Law, Music, and the Internet William Fisher iLaw 3 July 2, 2002.
Intellectual Property Protection for Software William Fisher June 23, 2004.
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Transcript of Intellectual Property Protection for Software William Fisher June 23, 2004.
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Intellectual Property Protection for Software
William Fisher
June 23, 2004
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Activities that Software Developers Might Control
• Consumer reproduction of object code
• Commercial reproduction of object code
• Incorporation of parts of source code in new programs
• Preparation and distribution of improved versions/derivative works
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Pro-CD Bowers
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Copyright
CONTU
Pro-CD Bowers
Apple EC Directive 91/250
TRIPS 10(1)
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Copyright
Patent
CONTU
DiehrBenson
Flook Alappat
State Street
Pro-CD Bowers
Apple EC Directive 91/250
TRIPS 10(1)
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
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Subject Matter• Restatement Definition: a process or device for
continuous use in the operation of a business. Includes:– information pertaining to contents of or manufacture of a
product– process of treating or preserving materials– information relating to business operations– computer programs; customer lists
• UTSA expands protected matter to include:– single or ephemeral events– negative information
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Subject Matter• Restatement Definition: a process or device for
continuous use in the operation of a business. Includes:– information pertaining to contents of or manufacture of a
product– process of treating or preserving materials– information relating to business operations– computer programs; customer lists
• UTSA expands protected matter to include:– single or ephemeral events– negative information
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Requirements for Protection
(1) Information must have been “secret” initiallysome courts add explicit novelty requirement
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Requirements for Protection
(1) Information must have been “secret” initiallysome courts add explicit novelty requirement
(2) Plaintiff must have made reasonable efforts to keep it secret
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Requirements for Protection
(1) Information must have been “secret” initiallysome courts add explicit novelty requirement
(2) Plaintiff must have made reasonable efforts to keep it secret
(3) The information must be commercially valuable
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Requirements for Liability• Breach of Confidence
– confidential relationship– reliance on commercial custom and tacit
understandings
• or: Secret was discovered through “improper means”– e.g., overflights; fraudulent misrepresentations;
phone taps– Not reverse engineering
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Requirements for Liability• Breach of Confidence
– confidential relationship– reliance on commercial custom and tacit
understandings
• or: Secret was discovered through “improper means”– e.g., overflights; fraudulent misrepresentations;
phone taps– Not reverse engineering
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Remedies• Injunctions
– debate over length and breadth– not available after plaintiff obtains a patent
• Damages– actual damages
• plaintiff’s lost profits, or
• defendant’s gains
– consequential damages– punitive damages– attorneys’ fees
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Trade Secret Protection for Software
• Companies sell copies of object code, keep source code secret
• Courts rule that public distribution of object code does not forfeit TS protection, so long as source code is hard to reverse engineer– Data General v. DCI (Del. 1971)– Telex v. IBM (CA10 1975)– Q-Co Industries (SDNY 1985)
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Trade Secret Protection for Software
• Appropriate to an era in which software is custom-made by vertically integrated hardware suppliers for large commercial customers
• Weaknesses– Gradual improvement of decompilers– No protection against “piracy” of object code– Limited protection against “downstream”
consumers– Consumers’ demand for access to source code
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Pro-CD Bowers
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Typical Shrinkwrap Licenses
• Restraints on resale or rental;• Limits on the manufacturer’s warranties;• Prohibitions on modifying or tampering with the
product (including disassembling or reverse engineering);
• Prohibitions on uses of the product that would have been permitted by the fair-use doctrine;
• Requirements that the consumer not contest the validity of the producer’s copyright or patent;
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Contractual Protection
• Pro-CD v. Zeidenberg (CA7 1996):– copyright law does not preempt state contract law,
used to enforce shrinkwrap license restriction on commercial uses
• Bowers v. Baystate Technologies (CAFC 2003):– Copyright law does not preempt state contract law
used to enforce shrinkwrap license restriction on reverse engineering
• UCITA
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Pro-CD Bowers
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Copyright
CONTU
Pro-CD Bowers
Apple EC Directive 91/250
TRIPS 10(1)
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Copyright Protection• 1964: Register of Copyrights announces
willingness to register published software programs – upon proof of sufficient “original authorship”– But object-code versions might not constitute
“copies”
• 1964-1977: 1,205 programs registered– 80% by IBM and Burroughs
• 1978: CONTU recommends full copyright protection for software
• 1980: Congress adopts recommendation
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Copyright Protection
• 1991: EC Directive 91/250: All member states must modify domestic copyright law to recognize copyrights in software
• 1994: TRIPS Art. 10(1):– “Computer programs, whether in source or object
code, shall be protected as literary works under the Berne Convention”
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Basic Copyright ProtectionEntitlements -- §106
(1) Reproduction(2) Derivative Works(3) First Distribution(4) Public Performance(5) Public Display
Exceptions:Fair Use -- §107Merger“essential” or “archival” copying -- §117
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Apple v. Franklin (CA3 1983)
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Apple v. Franklin (CA3 1983)
Apple
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Apple v. Franklin (CA3 1983)
Apple
Apple O.S.
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Apple v. Franklin (CA3 1983)
Apple
AppleBorland
Free access Apple O.S.
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Apple v. Franklin (CA3 1983)
Apple
Apple O.S.
AppleBorland
Free access
Franklin
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Apple v. Franklin (CA3 1983)
Apple
Apple O.S.
AppleBorland
Free access
Franklin
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Apple v. Franklin (CA3 1983)
Apple
Apple O.S.
AppleBorland
Free access
Franklin
Copy of Apple O.S.Verbatimcopying
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Apple v. Franklin (CA3 1983)
Apple
Apple O.S.
AppleBorland
Free access
Franklin
Copy of Apple O.S.Verbatimcopying
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Copyright
CONTU
Pro-CD Bowers
Apple EC Directive 91/250
TRIPS 10(1)
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Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Interoperability
• Menu Hierarchies
• Ineffective Enforcement
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Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of ProgramsCopying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Interoperability
• Menu Hierarchies
• Ineffective Enforcement
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Copying Nonliteral Features of Programs
• Whelan (CA3 1986)
• Plains Cotton (CA5 1987)
• *Altai (CA2 1992)
• Kepner-Tregoe (CA5 1994)
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Altai Test(1) Abstraction(2) Filtration
Unprotected Material includes:(a) Elements dictated by efficiency(b) Elements dictated by external factors
(i) mechanical specifications of the computer(ii) compatibility requirements of other programs (iii) computer manufacturers' design standards(iv) demands of the industry being served(v) widely accepted programming practices
(c) Elements taken from public domain(3) Comparison
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Nichols “Pattern” Test
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Nichols “Pattern” TestId
eaE
xpre
ssio
n
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Nichols “Pattern” TestId
eaE
xpre
ssio
n
Elements dictated by efficiency
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Nichols “Pattern” TestId
eaE
xpre
ssio
n
Elements dictated by efficiency
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Nichols “Pattern” TestId
eaE
xpre
ssio
n
Elements dictated by external factors
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Nichols “Pattern” TestId
eaE
xpre
ssio
n
Elements dictated by external factors
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Nichols “Pattern” TestId
eaE
xpre
ssio
n
Elements taken from public domain
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Nichols “Pattern” TestId
eaE
xpre
ssio
n
Elements taken from public domain
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Comparison
Protected Parts of Plaintiff’s program
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Comparison
Protected Parts of Plaintiff’s program
Elements of defendant’s program
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Comparison
Protected Parts of Plaintiff’s program
Elements of defendant’s program
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Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of ProgramsCopying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Interoperability
• Menu Hierarchies
• Ineffective Enforcement
![Page 53: Intellectual Property Protection for Software William Fisher June 23, 2004.](https://reader030.fdocuments.in/reader030/viewer/2022032801/56649d535503460f94a2fd2b/html5/thumbnails/53.jpg)
Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Reverse Engineering for the Purpose of InteroperabilityInteroperability
• Menu Hierarchies
• Ineffective Enforcement
![Page 54: Intellectual Property Protection for Software William Fisher June 23, 2004.](https://reader030.fdocuments.in/reader030/viewer/2022032801/56649d535503460f94a2fd2b/html5/thumbnails/54.jpg)
Organization of Computer Programs
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Organization of Computer Programs
Hardware
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Organization of Computer Programs
Hardware
Operating System
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Organization of Computer Programs
Hardware
Operating System
Application Program
Application Program
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Hardware
Operating System
Application Program
Application Program
Interoperability
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Hardware
Operating System
Application Program
Application Program
Interoperability
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Interoperability Strategy #1(e.g., Microsoft, Apple)
Dell
Microsoft
MicrosoftBorland
Free access
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Interoperability Strategy #2(e.g., Sega, Nintendo)
Nintendo
Nintendo
NintendoLicensee
License fees
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Interoperability Strategy #3(e.g., MAI Systems Corp.)
MAI
MAI
MAIMAI
No licenses
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Sega (CA9 1992)
Sega Genesis III
TMSS
Sega GamesLicensed Games
License fees
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Sega (CA9 1992)
Sega Genesis III
TMSS
Sega GamesLicensed Games
License fees
AccoladeGames
Lock-out
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Sega (CA9 1992)
Sega Genesis III
TMSS
Sega GamesLicensed Games
License fees
AccoladeGames
Lock-out
Microcode (copied by Accolade)
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Sega (CA9 1992)
Sega Genesis III
TMSS
Sega GamesLicensed Games
License fees
AccoladeGames
Lock-out
TMSSinitializationcode
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Sega (CA9 1992)
Sega Genesis III
TMSS
Sega GamesLicensed Games
License fees
AccoladeGames
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Fair Use Doctrine
• Purpose and Character of the Use– commercial use– transformative uses– parody– propriety of defendant’s conduct
• Nature of the Copyrighted Work– fictional works/factual works– unpublished/published
• Amount of the portion used• Impact on Potential Market
– rival definitions of “market”– only substitution effects are cognizable
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Fair Use Doctrine -- as applied in Sega
• Purpose and Character of the Use– commercial use: purpose of A’s copying was “study” (noncom)– transformative uses: concede no transformative use– parody: n.a.– propriety of defendant’s conduct: stress decency of A’s behavior
• Nature of the Copyrighted Work– fictional works/factual works: computer programs deserve less
protection that fictional works– unpublished/published: sale of program = publication
• Amount of the portion used: concede A copied entire program• Impact on Potential Market
– rival definitions of “market”: implicit adoption of narrow version– only substitution effects are cognizable
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Reverse Engineering for Interoperability
• Courts finding this to be fair use:– CAFC (Atari 1992; Bowers 2003 [dictum])– CA5 (DSC Communications 1996)– CA 9 (Sega 1992; Sony 2000)– CA11 (Bateman 1996)
• EC Directive 91/250, Art. 6, takes same position
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Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Reverse Engineering for the Purpose of InteroperabilityInteroperability
• Menu Hierarchies
• Ineffective Enforcement
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Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Interoperability
• Menu HierarchiesMenu Hierarchies
• Ineffective Enforcement
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Menu Hierarchies: Litigation History
• Lotus v. Paperback (DMass 1990)
• Lotus (CA1 1995)
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Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Interoperability
• Menu HierarchiesMenu Hierarchies
• Ineffective Enforcement
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Dimensions of Diminishing Copyright Protection
• Copying Nonliteral Features of Programs
• Reverse Engineering for the Purpose of Interoperability
• Menu Hierarchies
• Ineffective EnforcementIneffective Enforcement
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Source: Business Software Alliance
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Possible Explanations
• Local Self-Interest
• Ideology
• Pressure
• Improved Marketing
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Possible Explanations
• Local Self-Interest– United States in 19th century– Developing countries today
• Ideology
• Pressure
• Improved Marketing
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Possible Explanations
• Local Self-Interest
• Ideology
• Pressure
• Improved Marketing
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Possible Explanations
• Local Self-Interest
• Ideology– Global:
• From “monopoly” to “Intellectual Property”
• From nationalism to comity
• Habit yields sense of entitlement (VCRs, MP3)
• Pressure
• Improved Marketing
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Possible Explanations
• Local Self-Interest
• Ideology– Local:
• Labor theory
• Romantic conception of authorship/personality theory
• Communal conceptions of creativity
• Socialism; anti-individualism
• Pressure
• Improved Marketing
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Possible Explanations
• Local Self-Interest
• Ideology
• Pressure
• Improved Marketing
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Possible Explanations
• Local Self-Interest
• Ideology
• Pressure– TRIPS– Bilateral Agreements– Trade sanctions
• Improved Marketing
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Possible Explanations
• Local Self-Interest
• Ideology
• Pressure
• Improved Marketing
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Possible Explanations
• Local Self-Interest
• Ideology
• Pressure
• Improved Marketing
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Piracy Rates Within the United States
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Sou
rce:
Bus
ines
s S
oftw
are
All
ianc
e
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Sou
rce:
Bus
ines
s S
oftw
are
All
ianc
e
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MT
WY
ID
WA
OR
NV
UT
CA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VAWV
OH
MI
NY
PA
MD
DE
NJ
CTRI
MA
ME
VT
NH
AK
HI
Blue = Gore Red = Bush
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MT
WY
ID
WA
OR
NV
UT
CA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VAWV
OH
MI
NY
PA
MD
DE
NJ
CTRI
MA
ME
VT
NH
AK
HI
Blue = below average piracy rate Red = above average piracy rate
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MT
WY
ID
WA
OR
NV
UT
CA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VAWV
OH
MI
NY
PA
MD
DE
NJ
CTRI
MA
ME
VT
NH
AK
HI
Blue = below average piracy rate Red = above average piracy rate
35 states fit the pattern; 15 do not
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Copyright
CONTU
Pro-CD Bowers
Apple EC Directive 91/250
TRIPS 10(1)
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Forms of IP for Software
1950 1960 1970 1980 1990 2000
Trade Secrecy
Contracts
Copyright
Patent
CONTU
DiehrBenson
Flook Alappat
State Street
Pro-CD Bowers
Apple EC Directive 91/250
TRIPS 10(1)
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Processes
Products
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Processes
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Processes
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Processes
Machines
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Processes
Machines
Compo
sitio
ns
of M
atte
r
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Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
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Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
Product-by-process
PbP
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Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
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Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
Laws of Nature
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Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
tureAlgorithms
Laws of Nature
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Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
tureAlgorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
tureAlgorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
Purified
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PPA
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PVPA
PPA
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PVPA
PPA
Animals
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PlantsPVPA
PPA
Animals
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PlantsPVPA
PPA
Animals
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Design
Patents
SurgicalProcedures
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PlantsPVPA
PPA
Animals
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Software
Design
Patents
SurgicalProcedures
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PlantsPVPA
PPA
Animals
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Software
Design
Patents
Business Methods
SurgicalProcedures
Processes
Machines
Compo
sitio
ns
of M
atte
r
Man
ufac
ture
PlantsPVPA
PPA
Animals
Purified
Genes
Algorithms
Laws of Nature
NaturallyOccurringSubstances
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Patent Protection• Gottschalk v. Benson (US 1972)
• Parker v. Flook (US 1978)
• Diamond v. Diehr (US 1981)
• Federal Circuit Relaxation of the Test, 1982-present
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Federal Circuit Relaxation of the Test• Freeman-Walter-Abele test (1977-1982)
– Is the algorithm applied as part of an otherwise statutory process or apparatus claim?
• gradual weakening, 1982-1994– Iwahashi (1989)– Arrhythmia (1992)
• In re Alappat (CAFC 1994)– an algorithm embedded in a general purpose
computer becomes a patentable machine• PTO Guidelines (1996): will accept applications
for software on disks• State Street Bank (CAFC 1998)• AT&T (CAFC 1999)
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State Street Bank
Investment Portfolio
partn
ership
Mut
ual F
und
4Mutual Fund 5
Mutual Fund 1
Mut
ual F
und
2
Mutual Fund 3
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State Street Bank
Investment Portfolio
partn
ership
Mut
ual F
und
4Mutual Fund 5
Mutual Fund 1
Mut
ual F
und
2
Mutual Fund 3IndividualInvestor
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State Street Bank
Investment Portfolio
partn
ership
Mut
ual F
und
4Mutual Fund 5
Mutual Fund 1
Mut
ual F
und
2
Mutual Fund 3IndividualInvestor
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State Street Bank
Investment Portfolio
partn
ership
Mut
ual F
und
4Mutual Fund 5
Mutual Fund 1
Mut
ual F
und
2
Mutual Fund 3IndividualInvestor
11%
14%
20%
25%
30%
Data Processing System
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State Street Holdings• Transformation of data by a machine into a
final share price constitutes a practical application of an algorithm and is therefore patentable subject matter
• Repudiate the “business-methods” exception to patentability
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Software Patent Grants
0
2000
4000
6000
8000
10000
12000
14000
1995 1996 1997 1998 1999 2000 2001
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Software Patent Grants
• Over 100,000 software patents issued to date in U.S.
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Patent Doctrines by Technology Sector
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Patent Doctrines by Technology Sector
= average
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Patent Doctrines by Technology Sector
Utility
= average
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Patent Doctrines by Technology Sector
Utility Novelty
= average
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Patent Doctrines by Technology Sector
Utility Novelty Obviousness
= average
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Patent Doctrines by Technology Sector
Utility Novelty Obviousness Disclosure
= average
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Patent Doctrines by Technology Sector
Utility Novelty Obviousness Disclosure
= average
= software
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Patent Doctrines by Technology Sector
Utility Novelty Obviousness Disclosure
= average
= software
= biotechnology
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Patent Doctrines by Technology Sector
Utility Novelty Obviousness Disclosure
= average
= software
= biotechnology
Sophisticated PHOSITA;Mature technology
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Patent Doctrines by Technology Sector
Utility Novelty Obviousness Disclosure
= average
= software
= biotechnology
Sophisticated PHOSITA;Mature technology
Unsophisticated PHOSITA;Unpredictable technology
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What sorts of IP Protection (if any?) are appropriate for softeware?
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Patent Rights Most Likely to Foster Innovation in field where:
1) High R&D Costs2) High degree of uncertainty concerning success
of particular lines of research3) Content of technological advances can be
ascertained easily by competitors through “reverse engineering”
4) Technological advances can be mimicked by competitors rapidly and inexpensively
5) Innovators highly responsive to monetary incentives
6) Innovation not cumulative
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