CHAPTER THREE

Intellectual Property

Prof. Hatem Abd-Elkader

Dr. Sherif M. Tawfik

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 Learning Objectives
1. Introduction
2. What is Intellectual property?
3. Protecting intellectual property
4. Intellectual Property Rights in Software – What They Are and
How to Protect Them
– Software Patents
– Software Copyright
– Software Trade Secrets
– Software Trademarks
5. Open-source software
6. Fair use

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 Introduction
• Internet allows copies to spread quickly and
widely
• We benefit from access to high-quality television
shows, music, movies, computer programs
• Value of intellectual properties much greater than
cost of media
• In light of advances in information technology,
how should we treat intellectual property?

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 What Is Intellectual Property?
• Intellectual property: any unique
product of the human intellect that has
commercial value
– Books, songs, movies
– Paintings, drawings
– Inventions, chemical formulas,
computer programs

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Prices Fall When Works Become
Public Domain

Table from “Letter to The Honorable Senator Spencer Abraham,” by Randolph P. Luck from LUCK’S MUSIC
LIBRARY. Copyright © 1996 by Randolph P. Luck. Reprinted with permission.

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 Protecting Intellectual Property
• Intellectual Property Protection is protection for
inventions, literary and artistic works, symbols,
names, and images created by the mind.

• Learn how you can protect your intellectual

property by using:
• Patents
• Trademarks
• Trade Secrets
• Copyrights.
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 Patent
• A patent grants property rights on an invention, is a
public document that provides detailed description
of invention
• Allowing the patent holder to exclude others from
making, selling, or using the invention. Inventions
allow many businesses to be successful because
they develop new or better processes or products
that offer competitive advantage on the
marketplace.
• You get a patent by filing a patent application with
the Country Patent and Trademark Office. 7
 Trademark, Service Mark
• A trademark is a word, phrase, symbol, or design that
distinguishes the source of products (trademarks) or
services (service marks) of one business from its
competitors. In order to qualify for patent protection, the
mark must be distinctive.
– Trademark: Identifies goods
– Service mark: Identifies services
• Company can establish a “brand name”
• Does not expire
• Companies advertise to protect their trademarks
• Companies also protect trademarks by contacting those
who misuse them
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 Trademark, Service Mark
• Service marks are a subset of trademarks. A service
mark is the same type of device as a trademark, but service
marks distinguish the services of one company from those
of another provider.
• Service marks are often slogans. For example, the service
mark of a plumber might be "The Leak Fixers" with or
without a distinctive logo.
• Service marks are sometimes confusing. For example, is
McDonald's a service or a product? McDonald's the
company is a service. Within that service - providing fast
food - the company may have many products that are
also trademarked. The Big Mac® is a trademarked
product. 9
Screenshot by Xerox. Copyright © 2012 by Xerox Corporation. All rights reserved. Reprinted with permission.

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 Trade Secret
• A trade secret is a formula, process, device, or other business
information that companies keep private to give them a business
advantage over their competitors. Examples of trade secrets include:
– Soda formulas
– Customer lists
– Survey results
– Computer algorithms
• Unlike the other types of intellectual property, you can't obtain
protection by registering your trade secret. Instead, protection lasts
only as long as you take the necessary steps to control disclosure and
use of the information.
• May be compromised when employees leave firm
• Physical and digital protection of ideas is also necessary, so track
who has access and limit who can get into important databases.11
 Copyright
• Copyright protection is available for original works of authorship that
are fixed in a tangible form, whether published or unpublished.
• The categories of works that can be protected by copyright laws
include paintings, literary works, live performances, photographs,
movies, and software.
• Provides owner of an original work five rights
– Reproduce the work
– Prepare "derivative works" (other works based on the original work)
– Distribute copies of the work by sale, lease, or other transfer of ownership
– Perform the work publicly
– Display the work publicly
• Copyright-related industries represent 6% of U.S. gross domestic
product (> $900 billion/yr)
• Copyright protection has expanded greatly since 1790
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 Key Court Cases and Legislation
• Gershwin Publishing v. Columbia Artists
– The American Society of Composers, Authors, and Publishers (ASCAP)
brought this copyright infringement action against Columbia Artists
Management, Inc. (CAMI) to determine whether CAMI is liable for and can
be compelled to pay license fees when musical compositions in the ASCAP
repertory are performed at concerts sponsored by local community concert
associations promoted by CAMI.
• No Electronic Theft Act
– A federal law passed in 1997, provides for criminal prosecution
of individuals who engage in copyright infringement under
certain circumstances, even when there is no monetary profit or
commercial benefit from the infringement. Maximum penalties
can be five years in prison with fines.
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Copyright Creep

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 Intellectual Property Rights in
Software – What They Are and How
to Protect Them
• People talk a lot in the information technology
business about “intellectual property rights.”
– But what are they?
– How do they apply to software technology?
– Why should you protect them?
– How do you protect them?

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 Intellectual Property Rights in
Software – What They Are and How
to Protect Them
• Intellectual property rights are at the foundation of the
software industry.
• There are essentially four types of intellectual property
rights relevant to software: patents, copyrights, trade
secrets and trademarks.
• Each affords a different type of legal protection. Patents,
copyrights and trade secrets can be used to protect the
technology itself. Trademarks do not protect technology,
but the names or symbols used to distinguish a product in
the marketplace. 16
 Intellectual Property Rights in
Software – What They Are and How
to Protect Them
• Software patents can be extremely powerful economic
tools. They can protect features of a program that cannot
be protected under copyright or trade secret law.
• For example, patents can be obtained for ideas, systems,
methods, algorithms, and functions embodied in a software
product: editing functions, user-interface features,
compiling techniques, operating system techniques,
program algorithms, menu arrangements, display
presentations or arrangements, and program language
translation methods. 17
 Patent Wars
• Companies build up collections of patents to avoid lawsuits
– Apple's iPhone patents (e.g. vs. Samsung)
– Google buys Motorola, largely for mobile phone patents
– Microsoft vs. Google (Android); Microsoft / SCO vs. Linux
– Kodak vs. digital camera companies
– Verizon vs. Vonage (VoIP technology)
• Results of patent lawsuits:
– may need to settle (e.g. cash payout)
– may need to license the patents (Google pays MS $5-10 for every
Android device sold)
– suit may be thrown out for lack of merit (SCO vs. Linux).
– Students are asked to give a report about the
underline cases 18
 Patent lawsuit 1
• Court ruled that Microsoft infringed on 15 patents owned by
Alcatel-Lucent relating the MP3 music format (MP3 playback) in
Windows Media Player

• Alcatel-Lucent had argued it co-developed the technology with

Germany's Fraunhofer Institute (FI)
– MS licensed through FI (for $16M) but not also Alcatel-Lucent

• Damages: $1.52 BILLION (Microsoft appeals)

• Bad news for Apple?

– iTunes to iPod have dependency on MP3 technology
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 Patent lawsuit 2
• UW ugrad (!) has 4 patents on technology used by cell phone
manufacturers in "Bluetooth" technology
– Bluetooth is used in wireless devices; exchange info w/o wires

• Washington Research Foundation (WRF) working on behalf of UW

reached licensing agreement with Broadcom

• CSR (cell phone maker) did not want to license the technology
– WRF filed a suite against CSR for patent infringement

• April 2007, CSR settled with WRF for $15M

– CSR believes the suit was without merit
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 Intellectual Property Rights in
Software – What They Are and How
to Protect Them
• While a patent can protect the novel ideas embodied in a software
program, a copyright cannot.
• In the case of software, copyright law would protect the source and
object code, as well as certain unique original elements of the user
interface.
• The owner of a copyrighted software program has certain exclusive
rights (with some exceptions): the right to copy the software, create
derivative or modified versions of it, and distribute copies to the
public by license, sale or otherwise.
• Anyone exercising any of these exclusive rights without permission
of the copyright owner is an infringer and subject to liability for
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damages or statutory fines.
A Consequentialist Argument Why
Software Copying Is Bad

Beth Anderson

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 Do We Have the Right System in Place?

• Software licenses typically prevent you from

making copies of software to sell or give away
• Software licenses are legal agreements
• Not discussing morality of breaking the law
• Discussing whether society should give
intellectual property protection to software

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 Proprietary licenses
• most proprietary ($) software is licensed, not sold
– publisher grants you a "license" to use a copy of the software
– ownership of those copies stays with the software publisher
• reserves for the owner almost all rights
• grants only a limited set of rights to the end-user
• Without accepting the license, the end-user may generally not use
the software at all

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 Intellectual Property Rights in
Software – What They Are and How
to Protect Them
• Many features of software, such as code and the ideas and concepts
reflected in it, can be protected as trade secrets.
• Trademarks can protect the name of a software company, its
products and taglines, and prevent competitors from using similar
names. Trademarks protect software brands, but not the software or
code itself.
• For example, Adobe Corporation uses “ADOBE” as product
name on all of it designed software tools or software services.
• Maximizing the economic value of a software asset critically
depends on understanding the nature of the intellectual property
rights involved and how best to use the available forms of legal25
protection to protect those rights.
 Trademark suit example
• Cisco owns the trademark "iPhone"
– Apple started negotiations with Cisco to share the TM
– Cisco wanted an open approach to allow Apple iPhone to
be compatible with other companies' products

• Apple announced its iPhone before an agreement was made

– Cisco sued Apple for trademark infringement

• Cisco and Apple reached a settlement (2/21/07)

– two companies pledged to "explore
opportunities for interoperability in the areas
of security, and consumer and communications."
– Other terms were confidential
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 Trade secret examples
• Symantec said Veritas shared trade secrets and even trained
Microsoft engineers as the companies began working
together
– Microsoft used trade secrets to start developing products
[Vista] that directly competed with their offerings, the
lawsuit said.

• Microsoft said that in 2004 it bought from Veritas the rights

to the technologies in question

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 Case Study: Database Guru
• Arjun employed at Felicity Software
• Signed a confidentiality and proprietary rights
agreement
• Developed some database optimizations
• Moved to Unrelated.com, supervises team
developing database software
• Realizes his optimizations would help team at
Unrelated.com
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 Two alternatives for Arjun
• “Clean room” strategy
– Provide team with publicly available information
– Provide team with performance targets
• Become personally involved
– Ask team open-ended questions
– Allow them to rediscover the optimizations he
made at Felicity

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 Open-Source Definition
• No restrictions preventing others from selling or
giving away software
• Source code included in distribution
• No restrictions preventing others from modifying
source code
• No restrictions regarding how people can use
software
• Same rights apply to everyone receiving
redistributions of the software (copyleft)

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 Beneficial Consequences of
Open-Source Software
• Gives everyone opportunity to improve program
• New versions of programs appear more frequently
• Eliminates tension between obeying law and helping
others
• Programs belong to entire community
• Shifts focus from manufacturing to service

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 Examples of Open-Source
Software
• BIND
• Apache
• Sendmail
• Android operating system for smartphones
• Firefox and Chrome
• OpenOffice.org
• Perl, Python, Ruby, TCL/TK, PHP, Zope
• GNU compilers for C, C++, Objective-C, Fortran, Java,
and Ada

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Impact of Open-Source Software
• Linux an alternative to proprietary versions
of Unix
• Linux operating system on 97% of the
world’s 500 fastest supercomputers (as of
June 2014)

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 Fair Use Concept
• Sometimes legal to reproduce a copyrighted
work without permission
• Courts consider four factors
– Purpose and character of use
– Nature of work
– Amount of work being copied
– Affect on market for work

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 Sony v. Universal City Studios
• Sony introduced Betamax VCR (1975)
• People started time shifting TV shows
• Movie studios sued Sony for copyright
infringements
• U.S. Supreme Court ruled (5-4) that time
shifting is fair use

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Time Shifting

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 Audio Home Recording Act of
1992
• Protects rights of consumers to make copies of
analog or digital recordings for personal,
noncommercial use
– Backup copy
– Give to family member
• U.S. Court of Appeals, 9th Circuit, affirmed that
space shifting is consistent with copyright law

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Space Shifting

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 Kelly v. Arriba Soft

• Kelly: Photographer maintained Web site

with copyrighted photos
• Arriba Soft: Created search engine that
returned thumbnail images
• Kelly sued Arriba Soft for copyright
infringement
• U.S. Court of Appeals, 9th Circuit, affirmed
that it was fair use
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 Cyberlockers
• Also called file-hosting services or cloud
storage services
• Internet-based file-sharing services
• Allow users to upload and download
password-protected files
• Support workgroup collaboration
• Make sharing of copyrighted material easy

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 BitTorrent
• Download much faster than upload
• BitTorrent speeds downloading
– Files broken into pieces
– Different pieces downloaded from different
computers
• Used for downloading large files
– Computer programs
– Television shows
– Movies

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Concept Behind BitTorrent

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 Legal Action Against The Pirate
Bay
• The Pirate Bay started in Stockholm, Sweden
• One of world’s biggest BitTorrent file-sharing sites
• People download songs, movies, TV shows, etc.
• After 2006 raid by police, popularity increased
• In 2008 the International Federation of the Phonographic
Industry sued four individuals connected with site
• Defendants said The Pirate Bay just a search engine
• Found guilty; sentence to prison and fined $6.5 million
• Meanwhile, The Pirate Bay still operational
• More than 150 proxy servers all over the world
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