Illinois Law
Illinois Intellectual Property & Computer Law
- Intellectual Property & Computer Law
Intellectual Property & Computer Law
The creative ideas generated by businesses are among their most important strategic competitive weapons. This creative output is afforded protection under the law, but if not properly managed, a company's ideas can be used by others and result in a loss of competitive advantage. The law gives different protection to different categories of intellectual property. Which category applies depends on the particular subject matter in question. This chapter summarizes three types of intellectual property protection: copyright, patents, and trademarks; and includes some information unique to computer law.
Copyright
Coverage
Various things can be copyrighted: literature, drama, music, sound recordings, computer software, advertising copy, motion pictures, choreography, pantomimes, and architectural works. What all of these items have in common is an original expression of an idea. Copyright applies only to the expression of the idea, not the idea itself. Whether something infringes on a copyright is difficult to discern; thus, a great deal of case law has been generated on the subject. For example, in a written work, outright plagiarism--that is, the exact copying of words--is infringement, but a copyright does not prevent others from using the facts and ideas used in that work.
Copyright ownership is separate from the subject matter of the copyright. For example, if a person buys a painting from an artist, he or she buys the painting only and not the copyright. If the buyer makes copies of the painting and sells them, the buyer is infringing on the artist's copyright. Copyright gives the creator of the work the exclusive right to reproduce, perform, display, and distribute copies of the work, and to prepare other works based on the copyrighted work. An owner of a copyright may sell one, some, or all of these exclusive rights. For example, an author of a novel might sell the movie rights to one person and the paperback rights to another. Not everything can be copyrighted, however. Among things not eligible for copyright protection are ideas, procedures, methods, names, slogans, works not fixed in a tangible form, and works made up entirely of public information, such as standard calendars and height and weight charts.
Duration
Copyright protection originates from the time the work is created; it does not have to be published in order to receive copyright protection. There are no applications to fill out in order to have copyright protection. Copyright protection has a limited duration; the time period depends on when the work was created and whether it was published. Generally, works created on or after January 1, 1978, have copyright protection from the time of creation throughout the creator's life, plus an additional 50 years. For works made during the course of employment, the duration of copyright is 75 years from publication or 100 years from creation, whichever
is shorter.
Owner
The owner of a copyright typically is the creator of the work. However, if a person is employed by another and creates the work while on the job, the copyright is owned by the employer, not the employee. This is known as "work made for hire." If a person hires an independent contractor to create a work, he or she does not necessarily own the copyright despite the fact that they paid the independent contractor for creating the work. In this situation, the parties should put in writing who owns the copyright and whether the work is work made for hire.
Notice and Registration
As stated previously, copyright protection arises when a work is created. It does not require registration and, for works created after March 1, 1989, it does not require a copyright notice on the work. However, a person has the option to give notice that the work is copyrighted and register a copyright. It is a good idea to place the copyright notice on all creative works. If there is an infringement of a copyright, a court will not allow the party who infringed to claim that he or she did not know that the work was copyrighted if a notice was placed on the work.
A copyright notice contains three parts:
- The word "Copyright," the abbreviation "Copr.," or the © symbol
- The year the work first was published
- The name of the copyright owner
Besides placing a copyright notice on an original work, a person also may register the copyright. Registering a copyright is not required, but it provides three benefits: it creates a presumption that the copyright claim is valid, it allows the possibility of an award of attorney fees and statutory damages in an infringement case, and it is a prerequisite to bringing a suit for copyright infringement.
Registering a copyright is relatively straightforward. The registration should be done within three months of publication. A person must complete an application supplied by the Copyright Office of the Library of Congress, and send the form to the Office with a filing fee and copies of the work. The number of copies to be supplied depends on whether the work has been published, whether the work has been published outside the United States, or if the work is a contribution to a collective work.
Fair Use
Although a copyright gives its owner exclusive rights, fair use of a copyrighted work is not considered an infringement of copyright. Fair use includes copying for purposes such as news reporting, teaching, research, and comments and criticisms. Factors to be considered in determining whether use of a copyrighted work is fair use include the purpose of the use, whether the use is for profit, the amount of the work used, and the effect of the use on the value of the work. There also are exceptions for libraries and teachers.
Patent
Patent Categories
An invention must be new, useful (except for a design patent, which must be ornamental), and not obvious in order to be granted a patent. There are three categories of patents--utility patents, design patents, and plant patents. A utility patent is granted to anyone who invents or discovers any new or useful process, method, machine, manufacture, composition of matter, or any improvement thereof. For example, a new industrial or technical process may be patented. A utility patent is granted for a term of 20 years from the filing date of the application if the application was filed on or after June 8, 1995. A design patent is granted to anyone who invents a new, original, and ornamental design for an article of manufacture. The appearance of the article is protected under this patent. A design patent is granted for a term of 14 years. A plant patent is granted to any person who invents or discovers and asexually reproduces any distinct and new variety of plant. The plant variety can be any mutant, hybrid, or newly found seedling, except a tuber-propagated plant or a plant found in an uncultivated state. A plant patent is granted for a term of 17 years.
Application
In order for a patent to be granted to an inventor, an application for a patent must be filed. Once a patent has been applied for, the inventor may proclaim that his or her product has a "patent pending," but this does not provide any protection against infringement. It only serves as a warning to others that a patent may be forthcoming. A patent application is made to the Patent and Trademark Office, which is part of the United States Department of Commerce. A patent application is confidential; however, if a patent is granted, the application becomes public information.
The application includes three components. First, the applicant must submit a written document that describes the invention and states the claims of the inventor. The statement must be in such detail that a person knowledgeable in the subject matter area could build and use the invention based on the information provided. The claims must state the patented characteristics of the invention. This document also must contain a sworn declaration by the inventor that he or she believes himself or herself to be the original and first inventor of the application's subject matter. The second component of the application is drawings that illustrate the invention. An inventor should supply as many drawings as necessary to describe the invention. The third requirement is the filing fee. The fee may be reduced by 50 percent if the patent applicant is an individual, small business, or nonprofit organization as defined in 37 C.F.R.1.27.
After a patent application is filed, a patent examiner reviews the application. The examiner may allow the patent, reject the application, or object to the application. A rejection means that the examiner believes the invention should not be granted a patent, while an objection means that there is a problem with the application. A problem with the application can be fixed--an inventor can amend the patent application to address the concerns raised by the examiner. An inventor can appeal a patent rejection and such rejections are frequently overcome.
A patent will not be granted if the invention was in public use or on sale in the United States more than one year before filing the application. Even an inventor's own use of the invention may bar him or her from receiving a patent if the use occurred more than one year before the application filing date. A patent also will not be granted if the invention was the subject of a patent application in another country that has matured more than one year prior to the filing of a patent application.
Patents are granted only to the inventor; however, an inventor may sell the rights to the patent or sell a license whereby another can pay a fee to use the patented invention. The license may be exclusive or nonexclusive. If the rights to a patent are assigned, the assignment should be recorded with the Patent and Trademark Office.
Before an inventor applies for a patent, a search should be done to determine whether a patent already has been granted for the invention. This search may be expensive. The Public Search Room of the Patent and Trademark Office is the primary source of information. Also, Patent and Trademark Depository Libraries have been established at the Illinois State Library in Springfield and at the Chicago Public Library.
When a patent is granted, an inventor must pay an issuance fee. Also, maintenance fees for the patent are paid three times during the patent period to keep the patent in force.
Patent law is a highly specialized area of legal practice. The Patent and Trademark Office maintains a register of attorneys and agents who have met the legal, scientific, and technical requirements to practice patent law, and who have agreed to uphold high standards of professional conduct.
Trademark
Rights to a trademark arise when a trademark is used or an intent-to-use application to register the mark is made and the applicant proves use of the mark. There are a number of advantages to federal registration. A registered trademark gives the owner exclusive rights to use the trademark as long as it is used to identify goods or services. As is the case with copyrights, federal registration is not necessary for a trademark to be protected. A trademark is good from the first time a mark is used in interstate commerce such as when goods bearing a mark are shipped across state lines. A mark may lose its trademark significance if it becomes the generic name for the product. For example, the terms "nylon" and "escalator" were trademarks that became generic. A trademark may be registered with either the United States Patent and Trademark Office or the Illinois Secretary of State. Registration in one office does not register the trademark in the other office.
Anyone considering adopting a trademark should first have an attorney conduct a trademark search of both state and federal registers to discover if there are already any similar trademarks registered. If there are, it is best to pick a different trademark. It is wise to avoid the possibility that someone with a similar trademark will file a suit for infringement. Once a person has adopted a trademark, he or she must continue to use it in order to maintain their rights to the trademark. Trademark protection can be lost if the trademark is not used for three consecutive years.
Federal Trademark Registration
As previously mentioned, federal registration of a trademark is not required; however, there are two basic benefits of registering. First, the owner of a federal trademark registration is presumed to be the owner of the trademark. Second, the owner of a federal trademark registration is entitled to use the trademark nationwide for the goods and/or services covered by the registration.
An application to register a trademark must be filed in the name of the owner. The owner can be an individual, partnership, or corporation. An owner who has already begun using a trademark may file an application based on that use, and someone who has not yet used a trademark may make an application based on an intention to use the trademark. Use of a trademark in promotion or advertising before the trademark is used on the products does not qualify as use. If an owner files an application based on intent to use the trademark, he or she must later use the trademark and submit proof of this use before the trademark will be registered. The application consists of a completed application form, a drawing of the mark, and a filing fee. There is a separate filing fee for each class of goods or services listed in the application. The Patent and Trademark Office maintains a list of over 40 class categories, from furniture to clothing to chemicals. If the application is based on the use of the trademark, the application must include three identical examples per class showing actual use of the trademark. A separate application must be filed for each trademark a person wishes to register. The applicant must be careful when identifying goods and services, because an application may not be amended later to add goods or services not within the scope of the original identification.
After an application is filed, it is reviewed to determine if it meets the minimum requirements. If it does, the application is given a serial number and the applicant is sent a receipt. If minimum requirements are not met, the application and the fee are returned to the applicant. After an application is accepted, a trademark attorney examines the application to determine whether the trademark should be registered. If the attorney decides that the trademark should not be registered, a letter is sent to the applicant stating the grounds for refusal. The applicant must respond to any objections within six months or the application will be abandoned. If the applicant's response does not overcome the attorney's objections, a final refusal will be issued. A common reason for refusing to register a trademark is the likelihood of confusion between the applicant's trademark and a trademark that already has been registered.
If there are no objections to the application or the objections have been overcome, the attorney will approve the trademark for publication in the Official/Gazette, a weekly publication of the Patent and Trademark Office. Any party who believes that it may be harmed by registration of the trademark has 30 days to file an opposition to the trademark, which is heard before the Trademark Trial and Appeal Board.
If no oppositions are raised, the application continues in the registration process. The next step depends on whether the application is based on actual use of the trademark or intent to use the trademark. If the application is based on the actual use of the mark, the Patent and Trademark Office registers the mark and issues a registration certificate.
If the application is based on the party's intent to use the trademark, the Patent and Trademark Office issues a Notice of Allowance. The applicant has six months from the date of the notice either to use the trademark and send to the Office a Statement of Use with three samples of use per class, or to request an extension of time. If the Statement of Use is filed and approved, the Patent and Trademark Office then issues a registration certificate. There is an additional fee per class for these filings.
As mentioned, before a person begins using a trademark or applies for federal registration of a trademark, a search should be done to determine whether there are any conflicting trademarks. The application fee is not refunded if a conflicting trademark is found. Also, one would not want to spend resources on a trademark that is not available. Searches may be done at the Public Search Room of the Patent and Trademark Office or at the Patent and Trademark Depository Library at the Illinois State Library in Springfield or the Chicago Public Library. The term of a federal trademark registration is ten years, with ten-year renewal terms.
Besides registering a trademark, a person also may give notice to the public that trademark rights are claimed. The "TM" symbol or the "SM" symbol may be used by anyone to notify the public of the claim. Use of the registration symbol ® is permitted only when the trademark has been registered with the Patent and Trademark Office.
State Trademark Registration
A trademark also may be registered with the Illinois Secretary of State's Office and in any other state. A state trademark registration is not equivalent to federal registration. A trademark that is registered with the United States Patent and Trademark Office does not need to be registered with a state because federal registration gives the owner the rights to that trademark nationally. However, a party who has not registered a trademark federally may wish to register the trademark with the state. For example, if a person is operating a small business in Illinois and has no intention of expanding the business, he or she may consider registering the trademark with the Secretary of State to protect his or her interests only in the state of Illinois. State registration only provides limited protection in that state, so a person can have a trademark registered in Illinois and another person could legally use and register the same trademark in Michigan.
A trademark registration in Illinois takes less time and money than the federal registration. A party must submit an application to the state with the appropriate filing fee. A trademark registered in Illinois is protected as long as the trademark continues to be used. The initial term of a trademark registration is ten years with subsequent renewal periods. Registering an assumed name or a corporate name in Illinois is not trademark registration and does not provide trademark protection or guarantee that the name is available for use as a tradename.
Trade Secret Law
An attorney experienced in this area can advise on the steps appropriate for a particular business to take in order to protect its trade secrets. By maintaining a strict policy regarding the identification, communication, and use of trade secrets, a business generally can avoid problems before they start. Some practical means by which a company can help avoid misappropriation of its secrets include reminding employees about confidential communications before and after the discussion of a trade secret, asking employees to sign confidentiality agreements, and marking sensitive communications with the word "secret," or "confidential."
Computer Law
Computer Copyright, Patent and Trademark
Computer programs--or software--may be protected in the same way other intellectual property is protected. Computer programs may be patented in certain circumstances. The procedures for obtaining a patent on software are no different than those for obtaining a patent on anything else, and the same requirements apply. Software also can be copyrighted. Some of the issues discussed above, such as expense and delay, may make a copyright a more feasible option than a patent for developers of software. Again, the same issues arise with regard to copyrighted software as with other works: who owns the copyright, for example. Finally, businesses also should include computer programs within their general policies governing trade secret protection.
Computer Contracts
In a sense, a contract is a contract. Any contract, no matter what its subject, must include certain elements in order to become valid and enforceable. One party must make an offer, the other party must accept the offer within a reasonable period of time, and the contract must be supported by consideration. If one party does not comply with the terms of the contract, the other party may file a breach of contract lawsuit to enforce the contract's terms or to force the breaching party to pay damages. Contracting over computers is no different.
However, there are specific aspects of using, selling, buying, or operating computers and computer software that require specific types of contracts. A smart businessperson should be aware of the types of agreements or clauses within agreements that are particularly important with regard to computers.
Standard Contracts and Specific Clauses
As noted, many times computers will be the subject of contracts that differ only slightly from contracts concerning real estate, construction services, or sale of a business. People or businesses may contract to buy and sell computer hardware or computer systems. A business may contract with a computer maintenance service for inspection and service of all computers on a monthly or semi-monthly basis. Some companies may contract out all computer management to another company that is responsible for customizing the computer system to the business' needs, programming, and operation; even management of computer or data-processing personnel may be outsourced to such a company. Obviously, any of these negotiations should end in a sound and detailed contract that, like any contract, provides for liabilities and responsibilities in the event any problems arise.The fact that computer technology is changing at a staggering pace raises some important contract concerns. Computer terminology may not be understood by the business people or representatives negotiating the contract. All terminology should be defined in the contract. A good rule to follow in this regard is not to assume anything. A company vice president should not presume, for example, that if he or she is not familiar with a particular phrase, the best strategy is just to let it pass and rely on the manager of information services to know what it means. As is true in the most basic of contracts (in which even basic terms such as "buyer" and "seller" are defined), all computer terminology should be defined. This is especially important because computer terms may change even during the life of the contract.
The rate of change in computer technology also means that there are few applicable laws, standards or governing regulations. Many industry contracts rely on industry-wide standards to define the parameters of acceptable conduct under a contract, or look to industry custom to determine whether a party fulfilled his or her responsibilities. Again, because of the rapid rate of growth, what is standard in the computer industry today may have changed entirely by tomorrow. Computer contracts should detail how disputes will be resolved, what standards will be used, who has responsibility for licensing or acquisition of software, whether there are warranties on goods, whether service contracts are included, whether damages are liquidated, and "act of God" or disaster contingencies.
Software Licensing
One kind of contract specific to computer contracts is software licensing. Because of the unusual nature of these kinds of arrangements, the law of software licensing is uncertain. The problem arises from the nature of the software itself. Most users of software know how to obtain software without actually purchasing or renting it. Pirating software in this way obviously is illegal, and manufacturers have discovered ways to make pirating more difficult. More of a concern for developers of software is how to prevent buyers from copying software they purchased legitimately, then returning it for a refund. Manufacturers have dealt with this problem by selling software (and its license) in "shrink-wrapped" packages. A box of this type contains a license that is visible through the package, and clearly states that the person who opens the package agrees to the licensing terms. Known as "tear-me-open," "box-top," or "self-executing" licenses, these documents are a way for manufacturers to attempt to avoid the problem of the buyer obtaining the privilege of use that is the true value of the commodity sold. As any good businessperson would guess, however, an agreement that is "self-executing" by its nature may not contain the requisite contract elements to make it enforceable. Using box-top licenses may not be the most reasonable way for manufacturers to license their software. All of these issues should be addressed, prior to creating a licensing agreement, with an attorney whose expertise is in staying abreast of developments in this area.
Other Software Contract Issues
Other peculiar issues arise when contracting over computer software. Sale and licensure of software by the manufacturer to the user is only one, albeit significant, issue. As discussed above, contracts for software development must address copyright and patent issues. Companies in the business of developing software should write into all employment agreements that the business retains all rights and ownership of developed products. Agreements with independent contractors or separate businesses to develop software likewise must address the question of ownership. Buyers of software should ascertain whether there are restrictions on use. Warranty clauses, including those governed by the Uniform Commercial Code, may need to be included or expressly disclaimed. A specific type of express warranty, called a "reliability warranty," is particularly applicable to software. Basically, this warranty ensures that a computer system will continue to be available for the user to carry on his or her business. A seller of a computer system would warrant that it will repair or replace malfunctioning equipment, and that it will do so within a specified period of time. Usually, there is also an economic penalty for failure to do so. Without such a warranty clause, a business could be seriously injured if a computer system went down for any significant period of time. Basic equipment leases, noncompete clauses, confidentiality agreements, and damages clauses also should be addressed.
Tort Liability
Buyers, sellers, and users of computers should be aware of unique liability issues in computer law. As is true of computer contracts, the basic elements of tort causes of action are no different in principle than in any other substantive area. But, because computers by their nature create potential for widespread and substantial damage, some special issues arise.
Negligence liability can attach to a computer manufacturer. As in any negligence action, the plaintiff must prove that the defendant owed a duty, the defendant breached the duty, the breach caused the injury, and actual damages resulted. The extent of any duty is based on a reasonable person standard. In the world of computer litigation, an interesting problem arises concerning duty. Because judges and juries usually are not computer experts, they may have unrealistic expectations of how reasonable computer manufacturers should act. Resulting unrealistic standards of care may result--that is, too much or too little may be expected of manufacturers. For example, application software is, by its nature, prone to problems. To what extent is problematic software the responsibility of a manufacturer? The average jury may not benefit from knowing that a manufacturer has a duty to create application software as a reasonable manufacturer would. Another element of negligence law that is particularly troublesome as applied to computers is causation. Locating the source of a problem may require costly experts; even so, the complex interplay of computer software, computer hardware, networks, utilities, viruses, and human error may make locating the party who should be held liable nearly impossible. Other negligence questions that may arise concern liability for inaccurate data and liability for failure to use state-of-the-art technology.
Liability of individuals for failing to exercise reasonable care may arise in many aspects of computer business. Malpractice liability akin to professional malpractice liability (such as that faced by doctors or lawyers) has not developed as a viable way of holding people culpable for computer negligence. This is true in part because it is difficult to define a "computer professional" and because no universal standards exist to measure error. This does not mean, however, that service providers cannot be found responsible for negligence. Based in the common law theory of liability for reasonable reliance on representations, for example, service providers such as programmers, suppliers, electronic bulletin board operators, systems operators, or even auditors may find themselves liable for negligent failures.
Finally, a business owner may find that the computer system he or she thought would make running the business simpler actually creates potential for liability. Businesspersons should be aware that breach of security in internal computer systems, failure to keep data confidential, and even inadequate training of personnel who access computers may ultimately cause problems for which the business may be liable. A computer lawyer will be able to advise a business how to create and comply with standards that will help it avoid such liability.
Computer Crimes and Abuses
Computer crime is an area of the law in which the government appears to be playing catch-up with the growth in new technologies. Some variations of computer crime are so new that there are no specific laws to address them, and general laws in existence do not seem adequate in proscribing the particular illicit activities.
Conduct specifically outlawed by federal statute includes gaining unauthorized access to confidential national security information; obtaining, without authorization, the financial information of a financial institution or a credit card issuer; intentionally accessing, without authorization, a computer of a federal department or agency; accessing a federal interest computer without authorization, to further a fraud, obtain anything of value, or alter, damage, or destroy information; and trafficking in a password through which a computer is accessed, without authorization, if the computer affects interstate or foreign commerce or is used by or for the government.
Illinois law also recognizes the crimes of computer tampering, aggravated computer tampering, and computer fraud. It is illegal for a person knowingly and without authorization to access a computer, program, or data; access and damage or destroy a computer, program, or data; or to insert a "program" (virus) into a computer knowing that it contains information that will damage or destroy that computer or alter, delete or remove a program or data. A person who commits computer tampering and knowingly disrupts government or other public services or causes great bodily harm to a person is guilty of aggravated computer tampering. Computer crimes carry severe penalties, especially as the value of the property damaged or stolen increases in value.
Resources
United States Department of Commerce, Patent and Trademark Office, Washington, DC 20231. General Information: (703) 308-HELP. Automated Information: (703) 557-INFO. TDD: (703) 305-4487.
For Illinois trademark registration information, contact the Illinois Secretary of State, Department of Business Services, Trademarks Section, 213 State Capitol, Springfield, IL 62756, (217) 785-3285.
Patent and Trademark Depository Libraries, where searches can be made for conflicting patents or trademarks, are located in Illinois at the Chicago Public Library, 400 South State Street, Chicago, IL 60605, (312) 269-2865 and in Springfield at the Illinois State Library, 300 South Second Street, Springfield, IL 62701-1976, (217) 782-5659.
Volunteer Lawyers for the Arts publishes Trademark: How to Name a Business and Product, which is available from Nolo Press by sending $29.95, plus $5.00 shipping and handling, to VLA Publications, One 53rd Street East, Sixth Floor, New York, NY 10022.
Computer Law Handbook: Software Protection, Contracts, Litigation, Form, David F. Simon, American Law Institute, American Bar Association, Philadelphia, PA, 1990.