l21. trade secrets, copyrights, and patentseliza.newhaven.edu/ethics/attach/l21_copyright.pdf · i...

Outline Intellectual Property Trade Secrets Copyrights Patents Lawsuits

L21. Trade Secrets, Copyrights, and Patents

Alice E. Fischer

November, 2017

Legal Protection. . . 1/35


Intellectual Property

Trade Secrets

Copyrights

Patents

Lawsuits



Intellectual Property

DefinitionPrinciple

Protections



Intellectual Property: Definition

Intellectual property is something you created:

I a song you wrote.

I a book, poem, etc. you wrote.

I a photograph you took

I a picture you painted

I a program you wrote

I a process you invented

I a device you designed and built



The Moral Principle

A person has the right (legal, constitutional, and natural)

I to control (to restrict the use of, or to loan)

I to possess (to hold and to use)

I and to profit from (earn a living, sell, rent out, invest)

the fruits of his labor.

First stated by John Locke in 1689.



The Social Benefits“The Congress shall have Power ... To promote the Progress ofScience and useful Arts, by securing for limited Times to Authorsand Inventors the exclusive Right to their respective Writings andDiscoveries;”(The United States Constitution, 1787)Why should society defend the rights of an individual to hisintellectual property?I It can encourage people to create and to innovate. For

example, the cost of developing and testing a new drug aresky high. They include sophisticated research and years oftests for the FDA approval process.

I The small inventor can be protected from predatory largecompanies.

I For patents, society will eventually get the full plans for theinvention.



The Social Costs

Should the legal protection of intellectual property be limited?

I When a company charges large royalties to use a protectedcreation (drug, song, software, book), the public is deprived ofthe benefit of that creation.

I How much protection is needed to cover the costs ofdevelopment?

I How serious does an offense need to be to justify prosecution?

I Should the protection extend beyond the lifetime of theauthor?



Kinds of Legal Protection

In the United States, there are three kinds of protection forintellectual property:

I Trade secrets

I Copyrights

I Patents



Trade Secret: DefinitionA trade secret is aI formula,I practice,I process,I design,I instrument,I pattern, orI compilation of information

which is not generally known or reasonably ascertainable, by whicha business can obtain an economic advantage over competitors.

The formula for Coca Cola has always been a secret. In about1900, the cocaine was removed, but it still contains an extract ofcoca leaves.



Trade Secret: Protection

A company can attempt to guard its trade secrets by:

I Non-competition contracts with employees

I Non-disclosure contracts with employees 1

I Limiting knowledge to top executives and very few others.

Unlike a patent :

I Trade secrets are protected by state, not federal, law.

I The protection does not expire unless the secret is exposed.

I Unlike a patent, a competitor could duplicate the secret andprofit from that. A holder must take reasonable steps tosafeguard a secret

1Many student interns are asked by their employers to sign non-disclosurecontracts.



RisksA trade secret can be broken...

I By industrial espionage (network hacking, for example)

I A vengeful ex-employee

I Reverse engineering.

A person who gets a trade secret by illegal means has committed acrime. If the secret is then used for political or economic gain, thatis a second crime.

May 23, 2007. Two former Coda-Cola employees were sentencedto federal prison terms for conspiring to steal and sell trade secretsto Pepsi. (Joya Williams, 42, 8 years. Ibrahim Dimson, 31, 5 years.On June 6. Edmund Duhaney, 43, was sentenced to 2 years. Theplot was discovered when Pepsi tipped off Coke that it was beingoffered inside information.



Copyright: Definition

A Copyright is a form of intellectual property law.I It protects original works of authorship including

I Literary and dramatic works such as poetry, novels, andtextbooks

I Musical works such as songs and compositionsI Artistic works such as movies and architecture.I Computer software

I Copyright law does not protect facts, ideas, systems, ormethods of operation, although it may protect the way thesethings are expressed.



Rights of the Copyright Holder:A copyright confers a limited set of exclusive rights granted to theauthor or creator of an original work

I The copyright holder has the rightI To control the distribution of the workI To control the display or performance of the work.I To control making copies of the work or of substantial parts of

it. (Limited by the fair use doctrine)I To determine who may adapt or translate the work.

I Some uses are permitted under the fair use policy and do notrequire permission from the copyright owner.

I All other uses require permission from the copyright owner.

I At the end of the copyright period, the work is said to “enterthe public domain”.



More about Copyrights

I An author can copyright a work simply by putting a copyrightnotice conspicuously on it.

I The author can assign his copyright to someone else, such asa publisher.

I For a fee, the copyright can be registered with the U.S.Copyright Office.

I In most jurisdictions copyright arises upon fixation of the ideaand does not need to be registered.

I However, copyright registration adds proof of copyrightownership and aids you in fighting copyright infringement.



The Term of a Copyright

I Originally, copyrights expired after a small number of years.

I However, the number of years of protection keeps gettingextended.

I Things copyrighted since 1925 are now protected for 95 years,

I Things copyrighted since 1978 are protected for 105 years,

Disney has lobbied heavily to get the number of years extended.



Fair Use: a Limitation of Copyright RightsThe owner’s exclusive rights are balanced, for public interestpurposes, with limitations and exceptions. Fair use defines normaluses of a published work that do not constitute copyrightinfringement. These are: 2

I Criticism, comment, or news reportingI Teaching, scholarship, and research.

Four factors must be considered in determining whether or not aparticular use is fair:I The purpose and character of the use, whether such use is of

commercial nature or is for nonprofit educational purposes.I The nature of the copyrighted work.I The amount of material used in relation to the work as a

whole.I The effect of the use upon the potential market for the

copyrighted work.2from Wikipedia



Examples of Fair Use

I I pass around a copy of a current news article in class.

I I quote a few slides from a copyrighted journal article.

I It is OK to record a TV program in order to view it at adifferent time.

I A radio news commentator can play a recording of part of apublic speech.

I A student can quote from a copyrighted work in order tocriticize or comment upon it.



Fair Dealing: a Limitation of Copyright Rights

The owner’s exclusive rights are balanced, for public interestpurposes, with limitations and exceptions.3

I Fair dealing is an enumerated set of possible defences againstan action for infringement of a copyright.

I The fair dealing laws apply only to acts which fall within oneof the listed categories.

I In the U.S., fair dealing implies a duty of full disclosureimposed upon corporate officers, fiduciaries, and parties tocontracts.

3from Wikipedia



Enforcement

I You can sue someone if you think they are stealing yourcopyrighted material.

I The RIAA threatened to sue the Girl Scouts for singingcopyrighted songs at summer camp!

I The TV networks do not broadcast people singing ”HappyBirthday” because they fear being sued.

I Many people try to honor copyrights. Schools andorganizations do. They make real efforts to teach students,employees, and volunteers what IS and IS NOT permitted.This kind of voluntary “cooperation” is far more extensive andeffective than the threat of lawsuits.



Patent: DefinitionA patent is a limited property right that the government offers toinventors in exchange for their agreement to share the details oftheir inventions with the public. When a patent is granted,I The owner has the right to prevent others from making, using,

selling, or distributing the patented invention withoutpermission.

I Like any other property right, it may be sold, licensed,mortgaged, assigned or transferred, given away, or simplyabandoned.

I Sometimes a large company will buy a patent for the purposeof ensuring that it is NEVER produced and sold.

I Patent rights are recognized world-wide, but the rules andconditions do differ from country to country.

I This right is enforced by filing a lawsuit.I Improving someone else’s invention does not give you the

right to ignore his patent.Legal Protection. . . 20/35


What can be patented?

I A physical expression of an idea or algorithm (such as analgorithm implemented in a circuit board). The idea oralgorithm cannot be patented by itself.

I A process or method (business method, chemical process)

I A specific software application (and all of its parts)

I A biological discovery. It can be a composition of matter, amethod, or a product. When a natural biological substancecan be patented as long as it is sufficiently ”isolated” from itsnaturally-occurring states. Examples include adrenaline,insulin, vitamin B12, and unmodified genes.

I A design patent can be granted on the ornamental design of afunctional item. (Jewelry, insignia, fonts, Coke bottle)



Requirements to be patentable:

The Patent Office was established by Congress in 1790 toencourage the development of useful technology.

To be patented, an invention must be:

I Novel (unlike anything that already exists)

I Useful (practical, not imaginary!)

I Non-obvious (requiring application of cleverness and effort toinvent.)

Patents include both the fundamental idea and the specificapplications for which ownership is claimed.

You can’t patent something you already published!



Patent Application ProcessAssume an inventor has developed something he thinks can bepatented.I Prior to filing an application, the inventor must search the

patent archives for related prior patents. His ownimprovements must be made clear in the application.

I A provisional application may be filed with partial disclosureto establish an invention date. This must be followed by thefull application within a year.

I The actual application consists ofI a complete description of the invention (the patent

specification). This is made publicI official formsI correspondence relating to the invention. This is used to

establish FIRST invention, in case of a dispute.I A patent agent or attorney can help negotiate at this stage.

The patent may or may not eventually be granted.Legal Protection. . . 23/35


Term of the Patent

I In the United States, since 1995, a patent is in effect for 20years from the filing date.

I The technical description of the invention is made public 18months after the filing date. Thus, the inventor has a 1.5 yearhead start on developing and selling his invention.

I Design patents expire after 14 years.



Lawsuits

Apple, Inc. v. Microsoft Corporation (1994)Fischer vs. Rabin (1997)

Gelernter vs. Apple (2010)



Look and FeelI Apple, Inc. v. Microsoft Corporation, 35 F.3d 1435 (9th Cir.

1994)

was a copyright infringement lawsuit in which AppleComputer, Inc. sought to prevent Microsoft Corporation andHewlett-Packard from using visual GUI elements that weresimilar to those in Apple’s Lisa and Macintosh operatingsystems.4

I Apple claimed the ”look and feel” of the Macintosh operatingsystem, taken as a whole, was protected by copyright, andthat each individual element of the interface (such as theexistence of windows on the screen, the rectangularappearance of windows, windows could be resized, overlap,and have title bars) was not as important as all theseelements taken together.

I The court ruled that, ”Apple cannot get patent-like protectionfor the idea of a graphical user interface, or the idea of adesktop metaphor [under copyright law]...”

4from Wikipedia



Fischer vs. RabinI Michael Rabin published a journal article on forward error

correction in 1989.I In 1991, he filed a patent application on this idea an process,

citing a dozen areas of application. This patent was granted,in spite of the prior publication. It is unclear why.

I In 1996, Michael Fischer filed a patent application for aspecific, highly-engineered program, embedded in a chip, todo forward error correction on satellite transmission of largeamounts of data (such as beaming the New York Times to aship at sea). This patent cited the prior published work. Itwas granted in 2000.

I Rabin contested the Fischer patent application and lost.Why?I Fischer based his work on the 1989 published paper by Rabin.I The Fischer work was a highly-engineered, fast, product that

could perform in close to real-time on large transmissions.Legal Protection. . . 27/35


Gelernter vs. AppleI In 2005, Apple released OS 10.4, Tiger, with the Spotlight. It

automatically indexes the names and contents of all the fileson your disk. A GUI makes it easy to find all the files, in anydirectory, that contain a particular phrase or have a particularname.

I In 2006, Apple purchased Cover Flow and integrated it intoITunes 7.0, the Finder, and other products. This is ananimated, 3-D GUI for visually flipping through snapshots ofdocuments, website bookmarks, album artwork, orphotographs.

I In 2007, Apple introduced OS 10.5, Leopard, with the TimeMachine. It does automatic backups every hour to an externaldisk. A GUI makes it easy to retrieve a lost file or version ifthe deletion happened more than an hour ago and if you knowwhen you had the version you now want.Legal Protection. . . 28/35


Gelernter vs. Apple Continued.

I In 1992, David Gelernter published —it “Mirror Worlds: Orthe Day Software Puts the Universe in a Shoebox...How it willhappen and what it will mean”.

I October, 2010. A Texas jury found Apple guilty of copyrightinfringement on Spotlight, the Time Machine, and CoverFlow.

I A small business founded by Gelernter was awarded $625.5million.



Apple vs. HTC

I March, 2010. Apple filed a lawsuit against mobile devicemanufacturer HTC – which made numerous phones forT-Mobile, Sprint, and Verizon – claiming patent infringement.

I Apple said that HTC had infringed upon 20 patents related tothe iPhone user interface, architecture, and hardware.

I “We can sit by and watch competitors steal our patentedinventions, or we can do something about it. We’ve decidedto do something about it,” said Steve Jobs.

I August 29, 2012 – Taiwan smartphone maker HTC says it has“no intention” of settling its lawsuit with Apple followingApple’s patent infringement victory over Samsung.

I November, 2012 – The HTC lawsuit was settled with alicensing agreement, according to Apple’s CEO, Tim Cook.



IBM vs. SCO

I In March, 2002, the SCO Group became involved in anincreasingly rancorous legal controversy over alleged violationsof SCO’s UNIX intellectual property contract. SCO assertedthat copyrighted UNIX code was widespread in Linux.

I March 6, 2003. The SCO Group filed a $1 billion lawsuitagainst IBM for “devaluing” its version of the UNIX operatingsystem. SCO claimed that IBM had, without authorization,committed trade-secret theft and breach of contract forcopying proprietary Unix source code into its Linux-basedproducts. The amount of claimed damages was laterincreased to $3 billion, and then $5 billion.



IBM vs. SCO: GPL is illegal?

The discovery portion of the lawsuit lasted several years.

I August 2003. SCO asserted that the GPL, under which Linuxis distributed, violates the United States Constitution and theU.S. copyright and patent laws. (Authority to enact patentand copyright laws was granted to Congress by Article I of theUnited States Constitution.)

I The SCO attorney was planning to argue in court that theGNU General Public License (GPL), which covers Linux andrelated software, is invalid. The strategy was part of SCO’slawsuit against IBM.



IBM vs. SCO, Which code? Which concepts?

I May 2003. The SCO Group sent letters to the Fortune 1000and Global 500 companies warning them of the possibleliability if they used Linux.

I The basis for SCO’s suit is that any code developed on top ofSVRX (System 5 Unix) is a derivative work of SVRX. Thatwould include IBM’s system, AIX. Also, IBM publiclyadmitted that it contributed AIX code to the Linux kernel.

I December 2003. The court ordered SCO to, ”identify andstate with specificity the source code(s) that SCO is claimingas the basis of their action against IBM.”



IBM vs. SCO: BattlingThen the demands and counter-demands started.I SCO demanded the AIX code from IBM, so it could compare

AIX code to Linux kernel code.I IBM refused to comply, and demanded that SCO say which

lines of Linux code it claimed were infringing.I SCO responded that it could’t determine which code was

infringing until it looked at the AIX code.I December 5, 2003. A judge granted IBM’s two motions to

compel against SCO. This gave SCO 30-days to say ”withspecificity” which lines of code in Linux formed the basis oftheir case.

I June 28, 2006. Judge Brooke Wells granted IBM’s motion tostrike most of SCO’s evidence, citing in part SCO’s inability toprovide the specificity required by the court.



IBM vs. SCO settlement.

What was the basis for throwing out this case:

I Even early in the lawsuit, SCO could have and should have atbeen able to articulate which methods and concepts formed“the basis of their action against IBM.”

I By the final submission time in 2006, SCO should haveidentified the code behind these method and conceptspursuant to Judge Kimball’s order from July 2005.

I SCO appealed to the verdict and asked for a de novo reviewof Judge Wells’ order. On November 29, 2006, Judge DaleKimball affirmed Judge Wells’ order in its entirety.


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