Free Term Paper on Intellectual Property Rights

Historically, ideas have changed the world. They impact cultures, governments, and religions. Ideas also shape businesses on many different levels, influencing marketing, management, and operations decisions on a daily basis. Today, businesses operate in an ever-changing global market, requiring access to information via high-speed communications. The explosion of technological innovation has increased competition and forced businesses to find alternate means to generate profits.

Outline

I. The BlackBerry Case

II. The Importance of Intellectual Property

A. Patents

B. Copyright

C. Trademark

D. Trade Secret

III. The Consequences of Piracy to Business

IV. Protection of Intellectual Property Rights Internationally

V. Legal Relief: Infringement Causes of Action, Injunctions, and Contracts

VI. Controversial Aspects of Intellectual Property

VII. Conclusion

The BlackBerry Case

Intellectual Property RightsIn 1999, Research in Motion Ltd. (RIM), an Ontario-based firm that designs and manufactures wireless mobile devices, introduced the BlackBerry wireless platform (commonly called a BlackBerry). The BlackBerry is a handheld palm computer that uses a radio frequency technology to allow millions of users to instantly access their e-mail, phone messages, Internet, and business data. The introduction of the BlackBerry revolutionized communication capabilities for corporate executives, small businesses, elected officials, and law enforcement agencies. In 2001, NTP Inc., a small patent holding company, filed a patent infringement lawsuit against RIM. NTP claimed that it held the patents to the radio frequency technology used for the BlackBerry and feared that RIM misappropriated the patents without paying royalties. In 2002, a federal jury agreed that RIM had infringed on NTP’s patents. In 2003, the court entered a final judgment in favor of NTP and imposed a permanent injunction against RIM for the further manufacture or sale of BlackBerry products. The injunction was stayed pending RIM’s appeal. In January 2006, the U.S. Supreme Court declined to hear RIM’s appeal (Locy 2006; Spencer and Vascellaro 2006).

In March 2006, with an impending shutdown of all BlackBerry products, NTP and RIM settled out of court for $612 million before the trial judge issued a final opinion regarding the form of injunctive relief. The settlement saved approximately 4 million users from life without their so-called CrackBerries. In May 2006, Visto Inc. filed a patent infringement lawsuit against RIM, alleging that it held the patents to the email technology used in BlackBerry products (Wong 2006; “BlackBerry Maker” 2006). The case was settled in July 2009. However, in January 2010, Motorola filed a request with the International Trade Commission to ban BlackBerry imports, alleging that the device’s early-stage innovations drew on Motorola patents. Meanwhile, BlackBerry continues to dominate the business smart phone market, capturing a 61 percent share (Rysavy 2009).

The lawsuits against BlackBerry manufacturer RIM provide insight on two important concepts: (1) the importance of innovation in technology, usually in the form of intellectual property, and (2) the importance of protecting those innovations from piracy.

The Importance of Intellectual Property

The idea of protecting intellectual property dates back to ancient times. In Greek mythology, Prometheus arguably committed an infringement when he stole fire from the Olympian gods to give to mankind. Zeus punished Prometheus by chaining him to a mountainside, where an eagle devoured his rejuvenated liver each day. As a consequence of Prometheus’s actions, mankind still has fire to the present day.

During the Middle Ages, protection for intellectual property was granted from the crown or a sovereign. Publishing patents were granted to printers of books like the Bible or legal treatises (factors include relative expense and /or politics). Additionally, the Stationers’ Company in England maintained a monopoly of registered books, where the government allowed a printer or bookseller, but not the author, copyright protection on a written work. Publishers paid large sums of money to authors not to sell their works (e.g., John Milton’s contract for the sale of Paradise Lost in 1667) (Posner 2009).

Modern protections of intellectual property formed with the spread of the Industrial Revolution. In 1710, England instituted the first modern copyright law (Posner 2009). At the Constitutional Convention in 1788, the Founding Fathers recognized the importance of intellectual property when they granted Congress the power 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” (Friedman 2004, 426). In comparison with imperial China, “Chinese culture placed continuity with the past, and its suspicion of novelty, both of which encouraged copying” (Posner 2009, 393).

Congress established the Patent and Trademark Office under the auspices of the Department of Commerce. One of the deputy undersecretaries of commerce is the deputy undersecretary of commerce for intellectual property. The Patent and Trademark Office “examines patent and trademark applications, issues patents, registers trademarks, and furnishes patent and trademark information and services to the public” (Garner 1999, 1149). In 1879, Eaton S. Drone published A Treatise on the Law of Property in Intellectual Productions, one of the earliest hornbooks on intellectual property law.

Intellectual property is divided into four categories: (1) patents (ideas), (2) copyrights (expressions), (3) trademarks (source indicators), and (4) trade secrets (business processes).

Patents

A patent is defined as the “exclusive right to make, use, or sell an invention for a specified period . . . granted by the federal government to the inventor if the device or process is novel, useful, and non-obvious” (Garner 1999, 1147). In essence, a patent is monopoly granted by the government for a finite amount of time, despite the general premise that monopolies are disfavored in law or public policy.

Most patents cover functional discoveries (known as utility patents, which last 20 years) and original nonfunctional ornamental designs (known as design patents, which last 14 years), but the Plant Patent Act of 1930 expanded patent protection to newly “discovered and asexually reproduced any distinct and new variety of plant” as long as the plant is a product of “human ingenuity and research” (Friedman 2004, 428). Patents cannot be renewed. Frequently, patent owners will improve a product and receive a new patent (e.g., if the patent on automobile brakes expired but the patent holder improved the brakes with an antilock braking system) (Emerson 2009). A common example of a utility patent is computer software or a process like pasteurization. Design patents are ornamental or distinctive in nature but do not improve the functionality of the product. Examples of a design patent are the shape of the Coca-Cola bottle or the Volkswagen Beetle. Design patents are similar to trade dress (Stim 2009).

Copyright

A copyright is defined as a “property right in an original work of authorship (such as literary, musical, artistic, photographic, or film work) fixed in any tangible medium of expression, giving the holder the exclusive right to reproduce, adapt, distribute, perform, and display the work” and must be creative (an exercise of human intellect) (Garner 1999). Although not required, owners of the copyright can enhance their legal rights by placing a copyright symbol (©) on the work and registering it with the U.S. Copyright Office (Stim 2009).

The rights attributable to a copyright expanded greatly in 1903 after the U.S. Supreme Court ruled that advertisements were protected under the Copyright Act. Thereafter, the rights applied to movies, piano rolls and phonograph records, radio and television, photocopying machines, music downloaded from the Internet, and computer software (Friedman 2004). In the late 1990s, Congress extended copyright protection to the life of the author plus 70 or 95 years (formally 50 or 75 years) after heavy lobbying by the Walt Disney Company. In 1998, the Digital Millennium Copyright Act (DMCA) was enacted to protect the burgeoning software businesses and to comply with the treaties signed at the World Intellectual Property Organization (WIPO) Geneva Conference in 1996. Specifically, the DMCA criminalized unauthorized pilfering of computer software, manufacture of code-cracking devices, and subterfuge around antipiracy measures and required Internet companies that performed services like music downloading (e.g., Kazaa, Napster, Apple iTunes) to pay licensing fees to record companies (Duboff 2002; Emerson 2009).

Trademark

A trademark is defined as a “word, phrase, logo, or other graphic symbol used by a manufacturer or seller to distinguish its product or products from those of others. The main purpose of a trademark is to guarantee a product’s genuineness. In effect, the trademark is the commercial substitute for one’s signature. To receive federal protection, a trademark must be (1) distinctive rather than merely descriptive, (2) affixed to a product that is actually sold in the marketplace, and (3) registered with the U.S. Patent and Trademark Office” (Garner 1999, 1500). Once a trademark is registered, it is valid for the life of the use of the trademark, as long as it is renewed every 10 years. Trademarks are classified into five categories regarding their inherent distinctiveness: (1) unique logos or symbols (such as the marks used by furniture makers and silversmiths), (2) created or fanciful marks (such as Exxon or Kodak), (3) common or arbitrary marks (such as Olympic for paints and stains or Target for retail sales), (4) suggestive or descriptive marks (such as Chicken of the Sea tuna or Oatnut bread), and (5) generic or common marks that have lost distinctiveness (such as aspirin or elevator). Generic or common marks do not receive trademark protection. Products of distinctive shape may be protected under a concept called trade dress (such as the packaging of a product or the motif used by national chain stores) (Stim 2009).

In 1905, Congress passed legislation to regulate trademarks based on their power to monitor interstate and foreign commerce. In 1946, Congress approved the Lanham Act to codify existing trademark law and afford further protection to businesses from infringement (Friedman 2004).

Trade Secret

A trade secret is defined as confidential business information that is designed to maintain an advantage over competitors. The information can appear as a formula, pattern, process, compilation, method, or program. As a trade secret, the information derives value because it grants a distinct advantage to the business owner, and the business owner implements reasonable tactics to maintain its secrecy. This is accomplished by restricting access to the information (to documents and /or areas where documents are stored), implementing confidentiality and nondisclosure agreements with employees, and preparing appropriate form agreements (Garner 1999; Duboff 2002; Emerson 2009).

The Consequences of Piracy to Business

The United States is the world’s largest exporter of intellectual property, including movies and music (Friedman 2004). Piracy of intellectual property costs businesses and consumers $250 billion and 750,000 jobs each year (U.S. Patent and Trademark Office 2006). Nonmonetary losses to piracy are “fame, prestige, the hope of immortality, therapy and inner satisfaction” (Posner 2009, 390). Piracy or infringement is the illegal reproduction or distribution of intellectual property (not by the exclusive or registered owners) protected by copyright, patent, or trademark law (Garner 1999). Piracy has been especially rampant in the communications, music, pharmaceuticals, and software industries. The important question determined by courts in most infringement actions is who (such as an independent inventor or corporate employee) or what (such as a corporation or organization) has ownership of intellectual property, whether it is an idea, expression, source indicator, or business process. Therefore it is imperative for businesses and government to protect intellectual property and develop appropriate commercial and legal strategies to implement that protection.

Protection of Intellectual Property Rights Internationally

Despite the protections afforded by the Constitution and legislation by Congress, infringement is on the rise, especially outside the United States. U.S. companies have filed infringement cases against China-based companies and seek protection from pirates in Latin America, Russia, and other parts of Asia. Once a patent, copyright, or trademark is registered in the United States, the registrar, in essence, becomes the owner and is granted exclusive rights to use that patent, copyright, or trademark within the United States. The registrar may grant a license or sell its interest to another party, domestic or foreign. With the advent of the global economy, industrialized nations and worldwide organizations have pushed for standardized intellectual property protection applicable to every participating country. The most common method to standardize that protection is through the use of treaties and agreements.

For example, agreements with other nations, such as the North American Free Trade Agreement, passed in 1994, strengthened patent and copyright protection in Mexico. Mexico agreed to strengthen its intellectual property laws and honor pharmaceutical patents for 20 years. Treaties like the Patent Cooperation Treaty and the Paris Convention allow U.S. inventors to file for patent protection in selected industrial nations if the inventor files the proper paperwork and fees within a certain time frame. The standards differ from country to country (Stim 2009). In most countries, intellectual property protection begins when it is registered, not on the date it was created or invented (which is true in the United States). In 2005, Congress considered (but did not enact) legislation that would change the date of protection to the date of registration, as in most international markets.

Many patent holders focus on protecting their rights in the United States and file international patents in the European Union and/or Japan, although the benefit of filing patent applications in China, India, and Russia will outweigh the cost in the near future. If infringed goods enter the United States, the owner can contact customs officials to confiscate and destroy the contraband. Likewise, once registered in a foreign country, U.S. registrars can be sued by the host country for alleged infringements, as a China-based corporation did in February 2006 (Parloff 2006). The hope by business analysts is that this type of litigation will force and encourage host countries to seriously police patent infringement.

Copyright protection is stronger internationally than patents because of various treaties like the Uruguay Round Agreement Act of 1994, the WIPO Geneva Conference of 1996 (which extended the Berne Convention), and the DMCA of 1998 (Emerson 2009). But copyright protection is not international because a country signs one of the treaties or agreements. Experts recommend that companies file for trademark protection as well as patent protection (e.g., Reebok in Uruguay) (Bhatnagar 2006). An additional fear of U.S.-based companies doing business overseas is fighting so-called third-shift products, which are produced by an authorized manufacturer but produced in excess of the number agreed on in the contract. Often, the excess product is sold on the black market. Courts have a difficult time declaring those products counterfeit, because it is nearly impossible to tell the difference or whether that particular product was within the contract (Parloff 2006).

Legal Relief: Infringement Causes of Action, Injunctions, and Contracts

Today, litigants file two types of lawsuits: (1) an infringement cause of action, which seeks monetary damages and a form of injunctive relief, and (2) a breach of contract action. If someone files an infringement lawsuit, the litigant usually requests the court to issue a restraining order or injunction and the awarding of monetary damages, fines, lost royalties, and/or attorney’s fees (Stim 2009).

An injunction is a “court order commanding or preventing an action. To get an injunction, the complainant must show that there is no plain, adequate, and complete remedy at law and that an irreparable injury will result unless the relief is granted” (Garner 1999, 788).

A contract is an “agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law (a binding contract)” (Garner 1999, 318).

Today, courts interpret contracts narrowly by considering the contractual text and limit most types of extrinsic evidence like the contracting parties’ intentions, special meaning of words, and/or trade usage of the industry. The court will regard extrinsic evidence only if the contract is vague or ambiguous (Posner 2009). If a plaintiff proves a breach of contract action, the usual remedy is monetary damages to make the plaintiff whole (returning the plaintiff to his or her precontract status). Specific performance is an unusual remedy in such situations.

If criminal behavior is suspected, it should be reported to the proper prosecution bodies— namely, the federal government or local authorities. The types of criminal charges available to a prosecuting agency include “mail fraud, interstate transportation of stolen property, voracious state common law charges, and violation of the federal Economic Espionage Act” (Emerson 2009, 558).

The statutory criminal offense for criminal infringement involves “either (1) willfully infringing a copyright to obtain a commercial advantage or financial gain . . . or (2) trafficking in goods or services that bear a counterfeit mark. . . . Under the second category, the statute imposes criminal penalties if the counterfeit mark is (1) identical with, or substantially indistinguishable from, a mark registered on the Principal Register of the U.S. Patent and Trademark Office, and (2) likely to confuse or deceive the public” (Garner 1999, 785).

Although a patent may be registered, companies can still challenge the patent, as Ranbaxy Laboratories Ltd. did to Pfizer’s patent on Lipitor. One of Pfizer’s two patents was invalidated during the litigation, cutting back Pfizer’s protection from June 2011 to March 2010. One strategy to elucidate the status of broad patents is for a registrar to file a declaratory judgment with the court to legally define the status of the patent (Smith 2006b).

Controversial Aspects of Intellectual Property

Public opinion indicates that many people believe that the United States is too litigious and question whether an individual or company can own an idea. This leads to controversy regarding intellectual property laws. In the early part of the 20th century, large corporations that subsisted on their employees’ sweat and brains controlled patents (Friedman 2004).

In many cases, the courts favored defendants, until 1982, when a law abolished the Court of Customs and Patent Appeals and gave the new Court of Appeals for the Federal Circuit the exclusive right to hear patent appeals. Today, plaintiff patent owners benefit from greater legal securities as the image of a patent shifted from “a tool of big business; now it was a legal shield to protect the entrepreneur, the risk taker, the start-up company” (Friedman 2004, 427–428). Additionally, patent lawsuits in federal court doubled between 1998 and 2001, and patent applications increased from 200,000 in 1994 to 380,000 in 2004. Currently, the Patent and Trademark Office is attempting to reform the system to quicken the review of 1.2 million backlogged patents (Schmid and Poston 2009).

Many fear a frivolous lawsuit that will cost a defendant time, money, stress, and years of frustration. Today, some corporations’ sole purpose for existence consists of buying patents and litigating possible infringements (Slagle 2006). For instance, the Rock and Roll Hall of Fame sued a photographer for infringement because he sold a poster depicting the Rock and Roll Hall of Fame before a “colorful sunset” and labeled “Rock n’ Roll Hall of Fame in Cleveland.” The court dismissed the case, despite a trademark registration and wide public recognition of the photograph (Duboff 2002).

Conclusion

Although protection of intellectual property is vital to businesses and other organizations (such as universities) both large and small, registration of patents, copyrights, and trademarks places limitations on individual creativity. In ancient times, plagiarism was the sincerest form of flattery; now plagiarism and infringement are synonymous with criminal activity. Realistically, intellectual property protections are necessary to protect hardworking inventors against those who seek to subvert the system while chasing ill-gotten gains.

In a global economy, patents, copyrights, and trademarks have an increased importance for organizations of all types and sizes. Advances in intellectual property and piracy affect every segment of industry; therefore, it is imperative that intellectual property be registered in the places where an organization conducts business or that organizations are prepared to deal with the consequences.

 

Jason A. Checque and Michael Shally-Jensen

 

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