12.2 Intellectual Property

Copyright Law

The foundation for copyright law is found in the U.S. Constitution, which grants, in Article 1, Section 8, “Authors and Inventors the exclusive Right to their respective Writings and Discoveries” to “promote the Progress of Science and the useful Arts.”¹¹ The Copyright Act of 1976 is the congressional statute that governs this form of IP.

The purpose of copyright law is to encourage the spread of knowledge by incentivizing authors to create new works. This is accomplished by granting the author of a work the exclusive right to reproduce, distribute, publicly perform or display the work, and also to make derivative works for a period of time that lasts for the life of the author plus seventy years. Examples of creations that can be copyrighted include books, architecture, musical works, movies, and—of particular interest to information systems professionals—software.

There are two requirements for an author seeking to obtain the protection of copyright law. The first is that the creation must be original, meaning it must be independently created and have some minimal degree of creativity. For example, simply alphabetically arranging a list of names and phone numbers will not meet this originality requirement. However, organizing that list by geographic areas would be enough to meet this minimal threshold. The second requirement is that the creation be fixed in a tangible medium of expression. This is so that it can be perceived or communicated to others. An example of this would be writing something down on a piece of paper. In the context of information systems, however, the creation is usually fixed in a computer file located on a hard drive.

Once an author creates a protected work and fixes it in a tangible medium of expression, it automatically gains copyright protection—meaning, no registration is required. However, registration of the work does provide certain benefits, including the ability to sue for copyright infringement in federal court.

Note that you cannot copyright an idea; only the expression of an idea merits legal protection with this form of IP. For example, suppose you came up with the idea and process for powering cars by saltwater instead of gasoline and proceeded to write a book about it. It would be legal for someone else to read that book, extract the idea and process for how to make cars run on saltwater, and build such a car, all without infringing your copyright. In addition to excluding protection for ideas (and instead protecting their expression, as in a book), copyright law does not cover a “procedure, process, system, method of operation, concept, principle, or discovery.”¹² The protection of these would require a different form of IP, a patent.

The duration of a copyright is the author’s life plus seventy years. This, plus the fact that copyright protection attaches automatically, leads to a great deal of information being protected for a long period of time. With the rise of the internet, a new movement arose to counter this: the open-source model, which means that content is open to everyone rather than being locked down via copyright. The emergence of open-source software has led to a great deal of collaboration and innovation, resulting in creations like Linux and open educational materials.

There is one significant aspect of copyright law that allows individuals to freely use copyrighted material: fair use, which is a principle that allows limited parts of works to be used for specific purposes like classroom activities, news reports, commentary, and criticism. To determine whether the use of copyrighted material falls within fair use, courts apply a four-factor test:¹³

• Purpose and character of the use (educational or commercial)
• Nature of the work (level of creative expression)
• Scope and substantiality (how much and what parts)
• Effect on the marketplace (negative impact on current market)

Of these factors, the effect on the marketplace is the most important. For example, if a professor were to use a five-minute clip from the movie The Matrix to teach the class about fight choreography, a court would most likely find that this was within fair use. This is because (1) the purpose and character of the use were educational in nature; (2) the substantiality of what was copied is only five minutes from a movie that was over two hours long, and most importantly; (3) the effect on the marketplace was negligible. In other words, the movie would not lose sales due to this act. In fact, some students might be interested enough in what they saw to view the movie, thereby increasing the revenue for the copyright holder. It should be noted that courts often weigh these factors differently depending on the specific case.

Patent Law

Also established by the U.S. Constitution, patent law protects any “new, useful, and nonobvious”¹⁴ process, machine, manufacture, or composition of nature. To obtain patent protection, the inventor must file with the U.S. Patent and Trademark Office (USPTO) (Figure 12.6). After filing, the inventor can prevent others from making, using, selling, and importing the patented invention. Theoretically, this enables the inventor to recover the costs associated with developing the invention and to profit from its sale. Some examples of famous patents granted by the USPTO include Alexander Graham Bell’s telephone patent, Thomas Edison’s patent for the incandescent light bulb, and more recently, Jaap Haartsen’s patent for Bluetooth communications.

Figure 12.6 This is a 1968 patent for a “data storage control apparatus for a multiprogrammed processing system” developed by colleagues at MIT/General Electric. This diagram is of a mainframe, showing how it is connected to a memory unit. The numbers represent the part or component of the product. (credit: modification of work “US Patent connected to Project MAC (Multics project)” by Couler, Glaser, U.S. Patent Office/Wikimedia Commons, Public Domain)

Obtaining a patent is not a simple process as there are several requirements involved in gaining patent protection. First, a patent application is filed with the USPTO submitting a detailed description of the invention. The USPTO will then go through the intensive process of determining whether the submission merits patent protection. This process is complex and almost always requires the assistance of a patent attorney or agent. This cost combined with those associated with the research and development necessary to create a patentable invention result in the fact that most patents are quite expensive to obtain.

Once obtained, patents provide one of the strongest forms of IP protection. Any entity that uses the invention in any way is subject to patent infringement. Generally, the only way to use the patented idea is to pay the owner a fee to obtain a license. Additionally, it is not legal for anyone else to independently discover and use the invention. Furthermore, no one can reverse engineer the patented invention to determine the nature of the idea. Due to these powerful protections, the primary way a competitor would seek to utilize a patented invention without the creator’s permission is by challenging the validity of the patent granted by the USPTO. As with obtaining a patent, the cost of litigation to challenge this form of IP is usually both very expensive and time-consuming.

Trade Secret Law

The source of trade secret law resides in the Uniform Trade Secrets Act, which defines a trade secret generally as information that derives economic value from not being generally known and that efforts to maintain its secrecy are reasonable.¹⁵ As you can imagine, various types of information can be protected, including business, financial, economic, technical, and engineering information. Specifically, formulas, patterns, compilations, programs, devices, methods, techniques, and processes can be subject to trade secret protection. The trade secret owner must ensure that the secrecy of the trade secret is maintained. Examples of such actions include nondisclosure agreements (NDAs), employee training, access controls, exit interviews, marking documents as confidential, IT security measures (such as firewalls and intrusion detection systems), and physical security measures (such as restricting access, security personnel, and CCTV monitoring). If the trade secret owner continuously maintains reasonable measures such as these, the duration of protection against misappropriation is potentially indefinite.

Trade secret protection can, however, be lost in several ways. First, competitors can legally reverse engineer any information that an organization maintains as a trade secret. Second, a competitor could independently discover the information that is being maintained as a trade secret, and the owner would have no cause for action. Finally, a competitor can lawfully acquire the information being protected. This can occur if the trade secret owner fails to take reasonable measures to maintain its secrecy. For example, posting a trade secret on a publicly accessible website will allow the competitor to lawfully acquire the trade secret. While these concerns are significant, companies often choose this form of protection over a patent because trade secrets can have a potentially indefinite term if properly protected, while a patent terminates after twenty years.

Trademark Law

The foundational source of trademark law is the commerce clause of the U.S. Constitution, which allows Congress to regulate interstate and foreign commerce. The Lanham Act of 1946 is the statute that governs this area of IP law. Trademark law protects a “word, name, symbol, or design” used to identify the source of a good and distinguish it from the products of another.¹⁶ Trademarks can be applied to product elements that make it uniquely identifiable in a market, such as specific shapes (like Coca-Cola’s bottle design), scent, colors, or packaging. Like copyright law, one does not need to register to receive trademark protection; however, doing so does provide certain benefits.

Trademarks are an essential part of almost any business. They provide consumers with a simple way to identify the source of a good or service, and are thereby crucial in building customer trust, brand recognition, and consumer loyalty. The duration of a trademark is potentially indefinite, though it can be lost for several reasons. For example, abandonment of the mark, which occurs when a trademark owner does not use the trademark for at least three years, will result in the loss of protection.

Ethical Issues in Intellectual Property Law

Intellectual property protections provide numerous benefits to individuals and organizations, but there are also significant ethical considerations associated with IP law. Intellectual property laws, especially copyrights and patents, incentivize creators to generate new information by providing them protection of that information for a period of time. However, the ultimate purpose of IP laws is to benefit society at large by providing its members access to new creations. This results in a tension between the rights of the creator and the rights of society. While the promotion of creativity and innovation is a worthy goal, IP laws also have the potential to restrict access to information and technology. This can potentially lead to digital divide issues, whereby certain specific individuals or communities are disadvantaged due to their lack of access to the new technology. Thus, governments and legal systems must strike an appropriate balance between incentivizing innovation and ensuring equitable access to new technology on a global scale.

Copyright Law in Information Systems and Information Technology

Copyrights are critical in protecting software, databases, and website content. Adobe Systems (Adobe) uses copyright law to protect its suite of creative software tools, including Photoshop, Illustrator, and InDesign. This protection extends to both the source code and the object code. Adobe has taken significant steps to combat software piracy, including filing lawsuits against individuals and organizations accused of infringing on its copyright. The company has established the Adobe Trust Center to proactively deal with fraud prevention. Their software offers automatic licensing checks through the Adobe Genuine Software Integrity Service. Copyright infringement can involve distributing or using unlicensed copies of Adobe’s software or cracking the software to bypass licensing protections. These measures taken are particularly important as pirated software undermines the financial stability of companies, like Adobe, that rely on the sale of licenses for their products.

Tech companies maintain websites to promote their business to clients. Amazon protects its product descriptions, promotional content, images, blog posts, and other Amazon-written material by copyright. This protection is aimed at preventing someone from legally copying the information contained therein and fixing it in another tangible medium of expression. It is also a violation of copyright law to scrape (that is, use automated tools, as you learned in Chapter 8 Data Analytics and Modeling, to extract data) Amazon’s site content without permission.

Copyright law also applies to databases, a critical component of information systems. Microsoft, for example, uses copyright law to protect its SQL server, a relational database management system. Both the source and object code used to create this database are protected by copyright law. While Microsoft’s copyright covers the database, the copyright does not extend to data that users and organizations enter into the database: the data held within the database are the property of the user or organization that maintains it.

Sometimes the relationship between copyrights and patents can confusing. For example, software code may be protected by a copyright, while a unique user interface or algorithm may be protected by a patent. By using patents and copyright laws to protect their IP, Adobe, Amazon, and Microsoft are motivating their customers and competitors to use their products in an ethical and legal manner. In general, copyright laws promote ethical behavior throughout society by discouraging various unethical and illegal activities. For example, because of copyright laws, moviegoers are unlikely to sit in a theater and record a movie, authors are discouraged from plagiarizing another writer’s work, and photographs are less likely to be used without permission.

Patent Law in Information Systems and Information Technology

As with copyrights, patents provide an incentive for organizations using information systems to invest in research and development. Patent law encourages innovation through this, and it also motivates ethical behavior regarding patents. One highly effective patent in the digital domain is Amazon’s “1-Click” patent.¹⁷ This innovation allows consumers to make purchases with a single click, significantly streamlining the online shopping experience. Although this patent expired in 2017, it gave Amazon a significant advantage in the e-commerce domain for many years, increasing market share and playing an important role in the online retailer’s massive growth.

Blockchain is another example of a technological innovation that utilizes patent law for protection. IBM, one of the leading patent holders in the United States, has obtained numerous patents related to blockchain.¹⁸ These patents give IBM twenty years of IP protection, enabling it to prevent others from utilizing its innovations. This helps guarantee more market share for IBM and can provide revenue streams if the company decides to license this technology to others.

Qualcomm is another tech company that utilizes patent protection for its innovations as part of its business model. As a market leader in wireless communications technology, Qualcomm holds over 160,000 approved and pending patents related to 5G technology.¹⁹ These patents cover many components of 5G networks, including chips in devices and infrastructure equipment. Qualcomm has been able to leverage its research and development successes by entering into over 200 licensing agreements with other entities to use its protected technology. IP protection is a central component of the enterprise’s goals of sharing its innovations while receiving fair value compensation.

Trade Secret Law in Information Systems and Information Technology

Trade secrets are critical to a tech company’s business strategy. Complex algorithms are the most important asset in many tech company portfolios. Google’s search algorithm, PageRank, which determines the ranking of web pages in a search result, is maintained as a trade secret. It provides a competitive advantage to Google and determines the access and visibility of online information.

Computer source code is another asset that many companies maintain as a trade secret. Oracle’s database software is a major asset for the company. This proprietary information is protected as a trade secret, ensuring that the details of how the software works at the source code level are kept confidential. To keep this protection, the company takes numerous measures to maintain its secrecy.

A company’s data collection, storage, and analysis methods involving big data are also considered trade secrets. Companies like Google use trade secrets to secure their customer data. These detailed data contain search histories, preferences, and passwords. Google uses this information to inform its search algorithm. In its YouTube platform, Google gives video recommendations, custom search results, and targeted ads based on users’ searches, videos they watch, and how they interact with the website.

Trademark Law in Information Systems and Information Technology

Trademarks help companies brand themselves in the marketplace and are very valuable in the tech sector. Trademarks are often recognized as part of a company’s intangible assets that give them a competitive advantage in the marketplace. One of the most iconic branding images is Apple’s bitten apple logo (Figure 12.7). It is recognizable worldwide, identifies the source of the good, and distinguishes it from the products of another. Consumers who recognize this symbol on a product know they are purchasing from Apple.

Figure 12.7 Apple’s bitten apple logo has been in use for 50 years. It identifies products created by Apple, such as (a) printers, (b) iPads, and (c) MacBooks, and assures consumers that they are purchasing genuine Apple products. (credit a: modification of work “Former Apple Logo” by “Cbmeeks”/Wikimedia Commons, Public Domain; credit b: modification of work “Apple tablet” by Carol Clarkson/Flickr, CC BY 4.0; credit c: modification of work “Apple Logo on MacBook” by Image Catalog, Unsplash/Flickr, CC0 1.0)

Another form of trademark protection is trade dress, which refers to the visual appearance of a product or its packaging. Google’s minimalist search page design has this form of IP protection. Figure 12.8 shows the simple, clean design that ensures users they are indeed performing a web search on Google and not one of its competitors.

Figure 12.8 Google’s minimalist search page design is an example of trade dress, and it is protected as intellectual property through trademark law. (credit: modification of work from Workplace Software and Skills. Google Search is a trademark of Google LLC.)

World Intellectual Property Organization

The World Intellectual Property Organization (WIPO) is an agency of the United Nations created in 1967, with the mission to “lead the development of a balanced and effective international IP system that enables innovation and creativity for the benefit of all.”²⁰ The WIPO serves a vital role in the information systems context, assisting in the synthesis of global laws governing system design, algorithms, and brand identities.

The WIPO seeks to harmonize international cooperation to create a legal framework that supports IP rights. To accomplish this, it administers dozens of international treaties that provide for the recognition and enforcement of IP rights. This assists those organizations that operate information systems on a global scale by providing protection in various jurisdictions for their creative output. The WIPO also provides services for trademark registration and an international patent system for patent applications.

Beyond these legal protections, WIPO seeks to create a more balanced and accessible IP system that offers benefits accessible to all countries. It does so by providing resources, education, and support for understanding IP rights. Additional initiatives include policy advice, legal and technical assistance, and capacity-building programs for developing countries. These efforts help emerging markets build a foundation conducive to technological innovation and creativity, thereby addressing ethical issues related to the digital divide.

Trans-Pacific Partnership

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is an agreement among several Pacific Rim nations that, among other purposes, serves to set standards for intellectual property within trade agreements. It was created as an alternative to the Trans-Pacific Partnership Agreement (TPPA) after the U.S.’s withdrawal prevented its ratification. Countries participating in the agreement include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United Kingdom, and Vietnam.

The primary purpose of the CPTPP is to harmonize IP laws across the member nations. This involves setting common standards for copyright terms, patent protections, and trademark regulations. Having common standards allows businesses operating in a number of these countries to simplify their IP management. The agreement also extended the term of copyright protection to what is standard in the United States and Europe—that is, the life of the author plus seventy years. Trademark protection was also strengthened by expanding the definition of what qualifies as a trademark. Importantly, the CPTPP also establishes a system for registration and protection of geographic marks, which are trademarks that include a geographic location. Finally, the agreement establishes a strong legal framework for enforcement of IP rights. This includes civil and criminal penalties for IP violations.