Transcript Trademarks

Trade Secrets &
Copyrights
Mike Morris
Overview
• Trade secret refresher
• Copyright refresher
• Termination of Copyright Transfers
Thanks to the following for their contributions:
John McNett
Braden Duffin
Professor Marshall Leaffer
Trade Secrets
= information
Neither the form of the information nor the
media on which the information is stored
matters: written; human memory;
electronic; physical sample, etc.
Trade Secrets
• Under the Uniform Trade Secrets Act, adopted by 45 states
including IN, a trade secret is information including a
formula, pattern, compilation, program, device, method,
technique, or process that:
– (1) derives independent economic value, actual or potential,
from not being known or readily ascertainable by proper
means by other persons who can obtain economic value from
its disclosure or use; and
– (2) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy
Examples of Trade Secrets
• Manufacturing methods, jigs,
processes
• Formulas
• Customer lists
• Customer preferences
• Material composition
• Computer code
• Engineering drawings,
specs, changes
• Pricing, cost & profit
information
• Data compilations
• Information re: regulatory
approval
• Failures; what did not work
• Bids
• Lab notebooks, meeting
minutes
• Legal information
• Vendor & raw material
identification, pricing, etc.
• Testing and QC procedures
Examples Of Efforts That Are “Reasonable” to
Maintain Secrecy
• Confidentiality agreements
Courts look at what efforts
– Vendors and contractors
you undertook – be active,
– Employees
not passive.
– Visitors
• Security alarms, systems
• Restrict computer access (user groups, limited authorization,
passwords)
• Legends on documents: “Confidential” or “Trade Secret”
• Limit tours and other access
• Visitor sign-in log
• Compartmentalize information: access given on a “need to
know” basis
Trade Secrets vs. Patents
Trade Secrets
• Establishment:
– Procedures to limit
access
– Notice to those with
access
– Immediately
Enforceable
• Duration:
– Can potentially last
forever
Patents
• Establishment:
– Filing application with
USPTO
– Expensive
– Delay in effective date
• Duration:
– Statutory term (20yrs.
from filing + PTA)
Trade Secrets vs. Patents
Trade Secrets
• Scope:
– Trade secrets apply
only to persons who
have a duty with the
owner, either by
contract or by
custom.
 Employees
 Vendors
– Can be defined at
time of litigation
Patents
• Scope:
– Only applies to
geographic territory
(i.e., country by
country)
– Limited number of
claims
– Often drafted years
before party is
targeted for
infringement suit
Trade Secrets vs. Patents
Trade Secrets
• Statute of Limitations
– 3 years in IN and
most states
• Ownership:
– Multiple parties can
separately own trade
secrets in the same
information
Patents
• Statute of Limitations
– 6 years before
laches issues
• Ownership:
– Only one patent can
have a particular
patent claim
Trade Secrets
• Remedies
– Damages (including punitive damages)
– Injunctions
– Attorney fees (if bad faith or willful and malicious
misappropriation)
• No trade secret violation if:
– Information is in the public domain (known or “readily
ascertainable”)
– Someone independently develops
– Purchased from legitimate 3rd party
– Information is obtained through reverse engineering
UTSA - Misappropriation
•
•
•
(a) acquisition of a TS of another by a person who knows or has
reason to know that the TS was acquired by improper means OR
(b) disclosure or use of a TS of another without express or implied
consent by a person who:
– Used improper means to acquire knowledge of TS
– At time of disclosure, knew or had reason to know his
knowledge of TS was:
– Derived from person who used improper means to acquire it
– Acquired under circumstances giving rise to duty of secrecy;
OR
– Derived from or through a person who owed a duty to
maintain secrecy; or
(c) before a material change in his position, knew or had reason to
know that it was a trade secret and knowledge of it had been
acquired by accident or mistake.
Confidentiality Agreements
• Before disclosing, have him/her sign a
confidentiality agreement.
• Disclose only on a need to know basis.
• Reclaim possession of documents afterwards.
• Beware: duration clauses (“this Agreement
shall be for a term of three (3) years…”) create
a strong argument that the information is no
longer confidential thereafter.
• Also get a noncompetition agreement!
Copyrights
Protecting Original Works of
Authorship
Copyrights
• What is a copyright? – “original works of authorship
fixed in any tangible medium of expression …”
• Only the “expression” is protectable, not the
underlying idea itself.
• Ideas, methods, discoveries and machines are not
copyrightable (they may be patentable).
• Titles and slogans are not copyrightable (they may
be trademarks) – but logo artwork is copyrightable.
• Pure information is not copyrightable (phone book;
raw data).
Copyrights Are Most Helpful if Registered Early
• Copyrights automatically come into being
when the work is created.
• Registration is not required, but is strongly
recommended (particularly if value or creation
time/effort/expense is great).
Federal Copyright Registration – How To Obtain
• Old Method:
– Fill out a paper form (TX, VA, SR, SE, or PA) and send it to the
U.S. Copyright Office along with the required fee and two
copies of the work.
– $65 filing fee ($50 for Fill-In Form CO)
– 11 month minimum processing time
– Check or money order
• Preferred Method:
–
–
–
–
eCO Online System (launched June 2008)
$35 fee for basic claims
3 month minimum processing time
Credit card, debit card, electronic check, or Copyright Office
deposit account
Federal Copyright Registration
• Has several advantages:
– Provides proof of creation date
– Required before bringing copyright infringement action in court
– If registration is applied for within 5 years of publication,
registration will establish a legal presumption of validity and
ownership.
– If registration is made within 3 months after publication or prior
to infringement, statutory damages and attorneys’ fees are
available to copyright owner.
– Otherwise, only award of actual damages and profits is
available to copyright owner—no attorneys’ fees.
• Register early and often for different versions
Copyright Notice
• Optional today, but strongly recommended
– Extensive use of helps show willful infringement
• Notice = Symbol + Year of 1st publication + Name of owner:
 © 2010 Jones Industries, Inc.
 Copyright 2010 Jones Industries, Inc.
• Required for statutory damages and attorneys’ fees
For works published before
1/1/1978
For works published on or
after 1/1/1978 and before
3/1/1989
For works published on or
after 3/1/1989
Federal protection began upon
general publication with proper
notice. Publication without proper
notice placed work in public
domain. §§ 10, 19 (1909 Act).
See also § 104A (1976 Act)
regarding restoration of foreign
copyright under TRIPS.
Notice required for all published
works. If work published w/out
notice, copyright owner had to
comply with 5-year cure
provisions to avoid placing work
in public domain. § 405(a). See
also § 104A regarding TRIPS
restoration of foreign copyrights.
Notice is optional. §§ 401-404.
Lack of notice may allow
reduction in amount of statutory
damages for innocent infringers.
§§ 401(d), 402(d)
Categories of Works
• 17 U.S.C. § 102(a):
– Literary works;
– Musical works, including any accompanying words;
– Dramatic works, including any accompanying music;
– Pantomimes and choreographic works;
– Pictorial, graphic, and sculptural works;
– Motion pictures and other audiovisual works;
– Sound records; and
– Architectural works.
• 17 U.S.C. § 102(b):
– Does not extend to any idea, procedure, process, system,
method of operation, concept, principle, or discovery,
regardless of the form
What Rights are in a Copyright?
•
Exclusive Rights (17 U.S.C. § 106):
– Reproduction
– Adaptation (derivative works)
– Public distribution of copies (sale, rental, lease, & lending)
– Public performance
 Does not apply to sound recordings
– Public display
 Does not apply to architectural works
- © in architectural works also does not include pictures, photographs or
other pictorial representations of the work (note: this is only a U.S.
limitation)
– Digital audio transmission of sound recording(s)
– Moral rights (not in § 106)
 Integrity, Attribution, and Disclosure
 Very limited - adopted in a piecemeal fashion
 § 106A such as VARA (Visual Artists Rights Act of 1990)
Ownership
• Unlike patents and trade secrets:
– no joint owner may license a third party without
consent of the other joint owners, and
– all royalty income is shared equally among the
owners, absent an agreement to the contrary.
• A work created by a person belongs to that person
unless it was:
– within the scope of the person’s employment, or
– subject to a contrary agreement which clearly
characterizes the work as a “work for hire”, or . . .
Work Made for Hire
– [a work is not a work for hire unless it is] specially
ordered or commissioned for use as:




a contribution to a collective work
a compilation, or an atlas
a supplementary work
a part of a motion picture, a sound recording or other
audiovisual work
 a translation
 an instructional text, a test or answer material for a test
– Merely saying something is a “work made for
hire” does not make it so
Remedies
• Injunction:
– Stop selling order from a court
– Destruction of infringing inventory
• Actual damages and infringer’s profits
• Statutory Damages:
– $750 ≤ x ≤ $30,000 per work
 (all parts of a compilation or derivative work constitute
one work for statutory damages)
 $200 per work min. if innocent infringer
– $150,000 per work max. for willful infringement
• Costs (regardless of registration)
• Attorneys’ fees (only if timely registered)
Copyright Duration—for works created today
• For works originally created on or after
January 1, 1978, a copyright lasts for:
– 70 years after the last surviving author’s death,
unless …
– If “work for hire” or if anonymous, then 95 years
from publication or 120 years from creation,
whichever is shorter.
Copyright Duration
DURATION AFTER THE CTEA
Date of
Protection
Nature
of
Term
Length of Term
Works Created On
or After 1/1/78
When work was
fixed in a
tangible medium
of expression
Unitary
Works Created but
not Published
Before 1/1/78
Federal
protection
began on 1/1/78
Unitary
Same as above, at least through 12/31/2002, if the work remained unpublished as of
that date, or until 12/31/2047 if the work was published before 1/1/2003
Works Published
Between 1964 and
1977
When work was
published with
notice
Dual
term
28-year first term
Automatic renewal term of 67 years (renewal
registration is optional but incentives attach to
renewal registration)
Works Published
between 1923 and
1963
When work was
published with
notice
Dual
term
28-year first term
Renewal term of 67 years, but only if renewal was
properly obtained
N/A
N/A
Work is now in the public domain
Works Published
Before 1923
Basic-term: Life of the author (or last-surviving author for joint works) plus 70 years
Alternative term for anonymous or pseudonymous works, or works made for hire: 95
years from publication or 120 years from creation, whichever is shorter
From Copyright Law, sixth edition, Joyce, Leaffer, Jaszi, Ochoa. Used with permission.
After 1976 Act
• Congress chose to give the author and statutory successors the
chance to recover some of the extended renewal term for pre1978 works and part of the copyright term for post-1978 works
• Under the 1976 Act, the author and statutory successors (spouse,
children, etc.) were given a right under §§ 304(c) and (d) to
terminate pre-1978 grants to recover some of the extended
renewal term for pre-1978 works
• Under the 1976 Act, the author and statutory successors given
rights under §203(a) to terminate post-1978 grants made by
author
Sections 304 (c) and (d) allow statutory
successors to terminate pre-1978
assignments and exclusive or non-exclusive
licenses of the renewal term of copyright, or
any right under it, by affirmatively serving
notice of termination effective within specified
5-year windows
• Copyrights to which termination under §§ 304(c),
(d) applies:
– Works “subsisting in either [their] first or renewal term” as
of 1/1/78
• Grants subject to termination under §§ 304(c), (d):
– Executed prior to 1/1/78
– by the author or, after author’s death, by the author’s
statutory successors (i.e., spouse or children/ executors/
next of kin)
• Who can terminate under §§ 304(c), (d):
– For grants by author: author, surviving spouse,
children, grandchildren, estate, can terminate
 In case of joint works: either author (or successors)
can terminate the particular author’s share
– For grants by persons other than the author:
surviving person(s) who executed it can
terminate
§ 304(c)
Provides for termination of grants with effective
dates from the end of the 56th year through the
61st year (the first 5-year window) measured
from the date copyright was originally secured.
§304(d)
Limited second chance: § 304(d) provides for
termination of grants during a period from the
end of 75 years through the 80th year (a
second 5-year window) measured from the
date copyright was originally secured – but
only for copyrights secured on or between
1/1/1923 and 10/26/1939 (37 CFR § 201.10)
• Sections 304(c) and (d) both provide that notice must
be served between 2 years and 10 years (8-year
window) before the effective date of termination, and
the effective date must occur within the relevant 5year window
8-year window
2 yrs
5-year window
Example
• Assume copyright date of 11/18/1951
• 5yr termination window 11/18/2008 to 11/17/2013
• Must serve notice between 11/18/1998 to 11/17/2011
8-year window
11/18/1998
11/18/2008
2 yrs
11/17/2006
11/17/2011
11/18/2008
11/17/2013
5-year window
Major exceptions to §§ 304(c), (d) termination
mechanisms
• Grants related to works for hire can not be
terminated
• Dispositions by will can not be terminated
• Derivative works created prior to effective date of
termination can still be utilized under terms of the
grant after termination
• Exploitation outside of U.S.A unaffected
• Non-copyright grants (e.g., trademark rights or
publicity rights), even in the same agreement as a
terminated copyright grant, can not be terminated
In 2013 another termination window opens
• §203(a) provides a right of termination for post-1978
grants made by author (applicable both to pre-1978
and post-1978 works) with a 5-year window open from
the end of the 35th year through the 40th year
measured from the date of the grant.
• The twist: If the grant covers the right of publication of
the work, effective date must occur between (i) the end
of the 35th year through the 40th year measured from
the date of publication OR (ii) the end of the 40th year
through the 45th year measured from the date of
execution of the grant, whichever ends earlier.
§ 203(a)
Same advance notice as in § 304(c) and (d):
• The § 203(a) 5-year window opens for the first time in
2013 (1978 + 35 = 2013)
• Termination notices can be sent now for effective
dates in 2013-2021 (2-10 yrs)
• Same exceptions as in § 304(c) and (d)
Who can terminate under § 203(a)?
• Author if alive
• If author is dead: the author’s statutory
successors (including surviving spouse,
children and grandchildren/or executor,
administrator, personal representative or
trustee)
§ 203(a)
Important differences from §§ 304(c), (d):
• Under § 203(a) the grant to be terminated
must have been executed after January 1,
1978 by the author
• For joint grants of joint works, majority of joint
authors (or respective/successors) must
terminate
Comparison of §203(a) and § 304(c) and (d)
§304
§203
Pre-1978 grants
Post-1978 grants
Measure from date copyright
secured
Measure from date grant
executed
Applies to grants by authors
and others
Applies to grants by authors
only
Either joint author can
terminate
Majority of joint authors can
terminate
Author/successors or surviving Author/successors can
persons who executed
terminate
grant can terminate
Ways to get around termination rights
• Negotiate a new post-1978 agreement with a party
other than the author (not subject to termination
under § 304 or § 203) that revokes and replaces the
pre-1978 contract that’s subject to termination (Milne,
Steinbeck)
• Serve timely notice of termination followed by prompt
sale of terminated interest back to grantor –
termination is not “agreement” but exercise of
unilateral right
• Devise by will
• Work for hire
Takeaway
• New window opening in 2013 offers new
opportunities for works subject to post-1978 grants
• Termination rules are complicated but potentially
rewarding to author and successors
• During 2-10 year periods when termination notices
may be sent, re-negotiation and a new grant may
make more sense (send notice then transfer rights)
• Re-negotiations could cancel previous grant and
remove option for termination of grant (Milne,
Steinbeck)
Takeaway
• Original parties (must include author) can
anytime re-negotiate and reset the 35 year
clock – does not eliminate termination right,
only postpones
• Best practice for businesses seeking rights in
a work is to acquire the work as a work for hire
• If termination is imminent, can create
derivative works prior to effective date and
exploit after effective date
Questions