Intellectual Property and Antitrust Laws
UNIT 4: Intellectual Property
Definition:-
Commercially valuable, secret information that is not generally known.
–Misappropriation:-
Wrongful use of a trade secret: (1) knowingly acquired through improper means, or by (2) disclosing or using information without consent, or by (3) reverse engineering.
Trade Secrets:
Remedies:–Owner of a trade secret may obtain damages or injunctive relief when the secret is misappropriated (wrongfully used) by an employee or a competitor
Criminal Penalties
— It punishes thefts of trade secrets, as well as attempts and conspiracies to steal secrets.
Trade Secrets and Noncompetition Agreements
–An entrepreneur may prefer to maintain an idea or process as confidential and to sell or license it as a trade secret. • Noncompete agreements protect valuable assets such as product information, clients, marketing ideas, and unique strategies. • Employees signing a confidential information agreement may be sued if they breach the agreement.–The entrepreneur may restrict confidential information. • Today’s tendency is to share more information with employees.–Proper protections help avoid serious future problems.
Suggestions to Maintain Secrecy:
- Funnel sensitive questions through one person.
- Provide escorts for all visitors.
- Avoid discussing business in public places.
- Keep travel plans secret.
- Control information presented to employees at conferences or in journals.
- Use locked file cabinets, passwords, and shredders. Have employees sign nondisclosure agreements.
- Debrief departing employees on confidential information.
- Avoid faxing sensitive information.
- Mark documents “confidential” when needed.
Preparing a Noncompetition Agreement:
–Protection against leaking of trade secrets is difficult to enforce. • Legal action is possible only after the secret is revealed.–Consider the following points when preparing a noncompetition agreement. • Determine if the employee can harm the company if he/she leaves. • Hire a competent labor law attorney to make sure the agreement is fair and enforceable. • Provide incentives for signing a non-compete agreement at hiring.• Specify what is included in the non-compete information. • Consider other options such as non-piracy or non-disclosure agreements.
Trade Symbols:
Definition:
– Any trade name, symbol, word, logo, design, or device used to identify and distinguish goods of a manufacturer or seller or services of a provider from those of other manufacturers, sellers, or providers
Types:-
- Trademark – distinctive symbol, word, or design used to identify the manufacturer.
- Service Mark – distinctive symbol, word, or design that is used to identify a provider’s services.
- Certification Mark – distinctive symbol, word, or design used with goods or services to certify specific characteristics.
- Collective Mark – distinctive symbol used to indicate membership in an organization .
Registration:
— Distinctive mark: being unique and fabricated.–Secondary meaning: a brand name that has evolved from an ordinary term.– Not immoral, deceptive, or scandalous.–Filing of a trademark request to the PTO has four requirements.–Completion of a written application form.–A drawing of the mark.–Five specimens showing actual use of the mark.–The appropriate fee.Unopposed marks are registered, the process takes 13 months.
Infringement
— Occurs when a person without authorization uses a substantially indistinguishable mark that is likely to cause confusion, mistake, or deception.– Diluting, Blurring, or Tarnishing Trademarks.
Remedies
- Injunctive relief.
- Claim of profits or damages or costs.
- Destruction of infringing articles.
Trade Names:
Definition:-
– Any name used to identify a business, vocation, or occupation.– Descriptive and generic words may become protected trade names if they acquire significant “secondary meaning.”
Geographical Indications:
A mark in one country can be a generic name in another. i.e. champagne, scotch whiskey, cognac, jerez, etc.
Copyrights
Definition:-
– Exclusive right, usually for the author’s life plus 70 years, publish, produce, sell, license, and distribute the original work.
Procedure:-
– Registration is not required but provides additional remedies for infringement.–It is registered at the Library of Congress and the process does not require an attorney.– Requirements are two copies of the original work and appropriate fees.–Copyright terms are life of the author plus 70 years.
Copyrights: Rights to:
- Reproduce the copyrighted work,
- Prepare derivative works based on the work,
- Distribute copies of the work, and
- Perform or display the work publicly.
Ownership
— The author is usually the owner of the copyright, which may be transferred in whole or in part.
Infringement
— Infringement occurs when someone exercises the copyright owner’s rights without authorization.– i.e. when someone copies a substantial part of the copyrighted work without permission.
Fair Use Doctrine
: Allows certain limited use of a copyright by someone other than the copyright holder without the permission of the copyright holder Examples of fair use include: o Quote for review o Parody or satireo Academic o Brief quote in news report.
Copyrights Remedies
- Injunction,
- Impoundment and possible destruction of infringing articles,
- Actual damages plus profits or statutory damages,
- Costs, and
- Criminal penalties.
Copyrights
It is a crime for a person to willfully infringe on a copyright. –It is prohibited to get unauthorized access to copyrighted digital works by circumventing encryption technology or the manufacture and distribution of technologies designed for the purpose of circumventing encryption protection of digital works.
Patents
Definition:
– the exclusive right to an invention for twenty years from the date of application for utility and plant patents; fourteen years from grant for design patents
Patents Categories of innovation that can be patented include:
- Machines
- Processes
- Improvements to existing machines, processes, or compositions of matter
- Designs for an article of manufacture
- Living material invented by a person
Patentability
– a patentable invention must be (1) novel, (2) useful, and (3) not obvious.
Patents:–A grant by the government upon the inventor of an invention for the exclusive right to use, sell, or license the invention for a limited amount of timeTypes of patents include:
- Utility patents grants owner’s protection from anyone making, using, and / or selling the invention.
- Design patents cover new, original, ornamental, and unobvious designs for articles of manufacture.
- Plant patents are issued under the same provisions as utility patents and covers new plant varieties.
Patents Procedure:
– patents are issued upon application to and after examination by the Patents and Trademarks Office.–Must apply for protection in other countries or in the EUequivalent office for all EU countries.–A patent may not be granted if the invention was used by the public for more than one year prior to the filing of the patent application.
Patent Application Process:-
-First, file a provisional patent application to establish a date of invention conception. • The actual filing of the patent must occur within 12 months.–The patent application is divided into sections. • The Introduction Section – background and invention advantages. • Description of Invention Section – engineering specifications, materials
, and components. • The Claims Section – establishes the criteria by which infringements will be determined.–Applications should contain a declaration signed by the inventor.–When application is sent, invention becomes “patent pending.”International Patents:–Concerns over international imitations and knock-offs resulted in International Patenting being a strategy for many startups.–The US established the Office of International Patent Cooperation to establish a harmonized patent system.–Joint efforts between the USPTO and the European Patent Office established a common classification system.–The Global Dossier allows a patent application be applied to five of the largest patent offices in the world: USPTO, EPO, JPO, KIPO, and CNIPA.Patents:Infringement – occurs when anyone without permission makes, uses, or sells a patented invention. Remedies for infringement: o (1) injunctive relief, (2) damages, (3) treble damages where appropriate, (4) attorneys’ fees, and (5) costs.–The entrepreneur cannot infringe on someone else’s patent.–Yet, many inventions are improvements on existing products. • Copying and improving a product may be legal and a good strategy.• If copying is impossible, licensing may be an option. Use the Internet and USPTO website to check on existing patents. • If in doubt, hire a patent attorney.Business Method Patents: With the Internet has emerged business method patents. • Amazon owns such a patent on its single click buying feature. • Priceline claims a patent on a service where a buyer can submit a price bid for a particular service.–Many firms use these patents against competitors.–The PTO reviews these patents through the Patent Trial and Appeal Board. –Not all startups have a patentable product but a unique marketing plan may provide competitive advantage.Licensing:–Information or technology protected by a patent, copyright, or trademark may be licensed to another party for a royalty fee. • Licensing has significant value as a marketing strategy. • A patent license agreement specifies access to the patent. • Licensing a trademark generally involves a franchising agreement. • Copyrights are also popular licensed property. • Celebrities license their name and image.–Licensing has benefits. • Can increase revenues without the risk and cost of a startup. • Could be a way to start a new venture even when the idea may infringe on someone else’s patent. UNIT 5:Regulating the Competitive Environment: Basic Regulatory Framework–Antitrust laws differ from nation to nation, but they tend to prohibit two types of activities: – Agreements between competitors that restrict competition.-The abuse of “dominant market” position.Trade Restriction:--Restraint of Trade – contracts, combinations, and conspiracies that restrain trade. o Requires concerted action. o Necessary to balance the anticompetitive effects against the procompetitive effects of the restraint.Possible Conducts:–Horizontal Restraints – agreements among competitors. Vertical Restraints – agreements among parties at different levels in the chain of distribution.Possible Conducts:-Price Fixing – an agreement with the purpose or effect of inhibiting price competition; horizontal agreements are per se illegal, while vertical price fixing is judged by the rule of reason.Price Discrimination: – buyers inducing or sellers giving different prices to buyers of commodities of similar grade and quality that causes- An injury to competitors of the seller.-An injury to competitors of other buyers.Possible Conducts:Market Allocation: – division of markets by customer type, geography, or products (horizontal agreements).Boycotts: – agreement among competitors not to deal with a supplier or customer.-Tying Arrangement :– sale of product (tying product) conditioned upon buyer’s purchasing a second product (tied product); illegal if the seller has considerable power in the tying product or affects a substantial amount of interstate commerce in the tied product.Monopoly: – monopolization, attempts to monopolize, and conspiracies to monopolize.–Monopolization – requires market power plus either the unfair attainment of the power or the abuse of such power.-Monopoly Power – ability to control price or exclude competitors.
Tying Contracts and Exclusive Dealing:–Tying Arrangements – prohibited if it tends to create a monopoly or may substantially lessen competition.–Exclusive Dealing – arrangement by which a party has sole right to a market; prohibited if it tends to create a monopoly or may substantially lessen competition.Mergers: – prohibited if it tends to create a monopoly or may substantially lessen competition.–Horizontal Merger – one company’s acquisition of a competing company.–Vertical Merger – a company’s acquisition of one of its suppliers or customers.–Conglomerate Merger – the acquisition of a company that is not a competitor, customer, or a supplier.Agreements to Restrict Competition:–The U.S. View: whether “vertical” agreement will enhance or inhibit the competitive marketplace.–The E.U. View: will most likely prevent ‘vertical’ agreements.–Japanese view: permits keiretsu (vertical, tightly-wound) networks of manufacture, supply and distribution.–Chinese view: prohibits agreements, decisions, or concerted actions that eliminate or restrict competition.Abuse of Dominant Market Position: U.S. View: prohibits only anticompetitive conducts that help to obtain or maintain a monopoly. EU View: prohibits abusive behavior by companies holding a dominant position on any given market.–o See the Microsoft Corp. v. Commissioner of the European Communities case (ECJ, 2007)–Japanese View: monopoly is forbidden.–Chinese View: monopoly is forbidden.Mergers and Acquisitions:–U.S. View: initial review and further request.–EU View: pre-notification and review.See the Airtours v. Commission (2002), the Schneider Elec. SA v. Commission (2002), and the Tetra Laval BV v. Commission (2002) cases–Japanese View: pre-merger notification.–Chinese View: filling approval. Preapproval Procedures Versus Litigation:– EU has preapproval system (U.S. does not)–Exemption system:Individual,Negative clearance,Individual or Block exemption,De minimis: aggregate market share less than 15% if both parties are not competitors in that market or 10% if they are.