Copyright, Patent, Trademark, and Related Doctrines Paul Goldstein, Fourth Edition Part One: Intellectual Property Law in Context
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Copyright, Patent, Trademark, and Related Doctrines (Goldstein) Reading notes compiled by David J. Stein, Esq. Copyright, Patent, Trademark, and Related Doctrines Paul Goldstein, Fourth Edition Part One: Intellectual Property Law in Context I. The Sources and Limits of Intellectual Property Law • Intellectual property law stems from the congressional powers set forth in the Article I, Section 8 of the U.S. Constitution: “Congress shall have power… (3) To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; (8) 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.” • Jurisdiction for enforcing intellectual property powers throughout all of the states is exclusively vested in the federal government by Article 6 of the Constitution (the supremacy clause) – can states pass laws to extend the rights granted by Congress and protect additional intellectual property rights? (e.g., state unfair competition laws) – states often did so in the 1800s, since the federal systems (copyright, trademark, and patent) were of limited use – eventually, the federal government passed the Lanham Trademark Act, the 1976 Copyright Act, and the 1952 Patent Act, all of which almost completely preempt state laws – states do still have some rights to pass trade secret laws • Sears, Roebuck & Co. v. Stiffel Co. (1964): SC stated that states cannot protect subject matter that comes within the Congress’s IP authority but that doesn’t qualify for protection under Congress’s rules – Sears: district court invalidated π’s patented lamppost design but enjoined Δ from producing competing lamps that violated state unfair competition laws – SC reversed: district ct verdict awarded “the equivalent of a patent monopoly on its unpatented lamp,” thereby usurping federal patent authority – 1970’s SC retreated from Sears in a series of decisions allowing state trade secret protection for unpatentable ideas, and state copyright protection for sound recordings that didn’t qualify for federal copyright protection – Bonito Boats, Inc. v. Thunder Craft Boats, Inc. (1989): SC returned to Sears reasoning by invalidating state statute that protected injection-molded industrial design processes for boats: “state law that substantially interferes with the enjoyment of an unpatented utilitarian or design conception which has been freely disclosed by its authors to the public at large impermissibly contravenes the ultimate goal of public disclosure and use which is the centerpiece of federal patent policy” • Goal of patent laws: Promoting investment in new technologies that might not work, that might not have market success, and that will not completely qualify for other intellectual property protections • International developments: The 1883 Paris Convention for the Protection of Intellectual Property set forth a broad mandate for international cooperation in Page 1 of 131 Copyright, Patent, Trademark, and Related Doctrines (Goldstein) Reading notes compiled by David J. Stein, Esq. protecting all forms of IP, but real unity on these issues has only been a recent development II. The Nature and Functions of Intellectual Property Law • The primary purpose of IP laws is to ensure consumer access to a variety of information products at the lowest possible prices, by granting property rights to companies for information that they create as a research/development incentive – copyright law secures rights for authors and artists to works of art; patent law secures rights for inventors to technologies; trademark secures rights for businesses to symbolic identifiers of their goods and services – trade secret law and unfair competition law (usually state laws) secure rights to businesses to information and products not yet ready for other forms of protection – finally, the right of publicity secures rights for public figures to the commercial value of their celebrity • Intellectual property laws deal with intangible information, thereby creating an appropriations problem (if information can easily be adopted by competitors, why use resources required to develop it?) and an indivisibility problem (not depleted by continued use, and thereby not due the absolutely stringent protection courts extend to tangible property) – the non-scarcity of information does not comport with the 20th-century economics concept that a valuable good shouldn’t be usable by one person without increasing the wealth of another person (and thereby excluding those who can’t/won’t pay the price) – “Put succinctly, the dilemma [of IP] is that without a legal monopoly not enough information will be produced but with the legal monopoly too little of the information will be used” • Other factors and views: Intellectual property creators have an inherent natural right to ownership of their efforts (no inducement rationale needed); political judgments, e.g., research and educational institutions should be exempt from monopoly liability A. Copyright Law • Macauley, Speech Delivered in the House of Commons (1841): Great books, especially those requiring deep meditation, can rarely be created by men engaged in active professions – remuneration is needed to encourage the production of literary works – the alternative, government patronage, damages the integrity and independence of the works so created – monopoly is an evil, but a limited-time monopoly is the least exceptionable way of promoting literary works – the duration should last only as long as the benefit to the author outweighs the harm to society • Breyer, The Uneasy Case For Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs (1970): Abolishing copyright law may make some books available at lower prices due to competition, but would also prevent many books from being written at all – an initial publisher bears many costs that publishers who copy those works don’t, like editing and correcting the text – also, the initial publisher is usually obligated to pay the author royalties, while copying publishers need not – this cost advantage is ordinarily large, and can be very large for complicated textbooks – this advantage has grown even larger with the advent of copy machines – while the initial publisher enjoys Page 2 of 131 Copyright, Patent, Trademark, and Related Doctrines (Goldstein) Reading notes compiled by David J. Stein, Esq. market lead time (quite important for novels, not as important for textbooks) and the threat of retaliation by way of below-cost pricing intended to dissuade copiers (more important in low-volume publications) – on balance, initial publishers have a cost disadvantage in textbooks, which usually have long-term costs, but might still publish them if even moderate profit is available • The factors weighing against copyright have been mitigated by market changes: automated copying virtually eliminates market lead time, and modern markets mostly go through distributors who are more sensitive to price differences than consumers – of course, below-cost pricing isn’t a viable long-term strategy • Breyer focuses on the quantity and variety of texts, but doesn’t much discuss the quality of texts – quality isn’t an issue because copyright protects expressions, not ideas, and publishers promote new expressions of old ideas – thus, copyrighted works usually express redundant ideas – is this undesirable? • Report of the U.S. Copyright Office ot the Subcommissioner on Patents, Copyrights & Trademarks (1984): 2.8% of U.S. GNP derives from “values added” by copyright industries – 1977 royalty payments in the U.S. exceeded $1.7 billion, and the U.S. had an $850 million surplus in international copyright trade – copyright industries employed 2.2 million Americans (2.2% of the U.S. civilian labor pool) B. Patent Law • Report of the President’s Commission on the Patent System (1966): The U.S. patent system goes all the way back to 1790, with major revisions in 1793 and 1836; no major changes to its general character since 1836 act – current U.S. economy depends directly on technology developments, for which the Constitution requires Congress “to promote the progress of useful arts” – the patent system is keenly functional for this purpose by providing an incentive to invest in research and product development, while encouraging public disclosure of technologies that might otherwise be kept as trade secrets and promoting international exchange of products • Malchup, An Economic Review of the Patent System (1958): Economists disagree on whether consumers benefit from patents: proponents argue that many inventions wouldn’t be available without a patent system, while opponents argue that many such inventions would have been created anyway; while some inventions wouldn’t be created, consumers indirectly pay for all patents – another source of conflict: the first-to-invent patent system encourages initial inventors to patent the first solution to a problem, then encourages competitors to patent alternatives “invented around” the first patents, and then encourages the first patent holder to patent all alternative solutions in order to block competitors from “inventing around” the initial patents – drawbacks: near-simultaneous inventors lose all rights to use their inventions if they lose the race to the patent office – the incentive to “invent around” can be seen either as useful (further research in a promising field) or wasteful (needless duplication of effort and solutions to a