Exclusive Rights: Issues in Intellectual Property Law

By Eugene Hertzberg

Bill Gates said, Intellectual property has the shelf life of a banana. No one can deny the fact that intellectual property and its creation, protection, and management, has become a major area of concern for individuals and companies worldwide. Unprotected intellectual property has the shelf life of a banana, or perhaps even less. Intellectual property is inherently in the public domain, unless the government provides legal protection. Protected intellectual property is a valuable exclusive right.
This book explores the exclusive rights associated with intellectual property by highlighting issues in copyright law and orphan works, music piracy and the Recording Industry Association of America, patent law and the development of the Segway, patent licensing and litigation between Xerox Corporation and Palm Incorporated, as well as metadata and the role of intellectual property lawyers.

• Language: English
• Publisher: AuthorHouse
• Release date: Nov 30, 2011
• ISBN: 9781467869669

Eugene Hertzberg

Eugene Hertzberg is a lawyer admitted to practice in New York, New Jersey and the District of Columbia. He previously published The Rise of Media, a book on communication methods, which was ranked among the top 200 history and criticism books on Amazon.com. He currently lives in New York City.

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Contents

INTRODUCTION

CHAPTER ONE

CHAPTER TWO

CHAPTER THREE

CHAPTER FOUR

CHAPTER FIVE

CHAPTER SIX

WORKS CONSULTED

ABOUT THE AUTHOR

Intellectual property has the shelf life of a banana.

—Bill Gates

To my parents, with love and gratitude.

INTRODUCTION

The United States constitutional basis for intellectual property grants Congress the power, 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. Intellectual property is inherently in the public domain, unless the government provides legal protection. Additionally, intellectual property is only exclusive property for a prescribed period time.

Bill Gates said, Intellectual property has the shelf life of a banana. No one can deny the fact that intellectual property and its creation, protection, and management, has become a major area of concern for individuals and companies worldwide. Unprotected intellectual property likely has the shelf life of a banana, or perhaps even less. Conversely, protected intellectual property is valuable for many years. In general, property is commonly associated with something that is visible, whether it is personal property or real estate. However, in law, property is something that can be owned.

This book explores the exclusive rights associated with intellectual property by highlighting issues surrounding copyright law and orphan works, music piracy and the Recording Industry Association of America, patent law and the development of the Segway self-balancing transportation device, patent licensing and litigation between Xerox Corporation and Palm Incorporated, metadata and the law, as well as, the practice of law and ethics.

CHAPTER ONE

Copyright Law and Orphan Works

Copyright law protects original literary and artistic expression that is fixed in a tangible form. Copyright protection exists automatically when an original work is created. Under basic copyright law, a work is created when it is fixed in a tangible medium of expression for the first time. Orphan works are copyrighted works where the owner is unknown or cannot be found. Works can become orphaned for a number of reasons. Works become orphaned because the owner sold the rights to the work and did not register the transfer, the owner did not register the work initially, or the owner died and his heirs couldn’t be located. Problems arise when future creators want to use that work but fear that they will have to pay a huge amount of money in damages if the owner emerges. In such a situation, the work becomes inaccessible for reprinting, adaptation, or other future uses, since the owner is not present to negotiate or grant a license. The addition of a safe harbor provision to copyright law would allow nonprofit institutions to use orphan works for a limited period of time without fear of unbudgeted financial exposure, if the copyright owner emerges and claims infringement.

Since 2005, efforts have been underway to solve the orphan works problem to ensure that libraries, museums, historians, book publishers, filmmakers, musicians and other artists can make use of works still under copyright when their owners cannot be found after a diligent search. Many organizations have proposed that the law should allow use of an orphan work if the user searched for the copyright owner in good faith, and with reasonable diligence but failed to find the owner to obtain permission.

Copyright law seeks to strike a balance between the rights of the creators and the rights of users of copyrighted works. See, Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 431-32 (1984) (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)). A safe harbor provision in the legislation covering orphan works would protect nonprofit institutional users like libraries, museums, public television stations and educational institutions. The current legislation gives these users protection from paying even reasonable compensation if they stop using the work. For example, the safe harbor would apply if a museum removed an orphan work from its website after a copyright holder reappears.

However, there are two provisions in the safe harbor section that deeply trouble nonprofit institutions. The first states that the safe harbor applies only if an orphan work is used without any purpose of direct or indirect commercial advantage. Yet, just because a museum may sell an exhibit catalogue that uses an orphan work in its gift shop doesn’t necessarily mean that it is using the work for commercial advantage. While indeed such sales are in commerce, they are used to fund only the nonprofit educational mission of the institution. A second provision requires that a nonprofit institutional user turn over any proceeds directly attributable to the use of the orphan work. This broad standard could make for all sorts of problems, even if the institution immediately ceases using the work. For example, a museum might be forced to give up admission fees from an exhibit which had an orphan work that it later removes.

The commercial advantage dichotomy concerns the unfairness that arises when a secondary user makes unauthorized use of copyrighted material to capture revenues as a direct or indirect consequence of copying the original work. Furthermore, the distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 562 (1985). Commercial advantage appears to occur when an act results in a direct or indirect advantage, benefit, or financial gain for a business or person.

Section 107: Fair Use

Whether the use in question is for commercial advantage is an explicit part of the first fair-use statutory factor of the U.S. Copyright Act of 1976: the purpose and character of the use, including whether such use is of a commercial nature. 17 U.S.C. §107(1). The language of the statute makes clear that the commercial purpose of a work is only one element of the first factor enquiry into its purpose and character. 17 U.S.C. §107(1). If the use is for profit, with commercial gain as its primary goal, it is less likely to fall within the fair use doctrine. The phrase including whether such use is of a commercial nature or is for nonprofit educational purposes was added to this first prong of section 107’s four-part fair use test by the House Judiciary Committee shortly before passage of the Copyright Act of 1976.

Courts will not sustain a claimed defense of fair use when the secondary use can fairly be characterized as a form of commercial exploitation, i.e., when the copier directly and exclusively acquires conspicuous financial rewards from its use of the copyrighted material. The goals of copyright law are not always best served by automatically granting injunctive relief. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 (1994) (rap group’s musical parody of Roy Orbison’s Oh, Pretty Woman may be fair use). The parties, authors and publishers, may enter into an agreement allowing continued electronic reproduction of the authors’ works and if necessary the courts and Congress, can draw on numerous models for distributing copyrighted works and remunerating authors for their distribution. See, e.g., 17 U.S.C. §118(b).

Education

While it would seem obvious that the purpose and character of photocopying multiple copies for classroom use is educational and noncommercial, courts have held that educational copying by a commercial photocopy business was a commercial undertaking because the actual photocopying of work selected by educators was performed by for-profit vendors. In Basic Books, Inc. v. Kinko’s Graphics Corp., Kinko’s was held to be infringing copyrights when it photocopied book chapters for sale to students as coursepacks for their university classes. 758 F. Supp. 1522 (S.D.N.Y. 1991). The copying was for commercial purposes, and not for educational purposes. The court found a direct effect on the market for the books, because the coursepacks competed directly with the potential sales of the original books as assigned reading for the students. The court specifically refused to rule that all coursepacks are infringements, requiring instead that each item in the anthology be subject individually to fair-use scrutiny. See, e.g., Princeton University Press v. Michigan Document Services, Inc., 99 F.3d 1381 (6th Cir. 1996) (a private copy shop created and sold coursepacks and was found to have acted outside the limits of fair use. When performed by commercial shop, copying is infringement even if professors select the coursepack materials).

Courts have held the mere fact that a use is educational and not for profit does not insulate it from a finding of infringement. Even nonprofit entities can stand to profit from their infringing activities. See, e.g., Television Digest, Inc. v. United States Telephone Association, 841 F. Supp. 5, 9-10 (D.D.C. 1993) (finding nonprofit national trade association’s duplication and distribution of the copyrighted newsletter was not nonprofit use); Marobie-FL, Inc. v. National Ass’n of Fire Equip. Distribs., 983 F. Supp. 1167, 1175 (N.D. Ill. 1997); (even where a defendant is a non-profit organization and d[oes] not receive any compensation for placing the [copyrighted material] on its web page its conduct may still be considered commercial).

Nonprofit status is not a license to infringe the rights of copyright owners. See, e.g., Marcus v. Rowley, 695 F.2d 1171, 1175 (9th Cir. 1983) (the first factor favored the plaintiff, even though it was uncontroverted that [defendant’s] use [incorporating a substantial portion of plaintiff’s copyrighted work into a booklet prepared by defendant, a school teacher, for use in her classes] was for a nonprofit educational purpose). The court held that a defendant could not assert a fair use defense. Id. at 1175-76.

In MacMillan v. King, the district court was presented with the question of fair use in an educational setting. 223 F. 862 (D. Mass.1914). The defendant acted as a private tutor and prepared typewritten outlines of the week’s lessons that were written to mirror the content of plaintiff’s textbook and often contained quotations from the textbook. None of the outlines were ever sold and the defendant claimed that the fee charged for the tutoring sessions was the same whether or not an outline was prepared for the session. With respect to the argument that the copying was permissible because it was done in furtherance of educational pursuits, the court was unable to believe that the defendant’s use of the outlines is any the less infringement of the copyright because he is a teacher, because he uses them in teaching the contents of the book, because he might lecture upon the contents of the book. Id. at 867.

In Encyclopedia Britannica Educational Corp. v. Crooks, the court restrained a nonprofit educational services corporation from videotaping copyrighted films, making copies, and distributing them to public schools. 447 F. Supp. 243 (W.D.N.Y. 1978). The court reasoned that the fair use defense was inapplicable despite the clear nonprofit educational purpose of the program because the taping of entire copyrighted films was too excessive. Id. at 52. As the Crooks court noted, the infringing activity did not involve an isolated instance of a teacher copying copyrighted material for classroom use but concerns a highly organized and systematic program for reproducing videotapes on a massive scale. Id.

As emphasized by the court in Marobie-FL nonprofits can benefit by making unauthorized copies of copyrighted works. In that