# Copyright Basics

## Changes in Copyright Law

### Learning Objectives

After completing this section, you will be able to
1. See how copyright law has continually adapted to technological change.
2. Note how digital entertainment industries in particular have been affected by changes in copyright law.
Throughout the more than 226-year history of copyright in the United States, technological innovation and changes in consumer behavior have continuously forced Congress and the courts to embrace new forms of copyrighted media and
      new ways of distributing and consuming it.

### The Copyright Act of 1976

As noted earlier, the nineteenth century saw copyright expand to include a variety of new technologies, such as mechanical reproductions of musical compositions (player pianos and phonographs), photography, and
      eventually motion pictures. But those changes were small compared with the enormous advances of the twentieth century. The invention of radio, broadcast television, cable television, the video cassette recorder (VCR), personal computers, computer
      software and video games, digital audio recorders, compact discs, the digital video recorder (DVR), the Internet, iTunes media players, and now the streaming of music and movies all offered consumers new forms of creative content—and offered creators
      a new means of reproducing and distributing it. Each of these required an adjustment in U.S. copyright law.
Take the advent of cable television in the 1960s and 1970s. Early court cases like

      in 1968 and

      in 1974 held that the rebroadcast of broadcast television shows over cable television systems did not constitute a “performance” and therefore did not infringe the copyright in those shows. The
      Copyright Act of 1976—the most significant revision of copyright law since 1909—remedied this failure to see cable broadcasts as performances and extended copyright protection to works performed over cable TV.
The
      Copyright Act of 1976
      made several other major changes to the law. It also codified “fair use” into the statutes rather than simply the common law, granted statutory copyright protection as soon as a work was reduced to a concrete form rather than only when registered,
      and began to bring the United States into compliance with international copyright law rather than continue to stand apart from it.
        Arthur R. Millerand Michael H. Davis,

### The Computer Software Rental Act of 1990

The next major copyright issue arose with the emergence of personal computer software in the 1980s. Software companies and independent developers lobbied Congress to curtail the illegal copying
      of copyrighted software. As a result, the Computer Software Rental Act of 1990 was passed, prohibiting the unauthorized rental, lease, or lending of a computer program for commercial gain. Individuals, however, could still make personal copies for
      their own use, and libraries were permitted to lend software.
        Library of Congress. (2003).

The hope was that this would curb the rampant software piracy then costing U.S. firms roughly $1 billion per year in lost sales and rentals. The law probably did slow piracy inside the United States. But by 2010, software piracy
      worldwide had grown into a $10 billion a year business.

### The Audio Home Recording Act of 1992

Hoping to prevent similar piracy in the emerging digital audio field, the Audio Home Recording Act of 1992 amended copyright law to require manufacturers and importers of digital audio recording
      devices to install technology to prevent the illegal copying of copyrighted music. It also mandated that royalties be paid to copyright owners for every device sold.
When it came to performance rights—one of the six exclusive rights of copyright owners—the last 150 years have witnessed major changes in the way musical performances are distributed and consumed. The American Society of
      Composers, Authors and Publishers (ASCAP) was formed in 1914 to develop a system whereby royalties could be obtained for composers whose songs were performed live—and later on, over the newly invented technology of radio. Today, 435,000 U.S.
      composers, songwriters, lyricists, and music publishers rely upon ASCAP to secure royalties for their work performed over TV, CD, and every new media that has come after radio.
The other three performing rights organizations are SESAC, formed in 1930; Broadcast Music, Inc. (BMI), formed in 1939; and SoundExchange, which in 2007 was granted the sole right by the Copyright Royalty Board to represent
      performers whose music airs on satellite radio (such as SIRIUS XM), Internet radio (like Pandora), cable TV music channels, and similar platforms for streaming sound recordings. The Recording Industry of America Association (RIAA), formed in 1952,
      represents record labels and music distributors and has played an important role in ensuring that their rights are respected even as new technologies for distributing recorded music have emerged.
The RIAA lobbied Congress to enact the
      No Electronic Theft Act of 1997, for example, which made it a criminal offense to reproduce or distribute music by electronic means (i.e., over the Internet). Nonetheless, by 2002, some 3.6 billion songs a month were still being
      downloaded illegally, thanks to music sharing sites like Napster, which had been launched in 1999 and at its peak facilitated the downloading (much of it illegal) of 80 million songs. Indeed, many college dormitory networks became overloaded with MP3
      musical file transfers.

At the time, many Internet pundits, enthralled with the misquoted notion that “information wants to be free” online, insisted that downloading technology made it impossible for musicians and their labels to enforce their copyrights
      on the Internet. For its part, Napster claimed that they should not be held responsible for any illegal downloading committed by users.
But the RIAA and musicians brought suits for contributory infringement. In court cases like

      and

        , judges and juries repeatedly found Napster guilty of infringement and it was forced into bankruptcy in 2002.
Music piracy still exists, of course. But in place of Napster, music consumers now have legal music download sites such as Apple’s iTunes music store that sell digital music with permission from, and appropriate royalties to, their
      copyright owners. Surveys show that most consumers don’t really want to steal music. They just want convenient, low-cost online access to it. Most consumers also appear to recognize that if music creators cannot make a living from their work, they
      won’t be able to keep making music.
Meanwhile, digital rights management (DRM) technologies had been developed that have the potential to limit the piracy of copyrighted content. Companies in various content industries lobbied Congress to pass the
      Digital Millennium Copyright Act of 1998 (DMCA). This law made it a crime to disseminate technology or services that could circumvent DRM measures used to control access to copyrighted movies, music, and books. It also increased penalties for copyright infringement on the Internet.

But in an appropriate concession to online services that merely hosted user content, the DMCA limited the liability of online services for copyright infringement committed by their users, so long as they acted to remove the
      offending content once informed of it.

### Viacom vs. YouTube

In 2007, however, Viacom filed suit against YouTube and its corporate parent Google for copyright infringement, claiming that the popular video-sharing site was committing “massive intentional copyright infringement”
      for not taking sufficient steps to prevent or remove some 160,000 unauthorized clips of Viacom’s entertainment programming posted by users. Google argued that the DMCA’s “safe harbor” provisions shielded them from liability for the actions of its
      users, and a district court judge ruled in favor of Google in 2010. But in April of 2012, a court of appeals vacated that decision and ruled that Viacom had presented enough evidence to warrant a trial. Viacom was seeking more than $1
      billion
      in damages from YouTube, but in March of 2014, the parties quietly settled the seven-year-old case.
A key factor in spurring the settlement is that Google has in the interim addressed the concerns of content owners like Viacom by creating a system that allows them to track their content when posted on YouTube and then request it
      be taken down or run with ads.

### Extending Copyrights

The same year that saw passage of the DMCA also witnessed the passage of the
      Sonny Bono Copyright Term Extension Act, which added an additional 20 years to the term of copyright—extending it for most works to the life of the author plus 70 years after the author is deceased. Critics called it the “Mickey
      Mouse Protection Act” because it effectively extended the copyrights of many of the characters and content of the Walt Disney Company, which lobbied strongly for the bill. They argued that copyright law was historically designed to serve a public
      purpose and ought to defer to the public interest, as it has throughout U.S. history. As the
      New York Times
      put it:
Even a staunch defender of intellectual property rights like Professor Richard Epstein of the NYU School of Law—he was rated one of the top legal thinkers of modern times by the journal
      Legal Affairs—believes that the copyright term of life- plus-70s years is too long.
“My own view is that no commercial property right should ever be tied to life, and the extra 70 years is far too long,” he argues. “It has the potential to create an anti-commons that deprives the public of its rights to freely
      access cultural works. Copyrighted works should pass into the public domain after 28 years, which was the approach of the Founders.”
The debate over the Copyright Term Extension Act, not surprisingly, continues.
In the international sphere, meanwhile, the late twentieth century also saw the United States finally agree to the
      Berne Convention
      in 1988, joining the following year. The purpose of the convention is to ensure fair and reciprocal copyright protection for member nations. Although it did not create an international copyright per se, it did require the United States to amend its
      copyright law to comply with certain Berne provisions, such as a ban on registration as a condition of copyright. But overall, the convention facilitated the reciprocal cross-border protection of creative works while leaving most details of each
      nation’s copyright laws to member states.

One proposed bill that didn’t make it into law was the
      Consumer Broadband and Digital Television Promotion Act of 2002. It attempted to deal with continuing piracy of copyrighted works by requiring every medium and every device for the consumption of copyrighted works to implement
      digital rights management (DRM) technology. But the bill was considered too draconian—too
      1984, if you will—and failed to pass.
To be sure, many companies have voluntarily implemented elements of DRM technology, to the chagrin of many consumers. Some electronic book readers (e-books) limit the ability of users to read books only on those devices, preventing
      interoperability between Kindle and iPad e-book readers, for example. Some music labels install software on their CDs to prevent copying of the music. And some Blu-ray and DVD movie players do not allow for the creation of transformative copies. In
      fact, iTunes, a very popular way to manage music and other media, used to employ a DRM system that limited the transfer of songs to five authorized computers.
Groups like the Free Software Foundation argue that “The motive for DRM schemes is to increase profits for those who impose them, but their profit is a side issue when millions of people’s freedom is at stake.” But their argument
      is undercut by the simple reality that if content creators can’t make a living from it, most will stop creating and take day jobs to pay the rent. This has always been the copyright bargain in America—protection for the rights of creators but only so
      long as it serves the public interest.
And enabling creators to keep creating is clearly in the public interest.

### E-Books

A more legitimate concern regarding DRM is that, whatever its perceived benefits for publishers and distributors, it is holding back innovation and consumer rights in digital content industries. This is especially evident in the
      burgeoning e-book market, which exploded from barely 10 percent of U.S. book sales in 2011 to 30 percent of all book sales by 2013. But a growing number of e-book publishers have now concluded that unless they meet consumer demands to ease these DRM
      anti-piracy provisions, further growth could be constrained.

According to Microsoft’s Chief Intellectual Property Strategy Counsel Tom Rubin, a leading voice on this issue, that’s because DRM makes the e-book reader experience much less enjoyable and useful than that for printed books. According to Rubin:
Rubin says the fault here lies not in the technology, which already exists to enable these capabilities in e-books and also augment them with rich audio, video, and social media. Rather, it lies in the business arrangements
      underlying the publication and distribution of e-books.
The e-book you buy, for example, is often available from only one source—and usually only readable on one proprietary device. You can’t access it from any device you want, nor can you use the e-reader app of your choice. This
      balkanization of the market diverts resources from enhancing the user experience into defending the turf of incumbent players.
But it’s not just the balkanization of the market that hinders competition and innovation. Some publishers now believe that the digital rights management (DRM) controls they employ to prevent piracy are actually preventing many
      consumers from fully embracing e-books. After all, as many book buyers have angrily noted, you can’t even download the digital version of a print book that you’ve already purchased unless you pay a second time.

### Publishing DRM Free

In response to consumer complaints, some publishers have dispensed with DRM controls.
      Harry Potter
      author J. K. Rowling has launched her own website,
      Pottermore.com, to sell her e-books DRM free, enabling readers to enjoy them on any device they choose. Interestingly, the piracy of
      Harry Potter
      books has declined by 25 percent since DRM was dropped in 2012.
Also in 2012, Tor Books, a major science fiction publisher owned by MacMillan, went DRM free as well, with no apparent harm to its sales—and to the delight of its customers.
Then there’s the big U.S. tech publisher O’Reilly, which has been DRM free since its inception. O’Reilly, which has one of the most loyal customer bases in publishing, signed a deal on April 16 of 2013 with Elsevier, the world’s
      largest publisher of scientific and health information, to distribute more than 1,200 titles DRM free. (It also distributes all Microsoft e-books DRM free.)
“The consumer ebook market is an emerging and changing one, and we want to offer customers as many choices as possible,” explained Elsevier spokeswoman Suzanne BeDell.
And finally, although the prestigious Harvard Business Press still sells its books on Amazon with DRM restrictions, it recently started selling books on its own site DRM free.
These early publisher moves to dispense with DRM restrictions parallel what happened in the digital music industry a decade ago. For the first few years after the launch of the iTunes music store in 2003, piracy-wary music
      publishers required Apple to sell its songs with DRM controls that limited the kind and number of devices consumers could play them on.
But on February 6, 2007, Apple CEO Steve Jobs wrote an open letter to the industry urging music publishers to let iTunes sell music DRM free:
This, said Jobs, would obviously be “positive for the music companies.”
And sure enough, once publishers agreed to license digital music DRM free later that same year, the market exploded. In 2013, iTunes announced the sale of its twenty-fifth billionth song!
Ultimately, argues Rubin:

### Recent Copyright Laws

The debate over DRM in e-books is likely to be center stage in the copyright debate in coming years. In the meantime, it’s worth mentioning three other copyright-related laws that were passed during the last decade or so.
One, the Technology, Education, and Copyright Harmonization (TEACH) Act of 2002 enabled educators to use certain copyrighted performances and displays for educational purposes.
        Technology, Education, and Copyright Harmonization (TEACH) Act of 2002, Div. C, Tit. III, Subtitle C of the 21st Century Department of Justice Appropriations Authorization Act, Pub. L. No. 107-273, 116 Stat. 1758, 1910 (Nov. 2, 2002) Retrieved from
        http://thomas.loc.gov/cgi-bin/query/z?c107:S.487.ES.

      The bill was focused on the fast-growing arena of distance education, whose students number 12 million and are growing rapidly.
Also that year, the Small Webcaster Settlement Act of 2002 eased royalty burdens for small webcasters who don’t have the resources of the major content distributors.
        Derived from Small Webcaster Settlement Act of 2002 (SWSA), Pub. L. No. 107-321, 116 Stat. 2780 (Dec. 4, 2002) Retrieved from
        http://thomas.loc.gov/cgi-bin/query/z?c107:H.R.5469.ENR.

Finally, the Family Entertainment and Copyright Act of 2005 mandated fines and possible imprisonment for the unauthorized recording of motion pictures in theaters. It also enabled consumers to use new technologies to screen out or
      skip over some 14 different categories of objectionable content in movies played on DVD players and other devices.
        Family Entertainment and Copyright Act of 2005, Pub. L. No. 109-9, 119 Stat. 218 (Apr. 27, 2005), codified at various sections of Titles 17 and 18 U.S. Code. Retrieved from
        http://www.copyright.gov/legislation/pl109-9.html.


# Copyright Basics

## New Technology Challenges to Copyright

### Learning Objectives

After completing this section, you will be able to
1. See how a changing music industry has been affected by copyright.
2. Appreciate the challenges that continued technology advances may pose for copyright in the future.
One of the newest technology challenges facing copyright law concerns royalty rates for streaming music online. As it stands, royalty rates are much lower for music played over satellite and cable radio outlets like Sirius XM than
      they are for music streaming services like Pandora.

### Music Streaming

Rates are set by the federal Copyright Royalty Board (CRB), a three-judge panel, but currently they apply a different rate for streaming music than they do for satellite and cable music. Sirius pays about 8 percent of
      its revenue to record companies and artists. Pandora, however, claims it must pay a rate per song streamed that amounts to 44 percent of revenue. So it pushed for the introduction in September 2012 of the Internet Radio Fairness Act, which would make
      the rates for Internet radio companies the same as those for satellite and cable radio.
This bill was opposed not only by many musical artists and their organizations, but by many copyright experts as well. In November of 2012, a who’s who of musicians and singers—including stars from Motown, rock and roll, country,
      rap, and jazz—published an open letter in
      Billboard
      magazine opposing Pandora’s plan to cut artists’ pay and make more money, as they put it in the letter, “on the backs of hard working musicians and singers.”
In November of 2013, Pandora quietly abandoned efforts to seek legislation that would help reduce the royalties paid to rights holders. Instead of pursuing legislation, Pandora said it will focus its efforts on lobbying the CRB.
In early December 2015, the music industry waited breathlessly for the CRB’s decision on royalty rates. Pandora had petitioned the CRB to reduce the current statutory rate of 14 cents per 100 songs to 11 cents per 100 songs
      starting in 2016. But music labels and artists represented by a royalty collection organization called SoundExchange wanted the statutory royalty rate raised to 25 cents per 100 songs—an 80 percent increase—and then by 1 cent every year after that
      until 2020. Collectively, music streaming services have a combined listenership of 100 million people and are the fastest-growing revenue source for artists and music labels.

On December 16, 2015, in a victory for record labels and artists, the CRB ruled that online radio firms will have to pay 17 cents per 100 plays of songs through 2020.

### TV Streaming

Another new technology challenge to copyright involved television broadcasters and an upstart television service called Aereo that at one point rented dime-sized antennas for $8 per month that act like long-range rabbit
      ears to people with digital video recorders, enabling them to watch and record over-the-air network channels like NBC or Fox without paying the much-larger fees for cable or satellite service.
TV broadcasters argued that Aereo violated their copyrights by rebroadcasting their TV signals. Aereo, however, claimed that it was the subscribers who were doing the transmitting, and that Aereo merely rented a tool that enabled
      people to watch a private performance—much like they do when they tape a TV show and watch it in their living room.
The case, which had the TV and technology industries on edge, was decided in their favor on June 25, 2014, by the U.S. Supreme Court, which ruled that Aereo had infringed the rights of copyright holders. Five months later, Aereo declared bankruptcy.


# Copyright Basics

## Alternative Forms of Copyright

### Learning Objectives

After completing this section, you will be able to
1. Understand how alternative forms of copyright are emerging in today’s increasingly digital ecosystem.
Up to now, we have focused on traditional copyright situations in which an author usually pursues some sort of monetary gain in exchange for the use of their creative work as well as situations in which the author also wants to prevent any alteration of their work. But what if an author simply wants to get their work out before the broadest possible readership and monetary gain is not an issue? What if an author would welcome others adding to the original work? In these cases, there are new kinds of copyright licenses that may be employed by authors.

### Creative Commons

The development of the
      Creative Commons
      represents a voluntary private sector alternative to traditional copyright that coordinates the creation and consumption of content among a wide variety of individuals and institutions—all without a hint of government intervention. In doing so,
      Creative Commons captures a whole section of the market for which broad dissemination of content and not financial gain is key, which is something that could not be done as effectively by either traditional copyright or the public domain.
The Creative Commons License is currently available in six flavors:
All of these licenses require the work to be copyrighted because the Creative Commons license is based on copyright. Although Creative Commons licenses can provide authors with added opportunities to have their work distributed and
      used, these licenses do not allow authors to limit any of the rights otherwise available under copyright law, such as fair use.
Creative Commons licenses also cannot be revoked, which means that if copies of your work are distributed under a Creative Commons license, they will always be distributed that way. If, for example, you distribute your amazing new
      video under a Creative Commons license and it generates five million page views on YouTube—and then 20th
      Century Fox offers you a seven-figure deal for exclusive rights to distribute your video—you will not be able to prevent everyone on the planet from continuing to distribute your video for free on the Internet.

### Open Access

Another alternative copyright approach is called open access, founded by the Budapest Open Access Initiative in 2002. Open access encourages scholars to provide the fruits of their research online without expectation of payment.
        Chan, L., Cuplinskas, D., Eisen, M., Friend, F., Genova, Y., Guedon, J., Hagemann, M., Harnad, S., Johnson R., Kupryte, R., Manna, M., Rev I., Segbert, M., Souza, S., Suber, P., & Velterop J. (2002, February 24).

      The aim here is to open up scholarly research far more widely than is currently the case, but open access adherents face a key challenge in the fact that many scholarly articles are published in expensive journals as “works made for hire.” This means
      that the rights belong to the journals, not the authors. But open access supporters are working with publishers to try to overcome this limitation and create more opportunities for scholarly research to be made more widely accessible at lower cost.
Finally, open source software licensing also offers an alternative to traditional copyright. An open source license for computer software allows the source code to be used, modified, and/or shared under certain defined terms and
      conditions set by the Open Source Initiative, an educational, advocacy, and stewardship organization formed in 1998. An open source license allows end users to modify the source code for their own purposes. Open source licensed software is mostly
      available free of charge, though this does not always have to be the case.


# Copyright Basics

## Copyright in a Changing World

### Learning Objectives

After completing this section, you will be able to
1. Understand how copyright law is showing signs of strain today.
2. Realize that it may very well need to adapt to an increasingly mobile world.
Comprehensive copyright reform may soon be on the horizon. On March 20, 2013, Register of Copyrights at the United States Copyright Office Maria A. Pallante testified before the House Judiciary Committee that the time had come for
      a comprehensive review and updating of the Copyright Act.

According to Pallante:

The list of issues requiring attention is long, involving everything from copyright term and digital rights management restrictions on digital content to the legality of developing secondary resale markets for digital content as
      exist with traditional printed content.
The debates may be contentious, as they always are when intellectual property rights are involved. But U.S. copyright law has throughout our history demonstrated a remarkable ability to adapt to new economic, social, and
      technological realities, and there is no reason to doubt that it will continue to do so.


# Trademark Basics

## Core Concepts

### Learning Objectives

After completing this section, you will be able to
1. Understand trademarks and their properties.
2. Identify differences between trademarks and other intellectual property rights.
A
      trademark
      is an intellectual property right granted by a government to an individual, business, or legal entity that creates and uses a distinctive word, name, symbol, or device to distinguish its products or services from those from any other entity in the
      marketplace.
The original purpose of a trademark was to indicate the origin of goods and services. Trademarks thus protected the public by preventing mistakes, confusion, or deception by those who would “palm off” their goods as those of
      another. But it also served to protect the market and reputation (or goodwill) of the producers of goods. As modern markets evolved, trademarks also developed into guarantees of quality as well as potent marketing and advertising devices.

### Trademarks as Branding

Consider, for example, the role that Nike’s “Swoosh” logo plays in its $106 billion shoe, equipment, and apparel business. In 1971, Nike founder Phil Knight paid graphic design student Carolyn Davidson a mere $35
      to design the “Swoosh” logo for the fledgling new company. According to the Portland
      Oregonian
      newspaper, when Knight saw her design, he reportedly told her, “I don’t love it, but maybe it will grow on me.” Nike attorneys nonetheless registered the logo with the U.S. Patent and Trademark Office (USPTO) on June 18, 1971.
        Allen Brettman,
        “

Today, this one logo is estimated to be worth as much as $20 billion, and is recognized around the world as a symbol of Nike’s quality workmanship and design. Indeed, its vital role in protecting Nike’s market share and reputation
      explains why the company so strenuously protects its trademark rights from being infringed by counterfeiters. As for design student Carolyn Davidson, Phil Knight gave her Nike stock in 1983 that is today worth more than $850,000.

### Trademarks vs. Other Intellectual Property Rights

Trademarks share with other intellectual property rights the power to encourage and reward creative enterprise. Trademarks also share with patent rights and copyrights the public policy
      goal of marshaling the benefits of creative endeavor—in this case, the distinctive branding of one’s products and services from those of others—to the public good. They do this by protecting the consumer from deception and encouraging sellers to
      provide quality products.
But trademarks are different from other intellectual property rights in three key respects. In the first place, the legal foundation for U.S. trademark law comes not from rights expressly enumerated in the Constitution, as is the case with patent rights and copyrights. Rather, it lies in the Commerce Clause of the Constitution, which gives Congress the authority to regulate interstate commerce and enact whatever necessary and proper legislation is required to do that.
Trademarks are also different from other intellectual property rights in that they are not limited in duration. Patents and copyright are granted only for limited periods of time because society benefits by putting an invention or literary work into the public domain once the inventor or artistic creator has recouped the costs of innovation and been rewarded for the pioneering endeavor. Trademarks, however, never hinder the sales of other products or services, so they are granted in perpetuity so long as they are not abandoned by the trademark owner.

### Trademarks Mean Business

Finally, trademarks exist only in conjunction with commercial activity. An inventor may receive a patent for a new invention and never employ or “practice” that invention in a business or research endeavor.
      Similarly, an author can receive a copyright for an original literary or artistic work and yet never publish, display, or sell it. A trademark, however, cannot exist by itself, apart from commercial activity.
Thus a trademark cannot be obtained by mere adoption. It can only be acquired through commercial use or in anticipation thereof—i.e., through the sale of goods and services.


# Trademark Basics

## Early Trademark Systems

### Learning Objectives

After completing this section, you will be able to
1. Discuss the origins of trademarks.
2. Analyze examples of early forms of trademarks.

### Bronze Age Origins

Scholars of antiquity give Early Bronze Age potters the credit for creating the world’s first trademarks by imprinting their works with distinctive markings. We assume that these marks were meant to indicate the
      origin of a particular work or the identity of its craftsman, but the historical record is not conclusive on this point. But an examination of the potters’ seals found on Corinthian artifacts dating to 2000 BC suggests this is a reasonable
      supposition. Trade and commerce between the tribes and early civilizations of that era were expanding rapidly, and in order to be mutually beneficial, trade requires a certain amount of trust in the provenance and quality of goods. These early
      potters’ trademarks seemed to have served that purpose by distinguishing the goods of quality craftsmen from those of unknown or uncertain sources.
Trademarks have always been inextricably bound up with commerce. And as commerce grew and developed over the centuries, so did the use of trademarks. Marks have been found, for example, on works ranging from Egyptian pots to the
      swords of Roman blacksmiths. But it was in the medieval period, with the emergence of powerful craft guilds, that trademark usage really expanded. Their marks identified a work as being made by a particular guild or member of that guild, and
      therefore continued the long tradition of identifying the origin of goods. But medieval trademarks also served other functions. They became a means by which guilds could control the quality of work of fellow guild members and, because of a
      trademark’s association with quality, ultimately, a source of competitive advantage in the market.
        Arthur R. Miller and Michael H. Davis,

      Trademarks thus began to acquire something akin to the existential “moral rights” found in later copyright statutes—i.e., the right of a creator to defend the quality, originality, and “personality” of their work.

Trademark use in medieval times also acquired a public interest function. As Arthur R. Miller and Michael H. Davis note in
      Intellectual Property: Patents, Trademarks, and Copyright in a Nutshell,
      “Statutes dating back as early as the thirteenth century show that [trademark] was eventually recognized as having social consequence. These statutes were meant to protect the public by preventing the sale of unidentified goods whose quality could
      not be ascertained.”
One notable trademark from the time was that of Löwenbräu Brewery, which claims to have used its lion mark since its founding in 1383.
        Gary Richardson,

### Early Trademark Cases

Scholars had until only recently attributed the first reported trademark case in Anglo-American law to be
      Southern v. How,
      which was decided in 1618. This despite the fact that the case involved not a trademark but the sale of counterfeit jewels.
        McKenna, M.

      Its connection to trademark came from a reference by the presiding judge to an earlier, unnamed, and unreported case in 1584 involving a suit brought by a cloth maker against another cloth maker who had used his mark. That earlier clothier case, only
      recently discovered and now known as
      Sanforth’s Case,
      is now held to be the earliest reported trademark case in Anglo- American law. It establishes beyond a doubt that even 250 years before the Industrial Revolution, trademark infringement was viewed as a tort of deceit and a violation of the laws
      against unfair competition.
        Keith M. Stolte,

To quote from a contemporary 1656 legal report:
In the more than four centuries since then, as commerce and industry have evolved into an $80
      trillion
      a year global marketplace unimaginable to the people of
      Sanforth’s Case
      time, its verdict that trademark infringement is competition most unfair and demands redress still serves as the foundation and wellspring of worldwide trademark policies and statutes today.


# Trademark Basics

## U.S. Trademark Law

### Learning Objectives

After completing this section, you will be able to
1. Grasp the basics of trademark law.
2. Analyze notable trademark cases.
As the young United States rapidly developed its commerce and industry in the late eighteenth and early nineteenth centuries, propelled in no small part by the nation’s unusually democratic and effective patent laws (see
      Chapter 1, “Section 1.5: What the U.S. Patent System Wrought”), the states developed increasingly sophisticated and complex trademark laws. Eventually, however, the transformation of America’s many local and regional markets into
      a single, unified, national economy propelled Congress to try to federalize trademark law despite the lack of any express constitutional authority to do so. So Congress passed the first national trademark laws in 1870 and 1876. But in a set of three
      court challenges consolidated into a single appeal before the U.S. Supreme Court in 1879, Justice Samuel Freeman Miller ruled for the majority that the

      of the Constitution gave Congress no explicit authority to regulate trademarks, and declared the 1870 and 1876 trademark laws unconstitutional.
        See

### The Commerce Clause and the Lanham Act of 1946

Two years later, Congress instead acted under the

      of the Constitution to pass the Trade Mark Act of 1881. This first national trademark law, however, only regulated trademarks used in commerce with other nations and with Indian tribes. It wasn’t until 1905 that Congress passed another trademark
      statute regulating the use of marks within the United States.
Those two trademark laws were subsequently overhauled by the

        , which remains the principal law of the land on trademarks in the United States to this day.
        Harvard University. (2012).

      It broadened national registration of trademarks, and also gave owners of unregistered marks access for the first time to the federal courts. The act also established remedies such as bars on the sale or importation of infringing products, and
      required the renewal of trademarks every ten years to weed out the registry trademarks that are no longer in commercial use (known as the “deadwood” prevision).
        Op. cit., Miller and Davis.

After 119 years in business, for example, the world-famous retailer Woolworth’s went bankrupt in 1997 and its trademark was no longer protected. The 83-year-old Hostess Twinkies brand, however, was acquired by two private equity
      firms for $410 million because they see future profit in the iconic brand—and the customers who love it.

### Requirements for a U.S. Trademark

The requirement that a trademark must be actively used or intended to be used in commercial activity in order to be protected by law has been a fundamental feature of U.S. trademark law since its
      inception. The Lanham Act specifically requires applicants to submit “a verified statement that the mark is in use in commerce, specifying the date of the applicant’s first use of the mark in commerce and those goods or services specified in the
      notice of allowance on or in connection with which the mark is used in commerce.”
        15 U.S.C. §1051 Retrieved from
        http://www.law.cornell.edu/uscode/text/15/1051.

      A trademark is presumed to have been abandoned when its owner ceases to use it for three or more years, after which anyone else can register and use the mark.


# Trademark Basics

## The Four Types of Trademarks

### Learning Objectives

After completing this section, you will be able to
1. Identify the four types of trademarks.
2. Compare differences between types of trademarks.

### Can I Trademark That?

Before reading this section, please watch the overview video below covering the four types of trademarks and what they are used for, the subject matter of trademarks, and why trademarks are important—not just to their
      owners, but even more so, to the general public.
The term “trademark” is usually used to describe any of the four types of marks that can be registered with the U.S. Patent and Trademark Office. The two primary types of marks are
      trademarks
      and
      service marks. The two other marks—certification marks
      and
      collective marks—occur much less frequently and must meet different requirements for registration.
        United States Patent and Trademark Office. (2012, May 24). Trademarks. Retrieved from
        http://www.uspto.gov/inventors/trademarks.jsp

### Trademarks

Trademarks identify
      products—i.e., physical goods and commodities—that are either manufactured, produced, grown, or that exist naturally. A trademark is a word, name, symbol, or device—or combination of these—used to identify and distinguish the
      source of that product. Examples of trademarks include the Nike “Swoosh” symbol, the arched “M” for McDonalds, and the apple symbol with a small curved bite taken out of it for Apple Computer.

### Service Marks

Service marks are exactly the same in principle as trademarks except that these words, names, symbols, or devices identify and distinguish the source of a
      service. Examples of service marks include the sleek silver greyhound dog on Greyhound buses, and United Parcel Service’s brown shield emblazoned with the bold yellow letters “UPS.”

### Certification Marks

A certification mark is any word, phrase, symbol, or design—or a combination of any of these—owned by one party that certifies the goods and services of others when they meet certain standards or requirements.
        United States Patent and Trademark Office. (2012, March 09).

      A certification mark identifies either the nature of a product or service—for example, that it meets the quality standards needed to receive the “Good Housekeeping Seal of Approval”—or the
      origin
      of products or services, as in the certification mark “Washington State” given to apples grown in that state.

### Collective Marks

Collective marks come in one of two varieties: collective trademarks and service marks, and collective membership marks. A collective trade or service mark is any word, phrase, symbol, or design that is owned by a
      cooperative, association, collective group, or organization and is used by its members to indicate the source of goods or services.
        United States Patent and Trademark Office. (2012, March 09). Frequently Asked Questions About Trademarks. Retrieved from
        http://www.uspto.gov/faq/trademarks.jsp

      An example of a collective trademark is the “Girl Scouts” mark seen on cookies every February, or the designation “CPA” to identify the services provided by a Certified Public Accountant.
A collective membership mark, by contrast, is used to indicate that a person is a member of some organization, such as a trade union or an association like the Rotary Club, but is not used to identify the source of goods and services.


# Trademark Basics

## The Subject Matter of Trademarks

### Learning Objectives

After completing this section, you will be able to
1. Learn the subject matter of trademarks.
2. Analyze characteristics of various forms of trademarks.
As discussed, there are four types of trademarks: trademarks, service marks, certification marks, and collective marks. But what does it mean to say that a trademark may be a “word [or phrase], name, symbol [or design], or device.”
      The answers may in some cases surprise you.

### Words, Phrases, and Names

There is little confusion about what is meant by a trademarkable
      word, phrase,
      or
      name.
      The only point to remember here is that words, names, and phrases that are simply descriptive of the goods or services with which they are associated do not necessarily qualify for registration as a trademark.
        United States Patent and Trademark Office. (2012, August 09).

      They must be distinctive and indicate the origin of a product or service. What is meant by distinctive—and how distinctive they must be—will be discussed in the next section.

### Symbols and Devices

      Symbols
      and
      devices
      are where things start to get interesting in trademark law. The language of the Lanham Act does not specify what is meant by a “symbol” or a “device” that can be trademarked. The U.S. Supreme Court took careful note of that fact, ruling in 1995 that,
      “Since human beings might use as a ‘symbol’ or ‘device’ almost anything at all that is capable of carrying meaning, this language, read literally, is not restrictive.”

In the United States, therefore, trademarks can include almost anything that carries distinctive meaning and identifies the origin of products and services. This includes slogans, letters, numbers, logos, three-dimensional
      designs—even colors, scents, and sounds that indicate the source of a good or service to consumers.
        Henderson, C.

A trademarkable symbol can be a
      number. The number 5, for example, is a trademarked symbol of Chanel No. 5 perfume (No. 73788555). So is the number 31, which is the trademarked symbol of Baskin-Robbins 31 Flavors (No. 72172718).
No trademark can block the use of the numbers 5 or 31 in math. Nor have the courts allowed the trademarking of mere part numbers,
        See

      model numbers,
        See

      or grades,
        See

      because these are not distinctive enough and do not indicate the origin of the goods in question. Regular gas, also known as “87 octane,” also cannot be trademarked because it doesn’t tell you whether that gas comes from Exxon, Shell, or BP.
Yet despite the above, one of the most iconic trademarked numbers is 501. Originally, the number 501 was simply the lot number Levi’s assigned to the famous copper-riveted waist overalls. But over time, 501 acquired meaning in the
      minds of consumers and came to be very strongly associated with
      Levi’s
      brand jeans. How otherwise un-trademarkable symbols (or words and designs) can acquire secondary (trademark) meaning will be discussed in the next section.
As for
      scents,
      the fundamental case for trademarking these came about when the USPTO denied Celia Clarke’s request in 1990 for a trademark for scented yarns and threads with a “fresh, floral fragrance reminiscent of Plumeria blossoms.” She appealed, and the
      Trademark Trial and Appeal Board overruled the examiner, granting her a trademark for the scent.

“[F]ragrance is not an inherent attribute or natural characteristic of applicant’s goods but is rather a feature supplied by applicant,” the board noted. “Moreover, applicant has emphasized this characteristic of her goods in
      advertising, promoting the scented feature of her goods. Applicant has demonstrated that customers, dealers and distributors of her scented yarns and threads have come to recognize applicant as the source of these goods. . . . In her advertisements
      and at craft fairs, applicant has promoted her products as having a scented nature. We believe that applicant has presented a prima facie case of distinctiveness of her fragrance mark.”
        In re Clarke, 17 U.S.P.Q.2d 1238 (T.T.A.B. 1990) Retrieved from
        http://ipmall.info/hosted_resources/TTAB_Decisions/TTAB_Appeal_758429.asp

On the other hand, a trademark cannot be granted for any scent that serves a function other than identifying the product’s source. The scent of perfumes and air fresheners, therefore, cannot be registered, nor can the sulfurous
      smell that serves as a warning for natural gas leaks.
Still, there remains a good deal of uncertainty about when a scent is trademarkable and when it is not. Consider the world-famous Cinnabon smell—that sweet, sugary, cinnamon-infused scent that is absolutely unmistakable (if not
      also irresistible). But it is not trademarked because even though it is certainly distinctive, it cannot be easily distinguished from the smell of cinnamon buns made by any number of other bakeries.

      Sounds
      can also be trademarked provided they indicate the source of the product or service with which they are associated, and indeed, there are approximately 700 trademarked sounds registered at the USPTO.
        See Constine, J. (2011, December 20).

      These include Tarzan’s Yell, the THX theme heard at the beginning of a movie, MGM’s roaring lion, America Online’s “You’ve got mail” announcement, the sequence of chimes heard with the display of the NBC logo on TV, and, naturally, the sound of a
      duck quacking “Aflac!” for the American Family Life Assurance Company.

### Designs and Trade Dress

A
      design,
      like a logo, can also be trademarked, provided it distinguishes the origin of the product or service from any other source or producer. In these trademarks, the logo must be unique and consist of more than simple stylization.
Bacardi for using a similar stylized “O” on its label for orange-flavored vodka. The court ruled against Geogri, however, because its design consisted merely of a stylized symbol that had not acquired a distinguishing (or
      secondary) meaning in the minds of consumers that enabled them to identify the producer.

Examples of pure trademarked designs, without any associated words, include Nike’s “Swoosh” and Apple’s famous logo of an apple with a bite taken out of it.
This is why design trademarks often take a “design plus words” approach, as in the trademarked Lacoste logo featuring the word “Lacoste” above the famous green alligator.
Trade dress, on the other hand, refers to the
      overall appearance
      of a product or service that indicates its source. Trade dress can include features such as size, shape, color or color combinations, texture, graphics, or even particular sales techniques. The key to claiming trade dress protection is that the
      attributes must be distinctive. For example, Taco Cabana has trademarked its distinctive and “festive eating atmosphere having interior dining and patio areas decorated with artifacts, bright colors, paintings and murals,” and won an infringement
      case against a competitor restaurant called Two Pesos. By creating a theme that was similar to Taco Cabana, Two Pesos created confusion in the minds of consumers.
        932 F.2d 1113, 1117 (CA5 1991), derived from:
        http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=505&invol=763

A design trademark may be one part of a product’s trade dress, but it is distinct from trade dress because it only covers the stylization of words, letters, numbers, or of a specific design like the Lacoste green alligator.
Imagine that an Apple competitor opened a retail store with the same colors, lighting, atmosphere, and overall look and feel as the Apple store but sold their own products. The goal would not be to stop the sale of the goods, which
      are not necessarily infringing any of Apple’s design trademarks or patents, but to stop the competitor from infringing the look and feel of the Apple store. In this case, Apple would file a trade dress suit.
Both design trademarks and trade dress are different from design patents. Although all three cover only
      nonfunctional
      designs and appearances, design patents strictly protect only the new and original ornamental design of an article of manufacture, and the actual drawing of a design patent limits what is protected. A design trademark, on the other hand, protects a
      particular word, name, symbol, or design used in commerce to distinguish a product’s source. And trade dress protects the overall appearance of the product and can include anything that gives a product or service meaning and distinguishes it from
      those of any other producer.
A design patent might protect the new and original ornamental design of a lamp, for example, so long as that appearance does not affect the lamp’s function. A design trademark would protect the words or symbols used on the lamp
      that identify it as coming from a particular producer. And trade dress protects the overall “look and feel” of the lamp.
Sometimes both forms of protection can be obtained, providing an extra advantage to the owner of these rights. Examples of products with both design trademarks and design patents include the
      Dustbuster
      vacuum cleaner, the
      Pepsi
      bottle, and the
      Honeywell
      round thermostat.


# Trademark Basics

## The Spectrum of Distinctiveness

### Learning Objectives

After completing this section, you will be able to
1. Discover the elements of distinctiveness within trademarks.
2. Identify the various kinds of marks used.
The fundamental and overriding requirement for a trademark is
      distinctiveness. The requirement for distinctiveness is analogous to the requirement for
      novelty
      in patent rights and
      originality
      in copyright. Without distinctiveness, there can be no trademark.
As Miller and Davis note, “Naturally, a trademark must be distinctive if it is to serve the function of identifying the origin of goods and thereby avoid confusion, deception, or mistake. If a trademark is to protect purchasers
      from confusion over what they are purchasing, then the trademark somehow must be recognizable, identifiable, and different from other marks.”
        Op. cit., Miller and Davis.

Some trade and service marks achieve distinction via their inherent nature—Nike’s curved “Swoosh” check mark suggesting speed and agility, for example.
But other marks gain distinctiveness as a result of marketing, eventually forming a powerful association over time in the minds of consumers. As an example, the term “Raisin Bran” is merely descriptive of the foods used in the
      cereal and would not be eligible for trademark registration had Kellogg Company not demonstrated through evidence of use (including sales, advertising expenditures, and consumer surveys) that the buying public had come to distinctively associate
      Raisin Bran with this particular Kellogg’s cereal.
The public’s distinct association of a trademark to a company is known as secondary meaning, and that is something that can only be established over time. An understanding of secondary meaning is crucial when discussing the
      spectrum of distinctiveness.

In

      in 1976, Judge Henry Jacob Friendly established five basic categories of marks along a spectrum of distinctiveness, ranging from “fanciful” marks that are inherently distinctive on one end and on the other end “generic” marks that are never
      distinctive and thus not eligible for trademark registration.

### Fanciful Marks

      Fanciful marks
      are invented words, symbols, or devices that have no relation to the good or service being sold and have no meaning other than to distinctly identify the product or service and distinguish it in the minds of consumers from those of any other vendor.
      “Xerox” is a good example of a fanciful mark, as are “Google” and “Kodak.” Fanciful marks are considered the strongest type of mark and are prima facie registrable with the USPTO.

### Arbitrary Marks

      Arbitrary marks
      are real words in common usage that have no descriptive relationship to the product or service being sold. Examples of arbitrary marks include “Apple” (for the computer company), “Oracle” (for the software company), and “Galaxy” (for the mobile
      phone). Arbitrary marks are also unreservedly eligible for trademark registration.

### Suggestive Marks

      Suggestive marks
      are marks that suggest or imply a quality or characteristic of the goods and services being sold. They require imagination, insight, or perception on the part of the consumer as to the nature of the article.
        Derived from:
        http://www.bitlaw.com/trademark/degrees.html

      Examples include “iPad” for the tablet computer and “Coppertone” for the sunscreen lotion.
A suggestive mark is the minimum required for a mark to be unconditionally registrable absent a secondary meaning. Or in the words of Judge Friendly, “The validity of the mark ends where
      suggestion
      ends and
      description
      begins.”
        Op. cit.,

      From this point on along the spectrum of distinctiveness, things get a bit tricky.

### Descriptive Marks

A
      descriptive mark
      explicitly describes the purpose, nature, or an attribute of a product or service and is, therefore, not eligible for trademark registration unless a secondary meaning or association has been developed in the public’s mind through usage.
        United States Patent and Trademark Office. (2011, January).

      Ineligible descriptive marks include “Lightweight” and “Faster.” However, if a descriptive mark takes on a secondary meaning in the public mind—“Sharp” televisions, for example, or “Windows” for windowing software—then it can be eligible for
      trademark registration.

The bar against descriptive marks is designed to protect for public use common concepts and language that everyone needs to use. Imagine having to pay the coiner of the term “reverse mortgage” every time you wanted to describe such
      a financial arrangement. It would create a nightmare of social costs, which can be prevented simply by allowing the descriptive term to remain in the public domain. The bar against descriptive marks spotlights the overall social purpose of
      trademarks, which is to prevent fraud and confusion in the market while not conferring a monopoly on anyone.

### Generic Marks

The last and least distinctive category of marks are
      generic marks
      that are simply the common name for the goods and services being sold. Examples of generic marks might be “Aspirin” for the analgesic, or the use of the word “Baskets” for a basket store without any accompanying logo or other design element to
      distinguish from a merely generic description of the items sold. A generic mark is never eligible for registration no matter how much evidence a mark owner offers that it has acquired a secondary meaning through advertising and marketing.
Ironically, a product or service can become so successful in the marketplace that the public begins to associate its trademark with an entire category of similar products and services. When this happens, a valid trademark can
      become a generic name and the trademark will be lost, as happened with both “Cellophane” and “Aspirin.” To prevent this from happening, companies like “Kleenex,” “Xerox,” and more recently “Google” have gone to great legal and advertising expense to
      prevent the generic misuse of their trademarks so these remain valid.
There are many companies that sell aspirin, but aspirin itself can no longer be trademarked.
Adobe, for example, sent emails to many web authors advising them to discontinue using the term “photoshopped” and instead say that their photos were “modified by Adobe Photoshop software.” Similarly, Xerox spent heavily on
      advertisements warning that “you cannot Xerox a document, but you can copy it on a Xerox brand copying machine.”


# Trademark Basics

## Bars to Trademark

### Learning Objectives

After completing this section, you will be able to
1. Identify the bars to trademark.
2. Dissect criteria for trademark registration.

### The Prior Use Bar

No one can register a trademark if it has been used by other parties prior to its use by the applicant. Indeed, if the applicant uses such a mark, he or she may be liable for trademark infringement.
        15 U.S.C. §1115.

      The only exception to the prior use bar is when the mark has been used in an entirely different market or field of business, as in the trademark “Progressive” granted to two companies, one a backpack manufacturer and the other an auto insurance
      company.

### The Functionality Bar

To be trademarked, no word, symbol, design, device, scent, or sound may purely or primarily serve a functional purpose. Nor can it be trademarked if its absence in or on the product inflates its cost or reduces its quality.

Thus as noted earlier, the scent of a perfume cannot be trademarked because the core requirement of a perfume is that it have a pleasant and distinctive smell.
The design of a chair presents an interesting dilemma, however. Does the design enable a person to sit—i.e., does it have a functional purpose? Or does the design distinctively mark an otherwise perfectly functional chair as coming
      from an identifiable producer?
This “chicken and egg” question has confronted many applicants, trademark examiners, judges, and juries over the years. The issue is usually decided by asking whether the appearance of a product or its components is inspired more by
      design or by function?
The issue is most easily decided when the functionality of an item resides in a specific part of the product, and the design elements are found in other parts of the product. A great example of this is the “A Christmas Story Leg
      Lamp” based on the classic 1983 film comedy. The functional part of the lamp is its electronics and light fixture sitting atop the base. The base, however, is in the shape of a woman’s stocking-clad leg, and is thus clearly a design feature that
      distinguishes the lamp from any other on the market, and it is trademarked (No. 77105065).

### Subject Matter Bars

In addition to prior use and functionality, certain kinds of subject matter are generally not eligible for trademark registration. These are surnames, geographic marks, and ornamental, immoral, or offensive marks.
        United States Patent and Trademark Office.(2012, March 09).

Surnames or family names such as “Smith” and “Johnson” cannot be trademarked except under certain conditions. The USPTO assesses five factors in determining whether a surname is eligible for a trademark:

“If the mark’s character as a surname predominates in terms of its ‘primary significance to the purchasing public,’ then it is prohibited,” write Miller and Davis.
        Op. cit., Miller and Davis.

      But over time, if the surname becomes associated in the public mind with the distinctive origin of products or services, then it may be eligible for a trademark, as is the case with “Sears” and “Macy’s.”
Geographic marks must also be evaluated for eligibility on the basis of several factors. If a geographic mark is simply
      descriptive,
      the following tests apply:

The test above determines whether there is a literal association to the name or not. For example, if an entrepreneur launches a company called “Los Angeles Shoes” to produce shoes in Los Angeles, the name would not pass the test
      for trademark eligibility because the primary significance of the mark is that it is a generally known location, the product is produced in the location stated in the mark, and consumers would believe the shoes were made in Los Angeles.
The goal of the bar against geographically
      descriptive
      marks, then, is to protect one party from seizing ownership of a geographic term that ought to remain in the public domain.
If a geographic mark is deceptively
      misdescriptive,
      however, the test is as follows:

The goal of this test for geographically
      misdescriptive
      marks is to prevent the confusion and deception of the consumer. For example, if an entrepreneur launches a fashionable shoe business called “New York Shoes” but actually manufactures the shoes in China, he will not receive a trademark for the name
      because it will likely confuse or deceive consumers.

Sometimes, however, a geographic name may be trademarked, as was the case with the online retailing giant’s trademark “Amazon.” In this case, the geographic name “Amazon” is not indicative of the source of goods, nor are consumers
      under the impression that the goods sold by the retailer come from the Amazonian region of South America. In addition, the geographic nature of the name “Amazon” is not a significant factor in whether or not consumers decide to purchase books,
      clothing, electronics, or anything else from the company.
Nor can
      ornamental, immoral,
      or
      offensive
      marks be trademarked. Ornamental marks such as a “smiley face” logo are merely decorative and are too vague to distinguish the origin of a product or service. Immoral or offensive marks—e.g., an online dating service with a logo depicting two naked
      people having sex—also cannot be registered.


# Trademark Basics

## Establishing Trademark Protection

### Learning Objectives

After completing this section, you will be able to
1. Identify the reasons for establishing trademark registration.
2. Understand the process of trademark protection.

### Establishing Your Trademark Protection

Before reading this section, please watch the overview video below covering the “spectrum of distinctiveness” and other fancy-sounding legal terms and what they really mean in the real world of commerce and consumerism.
As in the case with copyrights, trademarks do not necessarily have to be registered with the federal government, but doing so has benefits. The owners of unregistered trademarks have the exclusive right to use the mark concerning
      similar goods and services in the geographic area of actual use of the mark, the right to bring civil action against infringers, and protection against false advertising. Unregistered trademarks are usually identified by the “TM” symbol displayed on
      the product, package, or advertising used to promote them. Trademarks formally registered with the USPTO, however, receive additional benefits:

Because registration costs money, many small businesses choose to rely upon the common law protections afforded trademarks, especially when just starting up. A case in point was Google, which used an unregistered trademark for its
      first six years in operation. Only in 2006 did the company formally apply for a registered trademark for “Google.” It was registered in 2012.
But trademark protection can be vital to a small business, as one recent case amply demonstrates. Payam “Peter” Tabibian first registered the 1950s-style red, white, and yellow logo for his start-up Z-Burger chain in 2007, a few
      months before he opened his first restaurant the next year in a hip Washington neighborhood. As the
      New York Times
      reported, “his first restaurant was an immediate hit, attracting students from nearby American University. The place [later] drew public praise when it gave free food to federal workers who were furloughed from their jobs during government budget
      cutbacks.”
But Mr. Tabibian eventually fell out with his partners, who then tried to stop him from continuing to use his Z-Burger brand with his expanding chain of restaurants; they also demanded he transfer the trademarks to them.
But because Mr. Tabibian had done his homework and taken the time to properly register his trademarks, a federal judge ruled in August of 2015 that he was the legitimate owner of the trademarks and could continue to use them.
As James Gibson, law professor at the University of Richmond School of Law, told the
      New York Times,
      the Z-Burger case shows why “it is very important early on to pick a trademark that’s going to work, and make sure ownership is sewn on. That’s particularly true if nobody knows who you are and you’re operating in a limited area. The federal
      trademark gives you a lot of nationwide rights.”
In order for your trademark to be eligible for registration with the USPTO, however, you must actually use it in conjunction with commercial activity—i.e., with the marketing and sale of products and services—or be about to use it
      within six months. Absent the selling of athletic shoes and other sports attire, Nike’s $20 billion “Swoosh” logo would be nothing more than a worthless doodle.
When applying for trademark registration, the applicant must file an affidavit attesting to the date the mark was first used in commerce as well as a specimen showing how the mark was first used, whether in advertising or on the
      product in a store setting. It is imperative that the applicant identify the earliest provable date of first use in commerce, to lessen the likelihood that another party can claim prior use of that mark and invalidate the trademark.
The USPTO also offers an “intent-to-use” application, which allows an entity to apply for a trademark that is not yet used in commerce.
“If you have not yet used the mark but plan to do so in the future, you may file based on a good faith or bona fide intent to use the mark in commerce,” notes a USPTO publication. “A bona fide intent to use the mark is more than an
      idea, [but] less than market ready. For example, having a business plan, creating sample products, or performing other initial business activities may reflect a bona fide intent to use the mark.”

The mark must then be put into use within six months of receiving a “notice of allowance” from the USPTO or the applicant risks having to pay extension fees or losing the mark entirely.
If the trademark is still in commercial use five years after registration, the owner is eligible to receive an additional protection known as “incontestability,” which immunizes the mark from many challenges, including challenges
      to validity, ownership, registration, and descriptiveness. (Incontestable marks can still be challenged on some grounds, such as genericism, functionality, and abandonment.) To receive incontestability status, a § 15 Declaration must be submitted to
      the USPTO.
Once incontestability is achieved, no one can contest the validity, ownership, or registration of the mark, nor can anyone contest the owner’s exclusive right to use the mark. An individual or a corporate entity can register a mark.
A trademark can be assigned to others in the event of purchase or acquisition by another entity.
2. The registration number and the date of registration.
3. The fee for each class of goods/services in the registration to which the Declaration pertains.
4. A statement that declares:

-The mark has been in continuous use in commerce for a period of five years and is still in use in commerce -No final decision exists adverse to the owner’s claim of ownership of the mark for the goods/services, or to the owner’s right to register
the mark or to keep the same on the register -No pending proceeding exists involving the claimed rights in the USPTO or in the courts

5. A signed and dated affidavit or declaration under 37 C.F.R. §2.20
United States Patent and Trademark Office. (21 August, 2012).

There are other reasons why an owner might assign trademarks to another party, including a business name change, a security agreement, a license, a lien, as collateral for a loan, or as a result of a bankruptcy procedure. Ford used
      its trademarks as collateral for a $23.5 billion loan. Ford was still able to use its trademarks, but if the company had defaulted on the loan, the trademarks would have been assigned to the lender.
        CBS News. (23 May, 2012).

Just like tangible assets, trademarks and other intellectual property such as patents and copyrights often have enormous value. In fact, some sources estimate that in contrast to 40 years ago, when plant, equipment, and other
      tangible assets comprised 80 percent of the market value of most public companies, today it is intangible assets like intellectual property, business methods, and know-how that make up roughly 80 percent of the value of public companies.
        “Intangible Asset Market Value,” Ocean Tomo, Retrieved from:
        http://bit.ly/1gldnWL

Trademarks can also be licensed to others. In 2012, licensed trademarks generated $5.45 billion for North American owners, reported the Licensing Industry Merchandisers’ Association. That same year, the top 150 global brand
      licensors earned $230 billion in sales of trademarked products, with the Walt Disney Company alone accounting for nearly $40 billion in sales.

Abandonment of a mark results in loss of ownership and the associated rights of the mark. For a mark to be considered abandoned, it must be discontinued from active use in commerce with no intent to resume the commercial use of the
      mark. Evidence of nonuse for three consecutive years is usually considered to be sufficient proof of abandonment. Upon abandonment, the trademark owner loses the right to prevent others from infringing the mark.


# Trademark Basics

## Trademark Infringement

### Learning Objectives

After completing this section, you will be able to
1. Identify the factors involved in trademark infringement.
2. Understand the basis for determining similarity.

### Trademark Infringement and Remedies

Before reading this section, please watch the overview video below covering similarity, market confusion, vicarious infringement, and getting back what’s yours.
The purpose of trademarks is to enable consumers to distinguish the source of products and services as well as help businesses defend the quality and reputation of those goods. Trademarks benefit society by protecting consumers and
      businesses alike, and by preventing confusion in the marketplace. This principle lies at the heart of the trademark system.
It is also the basis on which the courts rule on claims of trademark infringement. The most common way that trademark infringement causes confusion is through
      similarity. In the words of the Lanham Act, no trademark may be registered “which so resembles” another name or mark that it will be likely “to cause confusion, or to cause mistake, or to deceive.”
        See 15 U.S.C. § 1052 Retrieved from
        http://www.law.cornell.edu/uscode/text/15/1052

To determine similarity, the mark must be evaluated as a whole rather than through its individual components. This is important because there are only a limited number of parts—words, names, shapes, symbols, or devices—that can be
      used separately or together to create a unique and distinctive trademark that indicates the origin of goods.
The courts generally look at five key factors to determine if a defendant’s use of your mark is likely to cause confusion among consumers.
2. The similarity in the overall impression created by the two marks (including the marks’ look, phonetic similarities, and underlying meanings)
3. The similarities of the goods and services involved.
2. The strength of your mark.
3. Any evidence of actual confusion by consumers.
4. The intent of the defendant in adopting its mark.
The basis for determining similarity, again, is not an assessment of the similarity between each component of two trademarks but of their totality as seen and experienced by the consumer. And the key test for similarity is
      resemblance, not
      sameness. In short, two marks do not have to be exact mirror images of each other to be legally similar. According to a 2003 decision by the U.S. Court of Appeals for the Federal Circuit, “Similarity is not a binary factor but is a matter of degree."
        In re Coors Brewing Co., Fed. Cir. 2003 Retrieved from:
        http://www.ipo.org/AM/Template.cfm?Section=Federal_Circuit_Opinions&ContentID=4174&template=/CM/ContentDisplay.cfm.

      Each and every attribute of a mark need not be replicated exactly by those of another mark to be deemed similar. But the more one mark’s attributes are similar to those of another, the greater the likelihood that there is legal similarity between the
      marks as a whole.
The social networking site LinkedIn, for example, sports a logo made up of the joined words “Linked” and “in” displayed in a white font with the “in” component surrounded by a blue colored square with rounded edges. If a new
      networking site for professionals was launched that featured a logo with the same words except that the “in” component was surrounded by a red colored square, there would likely be enough similarity between the two logos to justify a case for
      infringement. The colors of one component of the logo may be different, but when the concept, wording, font style, and design are considered as a whole, any judge or jury would probably find the similarity between the marks so substantial as to
      constitute infringement.
But similarity is not the only basis for assessing infringement. The question is also whether any similarity between marks is likely to cause confusion in the minds of consumers. This takes into account such factors as the
      similarity of the goods and services on which the two marks are being used. If a company that made metal chains called itself “LinkedIn,” that would less likely cause consumers to believe that the chains came from the same source as the social
      networking site, because the manufacture of chains is a very different line of business than running a social networking site.
An entity can be guilty of
      contributory infringement
      if it intentionally encourages the infringement of a valid mark by a third party. One can also be liable for contributory infringement if one continues to produce or distribute a product with knowledge that the beneficiary is infringing a mark. As
      the Supreme Court held in the 1982 case

        , “If a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows
        or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorily responsible for any harm done as a result of the deceit.”

Another type of infringement is
      vicarious infringement. The definition of vicarious infringement is somewhat convoluted, but Cornell University’s Legal Information Institute describes it thusly:
Vicarious infringement most often occurs on Internet sites that allow outside parties to post or upload files. One such example was

        ., in which third parties uploaded unauthorized games that displayed the Sega mark to the Maphia site with the knowledge and consent of—and to the profit of—Maphia owners.

Finally, there is a form of harm called
      trademark dilution, which is described by the International Trademark Association as “the weakening of a famous mark’s ability to identify and distinguish goods or services, regardless of competition in the marketplace or the
      likelihood of confusion. Dilution typically occurs as the result of blurring or tarnishment of the famous mark. . . . The concept of dilution developed from the idea that because some marks are so well-known and famous, they deserve an extra level of
      protection beyond the likelihood-of-confusion analysis. Dilution theory seeks to prevent the coexistence of a mark that is sufficiently similar to a famous mark, regardless of the goods and/or services associated with the allegedly diluting mark.”
The Federal Trademark Dilution Act of 1995 and the Federal Dilution Revision Act of 2006 created a federal cause of action for trademark dilution that is separate from infringement. Generally speaking, an owner of a trademark
      eligible for dilution protection can prevent another company from using that mark no matter how dissimilar the goods and services of the two companies are. That makes dilution protection potentially broader in scope than infringement protection.
      After the 2006 revision, however, only marks that are “widely recognized by the general consuming public of the United States” are eligible for dilution protection, which means that only a very small percentage of trademarks used in the United
      States—undoubtedly less than 1 percent—qualify for that protection. Google has protection against dilution. Your local dry cleaner does not.


# Trademark Basics

## Trademark Remedies

### Learning Objectives

After completing this section, you will be able to
1. Explain remedies for trademark infringement.
2. Discuss effects of infringement.
Remedies for trademark infringement are similar to those available to owners of other intellectual property, including the possibility of receiving monetary damages for lost profits and injunctive relief. But even more so than is the case with patent and copyright owners, trademark owners almost invariably insist on injunctive (e.g. prohibiting continued sales) to cure the infringement. That’s because when a trademark is infringed, the biggest loss to the owner is not necessarily revenue but the
      potential damage to the reputation of the brand in the minds of consumers.

Imagine, for example, that a manufacturer in Bangladesh started shipping substandard athletic shoes with the Nike “Swoosh” on them into the U.S. market. The loss of revenue resulting from U.S. customers mistakenly buying the Bangladeshi manufacturer’s counterfeit shoes might not amount even to a rounding error on Nike’s books. But if customers began to lose trust in the “Swoosh” symbol as a reliable indicator of Nike’s quality design and manufacturing, the damage to Nike’s brand and future profits could be significant. The company would want to secure an immediate injunction against the importation of the offending shoes and thereby stop the ongoing damage to its trademark and brand.

Incidentally, in cases where the products being imported are not patented or copyrighted, the courts may only require the importer to stop use of the mark, but allow for the continued importation of the product.
        See

In addition to injunctive relief, monetary damages may also be awarded in trademark infringement cases. Monetary damages are primarily aimed at compensating trademark owners for lost profits due to the infringing activity, and may
      be trebled if the infringement is deemed intentional. The courts may base an award on any or all of the following measures:


# Trademark Basics

## Fair Use of Trademarks

### Learning Objectives

After completing this section, you will be able to
1. Discuss fair use of trademarks.
2. Identify examples of fair use cases.
Not every use of a trademark is infringement.
Individuals and entities may be permitted the fair use of another’s trademark under two conditions. These are known as
      nominative fair use
      and
      classic fair use.

      Nominative fair use
      covers many occasions on which a party other than the trademark owner is using the mark another party to refer to genuine goods or services. An example of nominative fair use is when an auto repair shop advertises that it repairs BMWs and Hondas. It
      is using the mark “Honda” to refer to cars genuinely produced by the Honda Motor Company, and simply asserting that it is able to conduct repairs on those cars. Another example of nominative fair use is use of a competitor’s trademark in comparative
      advertising. When Verizon advertises that it has better coverage than AT&T, it is making nominative fair use of AT&T’s mark because it is actually referring to AT&T’s services.
Under nominative fair use, the entity using the trademark is permitted to use only so much of the mark as is necessary to identify the good or service to which it is referring, and cannot imply any sponsorship or endorsement by the
      mark holder (unless, of course, the repair shop really is a BMW- or Honda- approved repair facility). Another example is the use of another’s trademark for the purpose of a product review.

      Classic fair use
      occurs when a trademark is used in good faith for its primary meaning, and no consumer confusion is likely to occur. Classic fair uses typically involve marks that are descriptive. For example, even though Kellogg’s has gained secondary meaning for
      the mark “All Bran,” another cereal manufacturer might be able to describe its cereal as “all bran,” if indeed it consists entirely of the hard outer layers of cereal grains.
Although fair use of trademarks is in many ways similar to the fair use of copyrights, there are differences. Under copyright law, you can use a copyright for the purpose of parody. You can also use trademarks for the purpose of
      parody, but whoever does so must be very careful to avoid confusion in the marketplace and diluting or tarnishing the trademark in question.


# Trade Secret Basics

## Trade Secret Protection

### Learning Objectives

After completing this section, you will be able to
1. Define trade secrets.
2. Identify the advantages and disadvantages of protecting intellectual property through trade secrets.

### What Is a Trade Secret?

      Trade secret
      law is a source of protection for intellectual property that serves as an alternative to patent or trademark law. Whereas patent and trademark law require that the intellectual property to be protected be publicly “disclosed” (for example, through a
      patent application), trade secret law requires precisely the opposite—that is, that the intellectual property to be protected
      not
      be publicly disclosed. The subject matter of a trade secret may be virtually any information that is of value as a result of not being generally known.
There is enormous
      economic value
      in trade secrets—for companies and countries. A study released in March of 2014 estimated that trade secret misappropriation costs the world’s top 40 economies between 1 percent and 3 percent of their gross domestic product each year.
        “

Unlike copyright and patent law, there is no formal requirement of “novelty” or “tangibility” under trade secret law. Rather, trade secret protection is extended to information that has independent economic value by virtue of not
      being generally known or readily ascertainable by others, and which has been subject to reasonable efforts to avoid public disclosure.

### Advantages and Disadvantages of Trade Secret Law

      There are both advantages and disadvantages to protecting intellectual property through the use of trade secret law. The decision of whether to use trade secret law as opposed to other legal means of protecting knowledge or information is governed
      primarily by the nature of the intellectual property to be protected.

### Advantages

      One of the main advantages of trade secret law is that it provides indefinite future protection. Unlike the 20-year time limit that underlies the protection granted to a patent holder, there is no definite time limit placed on the protection granted
      to a trade secret owner. This indefinite future protection granted to trade secrets is appealing, assuming that the intellectual property to be protected is likely to remain generally unknown well into the future. For example, if the intellectual
      property to be protected is a method of manufacturing a product that can be determined from examining the product, then the best way to protect the new method of manufacture might be through a patent. On the other hand, if the new method of
      manufacturing the product cannot be determined from examination of the product, then the best way to protect the intellectual property might be to treat it as a trade secret.

### Disadvantages

      Although there is no definite expiration of the protection granted to trade secrets, the protection prohibits only the disclosure or use of the trade secret by one to whom the secret was disclosed in confidence. Unlike patent law, trade secret law
      does not offer any affirmative protection against the use of the same intellectual property that is independently derived or reverse engineered by a competitor. Consequently, if the intellectual property to be protected is a new method of
      manufacturing a product, and if that method of manufacture is ascertainable from an examination of the product, then the best form of protection for the intellectual property is most likely that offered by patent law.
The same analysis applies to intellectual property that is likely to be independently derived by a competitor. For as the U.S. Supreme Court noted in

        ,
        489 U.S. 141 (1989).

      state trade secret law has never given the holder of a trade secret protection against reverse engineering by the public or a competitor. The Supreme Court commented that in order to receive protection from reverse engineering, the holder of the
      intellectual property must seek the protection of federal patent law.

Whereas patent and trademark law involve an affirmative assertion of an intellectual property right, trade secret law only actively operates after a misappropriation or threatened misappropriation of the trade secret has occurred.
      Due to this difference in the way trade secret law protects intellectual property, the protections given to trade secrets are largely dependent on classifications of information made by courts. Thus, the foundation and development of trade secret law
      in the United States is inherently tied to the statutes protecting trade secrets, and the court decisions defining and interpreting the statutory protections created for trade secrets.


# Trade Secret Basics

## The Foundations of Trade Secrets Law

### Learning Objectives

After completing this section, you will be able to
1. Identify the roots of trade secret law in the United States.
2. Explain the purpose of the Uniform Trade Secrets Act.

      Unlike patents and copyrights that are issued in accordance with federal law, trade secret protection until very recently emanated from state law. But on May 11, 2016, the federal Defend Trade Secrets Act (DTSA) was signed into law, thereby creating
      a federal cause of action for trade secret misappropriation that largely mirrors the current state of the law under the Uniform Trade Secrets Act (UTSA), which has been adopted by 48 states.

Trade secret law in the United States is largely rooted in the English legal tradition, and was first incorporated through the court-made common law. The general consensus is that trade secret law originated in England in the early 1800s.
        Michael Risch, Why Do We Have Trade Secrets?, 11 Intellectual Property L. Rev. 1 (2007) (citing Restatement (Third) of Unfair Competition § 39 cmt. a (1995).

      Early cases dealt with trade secret concepts not in modern trade secret vernacular but instead through the guise of jurisdictional or restraint of trade terms. The trade secret concept began in American jurisprudence in the case of

        , 36 Mass. 523 (1837). The Massachusetts Supreme Court first expounded on trade secret law in modern terms in

        ,
        98 Mass. 452 (1868). In the 145 years since the Peabody decision, the courts, including numerous federal courts, have addressed trade secret issues and have contributed to the current body of trade secret law. However, because each state may regulate
        trade secret law independently, each state has developed its own legal regime, involving a mixture of both statutes and common law, to regulate and protect trade secrets.

### Uniform Trade Secrets Act

      In an effort to harmonize and standardize trade secret law in the United States, the Uniform Law Commission
        The Uniform Law Commission, also known as the National Conference of Commissioners on Uniform State Laws, is a nonpartisan, nonprofit organization that promotes the uniformity of law from state to state. The Commission publishes “model laws” that
        states are then able to adopt and enact.

      published the
      Uniform Trade Secrets Act (UTSA)
      in 1979. The UTSA sought to create a uniform trade secret law regime from state to state. However, the UTSA itself was not binding upon states at publication. In order for the UTSA to be successful, the states themselves needed to adopt and enact the
      model UTSA statute created by the commission. In 1980, Minnesota became the first state to adopt the UTSA. Since 1980, most states have adopted the UTSA, many with the 1985 amendments to the act. New York and Massachusetts remain the last states that
      have yet to adopt the UTSA. Although the UTSA harmonized various state law approaches to trade secrets, each state enacts the UTSA with any modifications or customizations the state legislature desires to make. Thus, although most states have adopted
      the UTSA, each state may have a slightly different adaptation of the UTSA.

One important provision of the UTSA is section 7, which deals with the interaction of the UTSA and state law. Section 7 preempts certain state law causes of action. Section 7 “displaces conflicting tort, restitutionary, and other
      law…providing civil remedies for misappropriation of a trade secret.”

### Trade Secret Misappropriation

      Although this section seems to indicate that the UTSA broadly replaces all state laws dealing with
      misappropriation
      of trade secrets, there is debate as to what constitutes “conflicting tort, restitutionary, and other law.” Additionally, what it means for a common law remedy to be “based on” misappropriation of a trade secret is often contested. Owners seeking to
      recover damages for misappropriation generally argue that only common law causes of action that have elements identical to the UTSA are preempted, while defendants argue that any cause of action used to protect trade secrets is preempted because it
      is duplicative of the UTSA. Despite this potential conflict between the UTSA and state common law, this chapter focuses on the main body of trade secret law as governed by the UTSA.


# Trade Secret Basics

## Elements of a Trade Secret

### Learning Objectives

After completing this section, you will be able to
1. Identify the key criteria used to qualify as a trade secret.
2. Explain how ideas can be protected as trade secrets.

      To qualify as a trade secret, the information in question must meet two essential criteria. First, the information must attain its value from the fact that it is not generally known.
Second, the owner of that information must take reasonable efforts to maintain its secrecy. Absent these two elements, information does not qualify as a trade secret and is not entitled to trade secret protections that prevent or
      remedy misappropriation under the UTSA.
        The UTSA defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that (i) derives independent economic value, actual or potential, from not being generally known to, and not
        being readily ascertainable by proper means by, other persons who can obtain value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

Trade secrets are not limited to particular subject matters, although the knowledge or information to be protected need not take any particular form. A trade secret can be information or knowledge in the form of a formula, pattern,
      compilation, program, device, method, technique, or process. Although the UTSA defines what may be a trade secret, various courts interpreting the UTSA have come to different conclusions on what type of material should be considered a trade secret.
      For example, whereas courts have found that an insurer’s database is a trade secret under Wisconsin law, a similar database was found not to be a trade secret in Rhode Island.
        Compare

### The Value of Secrets

      For information or knowledge in any of the above forms to be considered a trade secret, it must derive independent economic value because it is not generally known to, nor readily ascertainable by, other persons who can profit from its disclosure or
      use. Some examples of information courts have found to be trade secrets include computer software, sales information, customer information, and manufacturing formulas. However, merely because information is not known to the public does not
      necessarily make the information a trade secret. For example, information that is not generally known by the public but is known by different manufacturers in the same industry likely does not qualify as a trade secret.
        See e.g.

Material that is ascertainable through public sources generally does not derive independent economic value justifying trade secret protection. If the information in question cannot be quickly or easily ascertained from examining or
      testing the publicly available product, then it is more likely to be a trade secret.
        See

      Conversely, if the information may be discovered through public observation of the product or the company’s displays, it is unlikely to be a trade secret.
        See

      For example, customer lists are not considered trade secrets when the identity of the customers could potentially be discovered through public sources. However, identical information if not available through public sources could constitute a trade
      secret.
        Compare

      Additionally, processes or systems that are simply a compilation of known information generally do not rise to the level of trade secrets. The courts, however, are still quite divided on this issue.

### Protecting Ideas as Trade Secrets

      In addition to information, certain ideas may constitute trade secrets. Although ideas were not protected as trade secrets under common law, the UTSA provides protection for certain novel and concrete ideas. For example, remedies for misappropriation
      of an idea may be permitted based on the existence of a confidential relationship. The elements that must be proven under this common theory are: (1) a novel or original idea; (2) reduced to concrete form; (3) disclosed to the defendant in a
      confidential relationship, i.e., one in which it would be implied that use would not be made without compensation; and, (4) used by the defendant.

Protection of an idea may also be permitted on the basis of a contractual relationship with the defendant. Parties may enter into a contract to protect an idea being submitted or disclosed to another person or company. The major
      benefit of a contract to the submitter of an idea is evidence of a protected disclosure that is deserving of trade secret protections. The major benefit of a contract to the recipient of an idea is the establishment of the ground rules under which
      compensation, if any, will be payable to the submitter.
Corporations that receive unsolicited ideas many times grapple with how to best protect use of those unsolicited ideas. To protect themselves from the uncertainties of trade secrets law, the idea must be converted from an
      unsolicited idea to a solicited idea. This may be accomplished by contacting the submitter and alerting them that the idea will be considered only with the understanding that the use of the idea, and decisions regarding compensation for that idea,
      rest solely with the corporation.
Whether the trade secret takes the form of information or an idea, the owner of that trade secret must show not only that the trade secret was not generally known or readily ascertainable, but also that the lack of general
      knowledge of the trade secret conferred some value to the owner. When the owner derives a profit from licensing the use of the protected information, the value to the owner is quite apparent. However, in cases where the owner is seeking to show he
      was injured in the marketplace or through the loss of profits after costly research and development, the value may only become apparent by inference. But even if information is not generally known and gives the owner some value, the information is
      not a trade secret unless the owner takes steps to protect the secrecy of the information.