Intellectual Property and Unfair Business Practices - Research Paper Example

Intellectual Property Student’s Name Student ID # Class Number Professor’s Name Educational Institution Date Intellectual Property Introduction The term ‘Intellectual Property’ (IP) refers to an abstract concept, which defines the products or processes resulting from creative processes of individual minds. More aptly, Miller and Cross (2012) have defined IP as the “property resulting from intellectual, creative processes (p. 206). Referring to the abstract nature of the term, Stallman (2010) argues that the best way to grasp the real meaning of IP is to treat its individual components (i.e. patents, copyright, trademarks and trade secrets) as individual processes instead of lumping them together. Notably, IP is everywhere around humankind ranging from the books people read, the music they listen to or sing along to, the sculptures and drawings they buy, the movies they watch and even the TV shows or documentaries that they watch. As one would expect, some of the IPs are not simple and effortless works of art; rather, some have taken years of research and development and hence the need to protect them from copyists and other people who would like to make cheap imitations of the same. The relevance of IP and the laws that guard it are important in the contemporary globalized world, where technology is making it easy for people across different countries to access and even use innovations by other people. While some innovators may succeed in guarding the details that go into developing their innovations, others may be disadvantaged by the mere fact that imitators can easily investigate and reproduce their inventions. IP laws are thus important in safeguarding the intellectual properties of the latter group since justice demands that people benefit from their efforts. To put the IP case into perspective, this paper is organized into sections, which include a brief summary of what IP protection in law is and the different IPs covered. The paper will briefly discuss how IP laws affect the contemporary business environment, and will make reference to the Apple-Samsung case, where the former sued the latter for alleged infringement on IP rights. IP protection The need to protect peoples’ intellectual property is enshrined in article 1(8) of the US Constitution. In law, IP is mainly protected through copyrights, trademarks, trade secrets and/or patents (utility and design) (Miller and Cross, 2012). Within the US, the infringement of copyright, trademarks or patents have legal ramifications if the offended party litigates on the issue. With globalization and enhanced internet technologies however, IP has seized to become an issue that can be handled within a country’s borders; hence, the US (and other countries especially in Europe), are pursuing international agreements that will enhance the protection of IP on a global scale (Leaffer, 1990-1991; Miller & Cross, 2012). Lately, the US introduced two controversial bills- namely ‘Stop Online Piracy Act (SOPA), and Protect IP Act (PIPA)’ into Congress and Senate respectively in a bold step to protect US-based online intellectual property (Newman, 2012). Although millions of protesters petitioned the US lawmakers against making passing such bills into laws, the fact that they had been drafted was testament of the urgent need that governments and individuals have to protect their IP in a globalized and internet-connected world. The US legislators have powers under article 1 section 8 of the Constitution to pass laws that protect and promote useful arts and science by awarding inventors and authors the exclusive rights to use and benefit from their discoveries and writing (Besen & Raskind, 1991). Protecting different types of IP Generally, a trademark is a “distinctive mark, motto, device or emblem that a manufacturer stamps, prints, or otherwise affixes to goods produced” for purposes of making them distinct, and /or making the origins of the same products known (Miller & Cross, 2012, p. 207). People who do not own the trademark cannot use it, since they may mislead consumers and other stakeholders into believing that the product is a production of the genuine trademark owner. In law, trademarks are meant to protect the identity that is responsible for creating or producing specific goods or services, and the goodwill that the product, logo, design, smell, sound, color or phrase represent. Apple is a trademark in itself, as are other trademarks in its range of products, which include the iPad, the iPhone, iTunes, iPods and the Macintosh computers and laptops. Trade secrets are on the other hand defined as “any formula, pattern, or device or compilation of information” used in business, thus providing the business owner a competitive advantage over other investors in the same business line (Holland et al., 2007, p. 10). To keep a trade secret, the owner must make reasonable efforts to shield its confidentiality. As and when the trade secret owner needs to share it with other people, a confidentiality agreement or what is commonly known as a non-disclosure agreement must be signed between the secret owner and the person receiving the same. The law protects trade secrets by making their theft or their unauthorized use illegal. To adjudicate on cases relating to trade secrets, courts first determine if indeed the trade secret holder took considerable effort to keep the secrets confidential. During such processes, the court looks into actions that the trade secret owner may have taken including entering into non-disclosure agreements, consulting agreements, confidentiality agreements, or employment agreements that forbid the misappropriation or revelation of trade secrets. The other protection of intellectual property under law involves copyrights. As the most common form of IP protection, copyrights are meant to “protect original works of authorship, which are fixed in any tangible medium of expression” (Holland et al., 2007, p. 11). Such include written work, music, dramatic works, pictures, graphics, sculptures, motion pictures, and recorded sounds among other varying ranges of audiovisual. Computer programs (software and codes) are also protected by copyright, in addition to user interfaces and design features. As discussed later in this essay, Apple sued Samsung for alleged breach of copyright especially in regard to its user interfaces and design features of the iPad, which it (Apple) argued that were replicated or at least copied in part on Samsung’s Galaxy tabs (Levine & Kolker, 2012). In law, a copyright owner holds the exclusive mandate to authorize the “reproduction, distribution, public performance, and display” of the copyrighted material or work (Holland et al., 2007, p. 11). Finally, Patents are the other form of protection given to intellectual property. Usually, patents are classified either as utility patents or design patents. Utility patents are meant to protect “processes, machines, manufactures, or compositions of matter, or any new and useful improvement thereof” (Holland et al., 2007, p. 12). To qualify for protection in law, utility patterns must not only be new, they must also be non-obvious and useful. Design patterns on the other hand are meant to protect new, original, and/or ornamental designs made on articles of invention. Unlike copyright which is automatically obtained once a person uses or publishes their creative works, patents are granted upon application for the same from the patent office. The Apple and Samsung Case In 2011, Apple Inc., a US-based multinational company, which produces electronic communication gadgets, filed a law suit against Samsung Electronics, a Korean-based multinational, which produces a wide range of electronic gadgets. Apple accused Samsung of copying “the look, design, and user interface” of its iPad and iPhone on the latter’s Galaxy line of products that include smart phones and tablets in an alleged breach of copyright. The software in question is Android, which is manufactured by Google for commercial purposes. According to Levine and Kolker (2012), Apple initially filed 16 claims against Samsung, accusing the latter of what it called “slavish copying” of its designs. The initial complaint stated thus: ‘Instead of pursuing independent product development, Samsung has chosen to slavishly copy Apple’s innovative technology, distinctive user interfaces, and elegant and distinctive product and packaging design in violation of Apple’s valuable intellectual property rights…. Samsung has made its Galaxy phones and computer tablet work and look like Apple’s products through widespread patent and trade dress infringement. Samsung has even misappropriated Apple’s distinctive product packaging” (Apple Inc.’s Complaint, 2011, p. 2). In what seemed like a revenge litigation, Samsung sued Apple for the alleged infringement of 10 patents, which include the 3G technology and wireless connectivity technology. The two lawsuits were filed in April 2011. One month later in May 2011, Samsung requested Apple to provide it with the iPad and iPhone designs in order to compare it with its own product features, as a way of determining if indeed it had infringed on Apple’s trademarks and patents. In August 2011, a court in Germany slapped Samsung with an injunction barring it from further sales of the Galaxy Tab 10.1 in the European Union with the exception of the Netherlands. This ban was closely followed by a similar ban in Australia in October 2011. In November 2011, Samsung launched a revenge suit against Apple and tried to get a court injunction against iPhone 4S, claiming that Apple had illegally copied the source code used in the device (Buck, 2011). The case in Australia was however postponed until March 2012, and is hence pending by the time of this essay’s writing. Currently, the Apple-Samsung lawsuit has expanded to 20 lawsuits in nine different countries. All indications suggest that this will be a protracted legal battle that will probably last more than a year before a conclusion on the matter is attained. Following the Apple-Samsung case, one gets the impression that there is no clear winner. This is mainly because the two companies rely on each other in business, with Samsung being a major components supplier for Apple. In fact, Buck (2011) states that Apple paid Samsung a total of $8 billion for the purchase of semi-conductor supplies. Their business dealings aside, the litigation is a perfect example of how companies can protect their competitive advantages derived from IP through legal mechanisms. Unfortunately, and as has been noted by Levine and Kolker (2011), the details of the Apple-Samsung litigation are for the most part shielded from the public for purposes of protecting the trade secrets that are brought to the fore during the proceedings. However, it is obvious that Apple wanted the court to order Samsung to not only stop the alleged infringement on its patents and trademarks pursuant to 28 U.S.C §1338 (a); 28 U.S.C § 1338 (b); and 15 U.S.C. §1114, but it also wanted it (Samsung) to pay for the losses it had incurred as a result of the infringement. In Apple Inc.’s Complaint (2011), the company stipulates that it would like the court to issue judgment declaring that Samsung had indeed infringed on its patents; issue an order stopping Samsung and any of its subsidiaries from further infringement on its patents; and issue a judgment awarding it compensatory damages for the infringement of patents. Apple also prayed for the court to compel Samsung to provide funds for corrective advertising in future, in addition to other punitive damages and restitution relief in favor of Apple (Apple Inc.’s Complaint, 2011). So far, and at least in the US, the courts failed to honors Apple’s preliminary injunction for patents D618, 667; D593, 087; and D504, 889 (See figure 1 below), arguing that in the case of the iPhone patents (D618, 667 and D593, 087), an earlier art patent (Japanese Patent 1241638) (see figure 2 below) similar to the same existed, hence raising validity issues pertaining to the two patents (Design Patent Case Alert, 2011). Figure 1: The three patents that Apple claims Samsung has illegally copied Source: Design Patent Case Alert (2011) Figure 2: The Japanese Patent no. 1241638 Source: Design Patent Case Alert (2011) However, since Samsung had not raised issues regarding the validity of the iPhone-related patents, the court would have granted it the injunction if it had proved beyond reasonable doubt that it would suffer ‘irreparable harm if an injunction did not issue” (Design Patent Case Alert, 2011, p. 1). Unfortunately, Apple did not meet the burden of proof, and hence the court failed to honor its request for an injunction. Overall, the Apple-Samsung case is a classic example of one company trying to fight for what it alleges to its bona fide intellectual property. As seen in the patent case for both the iPhone and the iPad, the court recognized that the patents had issues of validity especially considering that there were earlier versions of the patent elsewhere in Japan (in the iPhone’s case). In the iPad case, Samsung had brought to the court’s attention earlier tablets that looked so much like the iPad (i.e. the 1994 tablet manufactured by Fidler/Knight Ridder (See figure 3 below), and the 2002 PC TC 1000 tablet manufactured by HP-Compaq) (Design Patent Case Alert, 2011). Figure 3: The Fidler/Knight Ridder Tablet Source: Design Patent Case Alert (2011) Although not yet determined in full, the Apple-Samsung case brings to the fore important facts about IP. One such fact is that a patent owner needs to ensure that their claims of innovation are valid and that no earlier versions of the alleged innovations had existed. Additionally, the case brings to the fore the need for patent owners to prove to the court that infringement of patents or trademarks would cause them irreparable harm. In Apple’s case, the court’s decision not to issue an injunction as cited by Design Patent Case Alert (2011) was partly informed by Apple’s inability to show that Samsung would cause it irreparable harm if indeed it continued selling the Galaxy range of Smartphones and tablets. The Apple-Samsung case also provides some insights into the role that observers can play in litigation involving the infringement of patents, where the accused party is alleged of creating products that could confuse buyers into believing that the products are a representation of a specific trademark owner. Overall, it is obvious that the burden of proof lies with the entity claiming ownership of IP rights - hence raising the need for protecting the same through patenting, copyrighting, protecting trade secrets, and trade marking the distinctive types of IP. Conclusion The Apple-Samsung case is just a snippet of the complex legal issues that pertain to protecting intellectual property. The complexity of IP laws becomes more evident as one considers the global nature of technology, and the fact the global community is yet to harmonize IP laws. As the protests inspired by the SOPA and PIPA bills mentioned elsewhere in this paper indicate, there is no easy way of dealing with the IP issues especially in the globalized and internet-connected world. As seen in the case featured in this essay, even where the IP rights seem to be infringed, the burden of proving that indeed infringement did occur is not clear cut. Finally, intellectual property is a multi-trillion dollar industry, and it is no secret that many companies ranging from software manufacturers to innovation companies dealing with all sorts of products are living off the proceeds of IP. Infringement of IP rights is therefore something that is not only illegal, but also morally wrong. This aside however, there is no denying that companies especially in the technology sector are often modifying and enhancing previous innovations made by others. The Fidler/Knight Ridder and PC TC 1000 tablets manufactured in 1994 and 2002 respectively may have for instance provided inspiration to Apple while designing the iPad. This then raises issues as to whether Apple has any moral rights to prevent other tech companies from using the design. While this is a widely-debated issue especially in online platforms, the final verdict will only be delivered by the courts, and that too could take several years. Overall however, the fact that IP enjoys legal protection is a distraction to would-be imitators and copyists. However, it seems that governments, enterprises and individuals need to put in a little more effort in developing enhanced and cohesive legal frameworks for handling IP related cases. References Apple Inc.’s Complaint (2011). Apple Inc., v. Samsung Electronics. Northern District Court of California. Retrieved February 8, 2012 from http://cdn0.sbnation.com/podcasts/apple-samsung-lawsuit.pdf Besen, S. M., & Rasking, L. J. (1991). An introduction to the law and economics of intellectual property. Journal of Economic Perspectives, 5(1):3-27. Buck, S. (2011). Apple vs. Samsung: the patent wars, explained [inforgraphic]. Mashable Tech. retrieved February 8, 2012 from http://mashable.com/2011/11/23/apple-samsung-patent-wars/ Design Patent Case Alert (2011). Apple v. Samsung, 2011 U.S. Dist. Lexis 139049 {N.D. cal. Dec. 2, 2011}. Retrieved February 8, 2012 from: http://www.designpatentschool.com/assets/Case%20Alert%20-%20Apple%20v.%20Samsung.pdf Holland, C. J. et al. (2007). Intellectual property: patents, trademarks, copyrights and trade secrets. New York: Entrepreneur Press. Leaffer, M.A. (1990-1991). Protecting United States intellectual property abroad: toward a new multilateralism. Iowa Law Review, 76: 273-306. Levine, D., & Kolker, C. (2011). Insight: Apple vs. Samsung lawsuit full of secret combat. Reuters. Retrieved February 8, 2012 from http://www.reuters.com/article/2011/12/02/us-apple-samsung-secrecy-idUSTRE7B030420111202 Miller, R. L., & Cross, F. B. (2012). The legal environment today: business in its ethical, regulatory, e-commerce and global setting. Mason, OH: Cengage Learning. Newman, J. (2012). SOPA and PIPA: Just the Facts. PCWorld. Retrieved February 8, 2012 from http://www.pcworld.com/article/248298/sopa_and_pipa_just_the_facts.html Stallman, R. (2010). Did you say ‘intellectual property’? It’s a seductive mirage. GNU Operating System. Retrieved February 8, 2012 from http://www.gnu.org/philosophy/not-ipr.html Read More