1. PLS 780
Week 8

2. Agenda
• Patents
• Trade secrets

3. Discuss
• I now believe it is possible that the current rules
governing business method and software patents
could end up hurting all of us… (Jeff Bezos)
• The only country earth…to give a exclusive legal
right to use of an idea…generally speaking other
countries have thought these monopolies of ideas
produce more embarrassment than advantage to
society… (Thomas Jefferson)

4. Patent
• Government granted right to exclude
• Based upon disclosure to government (USPTO)
• Nonrenewable 20 year term
• Term begins from application; Applications take 2-3
years from filing to acceptance so its really a 18
year exclusive right

5. Exclusivity
• Making
• Using
• Selling (or offering to sell)
• Importing to the US
• Different from copyrights in terms of defenses to
infringement—there is nothing like fair use

6. Patents confer a negative
right
• They don’t give the holder any specific rights and
instead only prevent others from using their patent
• Blocking patents demonstrate the complexity of this
idea (Patent 1 mug; patent 2 handle that attaches to
mug) since they prevent original patent holders from
creating and selling the improved version of a
product

7. Licensing and Cross-
licensing
• Patents constantly build upon ‘prior art’ or existing
ideas
• Therefore a health and robust system of licensing
patents exists
• Why? What do you think this looks like in the real
world? The online one?

8. Patent Prosecution
• The term of art for the patent application process is
patent prosecution
• Cannot enforce exclusivity during the patent
application process—risky! Sometimes opt for trade
secret protection instead (balance risk with
rewards—can’t license a trade secret)
• 80% of all patents are owned by corporations
• 50% of all patents are owned by foreign companies
• Why?

9. Limits to Exclusivity
• Duration
• First Sale Doctrine
• Experimental use
• Territorial reach
• Export

10. Duration
• Around 20 years
• Expensive to maintain! If not paid the patent lapses
(The iPod was a lapsed patent made by a guy in
England; Couldn’t afford the $12K to maintain the
patent so it lapsed and Apple swooped in—Steve
Jobs admitted this!)
• Push to make internet related patents shorter; Why?
• Unfortunately, won’t happen due to treaty
obligations…

11. Other limits
• First Sale Doctrine: allows for reselling a patent
based upon legal acquisition of rights under the
patent
• Experimental use: Sort of similar to ‘fair use’ but
very limited—doesn’t impact the internet; normally
reserved for medical trials and scientific study
• Territorial reach-Patents are enforceable only within
US; Must apply in each country where you want to
enforce
• Cannot export patented material

12. What is patentable?
• Within the scope—subject matter of patents
• Useful
• Novel
• Nonobvious
• Enabled
• Drafting a patent application to comply with these
requirements is difficult and requires enormous
technical knowledge about the subject of the patent

13. Scope
• Processes
• Machines
• Manufactures (articles of manufacturing--stuff)
• Compositions of matter
• Pretty broad! Includes basically any invention…
• Limits: Can’t patent laws of nature, phenomena,
abstract ideas

14. Utility
• Pretty low bar here
• The patent has to have a use of some kind
• It as to do something as described
• Not required to do anything better; just has to do
something

15. Novelty
• It has to be new
• Prior art can be built upon/augmented but it cannot be
duplicated
• Oftentimes prior art renders applications unpatentable
• Prior art searching (like trademark knockout searching) is
a useful skill (usually done by a patent paralegal!)
• First to invent first to file: Complex set of rules that must
be followed with regards to timing; If a patentable idea
has been used more than the 1 year grace period
without filing it is no longer patentable)

16. Nonobviousness
• Must be different from prior art—the more significant
the differences the more likely the idea will be
patentable
• Secondary considerations are also viewed including
the commercial viability of the invention, the
perceived need, failure of others to invent
something similar, a lot of people copied it
(counterintuitive…evidence of it being a good idea!)

17. Amazon v Barnes and
Noble
• Facts
• Issue
• Holding
• Reasoning
• Rule

18. Enablement
• Final requirement
• Requires that the patent be filed with specific
instructions that would enable anyone to reproduce
the art/invention
• Tough part of the application; You want to meet the
requirement but not disclose more than you have to

19. Type of patents
• Utility (most important to internet—hardware
software, business processes)
• Design (the way something looks—overlaps with
copyright and trademark but protects the usability of
a design—ipod click wheel)
• Plant (literally plants)

20. Business Methods
Patents
• Patent for processing information or conducting
operations
• Huge implications for internet companies and
ecommerce
• State St. v Signature: 1998 case that says business
methods must satisfy the same requirements for
patentability (you can’t toss an patent application
that involves a business process merely bc it is a
business process…)

21. In Re Bilski
• Facts
• Issue
• Holding
• Analysis
• Rule: Complicated case! Limits business methods
patents to those that actually product something and
have some utility; can’t be just an abstract idea bc
those are not patentable

22. Patent Enforcement
• Expensive but ultimately through litigation in the
federal circuit (subject matter jurisdiction over
patents) and can be reviewed by SCOTUS
• Cease and desist letters

23. Infringement
• Literal: includes everything from an original patent
that was infringed upon
• Doctrine of equivalents: May not be exact copy but
functions in substantially the same way; Lesser
standard than literal but still the same outcome:
Infringement. Is this good policy? Why or why not?

24. Defenses
• Not infringed: There are differences in the two
patents
• The original patent is invalid or unenforceable due
to obviousness or issues with the patent prosecution
itself

25. Remedies
• Damages and attorney’s fees
• Treble damages (up to three times in order to
punish)
• Injunctions to stop the infringement
• No criminal prosecution or fines like copyright;
Why?

26. Trade Secrets
• Critical intellectual property protection in the 21st
century involves protecting information. Why?

27. Knowledge as asset
• Information and knowledge form the
bedrock/foundation of our economy
• How things are made, what the ingredients are,
what information is used to make decisions etc. all
have immense value and implications
• Patents, trademark and copyright cannot cover and
protect all valuable information

28. Trade secrets
• Virtually any and all information that provides
economic value to business can be classified as a
trade secret
• Broader and less defined than patents or other IP
• Why?

29. Governing law
• The Uniform Trade Secrets Act—State law that has
been adopted by virtually all states protects
business information that is not generally known,
would be difficult to lawfully acquire and the owner
of which has made reasonable attempts to keep it
secure
• Economic Espionage Act of 1996—Gives federal
law enforcement powers to investigate and judiciary
the right to punish those who steal secrets

30. Why do we have trade
secrets law?
• Innovation
• Efficiency
• Ethics
• Even to prevent things like nepotism and cronyism

31. Obtaining and Maintaining
Trade Secrets
• No real process
• If it meets the requirements of the statutes (hard to
find information that you tried to protect) and
someone steals it, you sue and/or FBI investigates
• Cheap
• No limit on duration
• Good as a backup protection (especially software
since only first 25 lines need to be placed in
copyright applications)

32. Limits
• Doesn’t protect you from someone who
simultaneously or subsequently invents the same
thing on their own
• A third party could independently develop the
process and then patent; leaving you as the original
holder of the secret as a patent infringer!

33. Trade secrets litigation
• Asserting trade secrets rights in court:
• Information qualifies
• Reasonable measures were made to keep secret
• Information was misappropriated/acquired improperly
• Acquisition by improper means:
• Theft
• Bribery
• Breach or inducement to breach contract or
agreement
• Espionage (including electronic)

34. Defenses
• Reverse engineering (not a defense to patent
infringement obviously but a defense to trade secret
since it is acquisition by a ‘proper’ means
• Information was never secret
• First amendment right to post information (matter of
public or private concern is the litmus test for this
defense) Why? What policy is being served here?

35. Remedies
• Damages and attorney’s fees including treble
damages
• Injunctions
• TRO’s
• Criminal enforcement (in the case of espionage)