hapter 11, Part II (Copyrights, Patents, and Trade Secrets)

What law governs copyrights?

The Copyright Act of 1976, which protects original creative works fixed in a tangible medium.

What types of works are protected by copyright?

• Books and novels

• Artwork and photographs

• Music and movies

• Choreography and software

• Architecture and designs

What does it mean for a work to be “fixed in a tangible medium”?

The work must be recorded or written down — not just an idea in your mind.
Professor’s Example: “If you have a novel idea but never write it, it’s not protected.”

What does copyright protect?

The expression of an idea — not the idea itself.
It prevents others from copying, distributing, displaying, or making derivative works without permission.

What is a derivative work?

A new work based on a pre-existing copyrighted work (e.g., adaptations, remixes, or art based on photos).

What is the duration of copyright protection?

• Individual author: Life of the author + 70 years

• Business/Work for hire: 95 years from publication or 120 years from creation (whichever is shorter)

Who owns a “work for hire”?

The employer, not the employee — because it was created within the scope of employment.

What is piracy?

The intentional copying and unauthorized distribution of someone else’s creative work.
Example: Copying a textbook, selling pirated movies or music.

What doctrine limits the exclusive rights of copyright owners?

The Fair Use Doctrine — allows limited use of copyrighted material for criticism, education, commentary, research, or parody.

What are the four factors of the Fair Use Doctrine?

• Purpose and character of the use (commercial or educational)

• Nature of the copyrighted work

• Amount and substantiality of the portion used

• Effect on the market for the original work

What effect does commercial use have on fair use?

It heavily weighs against fair use — using a copyrighted work to make money usually violates copyright law.

Case: What happened in Warhol v. Goldsmith (2023)?

• Photographer Lynn Goldsmith took portraits of musician Prince.

• Andy Warhol used her photos to create silkscreen prints without permission.

• Supreme Court held: Warhol’s use was not fair use — it was commercial and derivative of Goldsmith’s photo.

• Key takeaway: Even “transformative” art can violate copyright if it competes commercially with the original.

Why did your professor say to read Warhol v. Goldsmith?

It illustrates the Fair Use Doctrine and the difference between derivative works and transformative use, which will be on the exam.

What damages can be awarded for copyright infringement?

• Actual damages: The owner’s lost profits or infringer’s gains.

• Statutory damages: $200–$150,000 per work (only if the work is registered).

• $150,000 for willful infringement.

Case: What happened in Sony BMG v. Tenenbaum (2013)?

• A college student illegally downloaded and shared songs before streaming services existed.

• Court ordered him to pay $675,000 in statutory damages.

• Lesson: Copyright law applies even to individuals — downloading music without permission = infringement.

What does a patent protect?

New, useful, and non-obvious inventions or processes — including machines, devices, and manufacturing methods.

Why do we have patents?

To encourage innovation — inventors can profit from their ideas for a limited time before they enter the public domain.

What types of inventions can be patented?

• Machines and electronics

• Processes or methods

• Chemical compositions

• Pharmaceuticals

• (Some plants and biotech inventions)

What are the three requirements for a patent?

• New (Novel): Not previously known or used.

• Useful: Must have a practical purpose.

• Non-obvious: Can’t be something anyone in the field could easily come up with.

What is the one-year sale bar?

If you publicly sell or use an invention for more than one year before filing for a patent, you lose the right to patent it.

How long does a utility patent last?

20 years from the date of filing.

How long does a design patent last?

15 years from issuance — covers ornamental designs, not functionality.

What is the first-to-file rule?

The U.S. awards the patent to whoever files first, not who invents first.
(Professor emphasized this for the exam.)

Why are patents expensive and time-consuming?

The USPTO process involves detailed drawings, applications, rejections, and revisions — costs can exceed $100,000.

What is a patent license?

Permission granted by the patent holder for another company to use or sell the invention in exchange for royalties.
Example: Apple licenses touchscreen patents from other inventors for use in the iPhone.

What are the three types of patents?

1. Utility Patent – inventions or processes (20 years)

2. Design Patent – ornamental designs (15 years)

3. Plant Patent – new plant varieties (20 years)

What happens when a patent expires?

The invention enters the public domain, allowing competitors to make and sell it (e.g., generic drugs).

What is a trade secret?

Confidential information that gives a business a competitive advantage and is actively protected as a secret.
Examples: Coca-Cola recipe, KFC formula, WD-40 mix, Tesla battery technology.

How long does trade secret protection last?

Indefinitely, as long as the secret is kept confidential.
Once disclosed, protection is lost.

What laws protect trade secrets in the U.S.?

• Uniform Trade Secrets Act (UTSA) – adopted by most states.

• Defend Trade Secrets Act (DTSA, 2016) – federal law allowing private lawsuits.

• Economic Espionage Act (EEA, 1996) – allows criminal prosecution for theft, especially involving foreign entities.

What must a company do to keep trade secrets protected?

• Restrict access

• Use confidentiality agreements (NDAs)

• Keep documents secure

• Limit employee knowledge

Case Example: What happened in the Coca-Cola trade secret theft case?

• A former Coke employee stole confidential formulas and tried to sell them to Pepsi.

• Pepsi reported it to the FBI.

• Lesson: Companies must actively protect trade secrets, and competitors are legally bound to respect them.

What international treaties protect intellectual property?

• Paris Convention (1883): Patents & trademarks

• Berne Convention (1886): Copyrights

• TRIPS (1995, WTO): Global IP trade standards

What did your professor say about international enforcement of trade secrets?

Developed countries cooperate through treaties, but China and some regions still violate U.S. IP laws by producing fake goods (e.g., fake Rolex watches or designer bags).