, Trademark, Copyright, and Trade Secret Cases.” Northwest Journal of Technology and Intellectual Property 11 (2013).

· Rogers, Eric, and Jeon Young. “Inhibiting Patent Trolling: A New Approach to Applying Rule 11.” Northwestern Journal of Technology and Intellectual Property 12 (2014): 291.

· Seaman, Christopher. “The Case Against Federalizing Trade Secrecy.” Virginia Law Review 101 (2015): 317.

· Serafino, Laurie. “Arguing for Protection of Data Stored in the Cloud.” Pennsylvania Lawyer 35 (Sept./Oct. 2013

Case Analysis Format

Read and understand the case or question assigned. Show your Analysis and Reasoning and make it clear you understand the material. Be sure to incorporate the concepts of the chapter we are studying to show your reasoning. Dedicate at least one heading to each following outline topic:

Parties [Identify the plaintiff and the defendant]

Facts [Summarize only those facts critical to the outcome of the case]

Procedure [Who brought the appeal? What was the outcome in the lower court(s)?]

Issue [Note the central question or questions on which the case turns]

Explain the applicable law(s). Use the textbook here. The law should come from the same chapter as the case. Be sure to use citations from the textbook including page numbers.

Holding [How did the court resolve the issue(s)? Who won?]

Reasoning [Explain the logic that supported the court’s decision]

Do significant research outside of the book and demonstrate that you have in an obvious way. This refers to research beyond the legal research. This involves something about the parties or other interesting related area. Show something you have discovered about the case, parties or other important element from your own research. Be sure this is obvious and adds value beyond the legal reasoning of the case.

1. Dedicate 1 heading to each of the case question(s) immediately following the case, if there are any. Be sure to restate and fully answer the questions

2. Quality in terms of substance, form, grammar and context. Be entertaining! Use excellent visual material

3. Wrap up with a Conclusion. This should summarize the key aspects of the decision and your recommendations on the court’s ruling.

4. Include citations and a reference page with your sources. Use APA style citations and references