Law School Outline - Intellectual Property - Stephen Kunin by BrittanyGibbons

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									Intellectual Property Law: Outline

Disclaimer: These notes and outlines are provided asis without any warranty as to their correctness, completeness, or quality. They are not meant to be a substitute for your own efforts. You may copy and forward this document as long as you do not alter its contents.

4/8/2005 Revision 0.1 Author: Philip Larson

Intellectual Property Law: Outline

Table of Contents
1. INTELLECTUAL PROPERTY LAW: OUTLINE .......................................................... 4 1.1 INTRODUCTION .................................................................................................... 4 1.1.1 GENERALLY........................................................................................................ 4 1.2 TRADE SECRETS ................................................................................................... 4 1.2.1 STATUS OF IDEAS OR INFORMATION AS TRADE SECRETS ....................... 4 1.2.2 WHEN ACQUISITION, USE OR DISCLOSURE OF A TRADE SECRET CONSTITUTES AN ACTIONABLE MISAPPROPRIATION............................................. 4 1.2.3 TRADE SECRETS SUBMITTED TO GOVERNMENT AGENCIES .................... 5 1.2.4 USE AND DISCLOSURE BY EMPLOYEES AND FORMER EMPLOYEES....... 5 1.2.5 REMEDIES FOR TRADE SECRET MISAPPROPRIATION ................................ 5 1.3 PATENTS ................................................................................................................. 5 1.3.1 UTILITY PATENTS .............................................................................................. 5 1.3.2 STATUTORY SUBJECT MATTER OF A UTILITY PATENT ............................. 6 1.3.3 THE NOVELTY STANDARD............................................................................... 6 1.3.4 THE STATUTORY BAR AND INVENTOR REQUIREMENTS........................... 7 1.3.5 NON-OBVIOUSNESS STANDARD ..................................................................... 7 1.3.6 UTILITY “USEFULNESS” STANDARD .............................................................. 8 1.3.7 DISCLOSURE REQUIREMENT ........................................................................... 8 1.3.8 INFRINGEMENT OF UTILITY PATENTS .......................................................... 8 1.3.9 REMEDIES FOR PATENT INFRINGEMENT .................................................... 10 1.3.10 DESIGN PATENTS ......................................................................................... 10 1.3.11 PLANT PATENTS........................................................................................... 11 1.3.12 INTERNATIONAL PATENT TREATIES TO WHICH THE US ADHERES .. 11 1.4 COPYRIGHT LAW ............................................................................................... 11 1.4.1 PURPOSE AND NATURE OF COPYRIGHT LAW ............................................ 11 1.4.2 THE SUBJECT MATTER OF COPYRIGHT ....................................................... 12 1.4.3 RIGHTS AFFORDED BY COPYRIGHT ............................................................. 13 1.4.4 EXCLUSIVE RIGHT TO REPRODUCE THE WORK ........................................ 14 1.4.5 EXCLUSIVE RIGHT TO PREPARE DERIVATIVE WORKS ............................ 14 1.4.6 EXCLUSIVE RIGHT TO DISTRIBUTE TO THE PUBLIC................................. 15 1.4.7 EXCLUSIVE RIGHT TO PERFORM PUBLICLY .............................................. 15 1.4.8 EXCLUSIVE RIGHT TO DISPLAY THE COPYRIGHTED WORK PUBLICLY15 1.4.9 MORAL RIGHTS ................................................................................................ 16 1.4.10 INFRINGEMENT OF COPYRIGHT ............................................................... 16 1.4.11 FAIR USE AND OTHER DEFENSES ............................................................. 16 1.4.12 ANTI-CIRCUMVENTION & DIGITAL RIGHTS MANAGEMENT .............. 17 1.4.13 OWNERSHIP OF COPYRIGHT ...................................................................... 17 1.4.14 NOTICE OF COPYRIGHT .............................................................................. 17 1.4.15 DEPOSIT & REGISTRATION ........................................................................ 18 1.4.16 DURATION OF COPYRIGHT PROTECTION ............................................... 18 1.4.17 RENEWALS OF PRE-1976 ACT FEDERAL COPYRIGHTS ......................... 18 1.4.18 TERMINATION OF TRANSFERS OF COPYRIGHT ..................................... 19 1.4.19 REMEDIES FOR INFRINGEMENT ............................................................... 19 1.4.20 INTERNATIONAL COPYRIGHT TREATIES ................................................ 19 1.5 TRADEMARK LAW ............................................................................................. 20 1.5.1 THE NATURE OF TRADEMARK LAW ............................................................ 20 1.5.2 TYPES OF MARKS............................................................................................. 20 1.5.3 DISTINCTIVENESS............................................................................................ 20 1.5.4 THE CONTENT OF MARKS .............................................................................. 22 Page 2

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Intellectual Property Law: Outline OTHER LIMITATIONS ON THE REGISTRATION AND PROTECTION OF MARKS 22 1.5.6 ACQUIRING OWNERSHIP OF MARKS............................................................ 23 1.5.7 FEDERAL REGISTRATION OF MARKS .......................................................... 23 1.5.8 CANCELLATION OF REGISTRATION............................................................. 24 1.5.9 INFRINGEMENT OF MARKS............................................................................ 24 1.5.10 TRADEMARK DILUTION ............................................................................. 25 1.5.11 TRADEMARK CYBERSQUATTING ............................................................. 26 1.5.12 GEOGRAPHIC BOUNDARIES ...................................................................... 26 1.5.13 DEFENSES TO AN INFRINGEMENT ACTION ............................................ 27 1.5.14 REMEDIES FOR INFRINGEMENT ............................................................... 27 1.5.15 INTERNATIONAL TRADEMARK TREATIES ............................................. 28 1.6 UNFAIR COMPETITION ..................................................................................... 28 1.6.1 THE NATURE OF UNFAIR COMPETITION ..................................................... 28 1.7 SAMPLE ESSAYS FROM BOOK......................................................................... 29 1.7.1 XXXXX 1: TRADEMARKS – COACH p27 ........................................................ 29 1.7.2 XXXXX2: TRADEMARKS – GRATEWAY p85 ................................................ 32 1.7.3 XXXXX3: TRADEMARKS – BODY WORKS p141........................................... 35 1.7.4 XXXXX4: TRADEMARKS – NESTLE p179 ...................................................... 37 1.7.5 XXXXX 1: COPYRIGHT – DEAD SEA SCROLLS p225 ................................. 39f 1.7.6 XXXXX 3: COPYRIGHT – DICTIONARIES p295 ............................................. 40 1.7.7 XXXXX 3: COPYRIGHT – INFRINGEMENT p359 ........................................... 42 1.7.8 XXXXX 5: COPYRIGHT – FAIR USE p413 ....................................................... 43 1.7.9 XXXXX 7: COPYRIGHT – MISAPPROPRIATION p527 ................................... 46 1.7.10 XXXXX 1: PATENTS – cDNA and PROTEINS p591 ..................................... 48 1.7.11 XXXXX 2: PATENTS – USEFULNESS OF cDNA p621 ................................ 51 1.7.12 XXXXX 3: PATENTS – NOVELTY p637....................................................... 52 1.7.13 XXXXX 4: PATENTS – NON-OBVIOUSNESS and ORIGINALITY p669..... 55 1.7.14 XXXXX 5: PATENTS – STATUTORY BARS p715 ....................................... 58 1.7.15 XXXXX 1: TRADE SECRETS p885 ............................................................... 59 1.5.5

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1. INTELLECTUAL PROPERTY LAW: OUTLINE
1.1 INTRODUCTION 1.1.1 GENERALLY A. Policy Considerations: IP law seeks to benefit the general public by providing a rich, diverse and competitive marketplace. Most IP doctrines are crafted to balance two conflicting public policy goals: 1) to provide an incentive to create by giving creators property rights in the products of their creativity, and 2) to provide the greatest possible public access to products and creativity to promote a competitive market. B. Jurisdiction: Art. 1, Sec 8, Clause 8 of the Constitution authorizes Congress to enact patent and copyright laws. The Commerce Clause (Art. 1, Sec. 8, Clause 3) is the basis for Congress‟s regulation of trademarks and unfair competition. States retain concurrent jurisdiction to regulate intellectual property under the 10 th Amendment. 1.2 TRADE SECRETS 1.2.1 STATUS OF IDEAS OR INFORMATION AS TRADE SECRETS A. General Definition: A trade secret is information that 1) derives actual or potential economic value from the fact that it is not known or readily ascertainable by others, and 2) is subject to reasonable efforts to maintain its secrecy. Restatement limits trade secret status to information or ideas used continuously in the Ps business. The Uniform Trade Secrets Act dropped this requirement. B. Factors Considered in determining trade secret status: To determine if something is a trade secret, courts will consider: 1) how widely the information is known outside Ps business, 2) who within Ps company knows the information, 3) whether P has taken reasonable measures to ensure the information remains secret, 4) how difficult it would be for others to legally acquire or duplicate the information, 5) whether the information gives P a commercial, competitive advantage over others, and 6) how much effort or money P expended in developing and acquiring the information. 1.2.2 WHEN ACQUISITION, USE OR DISCLOSURE OF A TRADE SECRET CONSTITUTES AN ACTIONABLE MISAPPROPRIATION A. Disclosure or use of a trade secret in breach of confidence: If D‟s unauthorized disclosure of a trade secret was in breach of confidence, then it is actionable. A duty of confidentiality requires D to refrain from disclosing the secret w/o permission. This duty arises when the parties are in a special relationship (e.g. lawyer-client, doctor-patient). The parties can also create a duty by express or implied contractual agreement. B. Disclosure or use of a trade secret learned from a third party with notice: If A reveals a TS to B when B has a duty of confidentiality, and B breaches by revealing to C, C will have a duty not to use or disclose the secret if he has notice that the information is a trade secret being revealed in breach of Bs duty. C will have notice if a reasonable person would be led to make further inquiry and a reasonable inquiry would reveal it. C. Disclosure or use of a trade secret learned by mistake w/ notice: If A reveals a trade secret to B by accident or mistake and B has notice the information is a trade secret and is being revealed by mistake, B has a duty to refrain from using the trade secret w/o permission, and will be liable if he does so. D. Continued Disclosure or use of a trade secret after receipt of notice: If C learns As trade secret from a 3rd party or if C learns by mistake, but C has no notice of the secrecy or breach, or of the mistake, C will not be liable for subsequent disclosure of the trade secret. However, the Restatement says that if C later receives notice, she must stop disclosing unless 1) she paid value for the secret in good faith, or 2) she has so changed her position in reliance on the secret that requiring her to stop using it would not be equitable. The Uniform Trade Secrets Act treats this differently saying that good-faith users who materially changed their position or paid value may be permitted by courts to continue their use if they pay a reasonable royalty. E. Disclosure or use of a trade secret acquired through improper means: B will be liable for disclosure or use of As trade secret if she acquired the trade secret through improper means. This includes illegal conduct and conduct which is below generally accepted standards of commercial morality.

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F. Acquisition, disclosure, or use of a trade secret w/ notice that provider acquired it through improper means: If X acquires Ys trade secret through improper means and gives it to Z, Z will be liable for subsequent disclosure if he has notice that it was a trade secret and was obtained through improper means. Reasonable person standard applies. G. The effect of Ds modification of Ps trade secret: the fact that D modified or improved P‟s TS before using or disclosing it will not relieve D from liability as long as P can show the information D used or disclosed was substantially derived from Ps TS. 1.2.3 TRADE SECRETS SUBMITTED TO GOVERNMENT AGENCIES A. Government agency disclosure of trade secrets and the takings clause: Many statutes require gov‟t agencies to publicly disclose trade secret information submitted to them by private parties. This is only an unconstitutional taking if, when the party submitted the TS, he had a reasonable investment-backed expectation of confidentiality (e.g. a statute expressly prohibits the agency from disclosing the TS). 1.2.4 USE AND DISCLOSURE BY EMPLOYEES AND FORMER EMPLOYEES A. In the absence of an express agreement: An employee owes a duty of confidentiality to his employer, which prohibits him from using or disclosing TS that the employer discloses to him w/I the scope of his employment. a. When the TS belongs to the employee: if the employee was not hired to create information of the type involved, but nonetheless creates a TS, the TS will be deemed to belong to the employee, and the employee is entitled to use or disclose it as he will. However, if the employee used the employer‟s work time, facilities or supplies to develop the TS, the employer has a shop right in it, a nonexclusive license to use the TS. B. In the case of an express agreement: An employer and employee may expressly agree that the employee will not disclose the employer‟s TS or that an employee will assign all his inventions in advance to the employer. Courts are unlikely to enforce covenants not to compete b/c they are against public policy. Courts will hesitate to enforce the agreements unless 1) it is reasonably necessary to protect the employer, 2) the agreement is reasonable as to the time and geographical area, 3) the restrictions are not harmful to the general public, and 4) the restrictions are not unreasonably burdensome to the employee. C. The doctrine of inevitable disclosure: Under this doctrine, adopted by some jurisdictions, the court will enjoin Ps former employee from taking a new position if: 1) the former employee knows Ps trade secrets, 2) the employee‟s new job duties are so similar to those of the former position that it would be difficult not to rely on those trade secrets, and 3) the former employee cannot be relied on to avoid using the trade secrets. 1.2.5 REMEDIES FOR TRADE SECRET MISAPPROPRIATION A. Injunctions: A D may be enjoined from using or disclosing Ps TS. Jurisdictions differ regarding the appropriate length of injunctions. Most limit the length to the duration of the secrecy. B. Damages: Damages may be measured by 1) the profits P lost as a result of Ds misappropriation, 2) a reasonable royalty for the Ds use of the TS, or 3) the amount of profits D made as a result of the misappropriation. C. Criminal prosecution: many states have made theft of TSs a criminal offense. The Economic Espionage Act of 1996 makes it a federal crime in many situations.

1.3 PATENTS 1.3.1 UTILITY PATENTS A. The nature and term of a utility patent: A utility patent gives its owner exclusive rights in an invention for a limited term. For many years, the term lasted 17 years from the date the patent was issued. However, for patents issued after June 8, 1995, the term beings on the date the patent issues and lasts for 20 years from the date the application was filed. B. Limitations on patents: patents are only available for those inventions that are non-obvious, novel, and useful, and are fully disclosed. If the Patent and Trademark Office (PTO) grants a patent, this creates a

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legal presumption that the invention meets these criteria, but a patent may be challenged in court, either through a declaratory judgement or through an invalidity defense in an infringement suit. 1.3.2 STATUTORY SUBJECT MATTER OF A UTILITY PATENT Patent Act § 101 authorizes utility patents for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” A newly discovered use for a known process, machine, manufacture or composition of matter may qualify as a patentable process. A. Naturally occurring vs. man-made things: patents may only be granted for “man-made” things, not for naturally occurring things. However, patents are not restricted to inanimate matter – a patent may be granted for living matter that has been altered by an applicant to have characteristics it would not have had naturally. B. Laws of nature and abstract ideas: The SC has held that laws of nature and abstract ideas may not in themselves be the subject of a patent. Computer programs are not patentable by themselves. However, a process or apparatus that incorporates a computer program as one step or element may be patenable. C. Business methods: recent law has established that business methods are patentable subject matter. D. Medical procedures: medical procedures are patentable, but remedies for infringement of such patents are limited in some cases. 1.3.3 THE NOVELTY STANDARD The novelty standard is set forth in §§ 102(a), (e), and (g) of the Patent Act. Novelty can only be defeated by a single prior reference which includes all the elements of the invention in the same arrangement. A. § 102(a): §102(a) focuses on the actions of persons other than the inventor/applicant prior to the date the inventor/applicant made the invention. It says that a patent must be denied if: 1) the applicant‟s invention was known by others in the US b/f the applicant, 2) the applicant‟s invention was used by others b/f the applicant invented, 3) the applicant‟s invention was described in a printed publication in the US or a foreign country b/f the applicant invented, or 4) the applicant‟s invention was patented in the US or a foreign country b/f the applicant invented. a. When an invention is “known by others”: TO have been known by others in the US prior to applicant‟s invention date, the invention must have been 1) reduced to practice, actually or constructively, or otherwise described in writing sufficiently to enable a person with ordinary skill in the art (POSITA) to make it w/ undue experimentation, and 2) accessible to the public. b. When an invention will be deemed “used by others”: To be used by others in the US prior to applicant‟s invention date, the invention must have been 1) reduced to actual practice, and 2) used in a manner for which it was intended by its inventor, and 3) accessible to the public. c. When an invention will be deemed described in a printed publication: To find a printed publication which anticipates an applicant‟s invention, several considerations are relevant. 1) must have been printed (satisfied if it was reduced to a discernible, tangible, permanent form), 2) there must have been a publication (typically found if an interested American exercising reasonable diligence could obtain the information, and 3) the printed publication must have set forth sufficient information about the invention that a POSITA could make it w/o further experimentation. d. When an invention will be deemed patented: In order for an invention to be anticipated by a prior patent under § 102(a), it must appear that: 1) the applicant‟s invention was the actual subject of a patent monopoly, 2) the patent effectively granted rights in the invention b/f the §102(a) applicant invented, and 3) the patent disclosure was available to the public b/f the §102(a) applicant‟s invention date. B. § 102(e): § 102(e) denies a patent to an applicant if: 1) b/f she invented, the same invention was described in an application for patent that was pending in the PTO, and 2) the pending application was ultimately published or granted. C. § 102(g)(2): §102(g) prohibits B from obtaining a patent if A made the same invention in the US b/f B did, and A did not abandon, suppress or conceal the invention.

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a. Identifying the first to invent: Invention entails 1) an inventive concept, and 2) reduction of the inventive concept into actual or constructive practice. It is presumed that the first person to reduce the concept to practice is the first to invent, but this can be rebutted. Abandonment, suppression and concealment: A (first inventor) will not be deemed to have abandoned, suppressed or concealed the invention as long as she was engaged in reasonable efforts to bring the benefit of the invention to the public. It is not necessary for A to file for a patent. Earlier invention abroad: § 102(g)(2) also prohibits a patent if the invention was made earlier in a foreign country and was not abandoned, suppressed or concealed. (not according to our class – this is only accommodated under § 102(g)(1), interference.

b.

c.

1.3.4 THE STATUTORY BAR AND INVENTOR REQUIREMENTS The statutory bars are set forth in §§102(b), (c), and (d). The inventor requirement is set forth in § 102(f). A. § 102(b): Similar to a SOL, §102(b) provides that a patent must be denied if, more than one year prior to the date the application was filed: 1) the invention was in public use in the US, 2) the invention was on sale in the US, 3) the invention was described in a printed publication anywhere in the world, 4) the invention was patented anywhere in the world. a. When an invention will be deemed “in public use”: A public use in the US is found if a person other than the inventor/applicant used the completed, operable invention in the way the invention was intended, under no restriction or obligation to keep the invention secret. i. Experimental use: public use that is primarily experimental (testing from a technological standpoint) will not trigger § 102(b). typically has to be testing directed or controlled by the applicant. ii. Indirect public use: If an invention is put to a commercial use that does not reveal it directly to the public (used to produce products sold to public, but the products don‟t reveal the invention), courts will nonetheless find a public use that starts the one-year statute running. b. When an invention will be deemed “on sale”: An invention is on sale in the US if it is offered for sale, regardless of whether it is in fact sold or delivered. The SC has held that it must be the subject of a commercial offer to sell. B. § 102(c): §102(c) prohibits a patent if the applicant abandoned his invention. The focus is on whether he abandoned his right to a patent, rather than his invention. C. § 102(d): §102(d) prohibits a patent if: 1) the applicant filed a patent application in a foreign country more than 12 months before he filed in the US, and 2) the foreign patent was granted b/f the US filing date. D. § 102(f): §102(f) requires that the applicant for patent be the inventor – the person who conceived of the specific invention claimed. 1.3.5 NON-OBVIOUSNESS STANDARD Patent Act § 103 provides that an invention is not patentable if, at the time it was made, it would have been obvious to a POSITA. To determine, the court must ascertain: 1) the scope and content of prior art, 2) the differences b/w the pertinent prior art and the invention, and 3) the ordinary level of skill in the pertinent art. Unlike novelty under § 102, which can only be defeated by a single prior reference which includes all the elements of the invention ins the same arrangement, obviousness can be demonstrated using two or more prior art references. A. The prior art: The POSITA, from whose perspective the obviousness determination is made, is presumed to have knowledge of all relevant prior art existing when the invention was made. Prior art is identified under §§ 102(a), (e), (f), and (g). Prior art is pertinent if it is in the same field of endeavor as the invention, or if it is reasonably related to the particular problem with which the inventor was concerned. B. Secondary considerations of obviousness: In determining obviousness, a court may consider objective factors, including: 1) the commercial success of the invention, 2) the length of time the need for the invention had been felt b/f the invention was made, 3) the level of acquiescence of others to the patent, 4) movement of POSITA in a different direction from that taken by the inventor, 5) existence of skepticism on the part of experts about the approach inventor took, 6) the fact that D copied the invention, rather than existing alternatives. Each of these may provide circumstantial evidence of obviousness.

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a. Nexus: a nexus must be demonstrated b/w the factor and the issue of obviousness. C. Obviousness can trigger § 102(b) one-year period: the §102(b) one-year SOL begins to run once information enters the public domain that, while not anticipating the invention, renders it obvious. 1.3.6 UTILITY “USEFULNESS” STANDARD A. “Usefulness”: An invention will be “useful” if there is a current, significant, beneficial use for the invention or, in the case of a process, the product of the process. An invention may be denied a patent for lack of usefulness if it fails to operate as claimed in the application. 1.3.7 DISCLOSURE REQUIREMENT A. § 112: requires the patentee to fully disclose the invention as the price of obtaining a patent. The disclosure requirement consists of three parts: 1) must include one or more claims which clearly and distinctly describe the invention, 2) the applicant must describe how to make and use the invention with sufficient clarity and detail to enable a POSITA to make it w/o undue experimentation (called enablement requirement), 3) the applicant must set forth the best mode that he contemplates for carrying out his invention. 1.3.8 INFRINGEMENT OF UTILITY PATENTS A. Suits to enforce patents: may be brought in any US District Court where venue is proper. a. Infringement: Persons may be liable for: 1) directly infringing a patent, 2) inducing another to infringe a patent, 3) contributory infringement, 4) importing, selling, offering to sell, or using a product protected by a US process patent, or 5) manufacturing or selling certain components of a patented invention to be assembled abroad. b. Claim interpretation and literal infringement: To determine whether D infringed P‟s patent, you look to the patent claims. The meaning and scope of the claims are an issue of law decided by the court. If D‟s product or process falls w/I the description of a claim, it literally infringes the patent. If D has made a change, so that the product doesn‟t fall within the wording of the claim, he may still be liable for direct infringement under the doctrine of equivalents. c. Doctrine of equivalents: prevents D from avoiding liability through insubstantial changes that take his product or process outside the literal language of a patent claim. To find infringement, D‟s device or process must contain an element that corresponds (is either identical or equivalent) to each element in the patent claim. Inquiry: is often framed as 1) whether Ds differing element performs substantially the same function in substantially the same way to obtain the same result as the claimed element. i. Factors: in making this evaluation, considerations include: 1) whether POSITA would have known the differing elements were interchangeable at time of infringement, 2) whetherh finding Ds invention equivalent would give patentee more rights than she would have gotten from the PTO, and 3) how great a departure the patentee‟s invention is from the prior art. ii. Objective: equivalency is an objective determination from the perspective of a POSITA d. Doctrine of prosecution history estoppel: the scope of a patent claim is interpreted in light of what happened in the application process at the PTO. B. Direct Infringement: Under § 102(a), amended in 1996, a person who makes, uses, sells, offers to sell, or imports the patented invention in the US during the patent term w/o the patentee‟s authorization will be liable for direct infringement. a. “Making” the patented invention in the case of combination patents: combination patents are patents for an invention whose individual components are already known but are combined in a novel, non-obvious fashion. Here, the combination (instead of the specific elements) are the subject of the patent protection. Here, a making is if D made an operable assembly of all the claimed components. b. Repair vs reconstruction as a “making”: W/ combination patents, there are no monopoly rights on the components. Therefore, mere replacement of individual components is permissible repair and does not constitute a making. Only reconstruction is an impermissible making. i. Reconstruction: Reconstruction occurs when the entire machine is spent and the owner must make a whole new combination.

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ii. Factors: There are four factors used to determine whether Ds activities constitute repair or infringing reconstruction: 1) nature of Ds actions, 2) nature of the patented device, 3) whether a market has developed to manufacture or service the part at issue, and 4) objective evidence of the patentee‟s intent. c. Selling the invention: SC says a patented invention cannot be “sold” until it is “made.” The first sale doctrine says that once the patentee authorizes the initial sale of an embodiment of the invention, she loses the right to control subsequent resales and uses of it, absent an express contractual restriction. d. Importing the patented invention: the first sale doctrine only applies to sales of products in the US. Tehrefore, a patentee can sell an invention abroad and then assert rights to prevent the importation, use or sale of the foreign-sold good in the US by subsequent owners. § 271(b) - Inducement to infringe: § 271(b) imposes liability for inducing infringement if the D actively and knowingly solicited or assisted a 3rd party to infrigne a patent, and the 3rd party did infringe. Merely complying w/ the request who directly infringes is not sufficient. D must know that direct infringement is likely to occur as a result of his acts. § 271(c) - Contributory infringement: Under § 271(c), a person who sells, offers to sell, or imports a material component of the patented invention, which has no substantial use other than use in the patented invention, will be liable for contributory infringement, if: 1) he knows the component he sold was especially made or adapted for use in the patented invention and has no other substantial use, and 2) the buyer in fact uses the component to infringe directly. Importing, selling, offering to sell, or using a product made through a process protected by a US patent: §271(g) says this constitutes infringement of the process patent unless the product 1) has been materially changed by subsequent processes, or 2) has become a trivial or nonessential component of another product. Exceptions and limitations shelter innocent infringers, noncommercial users, and retail sellers from liability. Manufacturing or selling components of a patented invention to be assembled abroad: §271(f) prohibits people from supplying all or a substantial portion of the components of a patented invention in a manner that induces combination of the components abroad. It also prohibits supplying a material component that has no substantial use aside from use in the invention if: 1) the person knows it is especially adapted for use in the patented invention and has no other substantial non-infringing uses, and 2) the person intends that the component will be combined with other components abroad in a mannter that would infringe the patent if the combination occurred in the US. Provisional rights prior to patent issuance: In 1999, Congress amended the Patent Act saying that the PTO should publish most patent applications 18 months after their filing date. Congress also granted patentees with provisional rights against third parties who make, use, sell, offer to sell, or import the invention during the period b/w publication and issuance. However, D must have actual notice of the published application and the claims in the issued patent must be substantially similar to the ones in the application. Recovery is limited to a reasonable royalty. Defenses to infringement: There are a number of defenses to a claim of patent infringement. Five include 1) patent invalidity, 2) patent misuse, 3) inequitable conduct, 4) the experimental use defense, and 5) the prior user defense. a. Patent invalidity: A patent is presumed valid. However, D may overcome this by proving w/ clear and convincing evidence that a condition of patentability was not satisfied. b. Patent misuse: The patentee has misused his patent if he uses it unreasonably to extend his market power beyond what Congress intended. If the D can demonstrate patent misuse, the patentee will be denied enforcement of his patent until the misuse ceases and doesn‟t enjoy the benefit from prior misuse. i. Tying arrangements: Conditioning a license to make, use, sell, or import the patented invention on the licensee/purchaser‟s agreement to purchase another good or license from the patentee will generally constitute misuse unless: 1) the good being purchased is a material component of the invention and has no substantial non-infringing use, 2) the patentee lacks market power in the relevant market for the patented invention, or 3) in the case of package licensing, the first patented invention cannot be practiced w/o infringing the patent on the second patented invention. ii. Activities that will not constitute patent misuse: § 271(d) says that it does not constitute patent misuse for the patentee to: 1) derive revenue from acts that would

C.

D.

E.

F.

G.

H.

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constitute contributory infringement if performed by another w/o the patentee‟s consent, 2) license or authorize others to perform acts that if performed w/o patentee‟s consent would be contributory infringement, 3) seek or enforce his rights against infringement or contributory infringement, or 4) refuse to license or use any rights in the patent. Inequitable conduct: This defense renders a patent unenforceable when D proves, with clear and convincing evidence, that the patentee intentionally intended to mislead the PTO by making misrepresentation or withholding material information during the patent prosecution. The defendant must show: 1) prior art that is material to patentability, 2) knowledge chargeable to the applicant of the prior art and its materiality, and 3) failure of the applicant to disclose the prior art. Experimental Use Defense: A person may make or use a patented invention w/o authorization if her purpose is only to satisfy her scientific curiosity or amuse herself as an intellectual exercise and she has no commercial or other practical motivation. i. § 271(e): permits people, under limited circumstances, to make, use, sell, offer to sell, or import certain patented inventions in the course of developing information to submit to federal agencies regulating manufacture, use or sale of drugs. Prior Use: § 273 provides a defense to a claim that D infringed a patented business method. To succeed, D must prove w/ clear and convincing evidence that it 1) actually reduced the patented business method to practice, in good faith, at least one year before the effective filing date of the patent application, and 2) commercially used the patented business method before the effective filing date of the Ps patent application. This is separate from the invalidity defense.

c.

d.

e.

1.3.9 REMEDIES FOR PATENT INFRINGEMENT Both damages and injunctions are available for patent infringement. A. The proper measure of damages: Courts may meaure based on 1) calculating a reasonable royalty for D‟s use of the patented invention, or 2) by calculating the patentee‟s lost profits attributable to the infringement. a. Entire market value Rule: courts may award lost profits on unpatented components sold with a patented apparatus if the patented and unpatented components are considered to be parts of a single assembly, operating together to achieve a result. b. Lost profits on products that do not embody the patented invention: courts can grant these if patentee can demonstrate: 1) that it would have sold the unpatented device but for the D‟s infringement, 2) the lost sales were reasonably foreseeable by the infringing competitor, and 3) the unpatented device directly competes w/ Ds infringing product. c. Willful infringement: however calculated, damages may be doubled or tripled upon showing of willful infringement or bad faith. B. Other monetary relief: The Patent Act authorizes awards of reasonable attorney fees to the prevailing party in exceptional cases. In addition, prejudgment interest is awarded to prevailing Ps as a routine matter. C. Injunctive relief: Courts are generally willing to grant permanent injunctions against further infringement, once infringement has been found. Preliminary injunctions are available upon a clear showing of irreparable harm and likelihood of success on the merits. 1.3.10 DESIGN PATENTS A. Nature and requirements of design patents: A design patent gives its owner a 14 year monopoly in the design (appearance) of an article of manufacture. To qualify, a design must be novel, non-obvious, and ornamental. The novelty standard is essentially the same for design patents as for utility patents. a. Non-obviousness: Non-obviousness is determined from the perspective of the professional designer of ordinary skill, comparing the overall appearance of the design with prior art. In order for a claimed design to be obvious, there must be a primary reference whose design characteristics are basically the same as the claimed design, and the prior are must suggest making the modifications to the primary reference in order to create the claimed design. b. Ornamentality: Regarding ornamentality, the design must be primarily ornamental, not dictated by functional considerations alone. The following considerations should be used in evaluating the ornamentality of a claimed design: 1) the existence of alternative designs, 2) whether the protected design represents the best design, 3) whether alternative designs would adversely affect the utility of the specified article, 4) whether there are any concomitant utility patents, 5) whether the

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advertising touts particular features of the design as having specific utility, 6) whether there are any elements in the design or overall appearance clearly not dictated by function. B. Infringement of a design patent: § 271, defining various ways a patent may be infringed, applies equally to utility and design patents. However, design patents are not published prior to issuance, and thus tive no provisional rights b/w publication and issuance. a. Standard: standard for judging infringement of a design patent is whether, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, the two designs are substantially the same (e.g. similar enough to deceive such an observer and induce him to purchase one supposing it to be the other). The similarity must arise from the novel aspects of the design. C. Defenses and remedies for infringement of design patents: all defenses available for infringement of utility patents are available for infringement of design patents. Additionally, the Patent Act provides for recovery of the Ds profits or an alternative minimum statutory damage amount for certain types of design patent infringement. 1.3.11 PLANT PATENTS A. Nature of plant patents: plant patents are available to persons who discover or invent a distinct and new variety of plant and asexually reproduce it. To quality, it must be novel, distinct and non-obvious and have been asexually reproduced. a. Novelty: to be novel, a plant must not have existed in nature. b. Distinctiveness and non-obviousness: the new plant must have characteristics that are clearly distinguishable from existing varieties. To be non-obvious, the characteristics must be significant. B. Infringement: plant patents give the owner the right to exclude others from 1) asexually reproducing the plant, 2) selling or using a plant so reproduced or any of its parts, and 3) importing a plant so reproduced. 1.3.12 INTERNATIONAL PATENT TREATIES TO WHICH THE US ADHERES A. The Paris Convention: The Paris Convention requires each member country to grant patent protection to applicants from other member nations on essentially the same basis that it grants protection to its own domestic inventors (national treatment). It also provides for filing priority: Qualified applicants who file an application in one member nation receive the benefit of their filing date in that nation for all subsequent filings in other member nations made w/i the next 12 months. Members for the most part are free to determine the nature and extent of the substantive patent protection they want to provide. B. The Patent Cooperation Treaty: PTC provides a centralized filing system to assist inventors applying for patents in a number of different countries simultaneously. C. The Agreement on Trade-Related Aspects of IP Rights (TRIPS): The WTO TRIPs agreement incorporates the provisions of the Paris Convention and builds on them. Including minimum disclosure requirements for patent applications, it also prescribes the subject matter for which TWO members must provide patent protection, the rights they must provide to patentees and the minimum term of protection. D. The Patent Law Treaty: The PLT tries to harmonize application filing procedures among its members, to reduce the complexity and cost of obtaining international patent protection. 1.4 COPYRIGHT LAW 1.4.1 PURPOSE AND NATURE OF COPYRIGHT LAW A. The nature of copyright law: The ultimate purpose of copyright law is to stimulate the creation and dissemination of as many works of authorship as possible, in order to benefit the public. It does this by giving creators of works limited rights in their works. Copyright protection is limited to an author‟s particular method of expressing an idea. Copyright never gives rights in the idea being expressed, or in facts or other elements of the public domain which may be incorporated into the work. a. Property right vs personal right: US copyright law has focused on granting economic rights. By contrast, many countries have fashioned their copyright laws to extend such personal rights, as well as economic rights. After the Berne Convention, Congress amended the US Copyright Act to provide personal rights (“moral rights”) in a narrow category of works of visual art. b. Rights in the intangible: The C/L of personal property protects rights in tangible embodiments of works of authorship, such as manuscripts and canvases. Copyright, by contrast, protects the

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intangible expression itself. A transfer of the physical embodiment of a work of authorship does not transfer the copyright. A separate writing is required to transfer copyright. Federal vs state law: prior to the effective date of the Copyright Act of 1976 (1/1/1978), the US had a dual system of copyright. Unpublished works of authorship were protected by state C/L copyright. Once a work was published, C/L copyright ended. Federal statutory copyright was available to works published w/ proper notice of copyright. In the ‟76 Act, Congress made federal statutory copyright available upon the fixation of a work in tangible form, regardless of publication, and said that federal copyright law preempts state copyright protection for works of authorship fixed in a tangible form.

c.

1.4.2 THE SUBJECT MATTER OF COPYRIGHT A. The statutory definition: The ‟76 Act provides that copyright subsists in “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” B. Originality requirement: the work of authorship must be original. This means: 1) the author must have engaged in some intellectual endeavor, and not just copied from a preexisting source; and 2) the work must contain a minimal amount of creativity. a. De minimus: works such as words, short phrases, slogans, etc. are not protected. b. Facts: because facts are discovered not created they are not proper subject matter for copyright. C. Fixation requirement: Federal copyright attaches to the intangible work of authorship, not the physical manifestation of it. Fixation can take many forms. The Copyright Act of 1976 provides that a work is fixed in a tangible medium of expression “when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” a. Copies & Phonorecords: All copyrightable works are fixed in either copies or phonorecords. Phonorecords are “material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed…” Anything else is a copy. D. Exclusion of Ideas, Procedures and Processes: Copyright protection never gives rights in ideas, procedures, processes, systems, methods of operation, concepts, principles or discoveries. When use of an idea requires copying Ps expression, the expression is not protected. a. Merger doctrine: when subject matter of a work is so narrow that there are only a limited number of ways to express it, there may be no copyright in any one form of expressing it. To provide otherwise might enable a person to have a monopoly in the subject matter, or idea, by obtaining all the alternative forms of expressing it. b. Thin copyright: Where there are few ways to express an idea, rather than use the merger doctrine, some courts refuse to find infringement unless the D‟s copy is nearly exact. c. Scenes a faire: An author may not obtain copyright in scenes a faire: incidents, characters, settings, or other elements which are indispensable in the treatment of a given topic. E. Categories of protectible works of authorship: the ‟76 Act provides that “works of authorship” include: 1) literary works, 2) musical works, 3) dramatic works, 4) pantomimes and choreographic works, 5) pictorial, graphic and sculptural work, 6) motion pictures and audiovisual works, 7) sound recordings, and 8) architectural works. This is not an exclusive list. a. Literary works – computer programs: The ‟76 Act expressly protects computer programs, which it defines as “a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.” b. Pictorial, graphic and sculptural works category: These include two-dimensional and threedimensional works of fine, graphic and applied photographs, prints and art reproductions, maps, globes, charts, diagrams, models, technical drawings, etc. i. Copyright in the design of useful articles: A useful article is “an article having an intrinsic function that is not merely to portray the appearance of the article or to convey information.” Pictorial, graphic and sculptural features of useful articles may be copyrighted if they are physically or conceptually separable from the utilitarian aspects of the useful article. The test is if the design features were significantly influenced by utilitarian considerations, then the features are inextricably intertwined with the function and are not copyrightable. If the design features weren‟t influenced by utilitarian

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functions of the article, but merely for aesthetic reasons, the design features are copyrightable. ii. Copyright in technical drawings: technical drawings and blueprints are protected by copyright. Unauthorized use of copyrighted plans to build the useful article typically does not in itself constitute infringement of the plans. Architectural Works Category: § 101 as amended by the Architectural Works Copyright Protection Act (AWCPA), defines an architectural work as the design of a building, as embodied in any tangible medium of expression, including a building, architectural plans, or drawings. In enacting the AWPCA, Congress intended to prohibit the unauthorized copying of the twodimensional architectural plans, unauthorized use of the plans to build a three-dimensional building, and unauthorized direct copying of the building. i. Pre-AWCPA works: The AWCPA only applies to architectural works created after 12/1/1990. Sound Recordings Category: Sound recordings are “works that result from the fixation of a series of musical, spoken or other sounds” but do not include the sounds accompanying a motion picture or other audiovisual work. Domestic sound recordings fixed before 1972 are not protected by federal copyright. Copyright for fictitious characters: The more widely accepted rule is that fictitious characters are entitled to copyright protection, apart from the work in which they appeared, if the characters were very distinctly delineated in the author‟s work. When the character has a visual aspect as well as personality characteristics, courts are more likely to find copyright protection. Compilations: compilations are works formed by collecting and assembling preexisting materials or data. Compilations include collective works, such as periodical issues, anthologies, etc. that compile a number of separate, independently copyrightable works. Compilations which are not collective works include directories, catalogs, or databases that compile facts which are not separately copyrightable. i. Protectible expression in compilations: The copyrightable expression in a compilation is that expression contributed by the author – usually the selection, coordination and arrangement of materials, along with any explanatory material. Compilations, like other categories of copyrightable subject matter, must be original. The arrangement must entail a minimum threshold of creativity. If the act of compiling was merely rote or clerical in nature, with no exercise of judgment or intellect, the originality requirement will not be satisfied. Derivative works: Derivative works are based on one or more preexisting works, such as translations, musical arrangements, dramatizations, fictionalizations, motion picture versions, art reproductions, abridgments, etc. Derivative works are w/i the subject matter of copyright, but copyright protection extends only to the original material contributed by the derivative author, not to the preexisting material. To constitute a separately copyrightable derivative work, an adaptation must contain substantial, not merely trivial, variations. Additionally, some circuits won‟t allow derivative works to be copyrighted if they will impact the copyright protection of the underlying work. Government works as copyrightable subject matter: Copyright is not available for any work of the US Gov‟t “prepared by an officer or employee of the US gov‟t as part of that person‟s official duties.”

c.

d.

e.

f.

g.

h.

1.4.3 RIGHTS AFFORDED BY COPYRIGHT A. Exclusive rights of copyright: The owner of a copyright in a work has the exclusive right to do or authorize the following: 1) reproduce the copyrighted work, 2) prepare derivative works based upon the copyrighted work, 3) distribute copies or phonorecords of the copyrighted work to the public, 4) publicly perform the work, 5) publicly display the work, and 6) to perform the copyrighted work publicly by means of digital audio transmission (for sound recordings). B. Moral rights in works of visual art: For works of visual art, the artist has the right: 1) to claim authorship in the work, 2) to prevent use of her name as the author of works she did not create, 3) prevent her name as the author of her own work, if the work has been distorted, mutilated or otherwise modified such that it would be prejudicial to her honor or reputation, 4) to prevent any intentional distortion, mutilation or

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modification of her work which would be prejudicial, and 5) to prevent the intentional or grossly negligent destruction of the work if it is of recognized stature. 1.4.4 EXCLUSIVE RIGHT TO REPRODUCE THE WORK The copyright owner has the right to prevent others from making copies of the copyrighted work. To demonstrate that a D infringed this right, it must appear that: 1) D‟s work was copied from P”s, and 2) there is a similarity of expression in the two works, so that copying amounts to an unlawful appropriation. A. Copying: Copying may be demonstrated by direct evidence or by circumstantial evidence that: 1) the D had access to the work and the D‟s work is similar to P‟s, or 2) D‟s work is strikingly similar to P‟s work. In determining similarity, all similarities (both copyrightable and uncopyrightable elements) may be considered. B. Unlawful appropriation: to ascertain whether D‟s copying was unlawful appropriation, D‟s work must be substantially similar to the copyrightable expression. This is made from the standpoint of the average member of the intended audience for the copyrighted work. Similarities in uncopyrightable elements cannot support a finding of unlawful appropriation/substantial similarity, although similarities in the selection and arrangement of uncopyrightable elements can. a. Extrinsic/Intrinsic Test: The 9th Circuit has adopted a two-part test to determine whether D‟s copying amounts to unlawful appropriation. In the case of non-literary works, the extrinsic test examines the similarity of the underlying ideas, and the intrinsic test examines the similarity of copyrightable expression based on the subjective, overall impression of the average listener or observer. With literary works, the extrinsic test does not consider similarity of ideas but objective similarities of copyrightable expression. b. Other approaches: Courts have used other standards for assessing infringement when the work at issue includes numerous uncopyrightable elements. These include the more discerning standard and the abstraction, filtration, and comparison standard. C. Literal vs nonliteral similarity: There are two types of substantial similarity that may lead to a finding of infringement: 1) literal similarity, and 2) nonliteral similarity (similarity in the works‟ underlying structure or arrangement). In the case of literal similarity, the amount of copying necessary to find infringement depends on how important the copied material is. The more important, the less must be copied. The difficulty in determining substantial similarity in nonliteral copying is drawing the line b/w what is an uncopyrightable idea and what is protectible expression. Generally, the more detail that is copied, the more likely it is that copyrightable expression has been taken. a. Abstractions test: Learned Hand‟s “abstractions” test is used to draw the line b/w idea and expression. D. Meaning of “Reproduction”: to infringe, a D must fix all or part of the copyrighted work in a material object in a manner that is sufficiently permanent or stable to permit the work to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. E. Exceptions to the “Exclusive Right to Reproduce”: a. Limitations on the exclusive right to reproduce – sound recordings: the exclusive right to reproduce sound recordings only extends to the mechanical reproduction of sounds from the sounds in the P‟s copyrighted recording. Mimicking the sounds in P‟s recording does not constitute infringement. b. Exception to the exclusive right to reproduce – computer programs: § 117, the lawful owner of a copy of a copyrighted computer program is not liable for infringement if he copies the program, as long as it is done as an essential step in utilizing the program in a computer or is for archival purposes only. c. Others: there are many other narrow exceptions to this right. 1.4.5 EXCLUSIVE RIGHT TO PREPARE DERIVATIVE WORKS A. The right to make derivative works: a.k.a. the right to adapt the copyrighted work. A derivative work is “a work based upon one or more existing works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation, or any other form in which a work may be recast, transformed, or adapted.” Typically when a right to adapt is infringed, a right to reproduce or the right to publicly perform is also infringed.

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Defining “Adaptation”: There have been some suggestions that a D‟s changes must constitute a substantial variation from the original. Courts also look to the economic impact of the Ds acts on potential markets for Ps work. B. Exceptions to the “Exclusive right to make derivative works”: a. Sound recordings: the right to adapt a sound recording, like the right to produce it, is only infringed if the D mechanically captures or “lifts” sounds from the copyrighted phonorecord, then alters or mixes them with other sounds. § 114. b. Computer programs: the owner of an authorized copy of a computer program may make an adaptation of the program, if it is done as an essential step in utilizing the program in a computer or if done for archival purposes. The altered program may not be transferred to someone else w/o the copyright owner‟s consent. § 117. c. Architectural works: owner of a building embodying a copyrighted architectural work may make or authorize alterations to or destruction of the building. § 120 a. 1.4.6 EXCLUSIVE RIGHT TO DISTRIBUTE TO THE PUBLIC A. The right of distribution: Copyright includes the exclusive right to distribute copies of the work to the public by sale or other transfer of ownership, or by rental, lease, or lending. Traditionally, to violate this right a person had to physically transfer a material copy to a member of the public w/o authorization. Recent case law says it is not always necessary to show physical transfer. Transmission of an electronic (digital) copy is also sufficient. B. First Sale Doctrine: once a copyright owner authorizes transfer of title to a copy, the transferee and his successors in interest are entitled to retransfer or otherwise dispose of that copy w/o returning to the copyright owner for authorization. This is only valid for lawful copies. A person who acquires a pirated copy will infringe copyright by reselling it or otherwise distributing it to the public. a. Droit de suite: The droit de suite doctrine gives authors of a work of fine art the opportunity to share in its appreciation in value when it is resold by subsequent transferees. Congress has not adopted this doctrine as an exception to the first sale doctrine, but CA has enacted a statute in this nature. b. Imports: § 602 says that unauthorized importation of copies of a work into the US infringes the copyright owner‟s exclusive right of distribution to the public. c. First sale on the intranet: Given that Internet transmissions generally reproduce the sender‟s copy, the first sale will seldom apply to permit purchasers of digital works to transfer them to others via the Internet. 1.4.7 EXCLUSIVE RIGHT TO PERFORM PUBLICLY A. The meaning of “performance”: To perform a work is “to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.” B. When a performance is “public”: There are four ways for a performance to be public: 1) if the performance occurs at a place open to the public, 2) if it occurs where a substantial number of people outside the normal circle of family and social acquaintances is gathered, 3) if it is transmitted to a place open to the public where people are gathered, or 4) if it is transmitted to the public, regardless of whether the public receives it in the same or separate places, at the same or different times. C. Exception – nonprofit performances of nondramatic literary or musical works: It is not infringement to publicly perform a nondramatic literary or musical work if the performance is direct (not transmitted), there is no commercial advantage, and the proceeds are used for charitable purposes. D. Exception – sound recordings: the right of public performance is not accorded to sound recordings. 1.4.8 EXCLUSIVE RIGHT TO DISPLAY THE COPYRIGHTED WORK PUBLICLY A. What constitutes a public display: To display a work is to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process…A display is public under the same circumstances in which a performance is public. B. Exception – owners of lawfully made copies: the owner of a lawfully made copy of a work may display that copy publicly either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located.

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C. Additional exceptions: 1) performances and displays of works by instructors or pupils in teaching activities, 2) certain performances and displays in religious services, etc. 1.4.9 MORAL RIGHTS A. The nature of moral rights: Many countries recognize rights that are personal to authors, apart from the economic rights discussed thus far. There personal rights are known as moral rights and are based on the view that works of authorship are an extension of the author‟s personality. Moral rights include the right of attribution and the right of integrity. The Berne Convention requires member countries to protect these. B. Visual Artists’ Rights Act of 1990: Congress enacted the VARA to comply with the Berne Convention requirement. It is limited in scope by providing moral rights only in works of visual art. Authors of qualifying works of visual art are given the rights of attribution and integrity in their works. These rights attach to single copies, not to intangible work of authorship. a. Right of attribution: gives the author the right to be identified as the author of a work, the right to prevent attribution to him of works that he did not create, and the right to prevent use of his name in connection with a work that has been modified in a way that will injure his honor or reputation. b. Right of integrity: gives the author the right to prevent the intentional distortion, mutilation, or other modification of her work that would be prejudicial to her honor or reputation. For works of “recognized stature”, it provides the right to prevent intentional or grossly negligent destruction of the work. c. Ownership transfer and duration of rights: moral rights are tgranted to the author and retained by the author even after she transfers the copyright in the work to someone else. The author may not assign moral rights. They last for the life of the author. d. Exception to moral rights: the owner of a building in which a work of visual art is incorporated may, in limited circumstances, remove the work from the building even though removal will destroy, distort, mutilate or otherwise modify the work. § 113(d) C. Other sources of protection for moral rights: The Lanham Act §43(a) and the state law of passing off may be used to prohibit persons from making a false designation of the origin or false represenations about the work. 1.4.10 INFRINGEMENT OF COPYRIGHT A. Direct infringement: anyone who makes an unauthorized reproduction, adaptation, distribution to the public, public performance or public display is liable for direct infringement to the owner of the copyright in the work. Lack of intent to infringe or lack of knowledge of the copyright will not avoid liability, but may affect the remedy. Anyone who violates the moral rights of attribution or integrity is liable to the author. B. Contributory infringement liability: One who knowingly induces, causes or materially contributes to the infringing conduct of another is liable for contributory infringement. Two elements must be demonstrated: 1) D must have known or have reason to know of the other person‟s infringing activity, and 2) D must actively participate by inducing, materially contributing to, or furthering the person‟s directly infringing activity. Sony said that one will not be held liable for selling items that can be used to infringe if they have substantial non-infringing uses. a. 9th Circuit’s limit on Sony: In the Napster case, the 9th Circuit distinguished Sony saying that if a computer system operator learns of specific infringing material available through its system and fails to purge the material, the operator will be liable for contributory infringement regardless of whether the system has substantial non-infringing uses. C. Vicarioius infringement liability: vicarious liability may be found whenever D has the right and ability to control or supervise the direct infringer and a direct financial interest in the infringement. D. Infringement on the Internet: Congress enacted the Digital Millennium Copyright Act (DMCA) in response to concerns about copyright infringement on the internet. It safe harbors from infringement liability for ISPs. 1.4.11 FAIR USE AND OTHER DEFENSES A. The nature of the fair use doctrine: The fair use doctrine is available once a prima facie showing of copyright infringement has been made. Founded on notions of equity and common sense, it is applied on a case-by-case basis. Examples of uses that may be found fair (§ 107) include uses “for purposes such as criticism, comment, news reporting, teaching, scholarship or research.”

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The four factors: § 107 provides four factors that courts should consider in determining whether a D‟s use was fair: 1) “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes”, 2) “the nature of the copyrighted work”, 3) “the amount and substantiality of the portion used in relation to the copyrighted work as a whole”, and 4) “the effect of the use upon the potential market for tor value of the copyrighted work”. No one factor is dispositive. B. Parody cases: a parody based on a copyrighted work is more likely to be excused as a fair use if the parody is aimed at the copyrighted work itself and the D only copied the extent necessary to “conjure up” the copyrighted work in the audience‟s mind, so they would no it was a parody. C. Reverse engineering code: the intermediate copying of code that takes place in the course of reverse engineering may be excused as a fair use when reverse engineering is the only means of gaining access to unprotected ideas and functional elements in the code. D. Copyright misuse: The copyright misuse defense is an equitable defense rendering a copyright unenforceable if the owner has engaged in misconduct in licensing or enforcing the copyright, broadening the scope of their monopoly beyond that intended by Congress. 1.4.12 ANTI-CIRCUMVENTION & DIGITAL RIGHTS MANAGEMENT A. Anti-circumvention provisions: DMCA makes it illegal to circumvent a technological measure that effectively controls access to a work protected by Copyright Act. It is illegal to manufacture, distribute or offer devices or services to defeat technological protection measures. The devices must be: 1) primarily designed for the purpose of circumventing, 2) have only limited commercially significant purposes other than to circumvent, or 3) be marketed for use in circumventing. a. Circumvention: is to descramble a scrambled work, decrypt an encrypted work, or otherwise avoid, bypass, remove, deactivate, or impair a technological measure w/o authority of copyright holder. 1.4.13 OWNERSHIP OF COPYRIGHT A. Initial owner of copyright: the author of a work is the initial owner of the copyright in it and may either exploit the work herself or transfer some or all of the rights to others. a. Ownership of copyright in joint works: the authors of joint works are co-owners of a single copyright. A joint work is “a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.” § 101. Each joint owner must have intended to contribute a part fo a unitary whole at the time she created her portion. b. Works for hire: If a work is “made for hire”, the employer or other person who ordered and financed the work is deemed the author for copyright purposes and is the initial owner of the copyright. There are two ways for a work to be a “work for hire”: 1) it is prepared by an employee in the scope of his employment, or 2) works created by independent contractors may be works for hire if a) it is one of nine enumerated categories of work, and b) parties have expressly agreed in a written document that the work will be considered “work for hire.” c. Ownership of copyright in collective works: § 201(c) says that in the absence of a writing to the contrary, the author of a collective work will have the following privileges: 1) privilege to reproduce and distribute the individual contributions as part of the collective work, 2) the privilege to reproduce the individual contributsion as part of later revisions, 3) privilege to reproduce the individual contributions in a later work of the same series. B. Division of ownership: copyright ownership is divisible. The copyright owner may transfer some or all of her exclusive rights. Any person who receives an exclusive right under the copyright is considered a copyright owner and has the right to sue to enforce the right she owns against others. C. Transfer of copyright: all transfers of exclusive rights must be in writing and signed by the transferor. Transfers of non-exclusive rights (e.g. licenses) need not be in writing. 1.4.14 NOTICE OF COPYRIGHT A. Copyright act of 1909: Prior to 1/1/78, the US had a dual system of copyright protection. C/L protected works prior to publication. When published, C/L protection ceased. Federal statutory copyright protection began if the published copies carried the proper notice of copyright. Failure to include notice, even in a few copies, meant forfeiture of the whole copyright. a.

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Publication under the 1909 Act: Publication required physically distributing tangible copies of the work to members of the public. B. Copyright Act of 1976: did away with the dual system of copyright, providing federal statutory copyright commencing upon fixation of the work in a tangible form. This preempts state copyright protection. It required notice of copyright be placed on all visually perceptible copies publicly distributed. a. Savings provision: § 405 said that if authorized copies were publicly distributed w/o copyright notice, copyright in the work would be invalid unless 1) only a small number of copies were distributed w/o notice, 2) the work was registered w/ the Copyright Office w/I five years of public distribution w/o notice and owner made reasonable efforts to add notices to all copies distributed to the public after the omission was discovered, or 3) notice was omitted in violation of an express, written agreement conditioning authorization to public on provision of notice. C. Berne Convention amendments: when the US joined the Berne Convention, it had to eliminate notice requirements. This made compliance with notice requirements voluntary, not mandatory, for copies distributed after 1989. It did not restore copyrights that had been lost due to lack of notice under the 1909 or 1976 acts. a. § 104A: restores copyright in works originating in foreign countries belonging to the Berne Convention. 1.4.15 DEPOSIT & REGISTRATION A. Deposit requirements: the owner of a copyright in a published work must deposit two copies of the best edition of the work with the Copyright Office w/I three months of publication. Failure to comply is punishable by fine, but not forfeiture of copyright. B. Registration requirements: a copyright owner may register copyright in a work at any time during the copyright. If a work is registered b/f or within 5 years after first publication, the certificate of registration will constitute prima facie evidence of the validity of the copyright. Owner of copyright must register the copyright or show an attempt to register and was refused, before she can bring suit for infringement. 1.4.16 DURATION OF COPYRIGHT PROTECTION A. Commencement of federal copyright: Under 1909 Act, copyright commenced on publication w/ proper notice. Under 1976 Act (effective 1/1/78), federal copyright commences upon creation of the work. A work is “created” when it is first fixed in a copy. B. Duration of copyright for works created after 1/1/78: The duration of copyright is life of author + 70 years. For works of joint authorship, it endures for the life of the last to die + 70 years. For anonymous, and works made for hire, duration is 95 years from first publication or 120 years from creation of work, whichever expires first. C. Duration of the copyright for works created but not published before 1/1/78: works created but unpublished by 1/1/78 became protected by federal copyright on that date. D. Duration of the copyright for works already protected by federal copyright on 1/1/78: Under the 1909 Act, federal copyright consisted of 28 years. The copyright could be renewed for another 28 years, giving a total of 56 years of protection. The 1976 Act extended the second term of pre-1976 Act copyrights by 19 years (to 47). The Sonny Bono Copyright Term Extension Act, enacted in 1998, extended the the second term of pre-1976 Act copyrights an additional 20 years (67 total years for second term). E. Rule for Calculating Terms: under ‟76 Act, all terms of copyright run to the end of the calendar year in which they are due to expire. 1.4.17 RENEWALS OF PRE-1976 ACT FEDERAL COPYRIGHTS A. Ownership of renewal right: If the author is not living, her renewal right pass to her surviving spouse and children. If there aren‟t any, the renewal right passes to the author‟s executor, who takes the right as the personal representative. B. Transferability of expectancy of renewal right: any persons from the section above may convey their renewal expectancy right to a 3rd party, if they clearly indicate their intent to do so in writing. C. Exceptions to right to renew: the person owning the copyright at the time to renew (rather than the author or his successors) is entitled to renew if: 1) the work is a periodical, encyclopedia and the copyright was secured by the proprietor not the author, 2) the work was copyrighted by an employer for whom the work was created for hire, 3) the work was a posthumous one. a.

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D. Process of renewal: Prior to Copyright Amendments Act of 1992, renewal claimants had to file an application during the last year of the first term of copyright. Congress amended the Act in 1992 to eliminate the filing requirement and provide that renewal would be automatic for all remaining first-term copyrights. To encourage people to voluntarily renew, the filed application to renew constitutes prima facie evidence of the validity of the copyright. E. Renewals and derivative works: when a license has been granted to create a derivative work based on acopyrighted original, the licensee has obtained no rights in the renewal term. Reproducing, publicly distributing or publicly displaying the derivative work made pursuant to the licenese will constitute infringement of the second term. The 1992 Amendments say that if an author fails to file for renewal, relying on the automatic renewal provisions, derivative works made under the first-term can continue to be exploited. 1.4.18 TERMINATION OF TRANSFERS OF COPYRIGHT A. Transfers executed after 1/1/78: all assignments and license after 1/1/78 are subject to termination under § 203 of the ‟76 Act unless the work was a work for hire. a. Persons entitled to terminate: In the case of transfers by a single author, the author may terminate. i. Joint authors: termination may be accomplished by a majority of the authors who made the transfer. b. Time for termination and notice: an assignment or license may be terminated at any point during a 5-yr period of time which begins the 36th year after the date the assignment or license was executed. To terminate, the author or his sucessors must give notice to the assignee/licensee or her successor in writing two to ten years before the date on which the grant is to be terminated. c. Effect of termination and further grants: on the date the notice of termination is given, the rights which will revert at termination vest in the author or his successors. Further grants and agreements to grant the terminated rights may only be made after the effective date of the termination. d. Derivative works: a derivative work prepared before termination of the assignment or license that authorized it may continue to be exploited after the termination. B. Transfers executed prior to 1/1/78: Copyright Act § 304 applies to all assignments and license or rights in the renewal copyright term executed before 1/1/78. There were a bunch more complex rules here… 1.4.19 REMEDIES FOR INFRINGEMENT A. Injunctions and disposal of infringing articles: preliminary and permanent injunctions may be awarded against copyright infringement and violation of the author‟s moral rights in works of visual art. The Copyright Act also provides for the impounding and eventual destruction of infringing copies or articles used to make them. B. Damages and/or profits: the copyright owner is entitled to recover the actual damages she suffersed as a result of the infringement or violation, plus any of the D‟s profits attributable to the wrongdoing which were not taken into account in determining actual damages. There can be no double recovery. P bears the burden of proving Ds gross revenues. The burden then shifts to D to prove what, if any, amound should be deducted as expenses or costs of producing the infringing work and what, if any, portion of his profits is attributable to factors other than infringement. a. Statutory damages: copyright owner may elect to recover an award of statutory damages, instead of actual damages and profits. The court may award damages of not less than $750 or more than $30,000, as it considers just. If P proves D willfully infringed, the court may increase the award up to $150,000. C. Costs and attorney fees: Courts may award costs against either party to an infringement suit, though generally costs are only awarded against a party who acted in bad faith. 1.4.20 INTERNATIONAL COPYRIGHT TREATIES A. The Berne Convention: US adheres. rests on the doctrine of national treatment. It also establishes minimum levels of substantive copyright protection that member nations must afford. Requires member nations to protect the right of reproduction, translation, adaptation, public performance, public recitation, broadcasting, and the film right. It also says member nations must protect moral rights of attribution and integrity.

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B. The Universal Copyright Convention (UCC): US adheres. Also based on national treatment. It protects literary, scientific and artistic works of nationals of member nations. This has been interpreted to include most works protected under US Copyright except for photographs, applied art and sound recordings. The UCC imposes fewer substantive requirements on member nations, and permits members to impose notice requirements and other formalities, and does not require moral rights to be protected. C. The TRIPS Agreement: The Agreement on Trade-Related Aspects of IP Rights is based on national treatment and requires WTO members to comply w/ most of the provisions of the Berne Convention, with exception of protecting moral rights. It says that computer programs must be protected as literary works. D. The WIPO Copyright Treaty: Ratified by the US in 1998, this upgrades the Berne Convention by providing a general right of distribution for all works of authorship and a specific right of communication to the public by online transmission. WIPO also requires member nations provide protection against circumvention of effective technological measures used to protect copyrights. 1.5 TRADEMARK LAW 1.5.1 THE NATURE OF TRADEMARK LAW A. The purpose of trademarks: trademarks permit consumers to identify the source of goods or services. The purpose is to ensure that consumers can rely on marks in exercising their purchasing preference by prohibiting competitors from using marks in a way that confuses consumers about the source, sponsorship, or affiliation of goods or services. Ensuring that trademarks accurately identify the source of goods or services benefits consumers by ensuring that they are able to accurately select the products and services they want. It benefits businesses by helping them create and protect business good will. B. Relationship b/w state and federal law: trademark law developed as one of a number of related doctrines under C/L unfair competition. Congress later passed a series of federal statutes in the Lanham Act. §43(a) provides relief for unregistered indications of origin. The Lanham Act also provides a means of registering marks. a. Administrative issues: the PTO handles registration of marks on the Principal Register. Inhouse administrative appeals from examiners‟ registration decisions go to the Trademark Trial and Appeal Board. From there, dissatisfied parties can seek review on the record from the Court of Appeals for the Federal Circuit. 1.5.2 TYPES OF MARKS A. Trademarks: A trademark is a word, name, symbol or device, which is used to distinguish the goods or one person from goods manufactured or sold by others and to indicate the source of the goods. B. Service marks: service marks are the same as trademarks except that they identify and distinguish services rather than products. TO register a service mark on the Lanham Act Principal Register, an applicant must provide a service that is sufficiently separate from the sale of goods. This will not be the case if the service is normally expected and routinely rendered in furtherance of the sale of goods. C. Certification marks: certification marks are words, names, symbols, or devices used by one person to certify that the goods or services of others have certain characteristics. Since consumers rely on certification marks for information about the products and services that bear them, the Lanham Act imposes strict restrictions on certification marks registered on the Principal Register. First, the owner of a certification mark may not use the mark in connection with its own goods and services. Second, the owner must police use of the mark and prohibit others from using it for purposes other than certifying. Third, the owner may not discriminatorily refuse to certify goods or services that satisfy its stated, objective standards. D. Collective marks: collective marks fall into two categories: 1) collective membership marks are marks adopted for the purpose of indicating membership in an organization, 2) collective trademarks and service marks are trademarks or service marks adopted by a collective organization, such as a co-op, for use by its members in selling their individual goods or services. 1.5.3 DISTINCTIVENESS A. Marks must be distinctive: Before a word, name, symbol, or device can be recognized and protected as a mark it must be distinctive. Marks are often categorized according to their distinctiveness. Highest in the hierarchy are arbitrary or fanciful marks and suggestive marks, which are deemed inherently distinctive.

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Lower in the hierarchy are common, descriptive, and surname marks, which are not viewed as inherently distinctive, and can only be protected if they have attained distinctiveness through use in the marketplace. At the bottom of the hierarchy are generic marks which are incapable of becoming distinctive and cannot be the subject of ownership rights. a. Arbitrary or fanciful marks: fanciful marks are marks that are made up, and have no meaning other than their trademark meaning. Arbitrary marks are those that in no way describe the particular product or service they are meant to identify. b. Suggestive marks: marks that indirectly describe the product or service. The consumer must engage in a mental process in order to associate the mark with a description of the good or service being identified. Two tests have been used i. Degree of imagination: the first test holds that the more imagination the consumer must use to get a direct description of the product or service, the more likely the mark will be found suggestive. ii. Needed by competitors: the other test looks to see if the mark is one that competitors are likely to need in order to describe their products or services. If not, the mark is more likely to be suggestive. c. Descriptive marks: This includes: 1) marks that appear to describe the product or service they identify, 2) marks that appear to describe the geographical location from which the goods emanate, 3) marks that are primarily merely a person‟s surname, 4) other marks that are commonly used in connection with the relevant type of goods or services. In determining whether marks are descriptive, one must consider what consumers encountering the mark will think. If thy are likely to think the mark describes the product or its geographic origin, it is descriptive regardless of whether it does in fact provide accurate information. i. Geographically descriptive marks: A mark is considered to be geographically descriptive or deceptively misdescriptive if 1) it conveys primarily or immediately a geographical connotation to a meaningful segment of the purchasing public, and 2) those persons are likely to think that the goods or services in fact come from that place. ii. Surname marks: A mark is primarily merely a surname if its overall impact on the consuming public is a surname meaning and nothing more. If the mark has no meaning to the public, then it is not primarily merely a surname for purposes of the distinctiveness requirement. If the mark has both a surname meaning and some other reasonably known meaning in the language, then it generally will not be deemed primarily merely a surname… iii. Evaluating Descriptiveness: Maks must always be evaluated in light of the particular good or service they identify. It is essential to consider the overall commercial impression the mark would make on the average prospective customer. For composite marks, one must consider the impression the mark makes as a whole and not break it down into its constituent elements. Misspelled words must be treated as though they are properly spelled. Foreign words are generally translated into English and then evaluated. d. Secondary meaning: secondary meaning is attained when, due to exposure to the mark in the marketplace, the relevant consuming public views the mark not in its primary, common, descriptive, or surname sense but as an indication of the source of the product or service. The Lanham Act provides that proof of substantially exclusive and continuous use of a descriptive mark for 5 years in connection w/ the product or service can be prima facie evidence that the mark has achieved secondary meaning. e. Abstract designs and other nonverbal marks: Many marks, such as abstract designs and product or packaging shapes, cannot readily be characterized as arbitrary, fanciful, suggestive or descriptive. As a general rule, common basic designs (circles, squares, stripes) are viewed as merely capable of becoming distinctive, so that secondary meaning must be demonstrated. f. Generic Marks: a generic mark is the common, descriptive name or a class or genus of good or service. A generic name or representation cannot serve as a valid mark for that good or service. The standard for determining whether a mark is or has become generic is whether its primary significant to consumers is an indication of the class or genus of product or service, or an indication of origin. i. Determining relevant “genus”: when a producer introduces a product that differs from an established product class in a significant, functional characteristic, and uses the

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common descriptive name of that characteristic as the name of the product, the new product becomes its own genus and the term denoting the genus becomes generic if there is no commonly used alternative that effectively communicates the same information. ii. Descriptive marks as generic: there is a difference of opinion in the circuits about whether a highly descriptive word like “tasty” or “delicious” should be treated as generic and denied protection as a matter of law. 1.5.4 THE CONTENT OF MARKS A. The mark must create a separate impression: to qualify as a mark, the word, name, symbol or device must be used in a way that creates a separate commercial impression on the viewer or listener, apart from the other material used with it. Its impact on the consumer must be primarily to identify or distinguish the goods or services, not merely to serve as decoration or serve some other purpose. B. Words, numbers, designs, etc as marks: recognizable words and combinations of words (slogans), arbitrary combinations of letters, combinations of letters and numbers, and numbers alone may serve as marks. Drawings, scents, and sounds may serve as marks. A mark may be comprised of two or more of these elements. These composite marks must be evaluated as a whole for distinctiveness. C. Trade dress: trade dress may be protected as a mark if it is capable of identifying or distinguishing the claimant‟s product or service. Under the modern view, color alone may be protected as a mark if secondary meaning is demonstrated. Trade dress typically falls into three categories: 1) product packaging, and 2) product features, and 3) overall image of a business. For trade dress to be protected, it must be nonfunctional and distinctive. a. Distinctiveness requirement for trade dress: The claimant of trade dress rights in product featuresmust always demonstrate secondary meaning. Product packaging trade dress can b inherently distinctive, as long as the combination of elements as a whole is not descriptive of the product, commonplace for that type of product, or a trivial variation on a combination that is commonplace. b. The non-functionality requirement of tradedress: In a § 43(a) suit for infringement of trade dress, the P bears the burder of proving non-functionality. If product features are encompassed in the claims of a utility patent, this adds great weight to the statutory presumption that the product features are functional, and the trade dress claimant has the heavy burden of showing the features are not functional, but are rather merely an ornamental, incidental or arbitrary aspect of the product. i. Two part test for functionality: In the TrafFix case, the SC set for the two-part test. 1) the court applies the Inwood Laboratories test: is the feature essential to the use or purpose of the article, or does it affect the cost or quality of the article? If yes, it is functional and cannot be subject of trade dress. If the answer is no, the court must apply the Qualitex standard: would the exclusive use of the feature “put competitors at a significant, non-reputation-related disadvantage”? If so, there is “aesthetic functionality” and the feature may not be protected. Only if the product feature is non-functional under both tests can it be protected as trade dress. Circuits have disagreed over whether to consider the availability of alternative product features in applying the Inwood test. 1.5.5 OTHER LIMITATIONS ON THE REGISTRATION AND PROTECTION OF MARKS A. Scandalous or immoral marks: marks that are scandalous or immoral will not be enforced or registered. Marks are scandalous or immoral if they give offense to the conscience or moral feelings or are shocking to the sense of decency or propriety. B. Matter that may disparage another: under Lanham Act § 2(a), a mark may not be registered or protected if it consists of matter that may disparage persons, institutions, beliefs, or national symbols. Whether a mark is disparaging should be evaluated from the standpoint of a substantial component of the people alleging disparagement, not from the standpoint of the general public. C. Deceptive marks: marks that are deceptive will not be enforced at C/L or registered. A mark is deceptive if it: 1) falsely indicates that the product or service has a characteristic, 2) prospective purchasers are likely to believe the misdescription correctly describes the product, and 3) the misrepresented fact would be material to a reasonable consumer in deciding whether or not to purchase the product or service. a. Deceptive vs “primarily deceptively misdescriptive” marks: deceptive marks (cannot be registered) and deceptively misdescriptive marks (can be registered if they secondary meaning)

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can be distinguished on the basis of materiality. If the misrepresented characteristic would be material to consumers in making their purchasing decision, the mark is deceptive. If not, it is deceptively misdescriptive. b. “Deceptively misdescriptive” marks vs “geographically deceptively misdescriptive” marks: While Lanham Act §§2(e), (f) permit deceptively misdescriptive marks to be registered upon showing secondary meaning, they do not permit primarily geographically deceptively misdescriptive marks, unless they got secondary meaning before 12/8/1993. D. Marks in prior use: Lanham Act § 2(d) prohibits registration of any mark that, when used in connection with the applicant‟s goods or services, is confusingly similar to a mark or trade name that another began using b/f the applicant and has not abandoned. It can be registered if the PTO determines that the likelihood of consumer confusion would be low (e.g. separate portions of the country). 1.5.6 ACQUIRING OWNERSHIP OF MARKS A. Use of the mark in trade: To acquire ownership rights in a mark at C/L, one must be the first to use it in trade and make continuous use in trade thereafter. To use a mark it trade is to use it in a way that allows consumers to rely on it for its ultimate purpose – to identify and distinguish the user‟s goods from those of other producers. The use must be “in the ordinary course of trade”, not merely a token use made for the purpose of reserving the mark. a. “Four factor test” for determining if “Use” is sufficient: Jurisdictions vary in the amount of use they require of a mark claimant before recognizing ownership rights. Some have held that they must achieve sufficient market penetration to pose a meaningful risk of consumer confusion if a competitor starts using a similar mark. Others apply a four-factor test: 1) the volume of sales of the trademarked product, 2) the growth trends in the area, 3) the number of persons actually purchasing the product in relation to the potential number of customers, 4) the amount of product advertising in the area. b. Affixation: To acquire ownership rights in a mark, one must also satisfy the affixation requirement. The mark will be deemed affixed if it is: 1) placed on the goods themselves, 2) placed on their containers, 3) placed on tags or labels attached to the goods or containers. Under federal law, affixation is probably satisfied by prominently featuring the mark on a display associated with the goods. c. Near-simultaneous use: while the general rule is that the first person to use a mark obtains ownership in it, courts may be influenced by equitable considerations when there is nearly simultaneous use of the mark in trade. B. In the case of descriptive marks: To obtain ownership rights in descriptive, geographically descriptive, suname marks and other marks that are not inherently distinctive, one must demonstrate that he or she was the first user to obtain secondary meaning in the mark. C. Use in commerce: to assert rights in a mark under the Lanham Act, a claimant must show that it has used the mark in interstate commerce, or in a manner that affects interstate commerce. 1.5.7 FEDERAL REGISTRATION OF MARKS A. Significance of registration on the Lanham Act Principal Register: ownership of marks is automatic under the C/L as soon as the mark is first used in trade (or, for marks that are not inherently distinctive, as soon as the claimant obtains secondary meaning). No registration or other admin process is necessary to acquire the ownership rights. However, federal law provides that owners may register them on the Principal Register. Registration provides additional rights beyond those available at C/L. B. Advantages of registration on Principal Register: Registeration provides: 1) a right to assistance from US Customs in preventing infringing goods from entering the country, 2) presumptions of mark ownership and validity and, after 5 yrs of registration, preclusion of certain challenges or defenses to the mark, and 3) rights in the mark in a greater geographical area than often would be possible at C/L. C. Registration: To register, the applicant must show use in interstate commerce or in a manner that affects interstate commerce. There are then two ways to register: 1) a person who has already satisfied the use in trade and use in commerce requirements may file with the PTO. The PTO will examine the application and publish it for opposition. If there is no successful opposition, PTO will register the mark. 2) a person may file application papers w/ PTO alleging a bona fide intention to use the mark in trade and interstate commerce. The PTO will make an initial examination and publish it for opposition. The applicant will

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have up to 2.5 years to make the necessary use in trade and use in commerce and file a statement of use with the PTO. Then, mark can be registered. a. Certificate of registration: provides prima facie evidence of the validity of the registered mark. b. Constructive use: Once the mark is registered, registrant will enjoy constructive use during the period b/w filing and registration. This permits the registrant to obtain priority (rights as the first user) over persons who made their first use of the mark during that time. D. Supplemental Register: Marks that are capable of distinguishing goods or services but are not registerable on the Principal Register due to lack of distinctiveness may be registered on the Supplemental Register. The primary benefit is that it may assist in obtaining registration of the mark abroad. 1.5.8 CANCELLATION OF REGISTRATION A. During the first five years of registration: during the first 5 yrs of registration, a person who believes himself injured by the registration may petition to cancel the registration on any ground that would have precluded registration in the first place. B. After 5 years of registration: If the mark has been registered for firve years, the Lanham Act limits available grounds for cancellation. Three important grounds for cancellation that are precluded after 5 years are: 1) the mark is not inherently distinctive and lacks secondary meaning, 2) the mark is confusingly similar to a mark that someone else used prior to the registrant and continues to use; and 3) the mark is dilutive of the senior user‟s mark. 1.5.9 INFRINGEMENT OF MARKS A. Injury to be protected against: trademark protection addresses two concerns: 1) it protects the public‟s interest in being able to accurately ascertain the source of goods and services in the market, and 2) it protects a trademark owner‟s business good will against the lost sales and damage to reputation that may occur if others are permitted to use its mark in a manner that is likely to confuse consumers about the source of the goods or services. B. Test for infringement: The test for trademark infringement is whether D‟s use of her trademark is likely to cause a significant number of consumers to be confused about the source of the goods or services. a. Factors in determining “Likelihood of Confusion”: Courts have set forth a number of factors to consider to determine whether a mark is likely to confuse: 1) similarity of the marks (in sight, sound or meaning), 2) similarity of purchasers, 3) similarity of marketing channels, 4) sophistication of prospective purchaser and the cost of the goods or services, 5) evidence of actual confusion; 6) the manner of presenting the mark, 7) the strength of the Ps mark, 8) the similarity of the parties‟ products or services, 9) the D‟s good faith, and 10) P‟s interest in entering D‟s market with the mark. b. Post-sale confusion: traditional focus of trademark law has been the likelihood of confusion at the point of sale. Some courts, however, have held that post-sale confusion may suffice to impose infringement liability. c. Initial interest (pre-sale) confusion: some courts have based a finding of infringement on evidence of initial consumer confusion that is dissipated prior to the actual purchase. d. Reverse confusion: Most cases involve a subsequent user of a mark who causes purchasers to think that his goods come from the prior user. However, infringement can also be found when the subsequent user causes purchasers to think that the prior user‟s goods come from it (the subsequent user). C. Trademark parodies: often no relief against trademark parody b/c a successful parody depends on consumers realizing that the marks are not the same. D. Collateral use of marks: trademark law does not give absolute rights in their marks. Unauthorized uses of a mark that do not create a likelihood of confusion will not infringe. a. Resale of goods lawfully bearing a mark: the first sale doctrine provides that once a mark owner sells goods bearing the mark, it cannot prevent subsequent owners from reselling the goods with the mark even if the goods have been used or changed. However, subsequent owners‟ use of the mark must be truthful, and not misleading, and must not lead to a likelihood of confusion about the source or nature of the goods. b. Gray market goods: gray market goods are goods manufactured abroad for sale in foreign markets with proper, legal trademarks registered in US> After release, parties buy up the product and import them to the US for resale. Generally, the import and sale of gray market goods does

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not infringe the trademark if the imported goods are the same as those sold by the US registrant. However, if the goods are materially different from the goods sold domestically, they will infringe. c. Competitors’ use of marks for comparison purposes: A mark owner‟s competitors may use its mark in selling their own goods and services, as long as the use is truthful and does not create a likelihood of confusion. E. Trademark counterfeiting: the intentional, knowing use of a spurious mark which is identical or substantially indistinguishable from a registered mark on the same kinds of goods as those for which the mark is registered. US trademark law has civil and criminal remedies for this. F. Contributory infringement: D will be held liable for contributory infringement if: 1) he intentionally suggests, directly or by implication, that another person infringe the P‟s trademark, and the other does so infringe, or 2) he sells goods to another knowing or having reason to know the buyer will use the goods in a direct infringement of P‟s trademark. 1.5.10 TRADEMARK DILUTION A. The nature of the dilution cause of action: State dilution statutes provide rights in highly distinctive, famous marks and trade names, which are broader rights than those available under the trademark infringement cause of action. Some courts hold that dilution is generally limited to commercial speech, due to First Amendment considerations, while others have not imposed this restriction. (Commercial speech is speech related solely to economic interests of the D). There are two traditional forms of dilution: 1) diminution and 2) tarnishment dilution. a. Diminution dilution: occurs when a D uses a mark that is similar to P‟s famous mark and thereby diminishes consumers’ automatic, strong association of the mark w/ P. D‟s goods or services need not be similar to the P‟s, and no showing of likelihood of confusion is necessary. b. Tarnishment dilution: occurs when D uses a mark that is similar to P‟s famous mark in a context that is unwholesome or out of keeping w/ P‟s high-quality prestigious image, thereby tarnishing the luster of P‟s mark. Again, no likelihood of confusion is necessary. B. Lanham Act § 43(c) cause of action for dilution: § 43(c) enables owners of a famous mark to prevent another person‟s commercial use in commerce of a similar mark or trade name, if such use begins after the P‟s mark has become famous and causes dilution to the famous mark‟s distinctive quality. The owner is confined to injunctive relief unless the D willfully intended to trade on the owner‟s reputation or dilute the famous mark. a. Famous marks: Only famous marks qualify for § 43(c) protection. To decide it a mark is famous, there are several factors: 1) the degree of the mark‟s inherent or acquired distinctiveness, 2) the duration and extent of the claimant‟s use of the mark, 3) the duration and extent of advertising and publicity of the mark, 4) the geographical extent of the trading area in which the mark is used, 5) the channels of trade for the goods or services with which the mark is used, 6) the degree of recognition of the mark in the trading areas and channels of trade used by the mark‟s owner and D, 7) the nature and extent of use of the same or similar marks by third parties, and 8) whether the mark was federally registered. i. Niche market fame: Circuits are split over whether fame that is limited to a niche market is sufficient to warrant federal dilution protection. b. Distinctiveness as separate prerequisite: courts have differed over whether § 43(c) imposes a distinctiveness requirement that is separate from the fame requirement. Jurisdictions that treat distinctiveness as part of the fame requirement will extend dilution not just to inherently distinctive marks, but also to marks that are not inherently distinctive but have acquired secondary meaning, as long as they are famous. Jurisdictions that separate the two requirements tend to limit dilution to famous marks that are inherently distinctive. c. Dilution: Lanham Act § 45 defines dilution as “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 b/w the owner of the famous mark and other parties, or 2) likelihood of confusion, mistake, or deception.” § 43(c) prohibits use of a mark if it “causes dilution of the distinctive quality of the [P‟s famous] mark.” i. The Mosely decision: In Mosely, the SC construed § 43(c) as requiring a showing of actual dilution, rather than likelihood of dilution. To prove actual dilution, Mosely distinguished b/w situations where parties marks are identical and situations where they

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are not. Where marks are not identical, the mere fact that consumers mentally associate D‟s mark with P‟s famous mark is not sufficient to show actual dilution. However, SC said it would not be necessary under § 43(c) to prove actual loss of sales or profits. You can rely on consumer surveys to prove actual dilution, or circumstantial evidence. Relationship of §43(c) to state dilution law: Congress made clear that § 43(c) does not intend to preempt state dilution. However, if a famous mark is registered in the Principal Register, it is immune from dilution claims brought pursuant to state law. Application of § 43(c) in the Internet: D‟s unauthorized use of a famous mark as a domain name may dilute the famous mark. D‟s use precludes P from doing so. It makes it harder for consumers to rely on the mark to find P‟s website. i. Liberal construction of “commercial use” requirement: D‟s use of P‟s famous mark as a domain name constitutes a commercial use in commerce as required by § 43(a) even if D sells no goods or services on the Web Site. ii. Application of §43(c) to “cybersquatter” cases: Cybersquatters are people who register marks as domain names and then offer to sell or lease the domain names to others. Courts have found cybersquatters liable for diluting the famous marks they register saying that undertaking to sell the mark/domain provides the commercial use in commerce of the mark.

d.

e.

1.5.11 TRADEMARK CYBERSQUATTING A. The Anticybersquatting Consumer Protection Act: This act amends the Lanham Act §43 by adding a new subsection (d) that prohibits the registration, trafficking in, or use of a domain name that is identical or confusingly similar to, or dilutive of another person‟s mark. There are two limits to the cause of action: 1) the mark must have been distinctive at the time the domain was registered and 2) P must demonstrate that D acted with a bad faith intent to profit. a. Factors considered in determining “bad faith intent to profit”: This non-exclusive list of nine factors includes: 1) whether the domain name registrant has a trademark or other IP in the name, 2) whether the domain name is the same as the registrant‟s own legal name or established nickname, 3) the domain name registrant‟s prior use of the name, if any, in connection with the bona fide offering of goods or services, 4) the registrant‟s bona fide noncommercial or fair use of the mark in a Web site accessible under the domain name, 5) whether the registrant intended to divert consumers away from the trademark owner‟s site either for commercial gain or w/ intent to tarnish or disparage the mark by creating a likelihood of confusion, 6) whether the registrant offered to sell the domain name to the mark owner or a 3rd party for financial gain, 7) whether domain name registrant intentionally provided material and misleading false contact information in her application for the domain name and has a pattern of such conduct, 8) whether the registrant acquired multiple domain names that he or she knows to be identical, confusingly similar, or dilutive of others‟ marks, and 9) the extent to which the mark at issue is distinctive and/or famous within the meaning of §43(c). b. Remedies: traditional trademark remedies are available including injunction, recovery of Ds profits, actual damages, and costs. B. Personal names: The Act also prohibits the registration of a domain name that is, or is substantially similar and confusingly similar to, the name of another living person. Typically limited to situations where the registrant is trying to profit by selling it to the P. 1.5.12 GEOGRAPHIC BOUNDARIES A. Geographic rights at C/L: Under C/L, first person to use a mark is the owner of it. However, if a second person later uses (or acquires secondary meaning in) a confusingly similar mark in a remote geographic area in good faith (w/ no notice that another person has made an earlier use that is ongoing in the US), the second person will have superior rights in the mark in that remote area. This is the remote, good faith user defense. a. Remote geographical area: For purposes of determining geographic boundaries, the area of a party‟s actual use of a mark is comprised not just of the area in which the user has sold goods or services through use of the mark, but also those areas in which there have been no sales but the mark has a presence by virtue of advertising or general reputation.

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The zone of natural expansion: Under this doctrine, a senior user of a mark may assert seniority not just in the area of his actual use, but also in his “zone of natural expansion” and may prohibit a later user from using a confusingly similar mark in that zone. This zone is the geographi area into which, at the time the other user entered, the senior user logically and foreseeably would eventually expand, given the nature of the senior user‟s business and history of expansion. B. Lanham Act: registering on the Principal Register expands the geographic rights in a mark beyond those at C/L by giving constructive notice of his use of the mark (“constructive use”). Anyone who begins using a confusingly similar mark after the effective date of registration is charged w/ notice and cannot claim to have begun his use in good faith. Therefore, the junior user has no remote, good faith user defense, and no superior rights over the registrant. C. Likelihood of consumer confusion: Under the majority rule, even if a mark owner has superior rights in a mark in a particular geographic area by virtue of federal registration, he will not be entitlted to enjoin another‟s use in that area unless D‟s use is likely to cause consumer confusion about the source, affiliation or sponsorship of the parties‟ goods or services. 1.5.13 DEFENSES TO AN INFRINGEMENT ACTION A. The fair use defense: Use of a mark that has the capacity to describe D‟s product in a strictly descriptive capacity is protected by the fair use defense. To determine whether D‟s use is protected, a court will consider 1) the manner in which D used the mark, 2) whether D acted in good faith, and 3) whether D‟s use is likely to confuse consumers. If D used a descriptive, geographically descriptive, or surname word in good faith, strictly to describe his own product, the court will usually find this to be fair use. B. Nominative fair use: adopted by the 9th circuit, this doctrine is applied when D has used Ps mark to describe or refer to P‟s product. For the defense to apply: 1) P‟s product must not be readily identifiable w/o use of the mark, 2) D may only use so much of the mark as is necessary to identify P‟s product, and 3) D must do nothing that would suggest sponsorship or endorsement of its product by P. The 9 th circuit applies this for nominative fair use cases rather than the regular “likelihood of confusion” factors. C. Abandonment: Under the Lanham Act, P may have abandoned his mark in two ways: 1) if registrant discontinues use of mark throughout the country and has no intent to resume use in the reasonably foreseeable future. Additionally, nonuse for three consecutive years is prima facie evidence of intent to abandon. 2) a P may abandon through acts or omissions that cause the mark to lose its significance as a mark. This includes licensing others to use the mark without supervising their use. D. Challenges to the validity of the mark: If P has registered the mark on the Principal Register, registration will serve as prima facie evidence of the validity of the mark. This shifts the burden to D to disprove these matters as a defense to the infringement claim. If D successfully challenges the validity of P‟s mark, he cannot be liable for infringing it. E. Federal registration incontestability status: A mark that has been registered for five years and is in continuous use may obtain incontestability status upon the filing of an affidavit to that effect. Incontestability eliminates a few ways of challenging or defending against the mark: 1) charges that the mark is not inherently distinctive and lacks secondary meaning, and 2) charging that the D used the mark before the registrant. 1.5.14 REMEDIES FOR INFRINGEMENT A. Injunctions: Courts regularly grant injunctions against further trademark infringement. Preliminary injunctions are also available. B. Monetary recovery: Lanham Act allows two types: 1) P may recover actual damages for injury to business reputation and lost sales. The Act authorizes the court to increase actual damages P is able to prove up to three times, if necessary, in order to adequately compensate P. 2) P may recover the amount of D‟s profits, if D has been unjustly enriched, P has sustained damages from infringement. Sometimes courts permit P to recover actual damages and D’s profits, as long as they aren‟t recovering twice from a sale to the same consumer. C. Attorney fees: Lanham Act allows a court to award reasonable attorney fees. This is not usually provided at C/L. b.

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1.5.15 INTERNATIONAL TRADEMARK TREATIES A. The Paris Convention: undertakes to ensure that each member country grants protection to nationals of other member countries against unfair competition, including mark infringement. This national treatment says nationals of other member nations get the same protection as their own nationals. a. Registration of marks: A national of a member nation may register their trademark in another member nation in two ways: 1) by satisfying all the nation‟s registration requirements on the same basis as domestic applicants, and 2) by registering the mark in its home country and relying on that registration in its application to register abroad (“telle quelle” registration). A country may refuse telle quelle registration to a mark that is confusingly similar to a mark already owned by another in that nation. b. Effect of telle quelle provision in the US: This provision means the US must treat foreign applications more favorably than it treats domestic applications (no use requirement). However, this advantage is minimized by the availability of the US intent-to-use registration process. c. Filing dates: Paris Convention says that once a mark owner applies to register in nation A, she obtains filing priority in other member nations for the next six months. B. The Trademark Law Treaty: simplifies international filings by harmonizing and simplifying member countries‟ trademark registration standards and procedures. C. The Madrid Protocol: provides an intnerational system for centrally filing trademark applications in its over 50 member nations. A person owning a trademark registration or application in his home country can file one Madrid application that designates any number of other member countries in which the owner wishes to register. The applicant‟s home Trademark Office forwards the Madrid application to the International Bureau of the World Intellectual Property Organization (IBWIP), which processes it, provides international registration, publishes the mark, and forward the application to each country designated. Each country then has 18 months to evaluate the application based on its domestic laws. D. The Agreement on Trade-Related Aspects of Intellectual Property Rights: The WTO Round TRIPSs Agreement builds on the Paris Convention and augments international trademark protection by imposing procedural and substantive standards for protection. 1.6 UNFAIR COMPETITION 1.6.1 THE NATURE OF UNFAIR COMPETITION A. An umbrella term: The term unfair competition encompasses a number of different theories of redress for improper behavior by businesses that injures others‟ business good will or related intangible trade values. While most of the law of unfair competition originated in state C/L, Congress has provided a federal cause of action in Lanham Act §43(a) that tracks the C/L unfair competition doctrines of passing off, false advertising, and commercial disparagement.

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1.7 SAMPLE ESSAYS FROM BOOK 1.7.1 XXXXX 1: TRADEMARKS – COACH p27 General Definition - Trademarks permit consumers to identify the source of goods or services. The purpose is to ensure that consumers can rely on marks in exercising their purchasing preference by prohibiting competitors from using marks in a way that confuses consumers about the source, sponsorship, or affiliation of goods or services. Ensuring that trademarks accurately identify the source of goods or services benefits consumers by ensuring that they are able to accurately select the products and services they want. It benefits businesses by helping them create and protect business good will. Summary - Here, Coach is trying to register six marks: 1) the mark „COACH‟ for its entire product line, 2) three specific handbag designs, 3) gray shaped leather tags, 4) the slogan “It‟s Not a Coach Bag Without a Coach Tag,” 5) the 1-800-HANDBAG phone number, and 6) “Sicily Sophisticate.” Types of marks - § 1127 of the Lanham Act defines four categories of marks that can be afforded protection: 1) trademarks, 2) service marks, 3) certification marks, and 4) collective marks. Under §§ 1052-54 of the Lanham Act, each of these types of marks is registerable. Here, Coach would like to register each of its five marks as a trademark. - A trademark is a word, name, symbol or device, which is used to distinguish the goods or one person from goods manufactured or sold by others and to indicate the source of the goods. The telephone number, it would like to register as a service mark. A service mark is the same as trademarks except that they identify and distinguish services rather than products. Use in Commerce - Trademark subject matter can include not just words, but also symbols and trade dress, such as product packaging and product configuration. - All subject matter functioning as a trademark must satisfy certain requirements, including both physical and cognitive use. On the physical side, the use means that the mark must have spatial association with the goods such that consumers perceive it as a signal conveying information about the trademark owner and its products. On the cognitive side, the word or symbol must be “distinctive.” - Distinctiveness: Before a word, name, symbol, or device can be recognized and protected as a mark it must be distinctive. Marks are often categorized according to their distinctiveness. - Highest in the hierarchy are arbitrary or fanciful marks and suggestive marks, which are deemed inherently distinctive. Lower in the hierarchy, representing common, descriptive, and surname marks. These marks are not inherently distinctive, and can only be protected if they have attained distinctiveness through use in the marketplace. At the bottom of the hierarchy are generic marks which are incapable of becoming distinctive and cannot be the subject of ownership rights. Requirements for a Mark “Coach” mark: The Coach mark has been used for 50 years, affixed to its products and therefore satisfies the physical use. Regarding distinctiveness, “Coach” will be considered an arbitrary mark and will therefore be considered inherently distinctive without a showing of secondary meaning. § 1127 defines a “trade name” as a term that identifies a business, and states that trade names can only acquire a trademark right if they are used in conjunction with goods and services. Here, the trade name “Coach” is used in conjunction with the companies handbags (e.g. on its tags) and will not be prohibited. Moreover, while “Coach” is a generic term, it is arbitrary as a means of identifying handbags. This is similar to “Apple” being considered arbitrary in conjunction with a company selling computers. Therefore, “Coach” is registerable as a trademark. - Three handbag designs: Two Pesos held that inherently distinctive trade dress (including product design) is protectable under § 43(a), without a showing of secondary meaning. Therefore, arbitrary trade dress is considered “inherently distinctive,” whereas descriptive trade dress requires secondary meaning to be

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protected. However, the SC held that product-design trade dress can never be inherently distinctive and always requires secondary meaning. TrafFix Devices. Moreover, the product-design cannot be functional. In a § 43(a) suit for infringement of trade dress the P bears the burden of proving the trademarked design they believe is infringed is not functional. In TrafFix, the SC outlined a two-part test for functionality: 1) the court applies the Inwood Laboratories test to see if the feature is essential to the use or purpose of the article, or affects the cost or quality of the article? If it does, it is functional and cannot be subject of trade dress. If the doesn‟t, the court must apply the Qualitex standard asking if the exclusive use of the feature would put competitors at a significant disadvantage. If so, the feature may not be protected. Here, it is likely that Coach will fail the first part of the test. Given that most of its designs are essential to the use of the bags and/or affect its price and quality it is unlikely to be successful. For example, the durable cowhide improves the quality and ruggedness of the bag. The brass hardware may also aid durability and certainly will influence the price and general quality. Even if some of the features of the handbags did pass the first test, many of them would fail the second part of the test because their use would put competitors at a disadvantage. Moreover, even if the handbag designs passed both tests, they would still have to prove they had achieved secondary meaning in their use in commerce. There is no evidence in the fact pattern that suggests any of the handbag designs have achieved secondary meaning. Therefore, the handbag designs are probably not protectable as trademarks. Gray shaped leather tags: The gray shaped leather tags have been affixed to its goods for many years. Therefore, it will satisfy the physical use requirement. Regarding cognitive use, the leather tags will be considered descriptive and will therefore require a finding of secondary meaning. In Qualitex, the court held that color alone can serve as a trademark where it distinguishes a firm‟s goods and identifies their source, without serving any other significant function. The court held that the green-gold color of the press pads at dry cleaners could be trademarked because the color acts as a symbol, identifying its source. The court held that the argument that colors are in limited supply was unpersuasive. Moreover, § 1052(f) states that “nothing…shall prevent the registration of a mark…which has become distinctive of the applicant‟s goods.” This does not exclude color or lozenge shaped tags. The Lanham Act also states that exclusive and continuous use of a descriptive mark for 5 years in connection w/ the product or service can be prima facie evidence that the mark has achieved secondary meaning. Given that the tags have been in continuous use for over 5 years in connection with Coach‟s handbags, this is prima facie evidence the mark has secondary meaning. More importantly, the tags have become valuable through Coach‟s promotional efforts. The fact that they are frequently stolen and have high, independent economic value is highly suggestive of secondary meaning. Therefore, the tags will probably be protected by trademark. “It’s Not a Coach Bag Without a Coach Tag”: The USPTO has strict regulations regarding whether or not a slogan can become a registered mark. In Microstrategy, the court held that a slogan is not protectable as a trademark unless it is used to identify the source of the goods or services. If a slogan is not actually part of the packaging of the product (affixation requirement) and only appears in advertising it is more difficult to establish that the slogan is being used as a source identifier. Here, the slogan includes the name of the company and attempts to guide users with a way to identify the source of their goods (e.g. by pointing them to the Coach tags). However, the fact that it is just used in its advertising and is not part of the product packaging probably means that it cannot be protected as a trademark. However, if the court did find that the slogan was a source identifier, it would have to find that the slogan had acquired secondary meaning. Slogans are inherently descriptive and therefore always need a showing of secondary meaning. It is unclear how long the slogan has been used and there is no evidence in the fact pattern that suggests the slogan has achieved secondary meaning in commerce. Therefore, this slogan is unlikely to be protected as a trademark. 1-800-HANDBAG phone number: The telephone number has been in use in commerce for three years as a service mark identifying Coach products. Therefore, it will meet the physical use requirement. Regarding cognitive use, at first glance the mark may look generic because the word “handbag” does not readily identify the source as being Coach. Generic marks are incapable of becoming distinctive and cannot be the subject of ownership rights. Anheuser-Busch. However, it is more likely that the phone number will be considered descriptive of Coach‟s services and will require a showing of secondary meaning. In Dial-A-Mattress, for instance, the court held that in the context of phone numbers, the genericity should be determined in its entirety rather than analyzing mechanically its component parts. Therefore, the court held that 1-888-MATRESS was actually descriptive, not generic, and had acquired distinctness as a service mark through use in commerce. Therefore, the court held it was protectable. Similarly, even though “Handbag” is a generic term, the fact that Coach has heavily advertised the phone

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number in magazines and newspapers for over two years suggests that it has probably achieved secondary meaning. Therefore, “1-800-HANDBAG” is probably protectable as a service mark. “Sicily Sophisticate”: § 43(a) states that any person who, in connection with a good, misrepresents the geographic origin of the goods, is liable in a civil action by any person who believes they have been damaged. A mark is geographically descriptive if it conveys primarily a geographical connotation to a meaningful segment of the purchasing public, and those persons are likely to think that the goods or services actually come from that place. As of 1993, § 1052 was amended so that it now bars registration for terms that are geographically deceptively misdescriptive and geographically deceptive marks. Therefore, it is no longer necessary to show whether consumers rely on the misdescription in their purchasing. Here, consumers will assume the Sicily Sophisticate line of handbags come from Sicily, when in fact they are to be made in the US. Even if the court does not consider it to misrepresent the geographic origin (unlikely), it will still have to prove secondary meaning. These handbags have not been manufactured or marketed yet, although they have been referred to in e-mail correspondence with potential customers. Therefore, they have not established secondary meaning in the marketplace. “Sicily Sophisticate” will not be a protectable trademark.

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1.7.2 XXXXX2: TRADEMARKS – GRATEWAY p85 General Definition Trademarks permit consumers to identify the source of goods or services. The purpose is to ensure that consumers can rely on marks in exercising their purchasing preference by prohibiting competitors from using marks in a way that confuses consumers about the source, sponsorship, or affiliation of goods or services. Ensuring that trademarks accurately identify the source of goods or services benefits consumers by ensuring that they are able to accurately select the products and services they want. Moreover, it protects the trademark owner‟s business against lost sales and damage to reputation that may occur if others are permitted to use their mark in a manner that is likely to confuse consumers about the source of the goods or services. Overview of Infringement - Likely to Cause Confusion: The traditional target of trademark protection is “passing off”, in which a trademark on a product is used in a way that is likely to cause consumer confusion as to the source of origin. § 1114 provides a remedy for this infringement when the trademark is federally registered. However, the likelihood of consumer confusion is also actionable under § 1125(a) (i.e. § 43(a)) for marks that are not federally registered. Factors for infringement: Courts have set forth a number of factors to consider to determine whether a mark is likely to confuse including 1) the similarity of the marks (in sight, sound or meaning), 2) the similarity of purchasers, 3) the similarity of marketing channels, 4) the sophistication of prospective purchaser and the cost of the goods or services, 5) the evidence of actual confusion; 6) the manner of presenting the mark, 7) the strength of the Ps mark, 8) the similarity of the parties‟ products or services, 9) the D‟s good faith, and 10) P‟s interest in entering D‟s market with the mark. Typically, the more sophisticated the purchaser, the less likely there will be confusion. Impulse purchases are likely to cause confusion. o Website Header: Typically, a mark owner‟s competitors may use its mark in selling their own goods and services, as long as the use is truthful and does not create a likelihood of confusion. Under Playboy, the 9th circuit adopted the doctrine of nominative fair use. This states that if D uses P‟s trademark to simply describe P‟s product, the defense will apply if 1) P‟s product is not readily identifiable without the mark, 2)D has only used as much of the mark as is necessary to identify P‟s product, and 3) D doesn‟t do anything that would suggest endorsement of the mark. Here, the site header that includes the term “Coach” will constitute a nominative fair use. “Coach” is only used once and Coach is not readily identifiable without using their mark. There is no descriptive substitute for the mark. Moreover, it only uses as much of the mark as is reasonably necessary because it only uses the trademarked word itself, without associated font, etc. Moreover, the statement in the header is about how Grateway‟s bags are superior. Therefore, there is no likelihood people will mistake it for endorsement. This will not be infringement in any jurisdiction that recognizes the nominative fair use exception to trademark infringement. o Metatags: In Playboy, the court held that Welles‟ use of trademarked terms in metatags was nominative. The court said that she had no way of accurately describing herself without using the trademarked terms, that there was no descriptive substitute, only as much of the marks that were reasonably necessary were used, and nothing suggests sponsorship or endorsement. Here, the first element is not as strong. There are other ways that Grateway could describe itself other than in comparison to Coach. However, Grateway did only use the word “Coach” which will probably be considered reasonable. The purpose of the site is to explain the differences between Grateway and Coach, therefore use of metatags are unlikely to make people suspect that Grateway endorses Coach. Therefore, in jurisdictions that don‟t recognize the nominative fair use exception, this will probably constitute infringement. However, in jurisdictions that do it will be a closer call, probably falling on the side of fair use. o Coachbaggage.com: In Walmart v. Wallmartcanadasucks.com, the court concluded that WalMart‟s domain names serve as commercial advertisements and indications of sources of their products. On the other hand wallmartcanadasucks.com was a criticism, or parody. Given that a reasonably prudent user would not confuse the site for any of Walmart‟s official sites. The court held that a parody depends on a lack of confusion to make its point. Therefore, since wallmartcanadasucks.com did not intentionally attempt to attract, for commercial gain, users to the website by creating a likelihood of confusion with Wal-Mart‟s trademark, there was no

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infringement. Here, coachbaggage.com probably does constitute infringement. A reasonably prudent user would certainly be likely to confuse the domain name with one of Coach‟s official sites. Moreover, Grateway intends to use the site to explain to consumers the advantages Grateway has over Coach‟s offerings. This is not a parody, like in Wal-Mart. This is a clear intention to use coachbaggage.com to attract users intending to go to a Coach website to actually go to Grateway‟s site. The purpose of this deception is commercial, as Grateway will then try to convert them into Grateway customers. Therefore, there is likelihood of confusion and, given that “Coach” if federally registered, probably constitutes infringement under § 1114.  Anticybersquatting Consumer Protection Act: The Anticybersquatting Consumer Protection Act amended §43 of the Lanham Act creating a new subsection d that prohibits the registration, trafficking in, or use of a domain name that is identical or confusingly similar to, or dilutive of another person‟s mark. There are two limits to the cause of action: 1) the mark must have been distinctive at the time the domain was registered and 2) P must demonstrate that D acted with a bad faith intent to profit. Here, “Coach” was a federally registered, distinctive mark at the time Grateway bought the domain name. In fact, Grateway bought the domain name specifically because Coach was famous and it wanted a place to compare its less well known bags with those of Coach. Moreover, Coach intends to profit from the site by taking customers away from Coach by explaining the value Grateway cases have over Coach offerings. This will constitute a violation of Cybersquatting under §43.  UDRP: Under the Uniform Domain Name Resolution Policy (UDRP), companies that register .com domain names have agreed to resolve disputes over registration and use through a dispute resolution service provider approved by the Internet Corporation for Assigned Names and Numbers (ICANN). Therefore, Coach could try to bring a dispute against Grateway under UDRP. o Product Designs: Coach was denied trademark status for its product designs. Therefore, just because Grateway bags are also made of full-grain cowhide with exterior bindings and seams probably does not mean they infringe on Coach‟s trademark. However, there is evidence in the record that Coach has run ads that focus on the beauty of their bindings and that people have come to identify Coach with heavily stitched edgings. Under the TrafFix test, the fact that the edgings are external and heavy may be considered essential to the use or purpose of the article (e.g. if the heavy stitching improves the quality). However, if the court finds that the feature is not functional because it is not essential to the use or purpose of the bags and would not put competitors at a significant disadvantage, Coach might have a descriptive mark that has achieved secondary status. Nevertheless, this still probably does not constitute trademark infringement unless the stitchings are substantially similar. o Gray Hangtags: Here, Coach has a trademark for its “light-sparkly” grey oval hangtags. The question is whether Grateway‟s “pearl” grey oval hangtags would constitute infringement. This would require an assessment of the factors listed at the beginning of this XXXXX, including how similar the marks were in shape, size and color. Ovals can be of different size and even shape, and the similarity of “pearl” grey and “light-sparkly” grey is not discussed in the facts. There is no evidence of actual confusion and the purchasers are different. The people buying expensive handbags are not necessarily the people who will be buying carrying cases for their portable devices. While the strength of P‟s mark works in its favor, there is no evidence that P is interested in going into this space. Moreover, the “pearl” grey is used throughout Grateway‟s products. There bags are grey, their plastic computer products are grey. Therefore, this is evidence that Grateway‟s use is not in bad faith given how prevalent the use of the color is in its products. Therefore, the balancing factors lean towards finding that Grateway‟s hangtags do not infringe on Coach‟s trademark. Dilution: Lanham Act § 45 defines dilution as “the lessening of the capacity of a famous mark to identify and distinguish goods” regardless of absence of competition b/w the owner of the famous mark and other parties, or 2) likelihood of confusion, mistake, or deception. § 43(c) enables owners of a famous mark to prevent another person‟s commercial use of a similar mark or trade name, if it causes dilution to the famous mark‟s distinctive quality. o Is “Coach” Famous: It is very likely “Coach” will be considered a famous mark. In deciding whether or not a mark is famous, a court may look at several factors including: 1) the degree of the

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mark‟s inherent or acquired distinctiveness, 2) the duration and extent of the claimant‟s use of the mark, 3) the duration and extent of advertising and publicity of the mark, 4) the geographical extent of the trading area in which the mark is used, 5) the channels of trade for the goods or services with which the mark is used, 6) the degree of recognition of the mark in the trading areas and channels of trade used by the mark‟s owner and D, 7) the nature and extent of use of the same or similar marks by third parties, and 8) whether the mark was federally registered. Here, Coach is federally registered, has been used for over 50 years, is nationally recognized, and has heavy advertising campaigns. Therefore, the “Coach” mark will be considered famous. Was there Dilution: In Mosely, the SC construed § 43(c) as requiring a showing of actual dilution, rather than likelihood of dilution. To prove actual dilution, Mosely distinguished b/w situations where parties marks are identical and situations where they are not. Where marks are not identical, the mere fact that consumers mentally associate D‟s mark with P‟s famous mark is not sufficient to show actual dilution. Here, there is no evidence that Grateway‟s use of its marks have caused a reduction in Coach‟s signaling capacity. Therefore, Coach probably does not have an action under § 43(c) for dilution.

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1.7.3 XXXXX3: TRADEMARKS – BODY WORKS p141 General Definition Trademarks permit consumers to identify the source of goods or services. The purpose is to ensure that consumers can rely on marks in exercising their purchasing preference by prohibiting competitors from using the marks in a way that confuses consumers about the source, sponsorship, or affiliation of goods or services. Ensuring that trademarks accurately identify the source of goods or services benefits consumers by ensuring that they are able to accurately select the products and services they want. Moreover, it protects the trademark owner‟s business against lost sales and damage to reputation that may occur if others are permitted to use its mark in a manner that is likely to confuse consumers about the source of the goods or services. The traditional target of trademark protection is “passing off”, in which a trademark on a product is used in a way that is likely to cause consumer confusion as to the source of origin. § 1114 provides a remedy for this infringement when the trademark is federally registered. However, the likelihood of consumer confusion is also actionable under § 1125(a) (i.e. § 43(a)) for marks that are not federally registered. Overview of Defenses - When a trademark has been infringed, the defendant may raise a number of defenses. For example, often no relief is given for trademark parody because a successful parody depends on consumers realizing that the marks are not the same. Moreover, the fair use doctrine states that a person can use P‟s mark to describe P‟s product in a strictly descriptive capacity. This XXXXX analyzes the impact of some of these defenses to trademark infringement in the context of the “Boddie Workers” example. Analysis - Use of “Boddie Workers”: At common law, the first person to use a mark is the owner of it. Under § 1115(b)(5), a combination of geography and timing can create a way for others to utilize a mark without the authority of the registered owner. Since notice only operates against those who adopt the mark after the notice is given, a trademark holder cannot acquire rights over merchants who used the mark before it was registered. Rather, under § 1115, all the registration can do is freeze the prior user‟s rights to confine the prior user to the geographic location where he was using the mark at the time it was registered. Moreover, some courts will also provide for a small zone of expansion. Here, Kathleen first used the mark “Boddie Workers” in October 1988 before “Body Works” was registered in the UK a month later, and over a year before it was finally registered on the Principal Register in December 1989. There is no evidence that Kathleen had knowledge of Body Works use of the mark before she opened her first store in October 1988. Therefore, under § 1115, Kathleen probably has rights to continue using the “Boddie Workers” trademark in NYC. This is not changed by the fact that Body Works has opened a store in NYC. Rather, the rule under § 1115 creates these localities where there is potential for consumer confusion in order to protect the smaller companies rights. However, the question remains whether use of the name “Boddie Workers” would also be protected for the store she opened in CT in January 1990, after notice was given through “Body Works” registration on the Principle Register. Given that it is located only 50 miles from her original store and that, at the time, Body Works did not have any stores in CT, it is likely that the court would accept this moderate expansion as protected under § 1115. - Use of “Body Works” in ads, mugs and shirts: § 1115(b)(4) states that the use of name is fair use when it is "descriptive of and used fairly and in good faith only to describe the goods or services of such party." Therefore, use of a mark that has the capacity to describe another‟s product in a strictly descriptive capacity is protected by the fair use defense. To determine whether the use is protected, a court will consider 1) the manner in which the mark is used, 2) whether it was used in good faith, and 3) whether the use is likely to cause consumer confusion. Here, Kathleen is using “Body Works” in good faith to distinguish their two products. Her use of “Body Works” is merely descriptive, and therefore will be protected as a fair use. - Use of Sickly Bunny in ads, mugs and shirts: Parody is a usage of a mark that pokes fun at the mark and does not confuse the public as to the source of the usage. Often no relief is granted against trademark parody because a successful parody depends on consumers realizing that the marks are not the same. In L.L. Bean v. Drake, Drake Publishers put out a two page article called “L.L Beam‟s Back-To-School-SexCatalog” under a section labeled “parody.” LL Bean requested an injunction to remove the issue from circulation, claiming trademark infringement, and dilution. Here, Body Works is similarly arguing that Kathleen‟s use of the sickly bunny undermines the goodwill and reputation associated with Body Works registered bunny trademark. In Drake, the court found that the parody constituted an editorial or artistic,

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rather than commercial, use of P‟s mark and therefore held it did not constitute infringement. Therefore, the noncommercial use of a trademark in a parody is protected. The rationale seems to be that if there is benefit to using the trademark, it should flow to its holder. Here, however, we have a commercial use of a trademark in a parody. On the other hand, the benefit of using the trademark is in poking fun at the holder‟s product. Therefore, Body Works would never benefit from this type of use. Nevertheless, putting the bunny on ads, mugs and shirts probably constitutes a sufficient degree of “commercialism” to prevent the parody from being protected. Body Works can probably enjoin Kathleen from using her sickly bunny in these commercial ways. Selling of Body Works Products: Trademark law does not give absolute rights in their marks. Unauthorized uses of a mark that do not create a likelihood of confusion will not infringe. For example, the first sale doctrine provides that the resale of genuine trademarked goods generally does not constitute infringement. Davidoff. Even if the subsequent sale is without the trademark owner‟s consent, the resale does not violate the Act. Id. Therefore, Kathleen‟s reselling of Body Works products without their consent does not, in itself, constitute trademark infringement. Body Works will not be able to enjoin her from doing this. However, putting the stickers of the sickly bunny on the products is probably different. Resale of a trademarked product that is materially different can constitute infringement if they will confuse customer and erode consumer goodwill toward the mark. Id. Here, Kathleen‟s reselling of Body Works products “for comparative purposes” will not create a likelihood of confusion. Kathleen is specifically selling the products in order to differentiate her own. She is not endorsing the products as her own. However, it could be argued that putting the sticker of the sickly bunny on the Body Works products is a material difference that will erode consumer goodwill. In Davidoff, the court held that a material difference is one that consumers find relevant to a buying decision, and that the threshold for materiality must include even subtle differences between the products. Therefore, the court will probably argue that the placing of stickers on the Body Works products is a material difference because it would effect consumer‟ buying decisions and could cause a likelihood of confusion.

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1.7.4 XXXXX4: TRADEMARKS – NESTLE p179 General Definition Trademarks permit consumers to identify the source of goods or services. The purpose is to ensure that consumers can rely on marks in exercising their purchasing preference by prohibiting competitors from using marks in a way that confuses consumers about the source, sponsorship, or affiliation of goods or services. Ensuring that trademarks accurately identify the source of goods or services benefits consumers by ensuring that they are able to accurately select the products and services they want. Moreover, it protects the trademark owner‟s business against lost sales and damage to reputation that may occur if others are permitted to use its mark in a manner that is likely to confuse consumers about the source of the goods or services. Trademark Infringement - § 1114(1)(a) states that the use in commerce of “any reproduction, counterfeit, copy, or colorable imitation of a registered mark” in connection with the sale of goods which is “likely to cause confusion” is liable in a civil action by the trademark owner. While trademark law does not usually protect against the sale of genuine goods, bearing a true mark, even if the sale is without the mark owner‟s consent, this does not apply when the genuine, unauthorized imports differ materially from the authentic goods. Rather, the unauthorized importation and sale of materially different merchandise violates § 1114(1)(a) because a material difference in products that are using the same name can confuse customers and reduce the goodwill of the local trademark holder. Therefore, the Venezuelan chocolates will not be considered “genuine” if they were not authorized for sale in the US and were materially different from the ones that were authorized. - Unauthorized: Just because Nestle licensed the production of PERUGINA in Venezuela, does not mean that it consents to the import of those products into the US. In Lever, the court prohibited the importation of goods made by a foreign affiliate of a US corporation where the foreign goods differed materially from the goods made by the US company. Therefore, the question is whether there were material differences between the two products that were sufficient to create a likelihood of confusion. This will be discussed below. Gray Goods - § 1124 states that “no article of imported merchandise ... which shall copy or simulate a trademark…shall be admitted to entry” into the US. Trademark law does not give absolute rights in their marks. Unauthorized uses of a mark that do not create a likelihood of confusion will not infringe. Moreover, the first sale doctrine provides that once a mark owner sells goods bearing the mark, it cannot prevent subsequent owners from reselling the goods with the mark even if the goods have been used or changed. However, subsequent owners‟ use of the mark must be truthful, and not misleading, and must not lead to a likelihood of confusion about the source or nature of the goods. Moreover, gray market goods are goods manufactured abroad for sale in foreign markets with proper, legal trademarks registered in US. After release, parties buy up the product and import them to the US for resale. Generally, the import and sale of gray market goods does not infringe the trademark if the imported goods are the same as those sold by the US registrant. However, the potential for consumer confusion is extremely high when a product catering to the specific conditions of one country competes with a product that is physically different but uses the exact same name. In this case, the court is likely to find that the Venezuelan product is a “copy” or “simulat[ion]” of the original if the goods are shown to be materially different. Therefore, just like under § 1114(1)(a), liability under § 1124 will depend on whether the products are materially different. Unfair Competition - § 43(a)(1) states that any person who “uses in commerce any word, term, name, symbol, or device” or “false designation of origin, false or misleading description of fact” that is “likely to cause confusion, or to cause mistake” will be liable to anyone that is damaged. Therefore, just like under § 1114 and § 1124, liability will depend on whether there are material differences between the Venezuelan chocolates and the Italian chocolates that would lead to consumer confusion. Material Differences

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Liability for each of the three charges, therefore, will likely rest on whether or not the differences between the two sets of chocolates are material. Under the Lanham Act, only those appropriations of a mark that are likely to cause confusion are prohibited. Therefore, if the Venezuelan product were identical to the Italian product, there would be no claims. However, if the same mark is used on goods that are not identical but are very similar, such as the use of gray goods, the likelihood of confusion is high. Therefore, even subtle differences must be considered because these are differences that consumers will most likely be confused by. Therefore, the threshold for materiality has to be kept low enough to ensure that these potentially confusing subtle differences are protected against. If the difference is one that a consumer would consider relevant when purchasing the product, it is probably one that could cause consumer confusion. Here, there are many differences between the products. First, the evidence suggests that the quality control procedures in the Italian chocolates is different from that in the Venezuelan chocolates. Second, the ingredients are different. The Italian product has more milk than the Venezuelan chocolates, in an attempt to prolong shelf life. Additionally, the beans come from different places, they use different types of sugar and a different quality of hazelnut. Third, the evidence suggests that the packaging of the two products is different. The Italian chocolates come in more shapes and sizes and have a glossier box than the Venezuelan chocolates. Fourth, there is a difference in pricing. The Italian chocolates cost $5 more per box. Therefore, given the low threshold of materiality that is necessary to find a likelihood of confusion in gray market goods, these differences are likely to be sufficient. Therefore, the Venezuela chocolate manufacturer will probably be guilty of trademark infringement under § 1114(1), unfair competition under §43(a) and violating § 1124 for importing a materially different product.

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Remedies - Remedies for trademark infringement, just like copyright and patent infringement, are statutorily based and include injunctive relief as well as forms of monetary relief. These remedies apply both to trademark infringement under § 1114(1) as well as violations under § 43(a). § 1116(a) specifically allows courts to grant injunctions “according to the principles of equity”. Moreover, preliminary injunctions are also available in situations where the P can establish a likelihood of success on the merits. Moreover, § 1117(a) provides monetary relief. The P may recover actual damages for injury to business reputation and lost sales. The Act authorizes the court to increase actual damages P is able to prove up to three times, if necessary, in order to adequately compensate P. Moreover, P may recover the amount of D‟s profits, if D has been unjustly enriched, and P has sustained damages from infringement. Sometimes courts permit P to recover actual damages and D’s profits, as long as they aren‟t recovering twice from a sale to the same consumer. However, the Lanham Act also precludes a monetary award of profits and damages “unless the D had actual notice of the registration.” Moreover, printers and publishers that qualify as innocent infringers are only subject to injunctive relief. Additionally, while at common law attorney fees were not usually provided for, the Lanham Act allows a court to award reasonable attorney fees.

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1.7.5 XXXXX 1: COPYRIGHT – DEAD SEA SCROLLS p225 Background on Copyright - Article I, Section 8 of the Constitution gives the United States Congress the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” This is the source of Congress‟s authority over copyright law. The basis of modern copyright law in the United States is the Copyright Act of 1976. Essentially, copyrights are an exclusive set of rights granted by the government to creators of creative or artistic work and subject matter. These rights enable the creators to regulate how these works are expressed. Among others, these rights include the exclusive rights to produce copies of the work, display the work publicly, and sell copies of the work. What is Protected - § 102 of the Copyright Act states that copyright protection is afforded to “original works of authorship fixed in any tangible medium of expression. Therefore, copyright requires 1) authorship, 2) originality, and 3) fixation. Under § 102, copyrightable subject matter includes literary works, musical works, dramatic works, graphic works, sculptures, motion pictures, sound recordings, architectural works and more. Copyright protection is limited to an author‟s particular method of expressing an idea, and § 102(b) expressly notes that copyright is not available for ideas, concepts, principles, and discoveries. Dead Sea Scrolls - Assuming that US law applies, the fact that the deciphered text became available in 1990 means the Copyright Act of 1976 is applicable. Under § 102, the deciphered text can be classified as a literary work and therefore represents copyrightable subject matter. Therefore, to be copyrightable the deciphered text of the Dead Sea scroll must meet the elements of 1) authorship, 2) originality, and 3) fixation in a tangible medium. - Authorship: The Dead Sea scrolls do not owe their origin to Qimron or Strugnell. They were created hundreds of years ago. Therefore, they can not claim ownership for the content found on the scroll fragments themselves. However, while facts owe their origin to no one, Feist, a compilation of facts may be protected by copyright. § 101 defines a compilation as “a work formed by the collection and assembling of preexisting materials” that are “selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.” § 103 states that while copyright protection does extend to compilations and derivative works, the protection only applies to the material “contributed by the author of such a work.” Therefore, just because the fragments of the scroll were in the public domain, and the content of those fragments are not copyrightable, a copyright may still be available for an author's originality in the selection, coordination, and arrangement of the content of the fragments. Therefore, Qimron was the “author” of the deciphered text in so far as he used originality in the arrangement of the facts. - Originality: The originality requirement is not too stringent. A work is original if it owes its origin to the author and was not copied from some preexisting work. The compilation of the Dead Sea scrolls probably meets the originality requirement. Evidence of originality can come from the level of creativity required in the process of creating it. Strugnell and Qimron selected a few hundred scraps (from thousands), arranged and compiled them, and then translated and deciphered their meaning. While strict translation probably would not count, the creativity in selecting and arranging the specific fragments probably does. The consolidation and translation of the text, over the course of 11 years, ultimately resulted in 120 lines of text. While originality is determined by the substance of the work, not the amount of time or talent required to arrive at it, this investment of effort can be used as evidence that a fair amount of creativity was required in the compilation of the facts. Therefore, the deciphered text probably constitutes sufficient arrangement of facts to meet the originality requirement. - Fixation: Under § 102, to obtain a copyright, the original work of authorship must be “fixed in a tangible medium.” This occurs when it is embodied in a copy “sufficiently permanent…to permit it to be…reproduced.” Therefore, the deciphered text was fixed in a tangible medium when it was put onto paper, or into Qimron‟s computer. Conclusion: Therefore, the deciphered text is probably copyrightable

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1.7.6 XXXXX 3: COPYRIGHT – DICTIONARIES p295 Background on Copyright - Article I, Section 8 of the Constitution gives the United States Congress the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” This is the source of Congress‟s authority over copyright law. The basis of modern copyright law in the United States is the Copyright Act of 1976. Essentially, copyrights are an exclusive set of rights granted by the government to creators of creative or artistic work and subject matter. These rights enable the creators to regulate how these works are expressed. Among others, these rights include the exclusive rights to produce copies of the work, display the work publicly, and sell copies of the work. Are Sam and Rivkah Joint Owners? - Under § 106 of the Copyright Act, a copyright owner has the exclusive rights to reproduce and distribute the original work, to prepare derivative works, and to perform and display publicly certain types of copyrighted works. Each of these rights can be transferred and owned separately. - Joint Owners: Under § 201(a), a copyright in a protected work “vests initially in the author or authors of the work.” When there are multiple authors, a joint work will exist if it is “prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent part of a unitary whole.” §101. In a joint work, each co-owner has the unilateral right to use or license the work, as long as he accounts for the profits to the other co-owners. - Work for Hire: In situations where a work is created within the context of an employment arrangement, the Act defines a “work for hire” doctrine. Under this theory, § 201(b) states that “the employer or other person for whom the work was prepared is considered the author…unless the parties have expressly agreed otherwise in a written instrument signed by them.” Therefore, the work for hire doctrine is an exception to the rule that copyright initially vests in the work‟s creator. The “work for hire” doctrine is incredibly important because it determines who owns all of the exclusive rights granted under the copyright. - When is it “for hire”? To determine whether a work is “for hire” under the Copyright Act, a court will first ascertain, based on general common law of agency, whether the work was prepared by an employee or a general contractor. Community for Creative non-Violence. Using this determination, the court can apply the appropriate subsection of § 101. Id. For employees, a work is “for hire” when it is prepared by an employee within the scope of his employment. For independent contractors, a work is “for hire” only if the parties have a signed written agreement to that effect. o Employee or Contractor: In Community for Creative Non-Violence, the court said that to determine whether a hired party is an employee, a court should look to the hiring party‟s right to control the manner and means by which the product is accomplished. This includes the skill required, the source of the instrumentalities and tools used, the location the work was done, the duration of the relationship between the parties, whether the hiring party has the right to assign additional projects to the hired party, the extent of the hired party‟s discretion over when and how long to work, the method of payment, whether the work is part of the regular business of the hiring party, whether the hiring party is in business, and the provision of employee benefits. The decision requires a balancing of these many factors. o Rivkah: David is in the business of creating dual-language dictionaries. He is well known and has enjoyed international reputation. David sent Rivkah on a paid trip to Israel to complete her drawings and even paid her medical bills when she injured her ankle. Moreover, Rivkah has done all of the illustrations for all of David‟s other books. This is all evidence supporting Rivkah being an employee. However, like Reid in Community for Creative Non-Violence, Rivkah is an illustrator, a skilled occupation. She supplied her own tools and worked from her own home, without daily supervision. She has no obligation to work with David on future projects and was hired for a relatively short period of time. Apart from the deadline for completing the illustrations, she had almost complete freedom on when to work and for how long. Moreover, she was paid in cash on an hourly basis. While creating illustrations for David‟s books is a more “regular business” than creating sculptures in Community, it is not a continuous business. Weighing all of these factors, the court would probably find that Rivkah was an independent contractor. Therefore, given that Rivkah prepared the work with the intention that her work be “merged into inseparable or interdependent parts of a unitary whole”, she is probably a joint owner in the

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copyright for the final work under § 201(a). While her illustrations have some meaning standing alone, they achieve their primary significance because of their combination with David‟s dictionary. Childress. o Sam: Sam never worked with David before. He too was paid in cash by the hour. However, he worked in an office provided by David and David had daily contact with him during the time the dictionary was being prepared. Moreover, David controlled Sam‟s work by telling him exactly which English expressions to translate. Additionally, David is in business and is well-known internationally. These factors probably lean in favor of finding that Sam was an employee. Therefore, he is not a joint owner in the final work. Use of illustrations on the website: - If Rivkah is found to be an employee, David will own the copyright to her illustrations. Therefore, his use of the illustrations on the website will not be actionable. If Rivkah is found to be an independent contractor (the more likely outcome given the analysis above), the use still is probably not actionable. - In this situation, each co-owner has the unilateral right to use or license the work, as long as an accounting of the profits is made to other co-owners. Therefore, since David is not profiting by selling the illustrations on the website, he is simply using them for their promotional value, this is probably not actionable. Failing to get their permission: - If Rivkah and David are joint owners, her action suing David for failing to get permission to license the work to Chaim will fail. David can unilaterally use or license the work, as long as he account for the profits to Rivkah. Chaim - Immediate Termination - David assigned the right to make a derivative work of the dictionary to Chaim. He is now interested in terminating that grant. While § 203 of the Act allows an author to terminate transfers and licenses after a period of time, the author must wait a minimum of 35 years after the execution of the grant in order to exercise that right. Therefore, David probably cannot immediately terminate Chaim‟s right to produce and market derivative works based on his dictionary, including the cassette. - Suing for Perversion of his Artistic Integrity - David is also interested in suing Chaim for perversion of his artistic integrity in its creation of the audio cassette. This argument would have to be based on a moral rights theory. In contrast to the pecuniary rights protected under § 106, moral rights protect the personal rights of authors. In the US, authors do not enjoy substantial moral rights protections. Some moral rights provided in other countries include the right of disclosure, the right of attribution, and the right of integrity. The right of disclosure says that the creator is the sole judge of when a work is ready for public dissemination. The right of attribution protects the creator‟s right to compel recognition for her work, as well as the negative right of anonymity. The right of integrity prohibits any alterations of a creator‟s work that will destroy the spirit and character of the work. Here, David could claim that Chaim‟s tasteless adaptation of his dictionary, by including a category for sexual expressions, destroys the spirit of what he was trying to do. However, the US does not currently provide protection for moral rights except for certain types of work, most notably visual art. Therefore, the right of integrity does not apply and David‟s suit against Chaim will likely fail. Chaim owns the right to create derivative works regardless of whether they impact the integrity of David‟s initial work.

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1.7.7 XXXXX 3: COPYRIGHT – INFRINGEMENT p359

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1.7.8 XXXXX 5: COPYRIGHT – FAIR USE p413 Background on Copyright - Article I, Section 8 of the Constitution gives the United States Congress the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” This is the source of Congress‟s authority over copyright law. The basis of modern copyright law in the United States is the Copyright Act of 1976. Essentially, copyrights are an exclusive set of rights granted by the government to creators of creative or artistic work and subject matter. These rights enable the creators to regulate how these works are expressed. Among others, these rights include the exclusive rights to produce copies of the work, display the work publicly, and sell copies of the work. Fair Use - Copyright laws in the United States do not attempt to prohibit all use or copying of copyrighted materials. Under the “fair use” doctrine, the Act allows some types of uses of copyrighted material. Fair use requires balancing the exclusive rights of the copyright holder with the public‟s interest in disseminating the information in various forms. Most of the time, the right to use a copyrighted work can only be secured through exchanging the rights in the open market. Therefore, the doctrine of fair use is one of the few situations where the public can avoid the potentially costly negotiation to obtain the right to use the material. - The fair use doctrine is an affirmative defense that is typically used once it is shown that the unauthorized use was substantially similar to the copyright owner‟s work. § 107 of the Copyright Act states that fair use of a copyrighted work includes the creation of copies in order to criticize it or comment on it or for the purposes of “news reporting, teaching, scholarship, or research.” However, the fair use doctrine‟s applicability typically turns on the particular facts at issue in the case. - Factors: Under § 107, the factors a court will consider in determining whether a work constitutes fair use include 1) the purpose and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes, 2) the nature of the copyrighted work, 3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and 4) the effect of the use upon the potential market for or value of the copyrighted work. Therefore, while the fair use doctrine does not list specific permissible uses for each type of work, the Act provides a framework by which courts can carve out fair use exceptions. - DMCA: The Digital Rights Management Copyright Act (DMCA) provides copyright owners with significant additional protections. Digital Rights management (DRM) refers to technology used to ensure that every user pay for the enjoyment of digital copyrighted works. Encryption and watermarking are two such tools. Book: Gone with the Wind, vs. , The Wind Done Gone Fair Use Argument: Suntrust and Online Movies - Suntrust and Online Movies will argue that under § 106, as the copyright owners to the DVD, they have the exclusive rights to reproduce and distribute the original work and to prepare derivative works. They will argue that Sue and Bell violated § 1201by circumventing the encryption protection employed by Online Movies. They will also argue that the unauthorized copying of a full digital copy of the film on Bell‟s machine constitutes a violation of their exclusive right to reproduce and distribute the work. And finally, they will argue that Bell‟s film, which contains substantial footage of the commentary from the DVD, constitutes an unauthorized creation of a derivative work. Sue and Bell, on the other hand, will argue that Congress did not prohibit the act of circumvention - Circumventing the Encryption: Violation of § 1201 o Suntrust Argument: § 1201 of the DMCA states that “no person shall circumvent a technological measure that effectively controls access to a work protected under this title.” Adobe; Elcom. Suntrust and Online Movies will argue that Sue violated this statute when she purposely used her technical expertise to sidestep the protections against copying contained in the program. Therefore, they will argue that the DMCA prevents the decryption of material, even if it can be used fairly under § 107. While the Librarian of Congress created a few narrow exceptions to the DMCA, legalizing the circumvention of copyright protections in a few instances, none of those instances apply here. Moreover, they will argue that under Grokster, one who actively induces

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copyright infringement is guilty of contributory copyright infringement. Therefore, here, Suntrust will argue that since Bell asked Sue to use her expertise to sidestep the protections, she actively induced Sue to violate § 1201. Therefore, under a theory of contributory liability, Suntrust will argue that Bell is just as liable for the violation as Sue. o Sue and Bell: Sue and Bell will argue that § 1201 was not intended to prevent the circumvention of technological encryption measures in situations where the decrypted material can be fairly used under § 107. They will argue that Bell‟s intentions were to make fair use of the copyrighted material in her film and that an exception should exist to § 1201 that would permit circumvention of encryption for the purpose of fair use under § 107. They did not circumvent the technology to add a digital copy to their digital libraries of movies. Nor did they do so to avoid the 30 day limitations on licensing imposed by Online Movies. Given §1201 does not list this as an exception, this argument is likely to fail and both Sue and Bell will probably be found guilty of circumventing the encryption in violation of § 1201. Creating the Full Digital Copy of the Film o Suntrust Argument: Suntrust will argue that Sue and Bell violated their exclusive right to reproduce copies of the copyrighted work. By sidestepping the encryption, Sue and Bell were able to download a full digital copy of the file of “Gone With the Wind” onto her computer. This reproduction was not authorized. Moreover, they will argue that while Sue actually made the copy, she was actively induced to make the copy by Bell. Therefore, they will argue that both are equally liable for this copyright infringement.  Fair Use: They will argue that the fair use factors weigh heavily in their favor. Regarding the commercial nature of the use, the purpose in creating this file was to create a derivative work that Bell then charged a fee to access. Bell received a tenure-track teaching position after her derivative work received significant publicity. Moreover, she was invited to appear on talk shows. Publicity has good economic value and all of this is evidence of the commercial nature of the use. Under Sony, they will argue that the commercial nature of Bell‟s actions make the use “presumptively” unfair. They will argue that the “nature of the work” factor is meant to provide more protection for creative, original works than to ones that are more fact-based. Sony. Here, the DVD was a limited edition version that had new commentary from famous authors. This footage was never before available to the public. They will argue that the entire film was reproduced and put on Bell‟s machine and therefore certainly constitutes a substantiality portion in relation to the copyrighted work as a whole. Under Napster, wholesale copying of an entire copyrighted work was strong evidence of unfair use. Moreover, they will argue that the use will have substantial negative effect on their potential markets. While Bell claims her intention was not to keep the movie, there is nothing preventing her from sharing the digital copy she received with others, inhibiting Suntrust‟s ability to charge fees for access to the content. They will argue that providing protection in Bell‟s case would have the practical effect that more and more people would circumvent the technology and infringe copyright under the guise of fair use. This could dramatically affect their ability to make money off the work. o Sue and Bell: Given that Bell is licensing the movie, rather than buying the movie, the first sale doctrine does not apply. She might try a creative argument that § 109(a) should be interpreted as providing someone who has licensed digital content to move that content between different mediums during the term of the license. However, this is not part of the plain meaning of the statute and would be rejected. Therefore, she will have to prove that her use constituted fair use.  Fair Use: Sue and Bell will argue that the factors of fair use weigh heavily in their favor. Regarding the purpose and nature of the use, they will argue that the digital copy they made was not intended for any commercial purpose. They had no intention of selling the full digital copy, or even using it for personal use except in the creation of the film for Bell‟s graduate school project. Therefore, the purpose was educational and scholarly. She will argue that this is the most important factor (Sony) and it weighs heavily in her favor. Regarding the nature of the work, Sue may have to concede that this works in favor of Suntrust. The content is not primarily factual and it does contain significant original content. Regarding the amount and substantiality of the portion used in relation to the work as a whole, Sue will argue that even though she created a full digital copy of

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the work, the same was true in Sony and the SC still found fair use. Moreover, she will argue that her intention in making the full digital copy was only to use a relatively small portion in her documentary during a period of time where she had a license to view the content. She paid Online Music a fee to have access to the content for 30 days and she will argue her creation of a digital copy, even in its entirety, is analogous to time-shifting, which the SC held was a valid use in Sony. Regarding the effect of the use upon the potential market for or value of the copyrighted work, Sue will argue that her full digital copy has no effect on either. She already paid to download the movie twice. Moreover, she had no intention of providing the digital copy to others so her digital copy would have absolutely no effect on the potential market or value of the work. o Assessment: Given that the entire film was copied for the purpose of creating an unauthorized film for which Bell planned to charge a fee, it is likely the court won‟t find fair use. Creation of the Derivative Work o Same analysis as above but for the derivative work.

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1.7.9 XXXXX 7: COPYRIGHT – MISAPPROPRIATION p527 Two specific state law doctrines that may overlap with copyright‟s coverage: Doctrine of Misappropriation and the Right of Publicity. Misappropriation owes its origins to state unfair competition laws meant to prevent “passing off.” States were concerned because these behaviors left consumers disappointed with their purchases and producers found their extensive investments in quality, advertising and goodwill undermined. The right of publicity also protects against attempts to utilize another‟s investment. Here, the investment is in a person‟s individual characteristics, such as his name and likeness. State Law vs. Federal Law The Copyright Clause can be read as excluding the states from undertaking activity in the field, a sort of dormant Copyright Clause. The SC has gone back and forth on the appropriate scope of federal preemption. Some courts have held that states should retain some control over protection of creative works of essentially local interest. § 301 defines the test for determining if state law is preempted. The first part of the test focuses on the nature of the work. Preemption wdoes not occur if the state law does not pertain to “works of authorship that are fixed in a tangible medium of expression.” Therefore, states can protect all works that are not protected by Copyright law because of their form. The second part of the test emphasizes the nature of the rights the state law attempts to safeguard. The state law will not be prevented if the state seeks to protect rights that are “not equivalent to any of the exclusive rights within the general scope of copyright.” § 106 grants the owner of a copyright the exclusive right to create derivative works. o Here, it is not nominative use or a parody. Therefore, the only protection the Meller‟s will have is to claim fair use. o Fair Use: Doctrine of Misappropriation Right of Publicity Dance Historians - Background o My clients, Nisa, Shanna and Rachel Meller, are dance historians. o Last March, they went to a live ballet where the famous dancer Ilana Kaye performed. o Performance was special…it was Ilana‟s 10th anniversary of her debut. o While Ilana was not the choreographer of the performance, she improvised liberally during the performance. o Ilana has a policy of allowing people to videotape her performances, as long as they get permission in advance. o Mellers wrote to Ilana for permission, but they never received a response. They still videotaped one of Ilana‟s solo numbers with a home video camera so they could enjoy it in their home. - Documentary o Months later, the Mellers decided to make a documentary film on 20th century dance. o The film was produced on DVD and many copies were sold. It had 20 minutes of Ilana‟s 2 hr anniversary performance. o The inclusion of this performance contributed greatly to the commercial success of the DVDs. - Lawsuit o Ilana instituted a lawsuit against the Mellers based on 1) copyright infringement, 2) misappropriation, 3) and violation of Ilana’s right of publicity. § 106, 301, & 1101 -

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Originality: Derivative Works - § 101 defines a derivative work as “a work based upon one or more preexisting works” in any “form in which a work may be recast, transformed, or adapted.” It defines a compilation as “a work formed by the collection and assembling of preexisting materials” that are “selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.” Compilations also include “collective works” that are an assembly of “separate and independent works in themselves.” - § 103 states that while copyright protection does extend to compilations and derivative works, the protection only applies to the material “contributed by the author of such a work.”

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1.7.10 XXXXX 1: PATENTS – cDNA and PROTEINS p591 Background - Under the US Constitution, Congress is granted broad power to legislate to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Art. I, § 8, cl. 8. - Patent Act § 101 authorizes utility patents for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Patents are not restricted to inanimate matter – a patent may be granted for living matter that has been altered by an applicant to have characteristics it would not have had naturally. Summary - Here, Gamma Biotech, a biotechnology company, and Dr. Alpha are interested in knowing if they can patent 1) a cell line from a patient‟s tumor, 2) the cDNA generated from the cell line and then sequenced, 3) the protein generated from the sequence, and 4) a method for launching new research projects. Patentable Subject Matter - Despite generally interpreting patentable subject matter broadly, the courts have drawn limits. In Diehr, the SC held that laws of nature, physical phenomena and abstract ideas are not patentable. Diehr. Under § 101, “Manufacture” has been construed to mean “the production of articles for use from raw or prepared materials by giving to these materials new forms, qualities, properties or combinations.” Diamond v. Chakrabarty. In Diamond, the court held that the bacteria was patentable because it did not occur naturally and was a manufacture of matter created using human ingenuity. Therefore, many non-human living things that are artificially produced are patentable if they have been altered to have characteristics it would not have had naturally. o Cell line: Here, the cell line from the patient‟s tumor is naturally occurring matter. It was not the product of human ingenuity. It was nature‟s own handiwork. The cell line has not been enhanced and simply constitutes a discovery of nature. The isolation of the cell line in Dr. Alpha‟s laboratory probably does not constitute a substantial transformation of the cells to warrant a patent. Therefore, the cell‟s are not patentable subject matter. o cDNA, Protein, Business Process: The cDNA, Protein and Business Process do constitute patentable subject matter. cDNA, which lacks the noncoding parts of regular DNA, does not exist in nature. It is artificially produced and results from human ingenuity. The protein, while appearing in nature, does not appear naturally in isolated form. Moreover, it required some degree of human creativity to generate and create the isolated protein. While it has not been transformed in any way, under Chakrabarty all non-human living things that are artificially produced are patentable. Therefore, the protein is probably patentable subject matter. Moreover, while traditionally, business methods could not be patented, they are now acceptable patentable subject matter under State Street Bank. - Usefulness: To be patentable, the invention must be “useful.” § 101. An invention will be “useful” if there is a specific, significant, beneficial use for the invention or, in the case of a process, the product of the process. Therefore, Brenner requires the specific benefit be currently available in order to be patentable. An invention may be denied a patent for lack of usefulness if it fails to operate as claimed in the application. Therefore, to be patentable, an invention must have a social benefit. A useless invention has no benefit and therefore does not deserve a patent. Moreover, Brenner distinguishes between the benefit to researchers and the benefit to end-users, claiming that only utility to end-users satisfies the requirements of § 101. o Protein, cDNA: Here, there is no current, significant, beneficial use to isolating the protein generated from the cDNA. While Gamma suspects the protein will cure cancer, this has not been established to any certainty. Therefore, there is no proof that there is social benefit to the cDNA or the protein for end users. While there may be a benefit to other researchers, this is not sufficient under Brenner to be patentable. Therefore, both the Protein and the cDNA are probably not patentable because there is no evidence of usefulness. However, the standard for utility is fairly low. Therefore, if Beta and Gamma can provide some additional evidence of usefulness, they are likely to meet the threshold. o Business Process: The business process for launching new research projects has public benefit. It will help find donors, identify new leads for cures, and match donors interest with the capabilities

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of scientists. This will provide better drugs to the public. Therefore, the business process will pass the utility requirement. - Novelty: In patent law, anticipation occurs when one prior art reference or event discloses all the features of a claim; the claim is then said to lack novelty because it was anticipated by the prior art. The novelty standard is set forth in §§ 102(a), (e), and (g) of the Patent Act. o Standard: §102(a) focuses on the actions of persons other than the inventor/applicant prior to the date the inventor/applicant made the invention. It says that a patent must be denied if: 1) the applicant‟s invention was known by others in the US b/f the applicant, 2) the applicant‟s invention was used by others b/f the applicant invented, 3) the applicant‟s invention was described in a printed publication in the US or a foreign country b/f the applicant invented, or 4) the applicant‟s invention was patented in the US or a foreign country b/f the applicant invented. o cDNA, Protein, Business Process: There is no evidence here that the cDNA, the protein or the business process were known by others, used by others, printed in a publication, or previously patented in another country prior to their invention by Beta and Gamma. Therefore, they will meet the novelty requirement. - Non obviousness: o Definition: § 103 states that an invention is not patentable if, at the time it was made, it would have been obvious to a person of ordinary skill in the art. Under Graham, the court held that obviousness should be determined by looking at 1) prior art, 2) the level of ordinary skill in the prior art, the differences between the claimed invention and the prior art, and objective evidence of obviousness. o Factors: In determining obviousness, a court may consider objective factors, including: 1) the commercial success of the invention, 2) the length of time the need for the invention had been felt b/f the invention was made, 3) the level of acquiescence of others to the patent, 4) movement of POSITA in a different direction from that taken by the inventor, 5) existence of skepticism on the part of experts about the approach inventor took, 6) the fact that D copied the invention, rather than existing alternatives. Each of these may provide circumstantial evidence of obviousness.  cDNA, Protein: The facts here do not tell us how all of these factors might weigh. There is no evidence of the length of time it took to go from cell line to protein or whether other‟s had tried to create the cDNA and proteins and failed. The only evidence is that both Beta and Gamma used standard, well known techniques in the creation of the cDNA and Protein. This suggests that the factors for both weigh in favor of obviousness, and therefore non-patentability.  Business Process: There are no facts suggesting that the factors would weigh either for or against obviousness in the business process Gamma wants to patent for launching new research projects. o Obvious to try: Some courts have recognized that as fields of knowledge grow, certain types of experiments can become obvious. Therefore, once standard processes for sequencing genes is invented, the argument goes, it becomes relatively obvious to use it to try to find interesting genomic material. However, the Federal Circuit has said that this type of general obviousness is not the same as legal obviousness. The court instead looks to see if there was a reasonable expectation of success. If there were a lot of ways to choose from, with a number of problems that could have arisen along the way, this is probably evidence of nonobviousness.  cDNA: It is unclear what the reasonable expectation of success in isolating the mRNA necessary to create the cDNA would have been. Given that only 3% of the DNA is useful, and it is necessary to get rid of the garbage, it seems plausible that it might be difficult to isolate the exact portion you are interested in. Moreover, it is not clear that there are many ways to choose to do this and that Beta was creative in choosing the right approach. Rather, it appears that she used the standard technique that would have been used by any person of skill in the art. Therefore, this leans towards a finding of obviousness.  Protein: Similarly, the protein is even simpler to create. Once the cDNA is created, there were standard techniques that had a presumably high expectation of success in creating the protein. While Gamma suspects the protein may be valuable in curing cancer, this does not make their creation of it using Beta‟s cDNA nonobvious. Conclusion

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Therefore, it is likely that the cell line, the cDNA and the protein are not patentable. The cell line is not patentable subject matter. The cDNA and protein lack usefulness and non-obviousness. The business method, on the other hand, probably is patentable as long as Gamma can show that it is novel and nonobvious.

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1.7.11 XXXXX 2: PATENTS – USEFULNESS OF cDNA p621 Under the US Constitution, Congress is granted broad power to legislate to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Art. I, § 8, cl. 8. Patent Act § 101 authorizes utility patents for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” o New and Useful: “New” and “useful” denote standards of inventiveness. Patents are not restricted to inanimate matter – a patent may be granted for living matter that has been altered by an applicant to have characteristics it would not have had naturally. An invention will be “useful” if there is a current, significant, beneficial use for the invention or, in the case of a process, the product of the process. An invention may be denied a patent for lack of usefulness if it fails to operate as claimed in the application. Therefore, usefulness requires 1) specific utility, 2) substantial utility, and 3) credible utility. o Therefore, to be patentable, an invention must have a social benefit. A useless invention has no benefit and therefore does not deserve a patent. Others believe the usefulness requirement means that the invention actually does what it claims in the specification. In this way, it ensures that if the invention has a use, it is more than just a principle of nature. o In Brenner, the court addressed whether a chemical process is “useful” within the meaning of § 101 because 1) it works to create the intended product, or 2) the product is the subject of serious scientific investigation. The court held that a process patent that has not been developed and pointed to the degree of specific utility, creates a monopoly of knowledge that should only be granted if clearly commanded by statute. Brenner. Otherwise, the patent may act to block off entire areas of scientific research which would impede the benefit to the public. Therefore, Brenner requires a “specific benefit” that is currently available in order to be patentable. The court held that a patent is not a “reward for the search” but rather is the “compensation for its successful conclusion.” Brenner therefore distinguishes between utility to researchers and utility to end-users, claiming that only utility to end-users satisfies the requirements of § 101. o Here, there is no current, significant, beneficial use to isolating the protein. While Gamma suspects it will cure cancer, the usefulness to researchers is probably not sufficient. It must be useful to end-users. Therefore, the cDNA probably does not meet the usefulness requirements of § 101. Usefulness: To be patentable, the invention must be “useful.” § 101. An invention will be “useful” if there is a specific, significant, beneficial use for the invention or, in the case of a process, the product of the process. Therefore, Brenner requires the specific benefit be currently available in order to be patentable. An invention may be denied a patent for lack of usefulness if it fails to operate as claimed in the application. Therefore, to be patentable, an invention must have a social benefit. A useless invention has no benefit and therefore does not deserve a patent. Moreover, Brenner distinguishes between the benefit to researchers and the benefit to end-users, claiming that only utility to end-users satisfies the requirements of § 101. o Protein, cDNA: Here, there is no current, significant, beneficial use to isolating the protein generated from the cDNA. While Gamma suspects the protein will cure cancer, this has not been established to any certainty. Therefore, there is no proof that there is social benefit to the cDNA or the protein for end users. While there may be a benefit to other researchers, this is not sufficient under Brenner to be patentable. Therefore, both the Protein and the cDNA are probably not patentable because there is no evidence of usefulness. However, the standard for utility is fairly low. Therefore, if Beta and Gamma can provide some additional evidence of usefulness, they are likely to meet the threshold. o Business Process: The business process for launching new research projects has public benefit. It will help find donors, identify new leads for cures, and match donors interest with the capabilities of scientists. This will provide better drugs to the public. Therefore, the business process will pass the utility requirement.

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1.7.12 XXXXX 3: PATENTS – NOVELTY p637 Under the US Constitution, Congress is granted broad power to legislate to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Art. I, § 8, cl. 8. Patent Act § 101 authorizes utility patents for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” The novelty standard is set forth in §§ 102(a), (e), and (g) of the Patent Act. Novelty can only be defeated by a single prior reference which includes all the elements of the invention in the same arrangement. Typically, the things considered relevant to the novelty inquiry include “prior art”, “references”, and “disclosures.” § 102 states that a reference is any activity that occurs “before the invention…by the applicant.” §102(a) focuses on the actions of persons other than the inventor/applicant prior to the date the inventor/applicant made the invention. It says that a patent must be denied if: 1) the applicant‟s invention was known by others in the US b/f the applicant, 2) the applicant‟s invention was used by others b/f the applicant invented, 3) the applicant‟s invention was described in a printed publication in the US or a foreign country b/f the applicant invented, or 4) the applicant‟s invention was patented in the US or a foreign country b/f the applicant invented. § 102(e): § 102(e) denies a patent to an applicant if: 1) b/f she invented, the same invention was described in an application for patent that was pending in the PTO, and 2) the pending application was ultimately published or granted. § 102(g)(2): §102(g) prohibits B from obtaining a patent if A made the same invention in the US b/f B did, and A did not abandon, suppress or conceal the invention. Problem: o Anticipation: Here, Ideal will argue that the patent should not hold up because it was anticipated by the “Gustafson” patent issued in March 1963. In patent law, anticipation occurs when one prior art reference or event discloses all the features of a claim; the claim is then said to lack novelty. They will argue that the invention “was known by others” in the US before the applicant, that the invention “was used by others” before the applicant‟s invention, that the invention was described in a printed publication, and was patented in the US. All of these claims depend on the idea that Obermeyer‟s patent was anticipated by the “Gustafson” patent Moreover, there is a presumption of validity given that Nichol‟s was granted a patent.  Enablement: The novelty requirement is intended to prevent the patenting of inventions that are already available to the public. Therefore, a reference will only anticipate if it contains enough information to enable a person of ordinary skill in the art to practice the invention. Therefore, the question is whether an ordinary person of skill in the art would have been able to create Nichol‟s invention based on Gustafson‟s patent. Here, there is no evidence that a person of ordinary skill in the art would have been able to put together his puzzle. While the Gustafson puzzle consisted of an outer shell that rotated around an inner shell, Nichol‟s consisted of using small, powerful magnets inserted into wood blocks. There was no inner shell and no outer shell that rotated around it. Therefore, the mechanism Nichols used for getting the pieces to rotate on the outside was not enabled by the Gustafson patent.  Every element: Moreover, under Scripps, invalidity of the patent for anticipation “requires that all of the elements and limitations of the claim are found within a single prior art reference.” The court held that there were elements that were not described by the dissertation. The trial court used extrinsic evidence to fill gaps and it can’t do this. Here, while we do not have a full copy of the Gustafson patent, it appears that there are many elements that are missing. These include the use of magnets, the cube shape that requires a different type of rotating motion than a spherical one. Given that Gustafson‟s patent did not anticipate all of the elements of the claims from Nichol‟s patent, the novelty requirement is probably met.  Inherency: Given that § 102(a) is meant to encourage the use of earlier work, prior art is said to encompass only information that is “inherent” in other works. In Sprout Litigation, the court held that the prior art must necessarily contain the inherent element and that “invalidation based on inherency is not established by „probabilities or possibilities.‟” Therefore, given that the structure and function of the joint was not

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inherent in Gustafson‟s patent, it is unlikely that it will be found to anticipate Nichol‟s patent. Conclusion: Nichol‟s patent will probably hold up.

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XXXXX 4: PATENTS – NON-OBVIOUSNESS and ORIGINALITY p669 Problem A: - Nichol’s Cube: o POSITA: To determine whether Nichol‟s cube was obvious, we must therefore determine whether it would have been obvious to a person of ordinary skill in the art of creating three dimensional puzzles. Typically, what a POSITA would have found obvious is determined by expert witnesses. According to Dillon, the information relevant is anything “within the field of the inventor‟s endeavor” as well as analogous fieds that are “reasonably pertinent to the particular problem.” o Here, we do not have a problem that was understood by a POSITA. The issue of how to design a magnet-based joint sufficient to hold colored cubes together in a formation sufficient to create a three dimensional puzzle was not one understood by a person of ordinary skill in the art of making puzzles. There is no evidence that other people in the art had attempted to create this type of puzzle, with this type of design. Rather, this problem was identified by Nichol‟s himself and he tinkered with a potential solution for many years. Moreover, his solution was a brand new one. No one before had inserted powerful magnets into small pieces of wood to create this type of joint. Therefore, both of these objective indicia suggest that Nichol‟s cube was non-obvious. Moreover, Nichol‟s had been trying to find a solution to this problem for a long time. He had tried multiple iterations of various joints and had failed. While there was not a strong need felt in the marketplace, this is not evidence of obviousness because his toy was meant to be recreational. People cannot feel a need for a type of recreation or toy that they do not know exists. Moreover, the Rubik‟s cube, built using Nichol‟s design, was wildly successful commercially. The Rubik‟s cube has become a household name because of its incredible popularity as a toy. This suggests that the design was non-obvious. Problem B: - Protein o Is the Protein Obvious given Dr. Beta determined the DNA sequence and published it? o This question hits on the major policy question of how large a contribution an inventor must make to merit a patent. As In re Bell and In re Dillon show, having a high threshold for patentability can negatively effect chemical and biochemical situations. In these fields, there is good enough knowledge to predict advantages of structures that have not yet been synthesized. However, creating these structures can be costly. Therefore, without a patent right there is an argument that these structures will not be created. Moreover, the decisions about o Obvious to try: Some courts have recognized that as fields of knowledge grow, certain types of experiements can become obvious. Therefore, once standard processes for sequencing genes is invented, it becomes relatively obvious to use it to try to find interesting genomic material. However, the Federal Circuit has said that this type of general obviousness is not the same as legal obviousness. The court instead looks to see if there was a reasonable expectation of success. If there were a lot of ways to choose from, with a number of problems that could have arisen along the way, this is probably evidence of nonobviousness. o Durden: However, in 1985, the Federal Circuit held in Durden that a method claim whose only inventive feature was that a starting material was new was not enough to be patentable. Since the method was known in the prior art, the invention was deemed obvious. This creates problems in biotechnology because much of the commercially significant research involves isolating and characterizing naturally occurring genes and the use of these genes to manufacture existing proteins. Therefore, Congress amended § 103 by adding § 103(b) that if a biotechnological process is patented at the same time as a patent for the starting material or end product of the process, the process will be patentable if the material is novel and non-obvious. o Here: Here, the protein would probably be considered obvious. After

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1.7.13 XXXXX 4: PATENTS – NON-OBVIOUSNESS and ORIGINALITY p669 PART C - Backgroud o Under the US Constitution, Congress is granted broad power to legislate to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Art. I, § 8, cl. 8. - Subject Matter o Patent Act § 101 authorizes utility patents for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Patents are not restricted to inanimate matter – a patent may be granted for living matter that has been altered by an applicant to have characteristics it would not have had naturally.  Exceptions: The SC has held that laws of nature, physical phenomena and abstract ideas have been held not patentable. Diehr.  Here: Here, R-X is patentable subject matter. R-X, while natural, does not appear in its isolated, purified form in nature. Therefore, it will represent a new composition of matter patentable under § 101.  Processes: Under the Patent Act, methods and processes are patentable subject material. § 100 provides another definition stating that a process is a “process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.” This encourages inventors to find new ways to use existing materials. Moreover, in Cochrane v. Deener, the court held that a process is a “mode of treatment of certain materials to produce a given result.” Therefore, it is “an act, or a series of acts, performed upon the subject matter to be transformed and reduced to a different state of thing.”  Here: Here, the process for creating R-X is patentable subject matter. It is a mode of treating Drug X to create a given result, namely the isolation of the R-X entiometer. - Usefulness: “New” and “useful” in § 101 denote standards of inventiveness. An invention will be “useful” if there is a specific, significant, beneficial use for the invention or, in the case of a process, the product of the process. Therefore, Brenner requires the specific benefit be currently available in order to be patentable. An invention may be denied a patent for lack of usefulness if it fails to operate as claimed in the application. o Social Benefit: Therefore, to be patentable, an invention must have a social benefit. A useless invention has no benefit and therefore does not deserve a patent. Others believe the usefulness requirement means that the invention actually does what it claims in the specification. In this way, it ensures that if the invention has a use, it is more than just a principle of nature. o Utility to who? Brenner therefore distinguishes between utility to researchers and utility to endusers, claiming that only utility to end-users satisfies the requirements of § 101. o Here, R-X will certainly be found to be useful. In FDA testing, R-X was found to effectively control a terminal contagious disease. Moreover, it did so with no new side effects and also reduced the known side effects of Alpha Companies alternative, Drug X. Therefore, there is current, significant social benefit to potential end users. Moreover, the process of creating R-X will be considered useful because the product it creates, R-X, is useful. - Novelty: In patent law, anticipation occurs when one prior art reference or event discloses all the features of a claim; the claim is then said to lack novelty because it was anticipated by the prior art. The novelty standard is set forth in §§ 102(a), (e), and (g) of the Patent Act. o Standard: §102(a) focuses on the actions of persons other than the inventor/applicant prior to the date the inventor/applicant made the invention. It says that a patent must be denied if: 1) the applicant‟s invention was known by others in the US b/f the applicant, 2) the applicant‟s invention was used by others b/f the applicant invented, 3) the applicant‟s invention was described in a printed publication in the US or a foreign country b/f the applicant invented, or 4) the applicant‟s invention was patented in the US or a foreign country b/f the applicant invented.  Prior art: Unlike non-obviousness, the prior art does not have to come from the field or related fields of the claimed “inventor.”

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Enablement: The novelty requirement is intended to prevent the patenting of inventions that are already available to the public. Therefore, a reference will only anticipate if it contains enough information to enable a person of ordinary skill in the art to practice the invention. o Every element: Moreover, under Scripps, invalidity of the patent for anticipation “requires that all of the elements and limitations of the claim are found within a single prior art reference.” The court held that there were elements that were not described by the dissertation. The trial court used extrinsic evidence to fill gaps and it can’t do this. o Inherency: Given that § 102(a) is meant to encourage the use of earlier work, prior art is said to encompass only information that is “inherent” in other works. In Sprout Litigation, the court held that the prior art must necessarily contain the inherent element and that “invalidation based on inherency is not established by „probabilities or possibilities.‟” o Here, the relevant prior art for novelty is Alpha Company‟s patent filed in 1998 as well as the two papers outlining methods for isolating using solvents and adsorption. None of these pieces of prior art anticipate the patent for just the R-X entiometer of its Drug-X, or the method of creating R-X. The Alpha Company‟s patent alone would not enable a person of ordinary skill in the art to create R-X. Therefore, R-X will probably be considered novel. Additionally, the method of creating R-X requires a combination of the two techniques of isolation. Neither paper contains every element of the process. Therefore, the new process is a combination of the two techniques and will be considered novel. Non obviousness: o Definition: § 103 states that an invention is not patentable if, at the time it was made, it would have been obvious to a person of ordinary skill in the art.  Case Law: Under Graham, the court held that obviousness should be determined by looking at 1) prior art, 2) the level of ordinary skill in the prior art, the differences between the claimed invention and the prior art, and objective evidence of obviousness.  Factors: In determining obviousness, a court may consider objective factors, including: 1) the commercial success of the invention, 2) the length of time the need for the invention had been felt b/f the invention was made, 3) the level of acquiescence of others to the patent, 4) movement of POSITA in a different direction from that taken by the inventor, 5) existence of skepticism on the part of experts about the approach inventor took, 6) the fact that D copied the invention, rather than existing alternatives. Each of these may provide circumstantial evidence of obviousness.  Here: Here, the factors lean in favor of non-obviousness for both R-X and the method of purification. Both will be commercially successful as they do a better job of addressing a terminally contagious disease. Moreover, the need for the invention has been at least 5 years, since Drug X was initially patented. Moreover, Alpha Company, a company that employed people of ordinary skill in the art, chose not to attempt to isolate R-X suggesting that CFTD‟s approach was new and non-obvious. o Different from Novelty: Unlike novelty under § 102, which can only be defeated by a single prior reference which includes all the elements of the invention in the same arrangement, obviousness can be demonstrated using two or more prior art references. Therefore, this ensures that inventions that are effectively disclosed in a series of references or represent minor changes to an existing technology are not patentable.  Prior art: Prior art is pertinent if it is in the same field of endeavor as the invention, or if it is in a field reasonably related to the particular problem with which the inventor was concerned. o Obvious to try: Some courts have recognized that as fields of knowledge grow, certain types of experiments can become obvious. Therefore, once standard processes for sequencing genes is invented, it becomes relatively obvious to use it to try to find interesting genomic material. However, the Federal Circuit has said that this type of general obviousness is not the same as legal obviousness. The court instead looks to see if there was a reasonable expectation of success. If there were a lot of ways to choose from, with a number of problems that could have arisen along the way, this is probably evidence of nonobviousness.  Here: Here, one could argue that since the methods existed for using adsorption and solvents to isolate enantiomers, it would be obvious to apply these to interesting mixtures of antiometers. However, this is merely generally obvious, not legally obvious. There is o

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decent evidence that there were a lot of ways to choose to try to isolate R-X, many of which failed on their own. There was not a reasonable expectation of success given that the process took years to perfect. CFTD encountered a number of pitfalls along the way before finally reaching 99% separation. Therefore, an isolated, purified form of R-X will probably be considered non-obvious. o Biotechnology: Congress amended § 103 by adding § 103(b) that if a biotechnological process is patented at the same time as a patent for the starting material or end product of the process, the process will be patentable if the material is novel and non-obvious. Here: § 103(b) appears to apply and makes it statutorily non-obvious. Under this statute, as long as CFTD applies for the patents for its process and for the end result (R-X) at the same time, the process will be considered non-obvious because R-X itself is novel and non-obvious. Nevertheless, there is reason to believe that this statute was overturned by caselaw in Ochai and Bower. Therefore, assuming this statute does not apply because it has been overruled by caselaw, we must determine whether the process is non-obvious under the rules of combination. o Combination: The combination rule states that if no prior art contains all of the elements of the invention, an examiner can look to multiple pieces of prior art to determine whether the invention is merely a combination of multiple pieces of prior art. If he finds this combination, the patent can be rejected as being an obvious combination of known prior art. However, there must be a suggestion in the prior art to combine the elements to find a patent obvious. Thus, in general the critical inquiry is whether there is something in the prior art to suggest the desirability, and thus the nonobvious nature, of the combination of previously known elements.  Here: Here, a combination of known processes were used including isolation by solvents, isolation by adsorption and standard purification methods. While the combination of known processes can be obvious, it typically requires that there be prior art suggesting the desirability of the combination. There is no evidence that either of the two papers referenced the value that could be gained by combining the two techniques. Therefore, CFTD‟s combination of various processes will be considered novel. Conclusion: Therefore, since R-X and the method of purifying R-X are patentable subject matter that are novel, useful, and non-obvious, both are likely patentable under existing law.

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1.7.14 XXXXX 5: PATENTS – STATUTORY BARS p715 - The statutory bars focus on events that precede the filing of a patent application. They augment the provisions of § 101 by adding new conditions for the patentability of an invention. The statutory bars are set forth in §§102(b), (c), and (d). The inventor requirement is set forth in § 102(f). - § 102(b): Similar to a SOL, §102(b) provides that a patent must be denied if, more than one year prior to the date the application was filed: 1) the invention was in public use in the US, 2) the invention was on sale in the US, 3) the invention was described in a printed publication anywhere in the world, 4) the invention was patented anywhere in the world. o A public use in the US is found if a person other than the inventor/applicant used the completed, operable invention in the way the invention was intended, under no restriction or obligation to keep the invention secret. Here: Here, there is probably a valid statutory bar based on public use. He completed the invention in 1968. He kept his creation in his office, on his desk, for all to see and potentially use. The experimental use exception does not apply, therefore the one-year statute started running. However, he did not file for the patent until 1970, over a year later. Therefore, he is prohibited from filing the patent under § 102(b).  Experimental use: public use that is primarily experimental (testing from a technological standpoint) will not trigger § 102(b). Typically has to be testing directed or controlled by the applicant.  Indirect public use: If an invention is put to a commercial use that does not reveal it directly to the public (used to produce products sold to public, but the products don‟t reveal the invention), courts will nonetheless find a public use that starts the one-year statute running. o When an invention will be deemed “on sale”: An invention is on sale in the US if it is offered for sale, regardless of whether it is in fact sold or delivered. The SC has held that it must be the subject of a commercial offer to sell. - § 102(c): §102(c) prohibits a patent if the applicant abandoned his invention. The focus is on whether he abandoned his right to a patent, rather than his invention. Here: Nichols abandoned his rights to the patent on January 2, 1969. He signed a contract giving all his rights in the puzzle to Moleculon in exchange for a return of any proceeds. This constitutes abandonment under § 102(c), and therefore he is barred from subsequently patenting the invention. Moreover, this would also start the statutory bar under § 102(b). Since he did not file his application until January 12, 1970, over a year after his forfeiture of the rights to Moleculon, this would also constitute a statutory bar to its patentability. - § 102(d): §102(d) prohibits a patent if: 1) the applicant filed a patent application in a foreign country more than 12 months before he filed in the US, and 2) the foreign patent was granted b/f the US filing date. - § 102(f): §102(f) requires that the applicant for patent be the inventor – the person who conceived of the specific invention claimed.

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1.7.15 XXXXX 1: TRADE SECRETS p885 General Definition - Under § 39 of the 3rd Restatement of Unfair Competition, a trade secret is “any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.” Trade secrets have been broadly defined under both state and federal law, and therefore cover things (like customer lists) that are not considered to be patentable information. Factors Determining Whether There is A Trade Secret - Therefore, the two main factors to be considered to determine whether there is a trade secret are 1) secrecy, and 2) economic value. Dionne. First, we must determine what information has the potential for being a trade secret in this case. I will analyze three sources of information 1) MAI‟s customer list, 2) knowledge of MAI‟s diagnostic software, and 3) knowledge of MAI‟s pricing strategy to determine whether they constitute trade secrets. After identifying which constitute trade secrets, I will assess whether those trade secrets have been misappropriated by Peak or Francis and are therefore actionable. - Secrecy: In determining the secrecy of the information, courts will look to how widely the information is known outside of the P‟s business as well as who within the P‟s company has access to the information. In Dionne, for instance, the use of confidentiality agreements and providing only “need to know” access was strong evidence of secrecy. In Lange it was not even necessary that confidentiality agreements be in place as long as reasonable measures were taken to protect the information‟s secrecy under the circumstances. The more difficult it would be for others to legally acquire or gain access to the information, the more likely the information will meet the secrecy requirement. o Customer List o Here, MAI‟s customer list will constitute a trade secret. MAI has never made the list available to the public means that it would be extremely difficult for others to legally acquire or gain access to the information. Additionally, just like in Dionne, MAI only provided employees access to the information on a “need to know” basis. The company even required all employees with access to the database sign confidentiality agreements. Under Lange, it is not even necessary that confidentiality agreements be in place to find secrecy so the fact that MAI took this step to ensure the information was protected will meet the secrecy requirement o Utilizing the Diagnostic Equipment: o It is unlikely that knowledge of how to use MAI‟s diagnostic software will constitute a trade secret. MAI does require owner‟s to sign a contract saying they will not utilize the software themselves, or let anyone else use it in their behalf. However, this directly conflicts with § 117(c) of the Copyright Act that permits the owner to use an installed diagnostic program, even without authorization. This implies a right to use the diagnostics that probably extends to letting third parties use it as well. Moreover, the diagnostic software is installed on every computer that it sells. Therefore, every owner has the potential to know how to use the diagnostic equipment. As such, MAI will probably not have a case to prevent Peak from using their diagnostic equipment. o Pricing Strategy o It is unlikely that MAI‟s pricing strategy constitutes a trade secret. While MAI argues that one of the most difficult aspects of the services business lies in the pricing of service contracts, pricing information is publicly available and therefore not secret. Additionally, beyond the fact that Peak advertises itself as offering maintenance at lower prices, there are no facts that suggest Peak is leveraging Francis‟ knowledge of MAI‟s pricing strategies to their advantage. - Economic Value: To constitute a trade secret, the information must also be sufficiently valuable such that it would afford an actual or potential economic advantage over others. Proof of economic value can come in many forms. For example, evidence of how much money the P spent in developing or acquiring the information, as well as the willingness of others to pay for the information can satisfy this requirement. Moreover, if an accused infringer decides to use bad faith to acquire the information, this is also evidence the information has economic value.  Customer List: MAI has provided sufficient evidence to prove the customer list has economic value. The list includes the names and addresses of all MAI customers. Lists of potential customers and contacts are something that have had a long historical value in business. People pay money for lists of contacts for promotional and lead generation

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purposes. Moreover, MAI‟s use of confidentiality agreements is strong evidence they considered the database valuable. MAI‟s description of the difficulty in accurate pricing for service contacts is further evidence that a list of customers that includes their bueiness needs and past service records would be valuable in setting accurate prices. Misappropriation - Now that we have determined that MAI‟s customer list probably constitutes a trade secret, we must address whether Francis and Peak will be found to have misappropriated the trade secret. Under the Uniform Trade Secrets Act, misappropriation occurs when one discloses the trade secret of another without consent after acquiring the information under circumstances “giving rise to a duty to maintain its secrecy.” - ANALYSIS: To prove that Francis and Peak misappropriated the customer list, MAI must show that Francis or Peak used the customer list in breach of a duty of confidentiality. Even in absence of an express agreement, one typically owes a duty of confidentiality that prohibits using information if he knows or had reason to know it was intended to be in confidence. § 41 3rd Restatement of Unfair Competition. Moreover, a duty of confidentiality can arise as a result of an express agreement. Id. Here, to gain access to the list Francis was required to sign a confidentiality agreement. Therefore, this represents an express agreement creating a duty of confidentiality. To show that Francis breached this duty, MAI must prove that Francis and Peak actually used the customer list. This will be the most difficult part of the case for MAI. However, there is probably sufficient circumstantial evidence to prove that Peak and Francis used the list. First, of the hundreds of customers Peak acquired after Francis departed MAI, over 70% of them had bought MAI equipment. The facts state that many customers followed Francis almost immediately after he left. Moreover, MAI‟s has provided evidence that building an accurate pricing model that would be competitive with MAI would be nearly impossible without detailed access to customer‟s past services records and business needs. Assuming MAI can provide even more evidence showing that the two most difficult aspects of the service business are finding customers and accurately pricing service contracts, it is likely they will be able to show misappropriation. Remedies - Once it is determined that a MAI‟s trade secret has been infringed, it turns to what the appropriate remedies for the infringement may be. Under § 42 of the 3rd Restatement of Unfair Competition, a former employee who uses or discloses a trade secret owned by the former employer in breach of a duty of confidence is subject to liability for appropriation of the trade secret. Therefore, Francis is liable, and Peak is liable through vicarious liability. - Injunctive relief: Injunctions are an adequate form of relief for infringement of trade secrets. § 42. It is likely that Peak (and Francis) will be enjoined from using MAI‟s customer list. While jurisdictions differ on the appropriate length of time, many will limit the length to the duration the trade secret maintains its secrecy. In this case, since MAI has no plans to release its customer list publicly, Peak would be enjoined from using the list indefinitely. o Inevitable Disclosure: Under the doctrine of inevitable disclosure, some jurisdictions allow injunctions to prevent a former employee from taking a new position if the former employee knows the company‟s trade secrets, the new job duties are very similar to the former position making it difficult to rely on them, and the former employee cannot be relied on to avoid using the trade secrets. Gillette; PepsiCo. While Francis‟ job duties may be very similar in his new position, there is no reason to believe he is incapable of avoiding using MAI‟s customer list in his work there. Therefore, this remedy is probably not available. - Monetary Damages: Under § 45 of the 3rd Restatement, Peak is liable for monetary damages reflecting either the “pecuniary loss” to MAI, or the “pecuniary gain” of Peak that resulted from the appropriation, “whichever is greater”. In this case, it is unclear whether Peak‟s profits from taking MAI‟s customers will exceed MAI‟s losses from losing them. Therefore, the amount of monetary relief MAI could expect to receive would depend on this evidence. - Criminal Penalties: Many states have made theft of trade secrets a criminal offense. In particular, § 1832 of the Economic Espionage Act makes it a crime to copy or steal a trade secret with the intention or knowledge that it will injure the owner. Here, Francis clearly knew that using MAI‟s customer list would injure MAI. Therefore, he and Peak may be fined (not more than $5 million) and sent to jail (not more than 10 years).

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