A. The subject matter of intellectual property, unfair competition, trademark, trade secret, copyright and patent are interrelated concepts frequently called business torts, intellectual property or the law of ideas.
1. It covers ideas in the form of inventions, trade symbols, artistic expressions, music and the written word.
2. The attorney who specializes in this area most often is a patent attorney.
- Patent lawyers have undergraduate or graduate degrees in science or engineering in addition to a law degree.
- Patent attorneys must be licensed to practice before the U.S. Patent and Trademark Office (PTO). The license is earned by having the educational credentials in a technical field and by passing a special bar examination administered by the PTO.
- It requires no special license to practice trademark or copyright law, however. A general practitioner is able to handle these matters competently.3. The PTO has a provision for recognizing non-lawyers as patent agents; such agents have a technical background.
- A patent agent may represent a client in filing and prosecution of a patent application, i.e., obtaining a patent.
- A patent agent may not render legal advice or represent a client in litigation or with respect to other legal problems.
B. Intellectual property focuses on competition. Wherever there is competition (the driving force in all areas of human endeavor) there is a likelihood of unfair competition.
1. Violation of the rules of the game is the essence of unfair competition, and it is the very nature of competition that determines those rules.
2. Competition in business favors fair dealings between competitors. The formation of monopolies is not generally favored, and hence we have antitrust laws.
- And yet patent and copyright frequently are called statutory monopolies. They are not true modern monopolies, however, although historically they were so designated.
- As we talk about the history of these regimes of protection, you will see where the monopoly concept originated and how the term applies to intellectual property today.
C. In addition to some unique concepts, the course also deals with interrelated contract and tort concepts.
1. One has a property right in a trade secret, trademark, copyright, patent, or even in the good name of a business.
2. Contract law governs much of what happens to intellectual property.
- It may be intangible property, but it represents a property right, nonetheless.
- This right has all the attributes of property; it may be leased, assigned, sold, mortgaged, inherited, etc.
- The property frequently has significant value, being developed or created after the expenditure of large sums of money and a good deal of time.
- Finally, the property must be guarded and protected against adverse interests that might destroy its value.
3. Tort concepts come into play primarily with trade secrets where an improper taking becomes an issue. Tort principles also are applicable in unfair competition.
- Assignments of rights in the property, leases and transfers of rights are all contracts as is the payment of royalties to the owners of such property.
- Negotiating contracts involving intellectual property is similar to other commercial negotiations with one critical exception: non-disclosure.
- Frequently, the buyer must promise non-disclosure of the property even before seeing the property he or she is considering purchasing.
- This is unique to this area.
- Employment contracts are crucial to some of these areas. Such employment contracts might require non-competition after the sale of a business or maintaining the secrecy of a trade secret if leaving the employ of a particular company.
D. Intellectual property is not so concerned with the rights of consumers as with conduct between two competitors.
1. There are instances especially in copyright where the rights of users of copyrighted materials are protected.
2. Also, in trademark, sometimes the significance of the mark to the consuming public is of critical importance.
3. However, in intellectual property, our primary focus is on business folks.
E. In intellectual property the individuals areas have related concepts but there also are separate and distinct bodies of law relating to each.
II. Unfair competition1. The degree of protection afforded to the invention, creative work or trademark is related to the ease with which federal protection is obtained.
2. The more stringent the initial requirements for obtaining protection, the greater the protection.
A. Unfair competition is to some extent a residual category that includes consideration of certain business wrongs which are not classifiable as patent, trademark, trade secret or copyright infringement.
1. Courts may look at colors, shapes and overall effort on the part of a competitor to copy and palm or pass off its product as that of a competitor.B. Because of basic objective of the law regulating the American economy is the promotion and encouragement of competition, unfair competition law is very important.
2. Included in unfair competition are attempts to interfere with an existing business relationship.
3. Unfair competition is covered in this course not as a separate subject but interrelated with the other types of protection.1. This is based on the premise that competition in business is socially and economically desirable. It assumes that healthy competitive rivalry will keep prices low for the consumer and yet high enough to enable the seller to earn a profit.
2. The law of unfair competition is being continuously refined. It can be described only in terms of conduct. The following activities have been identified as types of unfair competition.
- Dilution of good will in a business or product,
- Palming off goods,
- Simulation of containers or product configuration, trade dress or packaging,
- False representations and false advertising, and
- Appropriation of distinct literary and entertainer characterizations.
C. Many theories of unfair competition are grounded in common law concepts.
III. Trademark1. The North Carolina General Statutes create statutory prohibition for certain types of business conduct, however. See §75-5.
2. Also, there is one federal statutory prohibition in this area, but there is no general federal law of unfair competition although there is some movement in this direction.
A. Both federal and state law recognize trademarks and service marks.
1. A trademark or service mark is a word, name symbol or phrase, or a combination thereof, which is adopted by a manufacturer or merchant to identify his or her goods or services as distinct from those of others.
2. Federally registered trademarks have a 10-year life, recently reduced from 20 years. State trademarks traditionally have endured for 10 years. Both federal and state trademarks may be renewed.
B. U.S. trademark law is partially statutory and partially common law.
IV. Copyright1. The primary aim of a trademark is to identify goods and services and to prevent consumer confusion.
2. Trademarks generally are protected by registration, but registration does not create the trademark right.
3. Trademark rights arise primarily through use in commerce; therefore, determining priority of use is central to determining trademark rights.
4. The Lanham Act, found at 15 U.S.C. §§ 1051-1127, is the federal trademark statute. Passed in 1946, it contains the requirements and prerequisites for registration.
A. The basis for the U.S. copyright law is found in the U.S. Constitution, Article I, section 8, clause 8. After the Copyright Revision Act of 1976, copyright protection is exclusively a federal matter.
B. Copyright is defined as the legally secured right to publish and sell both the substance and form of a literary, musical or artistic work.1. Copyright protects the form of expression and not the idea itself. It protects the literary work and not the idea for the plot.C. The Copyright Act of 1976 became effective January 1, 1978, and is Title 17 of the U.S. Code.
2. The essence of copyright is to prohibit copying and not independent creation of identical or very similar works.
3. Examples of works protected by copyright are novels, paintings, musical compositions, sound recording, choreography, movies, graphic designs, advertising designs, toys and games.1. The central concepts for copyright protection are copyrightable subject matter, originality and fixation.
2. Copyright protection exits from the time a work is created and endures for the life of the author plus 50 years.
D. In copyright infringement, copying is the central element; copying may be direct or indirect.
V. Patents1. Fair use tempers the copying prohibition along with other statutory limitations on the exclusive rights of the copyright owner.
2. The copyright owner may license or assign one or all of the exclusive rights granted by the copyright.
A. A patent is a grant by the U.S. government of the right to preclude others from making, using or selling an invention within the territories of the United States for 20 years after the patent is filed.1. The authorization for the patent system is found along that for copyright in the U.S. Constitution.B. The Patent Act is found at Title 35 of the U.S. Code; it was enacted in 1952.
2. The concept of patent protection is based on openness as opposed to trade secret since even the accidental duplication is an infringement of the patent right.
C. Patent practice is divided into two phases: the application and the infringement phases.1. The issuance of a patent does not grant the owner the right to use his or her invention; rather, it grants the owner the right to exclude others from making, using or selling the invention.
2. The application is an originally written document that conforms to the statutory requirements including a technical description that would allow anyone familiar with that field to make and use or "practice" the invention.
3. The application is then subject to a rigorous examination process to determine eventual issuance of the patent. This process normally takes from one to three years.
D. The major issues in patent issuance are patentable subject matter, the requirements of originality, utility, novelty and nonobviousness.
E. Once the patent issues, the owner may license others to make, use or sell the invention.
VI. Trade Secret1. The owner must ever be on the lookout for infringers. Infringement suits are very expensive to undertake and often result in huge recoveries. On the other hand, courts frequently find patents invalid, however, in the course of infringement litigation.
2. At any time during the life of the patent, an owner is subject to defending the validity of the patent.
A. Trade secret is primarily a common law form of legal protection although some states now have statutes modeled on the Uniform Trade Secrets Act.1. Trade secret protection extends only to certain types of business property.
2. A trade secret is be a formula, pattern, device or compilation of information used in one's business to provide a competitive advantage. Chemical formulas, manufacturing plant processes, customer lists, computer programs, etc., have all been subject to trade secret protection. Thus, the range of subjects for which trade secret protection is available is much broader than that for which patent protection may be obtained.3. Trade secrets are of potentially infinite duration, so long as secrecy is maintained.B. In fact, the primary requirement for a trade secret is secrecy. The right may be lost accidentally or lost by theft or breach of confidentiality by an employee or someone with whom the owner is negotiating.
C. To succeed in trade secret litigation, the owner of the secret must demonstrate that the secret was unlawfully obtained and not discovered through lawful means such as reverse engineering.
D. North Carolina's Trade Secrets Protection Act is found in the N.C. General Statutes, § 66-152.