As demonstrated by the recent Second Circuit decision in Christian Louboutin v. Yves Saint Laurent America Holding, Inc., a shoe can certainly offer a great deal of legal controversy. In September 2012, the Second Circuit upheld the validity of designer Christian Louboutin’s trademark for the color red on the soles of his shoes. Although Christian Louboutin and the fashion media have called the case a victory for color trademarks, Louboutin’s affirmation of the “aesthetic functionality” doctrine will likely make defending color trademarks harder in the future. Further, a survey of color trademark registration activity and case law reveals that the Louboutin decision is an outlier, and the overwhelming tendency of courts is to weaken color marks in infringement lawsuits. Therefore, color mark applicants and current color trademark holders face steep obstacles in registering and protecting their color marks, and this battle will likely become more challenging in the near future.
For years, the United States has included intellectual property (“IP”) law in its free trade agreements. This Article finds that the IP law in recent U.S. free trade agreements differs subtly but significantly from U.S. IP law. These differences are not the result of deliberate government choices, but of the capture of the U.S. trade regime.
A growing number of voices has publicly criticized the lack of transparency and democratic accountability in the trade agreement negotiating process. But legal scholarship largely praises the ‘fast track” trade negotiating system. This Article reorients the debate over the trade negotiating process away from discussions of democratic accountability to focus instead on the problem of regulatory capture. The Office of the U.S. Trade Representative (“USTR”) is exempt from the Administrative Procedure Act and functionally exempt from the bulk of the Federal Advisory Committee Act. As a result, the USTR is likely to be captured by private parties through information asymmetry and to negotiate against the public good. Subject matter areas that are subject to collective action problems, such as intellectual property law, are particularly likely to be captured in the USTR.
Imagine you are the CEO of a new company in Silicon Valley, California. The company recently developed a revolutionary laptop screen that is not only entirely scratch resistant, but also allows for 3-D viewing. The company just entered into a contract with Orange Computer to be the sole manufacturer of Orange’s newly advertised “Made in Silicon Valley” computer. Located among the terms of the contract is a license, which allows the company to use Orange’s applicable patent and trademarks. As a result, the company heavily invests in its new enterprise and begins to profit. A few months later, however, Orange recognizes massive losses since it did not account for higher business costs in Silicon Valley. This forces Orange to file for bankruptcy and reject the license, leaving your company unable to manufacture its product without infringing on Orange’s trademarks. This risks your company’s vitality and ultimate existence.
The scenario above illustrates an example of a modern business practice-trademark licensing-and its tension with bankruptcy law. In today’s “[n]ew [w]orld,” intellectual property (“IP”) is an extremely important economic asset for many companies. An owner of IP has the ability to either (1) prevent others from using it or (2) authorize its use to a third party through licensing. The latter practice of licensing has grown significantly in the global economy, as it is a substantial source of revenue for many companies. Additionally, using IP to secure lending from a bank has become popular. Nevertheless, the value of IP licenses is limited due to risks created by economic hardships, with trademark licenses particularly vulnerable in cases of bankruptcy. In fact, since 1988, out of 1100 bankruptcy filings concerning IP, over 600 involve trademarks.
The scope and enforcement of intellectual property (“IP”) laws are becoming salient, for the first time, to a wide cohort of U.S. and international communities. National and international legislation, including the Stop Online Piracy Act (“SOPA”), the PROTECT IP Act (“PIPA”), and the Anti-Counterfeiting Trade Agreement (“ACTA”), have generated protests online and in the streets by people who are concerned about the expansion of IP rights. Common to each of these proposals was an expansion of the use of criminal sanctions to deter IP violations. Many copyright owners and the associations that represent them support criminal enforcement of IP rights, including the use of imprisonment, to combat the threat of increased IP piracy on the internet and throughout a globalized economy. Others, including a heterogeneous coalition of scholars, activists, and internet-based companies like Google and Wikipedia, fear that using criminal sanctions to protect IP will expand already overgrown rights and chill valuable expressive and inventive behavior.
The copyright troll and the phenomenon of copyright trolling have thus far received surprisingly little attention in discussions of copyright law and policy. A copyright troll refers to an entity that acquires a tailored interest in a copyrighted work with the sole objective of enforcing claims relating to that work against copiers in a zealous and dogmatic manner. Not being a creator, distributor, performer, or indeed user of the protected work, the copyright troll operates entirely in the market for copyright claims. With specialized skills in monitoring and enforcing copyright infringement, the troll is able to lower its litigation costs, enabling it to bring claims against defendants that an ordinary copyright owner might have chosen not to.
Tattoos are part of mainstream culture in the United States. This is especially true among younger generations. While 23 percent of Americans have at least one tattoo, 32 percent of “Generation Xers” have at least one, and 38 percent of millennials have at least one. 19 percent of millennials have at least two. Movie stars and sports stars now commonly have several tattoos. Chart-topping pop star Lady Gaga announced the title of her most recent album by tattooing it on her body and flashing the tattoo at Los Angeles International Airport. Eighteen-year-old Disney starlet Demi Lovato thanked her fans for their support by tattooing “Stay Strong” on her wrist. In 2005, the cable television channel TLC began broadcasting the reality TV show Miami Ink, which followed the events of a tattoo shop in Miami Beach, Florida. Miami Ink’s success led to spinoffs in Los Angeles, London, and Rio de Janeiro. Along with, and indeed aided by, the success of the reality TV shows, the modern U.S. tattoo industry is a multi-billion dollar industry.
In the past decade, the entertainment industry has waged a very successful legal campaign against online copyright infringements. In a series of high-profile decisions, content industries have persuaded courts to accept expansive interpretations of contributory enforcement, to create novel doctrines of copyright infringement, and to apply broad interpretations of statutory damage provisions. Many private file sharers, technology companies, university administrators, and Internet service providers have felt the reach of this litigation effort. Yet a significant empirical anomaly exists: even as the copyright industry has ramped up the level of deterrence, online copyright infringements continue unabated.
Why has the legal battle against file sharers been so ineffective? The most straightforward explanation is that infringers are not deterred, either because the probability of getting caught remains remote or because the sanctions are not sufficiently salient. If that is the case, the expansive statutory damage award remedies in decisions such as Capitol Records v. Thomas-Rasset and Sony BMG v. Tenenbaum carry renewed promise for the entertainment industry.
If even a portion of the rumors surrounding nanotechnology are true, the products and processes brought to market will have the ability to change and advance numerous industries well beyond their current levels. As developers in nanotechnology continue to innovate, they are patenting their discoveries at an ever increasing rate. Nanotechnology represents a new challenge for patent law, and these early patents, if not monitored closely, could effectively lead nanotechnology to a frozen state of development and commercialization before society has had a chance to reap the benefits of this new technology in the form of commercial products and medicinal advances. This Note explores the intellectual property issues surrounding nanotechnology and the societal repercussions of, and possible responses to, the extensive early patenting in this area.
The incentive thesis for patents is challenged by the existence of alternative means by which firms can capture returns on innovation. Taking into account patent alternatives yields a robust reformulation of the incentive thesis as mediated by organizational form. Patents enable innovators to make efficient selections of firm scope by transacting with least-cost suppliers of commercialization inputs. These expanded transactional opportunities reduce the minimum size of the market into which any innovator–or the supplier of any other technological or production input–can attempt entry. Disaggregation of the innovation and commercialization process then induces the formation of secondary markets in disembodied technology inputs. These organizational effects over transactional, firm, and market structure generate specialization economies that minimize innovation and commercialization costs. These efficiencies in turn exert incentive effects consistent with the standard thesis and market growth effects that extend beyond it. Conversely, the absence of patents, and the resulting obstacles to bargaining over ideas, can compel innovators to select overintegrated structures that inflate commercialization costs, resulting in distorted innovation investment and product output. These relationships are broadly consistent with organizational patterns in selected historical and contemporary technology markets, as illustrated in particular by disintegration processes in the “fabless” segment of the semiconductor market.
Ever since the Supreme Court pronounced in Diamond v. Chakrabarty that “Congress intended statutory [patentable] subject matter to include anything under the sun that is made by man,” the thrust of subject matter eligibility has been broadly to include all subject matters that are not “laws of nature, physical phenomena, and abstract ideas.” In essence, subject matter is eligible for protection under the patent laws if it is man-made and is ineligible if it is a part of nature. Such a definition of subject matter eligibility is, unfortunately, unhelpful in the biomedical context. A basic discovery involving a new pathological pathway, for example, represents an advancement of both basic knowledge about nature as well as basic know-how in diagnosing and treating human diseases. A successful isolation of a gene, protein, or cell represents a triumph both for our understanding of nature as well as our ability to diagnose and treat human diseases. This Article argues that subject matter eligibility should neither be a mere prohibition against the patenting of nature and abstract ideas, a mere pseudorequirement to enforce other patentability requirements, nor a mere exercise in the statutory interpretation of 35 U.S.C. § 101, but a unique constitutional requirement to ensure that the patenting of eligible subject matter promotes the useful arts. To take into account the cost side of patenting, eligibility may be defined in part as a prohibition of the patenting of “basic tools of scientific and technological work.” To ensure that knowledge that can be provided freely to the public is not unwittingly removed from the public, eligibility may be defined in part by distinguishing “inventions” from “discoveries,” as viewed from a person skilled in the art. To accentuate the role patents play in a nation’s larger Industrial Policy, eligibility may be limited to “industrial applications” and “technology” that are the purview of Industrial Policy. This Article emphasizes the importance of viewing the patent regime not just as a property system, but as part of a larger regulatory regime for promoting innovations.