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Deck 2: Protection of Intellectual Property Assets Through Patent and Copyright Law
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Deck 2: Protection of Intellectual Property Assets Through Patent and Copyright Law
1
Thurston Designs manufactures printed fabric for use in upholstery, draperies, and other home design applications. Thurston filed for a copyright registration on one of its designs, an abstract hexagonal honeycomb pattern, indicating that the design had been made as a "work for hire." Fabric printed with that design carried the following designation: "© 2008 Thurston Designs."
One of Thurston's competitors, Crandall Fabrics, produced a fabric with a design that is very similar, if not identical, to Thurston's honeycomb. Thurston filed for copyright infringement, and Crandall defended by stating that Thurston was not entitled to ownership of the copyright under the work-for-hire provision of the Copyright Act because the design had been created by a free-lance artist, not an employee.
The facts indicate that one of the two owners of Thurston, Anna, worked with an artist, Tomas, in creating the copyrighted design in 2008. Tomas worked with Anna on several other designs in 2008 as well over a period of seven months. At the end of seven months, Tomas ceased working for Thurston and moved to a different city.) Tomas reported to work at Thurston almost every day, generally working from 1:00 to 4:00 p.m., and conducted all of his work for Thurston on its premises. Thurston had hired several individuals like Tomas in the past. Typically, such individuals are recent graduates of design schools and the practice in the industry is not to consider them the owners of the intellectual property rights that might arise in the designs that they work on.
Anna had conceived of the honeycomb design and had played around with the design by laying out pieces of real honeycomb. Anna was unable to prepare the design herself, however, as she is not skilled at drawing. She asked Tomas to do a pencil drawing of her lay-out. Anna was not satisfied with the initial drawing that Tomas prepared, and had a conversation with Tomas in which she offered several corrections. She wanted the design less refined and more free-form. She made photocopies of the drawings that Tomas subsequently prepared and cut and pasted them on paper to approximate the look that she wanted. Anna then had Tomas prepare additional drawings based upon her efforts.
Anna stood over Tomas for four of the six hours he spent on the drawings, instructing him on when and where to change his drawing. After the drawing was complete, Anna picked colors from Japanese silk books containing over 500 colors and told Tomas how to color the drawings. She had him alter the color scheme several times before she was satisfied with the results.
Tomas was paid $75 per day for his efforts on this and other projects. He was paid by check on a weekly basis. Although Tomas was under the impression that he did not receive employee benefits or have taxes withheld, the other owner of the firm, Ronald, who handled the business affairs, testified in court that Tomas received normal benefits, including disability and worker's compensation insurance, that income taxes and social security taxes were withheld from his pay, and that Thurston paid the employer's share of the social security taxes on his behalf. Tomas did not receive medical benefits.
Should Crandall prevail on its defense? Explain thoroughly.
No. Under Section 201b) of the Copyright Act, the employer or person for whom a work for hire was prepared owns the copyright in the materials. Section 101 defines a "work for hire" as either 1) a work prepared by an employee within the scope of his or her employment; or 2) a work that falls within one of 9 specified categories, provided the parties agree in a written document that the work will be a work for hire. Thus, we need to determine whether the fabric design in controversy was a work for hire. If it was, Thurston owns the copyright and Crandall's defense fails. If not, Tomas owns the copyright and Crandall can successfully overcome Thurston's allegation of copyright infringement.
There is no evidence of a written agreement between Tomas and Thurston, so we know that the second definition of a work for hire will not apply even assuming that the fabric design fell within one of the specified categories, which it apparently does not.) The question therefore becomes whether Tomas was an employee in which case the design was a work for hire and the copyright belongs to Crandall) or whether Tomas was an independent contractor in which case the copyright in the design belongs to Tomas).
To determine whether a hired party is an employee, we look generally to common law principles of agency and specifically to the Reid factors laid out by the Supreme Court. According to the Supreme Court, we must consider the hiring party's right to control the manner and means by which the product is accomplished. Among the factors to be considered are: 1) the hiring party's right to control the manner by which the product is accomplished; 2) the skill required; 3) the source of the instrumentalities and tools; 4) the location of the work; 5) the duration of the relationship between the parties; 6) whether the hiring party has the right to assign additional projects to the hired party; 7) the extent of the hired party's discretion over when and how long to work; 8) the method of payment; 9) the hired party's role in hiring and paying assistants; 10) whether the work is part of the regular business of the hiring party; 11) the provision of employee benefits; and 12) the tax treatment of the hired party.
When we apply these criteria to these facts, it is clear that Tomas qualifies as an employee. Several factors support this result. The first factor the hiring party's right to control the manner by which the product is accomplished) leans heavily toward finding Tomas an employee, as Anna clearly exercised a great deal of control over the manner in which he executed this design standing over him directing the work, correcting the work, etc.). Similarly, it is likely though not clear from the facts) that Thurston provided the tools by which the project was accomplished factor three). It is clear that the work occurred at Thurston's location factor 4). Thurston had the right to assign additional projects to Tomas factor 6) and apparently controlled the hours of his work factor 7).
The second factor the skill required) leans toward finding Tomas an independent contractor as Anna indicated she hired him because she could not draw herself. On the other hand, Tomas was a recent graduate and while he was in a skilled trade, he was not particularly experienced within that trade.
The fifth factor is inconclusive: it would appear that Tomas left after a short time on his own initiative as opposed to his services no longer being required by Thurston. The eighth factor is also inconclusive as we have no evidence regarding Tomas' ability to hire assistants although it doesn't seem too likely based upon the description of his job).
Taken as a whole, we should conclude that Tomas was an employee. The work was therefore was a work for hire and Thurston was entitled to the copyright. Crandall's defense to the infringement claim thus fails.
The facts indicate that one of the two owners of Thurston, Anna, worked with an artist, Tomas, in creating the copyrighted design in 2008. Tomas worked with Anna on several other designs in 2008 as well over a period of seven months. At the end of seven months, Tomas ceased working for Thurston and moved to a different city.) Tomas reported to work at Thurston almost every day, generally working from 1:00 to 4:00 p.m., and conducted all of his work for Thurston on its premises. Thurston had hired several individuals like Tomas in the past. Typically, such individuals are recent graduates of design schools and the practice in the industry is not to consider them the owners of the intellectual property rights that might arise in the designs that they work on.
Anna had conceived of the honeycomb design and had played around with the design by laying out pieces of real honeycomb. Anna was unable to prepare the design herself, however, as she is not skilled at drawing. She asked Tomas to do a pencil drawing of her lay-out. Anna was not satisfied with the initial drawing that Tomas prepared, and had a conversation with Tomas in which she offered several corrections. She wanted the design less refined and more free-form. She made photocopies of the drawings that Tomas subsequently prepared and cut and pasted them on paper to approximate the look that she wanted. Anna then had Tomas prepare additional drawings based upon her efforts.
Anna stood over Tomas for four of the six hours he spent on the drawings, instructing him on when and where to change his drawing. After the drawing was complete, Anna picked colors from Japanese silk books containing over 500 colors and told Tomas how to color the drawings. She had him alter the color scheme several times before she was satisfied with the results.
Tomas was paid $75 per day for his efforts on this and other projects. He was paid by check on a weekly basis. Although Tomas was under the impression that he did not receive employee benefits or have taxes withheld, the other owner of the firm, Ronald, who handled the business affairs, testified in court that Tomas received normal benefits, including disability and worker's compensation insurance, that income taxes and social security taxes were withheld from his pay, and that Thurston paid the employer's share of the social security taxes on his behalf. Tomas did not receive medical benefits.
Should Crandall prevail on its defense? Explain thoroughly.
No. Under Section 201b) of the Copyright Act, the employer or person for whom a work for hire was prepared owns the copyright in the materials. Section 101 defines a "work for hire" as either 1) a work prepared by an employee within the scope of his or her employment; or 2) a work that falls within one of 9 specified categories, provided the parties agree in a written document that the work will be a work for hire. Thus, we need to determine whether the fabric design in controversy was a work for hire. If it was, Thurston owns the copyright and Crandall's defense fails. If not, Tomas owns the copyright and Crandall can successfully overcome Thurston's allegation of copyright infringement.
There is no evidence of a written agreement between Tomas and Thurston, so we know that the second definition of a work for hire will not apply even assuming that the fabric design fell within one of the specified categories, which it apparently does not.) The question therefore becomes whether Tomas was an employee in which case the design was a work for hire and the copyright belongs to Crandall) or whether Tomas was an independent contractor in which case the copyright in the design belongs to Tomas).
To determine whether a hired party is an employee, we look generally to common law principles of agency and specifically to the Reid factors laid out by the Supreme Court. According to the Supreme Court, we must consider the hiring party's right to control the manner and means by which the product is accomplished. Among the factors to be considered are: 1) the hiring party's right to control the manner by which the product is accomplished; 2) the skill required; 3) the source of the instrumentalities and tools; 4) the location of the work; 5) the duration of the relationship between the parties; 6) whether the hiring party has the right to assign additional projects to the hired party; 7) the extent of the hired party's discretion over when and how long to work; 8) the method of payment; 9) the hired party's role in hiring and paying assistants; 10) whether the work is part of the regular business of the hiring party; 11) the provision of employee benefits; and 12) the tax treatment of the hired party.
When we apply these criteria to these facts, it is clear that Tomas qualifies as an employee. Several factors support this result. The first factor the hiring party's right to control the manner by which the product is accomplished) leans heavily toward finding Tomas an employee, as Anna clearly exercised a great deal of control over the manner in which he executed this design standing over him directing the work, correcting the work, etc.). Similarly, it is likely though not clear from the facts) that Thurston provided the tools by which the project was accomplished factor three). It is clear that the work occurred at Thurston's location factor 4). Thurston had the right to assign additional projects to Tomas factor 6) and apparently controlled the hours of his work factor 7).
The second factor the skill required) leans toward finding Tomas an independent contractor as Anna indicated she hired him because she could not draw herself. On the other hand, Tomas was a recent graduate and while he was in a skilled trade, he was not particularly experienced within that trade.
The fifth factor is inconclusive: it would appear that Tomas left after a short time on his own initiative as opposed to his services no longer being required by Thurston. The eighth factor is also inconclusive as we have no evidence regarding Tomas' ability to hire assistants although it doesn't seem too likely based upon the description of his job).
Taken as a whole, we should conclude that Tomas was an employee. The work was therefore was a work for hire and Thurston was entitled to the copyright. Crandall's defense to the infringement claim thus fails.
2
Luther Kirkey owns the copyright on a musical composition, "Michigan Winter Blues." Li Advertising Services LAS) has produced a radio advertisement for one of its clients. The advertisement has a background melody a tune identical to Michigan Winter Blues. LAS had hired Margaret Nero, a composer, to write the music for this advertising spot, and Nero had provided LAS with this background melody.
a. Should Nero be held liable for copyright infringement?
Yes. Although Nero acted in good faith, the evidence nonetheless indicates that Nero had infringed upon Kirkey's copyright. We would apply the access plus similarity test. Nero clearly had access to the copyrighted work she admitted this in court) and the work she produced was identical to that of Kirkey's copyrighted work thus meeting the "substantial similarity" test). The fact that her copying was inadvertent and unintentional does not relieve her of liability for copyright infringement.
b. Might Kirkey have a cause of action against LAS? If so, on what grounds?
Yes. Kirkey could sue for vicarious liability. This arises where the defendant: 1) had the right and ability to supervise the infringing acts of another and 2) had an obvious and direct financial interest in the exploitation of copyrighted materials. That certainly seems to apply to LAS, who had the ability to supervise the activities of the composer it hired and who had an obvious and direct financial interest in the music she created.
a. Should Nero be held liable for copyright infringement?
Yes. Although Nero acted in good faith, the evidence nonetheless indicates that Nero had infringed upon Kirkey's copyright. We would apply the access plus similarity test. Nero clearly had access to the copyrighted work she admitted this in court) and the work she produced was identical to that of Kirkey's copyrighted work thus meeting the "substantial similarity" test). The fact that her copying was inadvertent and unintentional does not relieve her of liability for copyright infringement.
b. Might Kirkey have a cause of action against LAS? If so, on what grounds?
Yes. Kirkey could sue for vicarious liability. This arises where the defendant: 1) had the right and ability to supervise the infringing acts of another and 2) had an obvious and direct financial interest in the exploitation of copyrighted materials. That certainly seems to apply to LAS, who had the ability to supervise the activities of the composer it hired and who had an obvious and direct financial interest in the music she created.
Kirkey has sued Nero for copyright infringement. Nero testified in court that she did not deliberately copy Michigan Winter Blues. She admitted, however, that she owned a recording of the song and though she said she had not listened to it in several years, it was at one time one of her favorites. The court believed her testimony that she had not intentionally copied Kirkey's copyrighted work and that she had acted in good faith.
a. Should Nero be held liable for copyright infringement?
Yes. Although Nero acted in good faith, the evidence nonetheless indicates that Nero had infringed upon Kirkey's copyright. We would apply the access plus similarity test. Nero clearly had access to the copyrighted work she admitted this in court) and the work she produced was identical to that of Kirkey's copyrighted work thus meeting the "substantial similarity" test). The fact that her copying was inadvertent and unintentional does not relieve her of liability for copyright infringement.
b. Might Kirkey have a cause of action against LAS? If so, on what grounds?
Yes. Kirkey could sue for vicarious liability. This arises where the defendant: 1) had the right and ability to supervise the infringing acts of another and 2) had an obvious and direct financial interest in the exploitation of copyrighted materials. That certainly seems to apply to LAS, who had the ability to supervise the activities of the composer it hired and who had an obvious and direct financial interest in the music she created.
a. Should Nero be held liable for copyright infringement?
Yes. Although Nero acted in good faith, the evidence nonetheless indicates that Nero had infringed upon Kirkey's copyright. We would apply the access plus similarity test. Nero clearly had access to the copyrighted work she admitted this in court) and the work she produced was identical to that of Kirkey's copyrighted work thus meeting the "substantial similarity" test). The fact that her copying was inadvertent and unintentional does not relieve her of liability for copyright infringement.
b. Might Kirkey have a cause of action against LAS? If so, on what grounds?
Yes. Kirkey could sue for vicarious liability. This arises where the defendant: 1) had the right and ability to supervise the infringing acts of another and 2) had an obvious and direct financial interest in the exploitation of copyrighted materials. That certainly seems to apply to LAS, who had the ability to supervise the activities of the composer it hired and who had an obvious and direct financial interest in the music she created.
3
Acme Co. developed and made a no-drip faucet. Before it actually marketed the product, however, Acme investigated and discovered that its faucet infringed a patent belonging to Bigelow Co. Because Acme acted in error, without intending to infringe, and because it discovered that error prior to marketing the faucet, Acme is not liable for infringement.
False
4
Suffron Medical Supplies and Popiel Pharmaceuticals have each filed an application with the U.S. PTO for a patent on a new type of heart catheter. Suffron is able to prove that it was the first to file a patent application on this invention. Popiel is now able to show from its research scientists' records) that it was the first to actually create a working model of the catheter, although it filed its patent application two weeks after Suffron filed. Both parties invented independently within the last year. Who should receive the patent and why? Would your answer change if the application were being made in a foreign country?
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5
If you don't register your copyright prior to infringement by another party, you are limited to recovering only statutory damages.
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6
John Sivley is employed by Welega Corp. as a computer analyst and programmer. Welega manufactures precision testing equipment for pollution control devices. Sivley's job responsibilities involve the creation of programs and systems relating to accounting and personnel matters. Sivley is very interested in mechanical things, however. During his slow times at work, Sivley often goes into the laboratory and tinkers. In the course of this tinkering, Sivley discovered that by placing a simple but uniquely shaped twist into the intake tubing of a common air emission testing device, the accuracy of the device is greatly enhanced.
e.g., if there were an invention assignment agreement), Sivley would still have to file for the patent and then assign his rights to Welega.
e.g., if there were an invention assignment agreement), Sivley would still have to file for the patent and then assign his rights to Welega.
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7
Joan is an aspiring screenwriter and a business student at Michigan University Business School to boot. Joan has just written a great new screenplay about the business school experience. Joan is worried about whether her screenplay will be protected if she sends it to all of the major California studios. Joan wrote "Copyright, 2010, Joan Jovial" on the title page. Is Joan protected by copyright law if a studio steals her plan and passes it off as the studio's own?
A) Yes, copyrights arise automatically when the original work is created and fixed in a tangible medium.
B) No, the copyright only protects Joan within the state in which the work was created i.e., Michigan).
C) Yes, by correctly placing a copyright notice on the work, Joan has performed the act required to bring the work under the protection of the Copyright Act.
D) No, Joan must obtain a written waiver from the studios acknowledging her copyright in the work before she sends them her unsolicited play; otherwise, she automatically loses whatever copyright protection the law would otherwise grant her.
A) Yes, copyrights arise automatically when the original work is created and fixed in a tangible medium.
B) No, the copyright only protects Joan within the state in which the work was created i.e., Michigan).
C) Yes, by correctly placing a copyright notice on the work, Joan has performed the act required to bring the work under the protection of the Copyright Act.
D) No, Joan must obtain a written waiver from the studios acknowledging her copyright in the work before she sends them her unsolicited play; otherwise, she automatically loses whatever copyright protection the law would otherwise grant her.
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8
Master Maintenance, a janitorial supply corporation, hired West Central Ohio Internet Link, a third-party Web developer to redesign its website. Among the changes to be made, West Central was to include photographs of the janitorial supplies sold by Master Maintenance. Master Maintenance employees had the final approval over any changes made or proposed by West Central.
a. What is the significance of Corbis' copyright registration?
The copyright registration creates a rebuttable presumption of copyright ownership.
b. Is West Central liable for copyright infringement? Is Master Maintenance liable for copyright infringement? Explain thoroughly.
West Central is liable as a direct infringer because it copied protected work.
To establish vicarious liability for copyright infringement, Corbis must prove that Master Maintenance received a financial benefit from the direct infringement and had the right and ability to stop or limit the infringement but failed to do so.
Master Maintenance is liable for vicarious infringement because Master Maintenance had 1) received a direct financial benefit from the infringement, and 2) had the right and ability to stop the infringement-the company's employees were responsible for approving all changes made by West Central to the site-but failed to do so.
With regard to 1) the court stated, "Master used the copyrighted images for financial gain. Master redesigned its website for marketing purposes, to highlight its industrial cleaning business and attract new customers. Three of the four misappropriated images depicted janitorial and cleaning services. The use of copyrighted images to help draw customers can constitute a financial benefit." With regard to 2), the court stated: "Master had the right and ability to stop or limit the copyright infringement and failed to do so. Master employees . . . were responsible for approving changes to the site, including the placement of images. Even if Master did not supply the images at issue, it had the authority to approve or reject their use."
Based on Corbis Corp. v. Starr, 2009 U.S. Dist. LEXIS 79626 N.D. Ohio Sept. 2, 2009).
a. What is the significance of Corbis' copyright registration?
The copyright registration creates a rebuttable presumption of copyright ownership.
b. Is West Central liable for copyright infringement? Is Master Maintenance liable for copyright infringement? Explain thoroughly.
West Central is liable as a direct infringer because it copied protected work.
To establish vicarious liability for copyright infringement, Corbis must prove that Master Maintenance received a financial benefit from the direct infringement and had the right and ability to stop or limit the infringement but failed to do so.
Master Maintenance is liable for vicarious infringement because Master Maintenance had 1) received a direct financial benefit from the infringement, and 2) had the right and ability to stop the infringement-the company's employees were responsible for approving all changes made by West Central to the site-but failed to do so.
With regard to 1) the court stated, "Master used the copyrighted images for financial gain. Master redesigned its website for marketing purposes, to highlight its industrial cleaning business and attract new customers. Three of the four misappropriated images depicted janitorial and cleaning services. The use of copyrighted images to help draw customers can constitute a financial benefit." With regard to 2), the court stated: "Master had the right and ability to stop or limit the copyright infringement and failed to do so. Master employees . . . were responsible for approving changes to the site, including the placement of images. Even if Master did not supply the images at issue, it had the authority to approve or reject their use."
Based on Corbis Corp. v. Starr, 2009 U.S. Dist. LEXIS 79626 N.D. Ohio Sept. 2, 2009).
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9
A computer program developed by an in-house computer programmer for use in a random audit system instituted by a financial firm is a work-made-for-hire that would belong automatically to the firm, not the programmer.
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10
Which of the following is not a factor in the Copyright Act's fair use defense?
A) The purpose and character of the use.
B) The length of time between the original copyright and the infringement.
C) The nature of the copyrighted work.
D) The effect of the use on the potential market for or value of the copyrighted work.
E) All of the above are factors in the fair use defenses.
A) The purpose and character of the use.
B) The length of time between the original copyright and the infringement.
C) The nature of the copyrighted work.
D) The effect of the use on the potential market for or value of the copyrighted work.
E) All of the above are factors in the fair use defenses.
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11
MacVeigh Products, Inc. and Bryent Manufacturing have each independently developed a new valve for use in water softeners. Bryent filed for a patent one month before MacVeigh filed its patent application. MacVeigh can show from its scientists' records and log books that it conceived of the idea first and first created a working model of the valve. On these facts, MacVeigh is entitled to the patent, not Bryent.
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