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Intellectual Property and the Internet- Module 2 of 5

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Module 2: Intellectual Property and the Internet


          The Internet’s growth and the advent of new technology have significantly impacted the fields of intellectual property and cyberlaw. Intellectual property is a broad category of law, providing protection for interests in people’s creations and inventions. The Constitution grants Congress the power to pass laws dealing with intellectual property to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”[1]   

In this module, we’ll look at the intersection of cyberlaw and several categories of intellectual property, including copyrights, trademarks, patents and trade secrets. We’ll examine and learn how these are protected in the digital age.


The first intellectual property law category we’ll look at is copyright law. Copyright provides an author a set of exclusive rights when his expression is captured in a fixed, tangible medium. It’s a form of protection provided by federal law to the authors of “original works of authorship,” including literary, dramatic, musical, artistic, and certain other intellectual works. The Copyright Act of 1976 grants the copyright holder exclusive rights to reproduce, distribute, perform, or display the work and the exclusive right to authorize others to reproduce the work.[2]

Copyright law incentives the creation and dissemination of creative works. Unpublished or unrecorded thoughts and ideas cannot be copyrighted because copyrighted expressions must be tangible.[3] Copyright ownership also includes the right to control derivative works, which are works based on the pre-existing work. It entitles the copyright holder of the original form to produce and prohibit others from producing derivative works.

To be protected, a work must be creative and not consist solely of readily available information. For example, the Eighth Circuit held that an online fantasy baseball providers’ use of baseball statistics were facts in the public domain and that Major League Baseball was not entitled to copyright protection for these statistics.[4] These statistics weren’t “works of authorship” because they were readily available in newspapers and online and did not belong to Major League Baseball. On the other hand, if a person devises a creative or whimsical manner of conveying baseball statistics, such as color-coded pie charts, that expression could be copyrighted.

Copyrighting Online Content

Some refer to copyright as the “workhorse” of the Internet[5] because it’s so ubiquitous. It attaches to websites, photos, videos, blogs, music, e-books, software and myriads of other artifacts of expression captured in fixed medium in cyberspace. Almost any use of the Internet as a medium can make the author a creator of content.

Early Internet copyright disputes centered on who should be held liable for unauthorized uploading or downloading of copyrighted works. Internet access providers argued that liability should be restricted to the party who posts or downloads the copyrighted material and should not extend to entities that merely provided Internet access. Electronic bulletin boards, peer-to-peer platforms and database providers argued that it wasn’t their fault that “illegal” downloading occurred on their platforms.[6]

In 1998, Congress passed the Digital Millennium Copyright Act to protect copyright owners and to address the increase in popularity of sharing digital content.[7] The Act limits liability for internet service providers who comply with the law’s mandatory safeguards against illegal file-sharing. It also extends copyright protection to computer programs, movies, and other audiovisual works. This law attempts to regulate cyberspace and forbids devices whose purpose is to evade digital anti-piracy tools.

The Act allows a website operator, electronic bulletin board owner or internet service provider to avoid liability for copyright infringement if, among other requirements, it promptly removes or blocks access to infringing materials after a copyright holder files a “take-down notice,” which is a complaint sent to the operator to take down copyright-protected online content. The provision is designed to relieve websites from the burden of checking user-generated material before allowing content to be posted.[8]

When filing a take-down notice, a person must identify the infringement and declare, under penalty of perjury, that she is authorized to represent the copyright holder and that she has a good-faith belief that the use infringes on a copyright.

If a copyright dispute emerges, an injured plaintiff can obtain several remedies. First, he could obtain monetary damages, where the copyright owner may recover damages and lost profits from an unauthorized use of the copyrighted material.[9] Second, he could obtain special statutory damages, up to $150,000, when a party willfully infringes on another’s copyright.[10] The plaintiff can also obtain an injunction, where a court can order a website operator to remove certain content or even completely take down the website.[11]

Fair Use 

On the other side, a defendant may assert a variety of defenses, other than taking refuge in Digital Millennium Copyright Act’s safe harbor provision. These include the public domain use defense, the first sale doctrine and fair use. While the first two are tangential to our discussion, fair use constitutes the most common and probably the most important defense relevant to online content.

The fair use defense is applicable when the use of the copyrighted work is reasonable and limited, such as quoting from a book in a book review. Other examples of fair use might include showing short movie clips to a class for educational purposes and publishing excerpts from academic studies for critical commentary.

Federal law establishes four factors in determining whether the fair use defense applies. These are:[12]

·       the purpose and character of the use (the more commercial the use, the less likely it is to be fair use);

·       the nature of the copyrighted work (the more commercial the nature of the work, the less likely it is to be fair use);

·       the amount of the work used (the greater percentage of the work used, the less likely it is to be fair use); and

·       the economic impact of the use (the more likely that the use will hurt the copyright holder economically, the less likely it is to be fair use).[13]

Let’s look at this defense in action in a cyberlaw dispute. In the early 2000’s, Napster emerged as the most popular peer-to-peer file sharing network used for transmitting various files, mainly music, through .mp3’s. To protect their intellectual property, major record companies objected and sued Napster for contributory and vicarious infringement of copyrights..[14]

Napster asserted fair use, arguing that it wasn’t profiting off  the downloads because no sales took place on the platform. Napster also maintained its use was fair use because it was designed as a sampling mechanism, whereby users made temporary copies of songs on Napster before purchasing them from a record company. Moreover, Napster argued that it merely facilitated “space-shifting” where a user who may have already owned the song in audio CD format merely stored it on Napster’s platform for easy access.[15]

The court disagreed and rejected the fair use defense, holding that the peer-to-peer file sharing service could be held liable for contributory and vicarious infringement of copyrights.[16] Napster’s platform allowed for “repeated and exploitative” copying even though Napster wasn’t selling anything. What’s more, songs were found to be “close to the core” of the types of creative works intended to be protected by copyright. Entire songs were routinely downloaded, setting the second and third factors against Napster. Finally, Napster did have massive economic impact on record companies as the effect of the downloads unquestionably harmed possible album sales.[17]


The second category of intellectual property relevant to cyberlaw is trademark law. A trademark can be any word, name, symbol, device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. For example, the Amazon logo with the arrow pointing from the letter “A” to “Z” is a trademark for the online retailer.

Trademark law seeks to protect the public from confusion regarding the sources of goods or services and to protect businesses from the diversion of trade through the misrepresentation or appropriation of another’s goodwill. The Lanham Act is the federal law governing trademarks.[18]

The United States Patent and Trademark Office maintains a registry of trademarks. Each registration remains in force for ten years and each registration may be renewed for another ten years. If the trademark owner continues to use the mark, trademark protection may last indefinitely. The federal registration symbol consists of the letter R enclosed within a circle —®—.

A trademark owner may file an infringement action for unauthorized use of a trademark under the Lanham Act if he establishes the following elements:

·       that the infringer used the mark in commerce without the trademark holder's consent; and

·       that the use was likely to cause confusion.[19]

A defendant in a trademark infringement suit may raise several defenses, with one of the most common being that it was used as a parody. A parody is a use of a well-known work for purposes of satirizing, ridiculing, critiquing or commenting on the original work. Parodies are allowed because they are unlikely to be confused with the marketing of the original product.

In 2008, Wal-Mart sued a Georgia resident claiming trademark infringement after he created a website and logo with the words “Walocaust” and Wal-Mart’s trademarked smiley face logo as a way to criticize Wal-Mart.[20]  The federal court ruled that Wal-Mart could not use trademark law to stop the man from expressing his anti-Wal-Mart views.[21] It reasoned that the First Amendment protected his speech, which was a parody, and that there was no reasonable way consumers would confuse the man’s website with Wal-Mart.

Another common trademark infringement dispute involving cyberlaw concerns domain names and cyber-squatting. A domain name consists of words and characters that a website owner designates for his registered Internet address. Cybersquatting occurs when someone registers a domain name on the Internet that would be associated with a company’s trademark, and then seeks to profit by selling or licensing the name to the company. In 1999, Congress adopted the Anti-Cybersquatting Consumer Protection Act, also called the Trademark Cyberpiracy Prevention Act, to prohibit cyber-squatting.[22] The law authorizes trademark owners to obtain federal court orders transferring ownership of domain names from cyber-squatters to trademark owners. The law became necessary because numerous large companies, such as Panasonic, Fry’s Electronics, and Hertz, had paid large sums to buy their domain names from third parties.[23]

In one case, a South Korean cyber-squatter had registered the domain name “AOL.org.” America Online objected to this domain name, arguing that there was infringement on its “AOL” and “AOL.com” trademarks.[24] The court sided with America Online, finding trademark infringement because the South Korean entity used AOL’s mark for commercial purposes and “in connection with the sale, offering for sale, distribution, or advertising” of goods or services, and that the defendant used the mark in a manner likely to confuse consumers.[25] It ordered the South Korean company to transfer ownership of the domain name to America Online.


The third area of intellectual property law that intersects with cyber law is patent law. When it grants a patent, the United States Patent and Trademark Office issues property rights to an inventor. The patent grants the right to exclude others from making, using, offering for sale, selling or importing the patentor’s invention.[26]

For an invention to be patented, it must be:[27]

·       comprised of patent eligible subject matter;

·       useful;

·       novel;

·       non-obvious; and

·       adequately described

An analysis of patent infringement unfolds as follows. First, the court construes the patent’s “claims,” which define the patentee’s invention. Most patents have many claims. Second, the judge or jury will determine if the claimed invention has been infringed, which requires that the claims, as properly interpreted, cover the allegedly infringing product.

In 2011, two of the United States’ largest online retailers, Newegg and Overstock.com, became embroiled in a patent-infringement case with Alcatel, which claimed that the two web retailers had infringed on three patents that involved such e-commerce functions as web site drop-down boxes, text boxes, site search and tools that correct consumer misspellings and other errors.[28] Newegg and Overstock countered that Alcatel’s patents were invalid because they covered technology that was not original and was based on prior inventions. The court sided with the two retailers, finding that Newegg and Overstock had not infringed upon any of Alcatel’s patents because they were “obvious,” meaning that they were already well-known and unambiguous.

Trade Secrets

Finally, let’s look at trade secrets and cyberlaw. A trade secret is a formula, process, device, or other business information that a business owner keeps confidential to maintain an advantage over competitors.[29] Examples of trade secrets include customer lists, business plans, marketing strategies, prices, costs, processes, novel software and specific implementations of manufacturing concepts. The trade secret owner may protect information if it is not generally known in the industry or readily ascertainable through independent investigation. One does not have to file an application with the government to secure legal protection of the trade secret.[30] However, he must maintain it with reasonable confidentiality to conserve its status as a trade secret.

State law governs trade secrets. The Uniform Trade Secrets Act is a model statute that codifies the basic principles of common-law trade-secret protection.[31] The uniform law, adopted by 47 states,[32] protects information regardless of the manner, mode or form in which it is stored. For liability under this act, a trade secret must exist and a person’s acquisition, disclosure, or use of the trade secret, called misappropriation, must be improper.[33]

A person claiming misappropriation of a trade secret must also typically prove that he suffered an actual or threatened injury.[34] The remedies for misappropriation of a trade secret include injunctive relief and damages that can include the plaintiff’s losses resulting from the misappropriation and/or the defendant’s profits from the misappropriation.[35] In a case where a trade secret has been broadly disseminated over the Internet by the time it reaches court, the remedy is more likely to be damages rather than an injunction to recover the secret.

          When publication of a trade secret on the Internet is “limited so that it does not become generally known to the relevant people,” such as “potential competitors or other persons to whom the information would have some economic value,” there has been no dissemination of the trade secret.[36] The guiding concern in determining the effect of Internet publication is whether “the information has retained its value to the creator despite the publication.”[37]

In our next module, we’ll discuss cybercrimes and the statutes that attempt to curb illegal conduct on the Internet.


[2] Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541 (October 19, 1976); 17 U.S.C. § 106.

[3] Joan Ruttenberg, et. al., The OPIA Insider’s Guide to Intellectual Property and Cyberlaw at 3 (2013), http://www.hls.harvard.edu/content/uploads/2008/06/ip-cyberlaw-guide-final.pdf.

[5] What is cyberlaw?, Digital Business Law Group, http://www.digitalbusinesslawgroup.com/what-is-cyberlaw.html

[6] Sega Enters. v. Maphia, 857 F. Supp. 679, 687-88 (D. Cal. 1994) (noting one with knowledge of infringing activity may be held liable as a contributory infringer).

[7] Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat. 2860 (Oct. 28, 1998).

[10] 17 U.S.C. § 504(c).

[12] Religious Tech. Ctr. v. F.A.C.T.Net, Inc., 901 F. Supp. 1519, 1524-25 (D. Colo. 1995).

[14] A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1010-11(2001).

[15] Ivan Hoffman, Napster and “Fair Use”, IBPA, http://articles.ibpa-online.org/article/napster-and-fair-usequot/ (last visited June 21, 2018).

[16] Id. at 1017, 1024.

[17] Case Study: A&M Records, Inc. v. Napster, Inc., Washington University Law, https://onlinelaw.wustl.edu/blog/case-study-am-records-inc-v-napster-inc/ (last visited June 21, 2018).

[18] Trademark Act of 1946, Pub. L. No. 79-489, 60 Stat, 427 (“Lanham Act”).

[19] ITT Corp. v. Xylem Grp., LLC, 963 F. Supp. 2d 1309, 1318 (N.D. Ga. 2013).

[20] Joe Newman, Score one for the good guys: Court rejects Wal-Mart’s trademark claim, PublicCitizen (March 21, 2008). https://citizenvox.wordpress.com/2008/03/21/score-one-for-the-good-guys-court-rejects-wal-marts-trademark-claim/.

[21] Smith v. Wal-Mart Stores, Inc., 537 F.Supp.2d 1302, 1340 (N.D.Ga. 2008).

[23] Patricia Gima, Cybersquatting: What It Is and What Can Be Done About It, Inc., https://www.inc.com/articles/2000/05/19902.html (last visited June 21, 2018).

[24] Am. Online, Inc. v. Aol.Org, 259 F. Supp. 2d 449, 450 (E.D. Va. 2003).

[25] Id. at 451-52.

[26] General Information Concerning Patents, United States Patent and Trademark Office, (Oct. 2015), https://www.uspto.gov/patents-getting-started/general-information-concerning-patents#heading-2

[27] Gene Quinn, Patentability: The Nonobviousness Requirement of 35 U.S.C. 103, IPWatchdog, (June 17, 2017), http://www.ipwatchdog.com/2017/06/17/patentability-nonobviousness-35-usc-103/id=84716/.

[28] Thad Rueter, Newegg and Overstock win a patent-infringement case in federal court, Digital Commerce 360 (Oct. 19, 2011), https://www.digitalcommerce360.com/2011/10/19/newegg-and-overstock-win-patent-infringement-case/.

[29] Trade Secret Policy, United States Patent and Trademark Office, https://www.uspto.gov/patents-getting-started/international-protection/trade-secret-policy (last visited June 21, 2018).

[30] Intellectual Property Law Commercial Creative and Industrial Property § 4.01.

[31] Uniform Trade Secrets Act With 1985 Amendments, National Conference of Commissioners of Uniform State Laws (Feb. 11, 1986), http://www.uniformlaws.org/shared/docs/trade%20secrets/utsa_final_85.pdf

[32] Legislative Fact Sheet – Trade Secrets Act, Uniform Law Commission,http://www.uniformlaws.org/LegislativeFactSheet.aspx?title=Trade%20Secrets%20Act

[33] Uniform Trade Secrets Act With 1985 Amendments, supra note 31, at § 1.

[34] Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 220 (Cal. Ct. App. 2010).

[35] Basics of a Trade Secret Claim, Digital Media Law Project (June 21, 2018), http://www.dmlp.org/legal-guide/basics-trade-secret-claim

[36] DVD Copy Control Ass’n v. Bunner, 10 Cal. Rptr. 3d 185, 192-93 (Ct. App. 2004).