ITS 321: Legal and Ethical Issues in Information Technology

Lesson 5: Intellectual Property

Objectives:

Chapter 6 discusses concepts relating to intellectual property and laws that apply to it. Objectives important to this lesson:

  1. Intellectual property
  2. Copyrights, patents, and trade secrets
  3. Plagiarism
  4. Reverse engineering
  5. Open source code
  6. Competitive intelligence vs. espionage
  7. Cybersquatting
Concepts:

Chapter 6 begins with a shorter story about the Recording Industry Association of America and its efforts to shut down music piracy. The story is meant to introduce one type of intellectual property (artistic work) and one type of crime against it: unlawful copying and distribution.

Intellectual Property

The text defines intellectual property as a work of the mind, something that a human mind created and owns. Why is this definition necessary? Isn't all creative work the work of a human mind? Yes, so far. The distinction seems to be necessary because for some creative work there is no tangible output. The topic is about intangible property: songs, drama, and concepts can be property without there having been a realization (e.g. a recording, a publication, a performance) of them. Such things would not be property if someone did not or could not own them, hence the term.

The text further states that such a work must be distinct, which means that it is different from all similar work in some way or that it has recognizable features that identify it. Some examples are offered of types of intellectual property, and some of the words add to the confusion. Consider the word "book". Does the word mean only a construct of paper and ink, or is the an electronic file holding the same information still the same book? If it is the same, then am I allowed to make a "safety" copy of it, since copying a file is easy, or am I forbidden to do so in the same way that I am forbidden to photocopy an entire text, which I was unlikely to do due to the cost and effort involved? What about an audio copy: is that still a book or is it a performance? Let's consider three kinds of property laws, for three kinds of property.

Copyright

The constitution of the United States mentions copyright protection, and there are several laws about it. Other countries have similar laws. The text explains that a copyright establishes an exclusive right to distribute, display, perform, or reproduce an original work, as well as the right to produce derivative work based on the original (page 238). This means that not only may I not copy the work of Pixar, I may not make a sequel to any of their works without their cooperation and permission. As I write this, Warner Brothers is about to release a new movie based on the character Sherlock Holmes. They will have rights to this film, but they also must have obtained the right to use the character from the estate of the original creator, else they could not have legally made the film. Exceptions to the law exist, such as works that are satires or parodies. These exceptions keep humor magazines and tv shows in business.

Some terms that might help you understand this section:

  • intellectual property - something that was created by a human mind
  • copyright - exclusive right to an intellectual property. Note that copyright must be granted by a government agency, and the actual rights associated with it will vary from one government to another.
  • trademark - a visual and/or verbal expression used to distinguish the products of an entity from those of another. For example, the Nike Swoosh is a trademark, and may not be used by entities other than Nike unless the use has been approved, or is fair use.
  • fair use - the concept that some uses of copyrighted material do not violate copyright. For example, in the page linked above, Wikipedia displays the Nike emblem as part of a reference article (educational use) about the company. More on this below.
  • infringement - improper use of a trademark or copyrighted material
  • cease and desist order - a legal order that requires an entity to stop improper use of trademarks or copyrighted material; alternatively, a person who believes that someone has infringed on their work may send a cease and desist letter to the presumed violator

Page 239 offers a quote from the US Code about the protection of copyright. Before we go into that, the text has never bothered to explain what the "US Code" is. It is a compilation of Federal laws, published by the US House of Representatives. It serves as an official list of Federal laws. Its organization will be unfamiliar to most students, so follow the link above to get a rough idea of how it is organized. This will prevent your being mystified the next time you hear or read a reference like "Title 17, section 101".

The concept of copyright applies to properties like art, books, films, music, and other works that are the work of an author/artist/creator. Music is a complex issue: not only is the composer eligible to apply for a copyright, so is any performer who performs or records it, and the studio that produces it. A collaborative art, like music or film, may have many creators associated with it. On page 238, the text expands the list of eligible work to include architecture, audiovisual works, choreography, drama, graphics, pantomimes, pictures, sculptures, and more. Someone put some thought into the idea that authors could copyright work "in any tangible medium of expression, now known or later developed". This thought covers the idea of technology that the author of that phrase or the author of a copyrighted work could not predict.

A copyrightable work must fall into one of the categories mentioned, and must also be original, which may be a problem as time goes by. Read the Spider Robinson story Melancholy Elephants, and read more of his work, for that matter. Is that a copyright violation, by the way? Not at all, since Mr. Robinson has kindly made that story available to everyone. If you are not familiar with his work, try the Callahan's bar stories.

YouTube has posted an informational video about copyright that clarifies some points. Let's watch it then illuminate the part they left a little vague. YouTube Copyright Video

Back to the text, it is important to understand the fair use doctrine, discussed on page 239. It says that portions of a copyrighted work may be used without permission if that use is allowed under Title 17, section 107. The text is little light on this point so consider the following:

Use of copyrighted material by other than the copyright holder must be examined under four lenses to determine if the use is allowed.

  • What is the intent of the use? It may be a fair use if the intent is not to make money, if it is done for educational purposes, if it is a satire or parody, or if it is used as part of a review.
  • What is the nature of the copyrighted material? You can copyright a presentation/expression of an idea, but you cannot copyright facts or ideas themselves. The discussion on the page behind the link in this paragraph adds that unpublished, private material may have no fair use, since the author has not made it available in any form at that time.
  • How much of the work has been used? The concept of use for a review, for example, assumes that you may quote a portion of a copyrighted text, but you may not quote the entire text. A movie reviewer may show a portion of a film, but not the entire film. Further, if a filmmaker includes a portion of another film in a scene (e.g. the included film is playing on a television in the scene), permission must be granted or it is an infringement. This sort of use should be documented in the credits of a film, noting that the material was used with permission.
  • Does the new use affect the marketability of the original? If a shoe store sells imitation Nikes as though they were real Nikes, the trademark holder suffers a loss of those sales.

The text continues with a list of laws, acts, and agreements, some of them international in scope. By the time you reach the end of the list, you may wonder how many times the world must reinvent the same concept.

  • Prioritizing Resources and Organization for Intellectual Property (PRO-IP, 2008) - increased enforcement and penalties for copyright and trademark infringement. There is a typo in this section: the the US Intellectual Property Enforcement Representative oversees a Joint Strategic Plan against counterfeiting and piracy (not privacy).
  • General Agreement on Tariffs and Trade (GATT) - an international agreement on property rights, but the text notes that actual rights vary from one country to another
    • The GATT update in 1993 created the World Trade Organization (WTO), to promote business
    • The GATT update of 1993 also created the WTO TRIPS agreement, Trade-Related Aspects of Intellectual Property Rights (shouldn't that be TRAIPS?), which addresses intellectual property protection
  • World Intellectual Property Organization (WIPO) Copyright Treaty - a United Nations based treaty added in 1996 to address electronic media
  • Digital Millennium Copyright Act - a US law that made it an offense to circumvent copy protection, to make tools that would do so, and to distribute tools that can do so

Patents

Patents apply to inventions which, like copyrightable work, must be original. Note the list of requirements a patent application must pass that appears on page 246:

  • must be for a process, a machine, a manufactured object, a material compound, or a new use of something that is one of the above
  • must be useful
  • must be novel (new)
  • must not be obvious

The text lists three things the Supreme Court has ruled cannot be patented: abstract ideas (like math formulae), laws of nature (like gravity), and natural phenomena (like a sunrise). The text continues with a discussion of the number of software patents filed since 1980 (huge) and observes that it is almost impossible to search through existing patents to determine if a project is intruding on one.

The text discusses patent trolls, companies whose purpose is to file or buy a patent in order to sue other companies who may be infringing on that patent. As the name implies, there is little respect in the IT community for companies that do this but that does not prevent their activities. A method that may prevent some actions of this sort is defensive publishing. If a company develops a new technique, and finds it is unable to afford the patent process, it may choose to publish an article about the process/technique/innovation in order to prevent anyone else from obtaining a patent on it. The article proves the existence of the innovation at a point in time, and prevents anyone else from patenting it as a new invention, due to its existence as prior art. If a process already exists in prior art, it is not patentable.

Another unethical behavior described in the text is a submarine patent. The patent holder on a new or little used process convinces a standards body to adopt some process or method as a standard that includes the use of the holder's patent, all the while keeping the existence of the patent "secret". (Patents are not secret, they are public information, but no one reads them all.) When the standard becomes widely used, this gives the patent holder the ability to sue people following the standard for patent infringement. Filing suit against people who unknowingly violate a patent of this sort is called patent farming. It is to be hoped that no standards body would listen to arguments for standards from the patent holder again, but this does not appear to be the case.

Trade Secrets

We have already discussed the existence of trade secrets. The text offers a definition here:

  • it is business information
  • money or effort was spent to develop it
  • it is unique in some way
  • it is generally unknown to the public and competitors
  • it is kept confidential by the holder

Trade secrets are not patented, else they would be public information. An example is the recipe for any food or drink product. Often, the label of such a product is both accurate and vague, including "natural flavors" or "spices" in the ingredient list. It is truthful, but unhelpful to a competitor seeking to duplicate the recipe.

The text lists four advantages to having a trade secret, as compared to a copyright or a patent:

  • copyrights and patents eventually expire, but trade secrets do not, so the protection accorded to them is permanent
  • there is no application process and no disclosure involved in a trade secret
  • a court can rule that a patent is no longer valid; trade secrets do not have this vulnerability
  • because there is no application process, there are no costs associated for filing

The burden placed on the secret holder is to maintain the secret, and to maintain the knowledge among employees that it is meant to remain a secret. The text refers to two requirements in the Uniform Trade Secrets Act:

  • that there is a benefit to the secret being unknown and unascertainable by the public and competitors
  • that the secret holder makes reasonable efforts to maintain the secrecy of the information

So, what is the protection worth? The text mentions the Economic Espionage Act (1996) that established penalties up to $10,000,000 and prison sentences up to 15 years for the theft of trade secrets. It also mentions that some other countries offer no protection for trade secrets.

It seems inevitable that some employees who know trade secrets will eventually leave the companies whose secrets they know. This leads to the need for nondisclosure agreements, which would be a standard part of the conditions of employment in such a company. The employee agrees not to disclose such information either while in the employ of the company or afterward. The penalties for violating such an agreement are usually large. The text also mentions noncompete agreements, in which a departing employee (or company officer) agrees not to engage in a competitive business for a specific amount of time. It should be observed that in both of these cases, all the secret holder actually gets from the agreements is the ability to sue a person who violates them. For a large company, this makes sense, but not so much for a small company that may not be able to afford the court costs.

Plagiarism

Plagiarism is using the work of others as though it were your own. This seems like an issue related mainly to school, but the text lists examples from news reporting and movie making that show plagiarism can occur in the real world as well.

The text points out a common misunderstanding that could explain some instances of plagiarism. Some people seem to believe that anything posted on the Internet is public domain and subject to free use. Those beliefs are not correct, but even if they were, that would not excuse pretending that something made by someone else is your own work. It is unclear to me why the author presents a list of five web based companies that provide comparison services to teachers concerned about plagiarism. Those services are certainly geared to one market, and they are unlikely to be of much use to anyone outside a school system.

Reverse Engineering

The concept here is to examine something that works (like a software program), determine how it works, and make a copy or improved version of it. This is perfectly legal if you own the original, and quite illegal if you do not.

For those who have not worked in the software business, the example in the text may not be clear. Assume, for example, that we have a client database saved in a proprietary format that we purchase annually from a legitimate source. We use a database program that a contractor wrote for us to manipulate the data. Assume that the vendor changed data file format this year, and it is only available in the new format. The original contractor is long gone. We need someone to determine what the original program did, and find a way to write a program that will do the same or better with the new data source. The person who does this needs to reverse engineer the original program. Doing so will save a great deal of time in many cases. This is legal if we paid the original programmer for his work and his product: we own the right to do so.

An example of an illegal version of this process would be to decompile (translate from machine language to a programming language) a program that we do not own, such as any product from Microsoft (assuming we do not work for Microsoft).

To legally compete with the product of another vendor, we must create our product without knowledge of the code in their product. Think about it this way: if you are a magician, and you see another magician perform an act that is new and impressive, you can go two ways. The legal, ethical way is to look at the effect, and to figure out how to do something like it or better with your own skills and knowledge. That is what a good magician (and a good programmer) would do. The illegal, unethical way would be to steal the secret of the effect from the performer you saw (or from knowledgeable staff). This is what a thief would do. A third way would be to copy the code into your program, or copy the whole program and sell it as your own. This is what a pirate would do. (Although I am not convinced that Morgan and Bartholomew would approve.)

Open Source Code

Some computer programs are not protected by copyright. They are meant to be shared and adapted by other programmers who will in turn share their work with anyone willing to comply with the requirement to continue the open source agreement.

The text offers some examples of open source code products that are available for download on page 257. Remember that open source code products are typically free, but that is not the salient factor. They are open source code products because any programmer may attempt to improve the product as long as they comply with the requirement to keep the product open. In most cases, this means that updates are submitted as proposals, which would then be approved or disapproved, and then made a part of the ongoing product (or not).

Competitive Intelligence

If you research a competitor through public records, news releases, public relations articles, web sites, and other readily available sources, you can form opinions about what the competitor is doing and what you should do to compete more effectively. This is an example of using competitive intelligence. There is nothing wrong with this practice.

If, on the othe hand, you try to steal trade secrets, you interview their staff under false pretenses (are there true pretenses?), you hire people to work for the competitor to get information, and otherwise try to get insider information about the competitor, you are conducting industrial espionage, which is illegal.

The text offers a list of diagnostic questions on page 259 that can help you understand the difference. A way to summarize the difference in behavior might be to ask whether you would want the police to know what you are doing. If the issue makes no sense to you because it is only about soap (see the Procter and Gamble example in the text), remember that it is not about state secrets, it is about unlawful practices that translate to money in the marketplace.

Cybersquatting

The chapter ends with a discussion about people who register domain names with the hope that they will be able to sell the rights to the domain to a company that wants the rights enough to pay for them. A domain name can be considered as an intellectual property in that it is not real property, but it may be close enough to a trademark, service mark, or company name to serve as an asset to a company. This technique may backfire on a squatter who wants too much for the domain, or who is trying to get a payoff from a company who wishes to take the squatter to court to force a reassignment of the domain based on the squatter having no legitimate claim to it.