Practical Application: Understanding Intellectual Property Law

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

Intellectual property is incredibly valuable, but not always tangible. Business professionals must be able to accurately identify intellectual property and articulate the characteristics of the laws that protect it.

Valuable but Intangible

Intellectual property can be difficult to protect because it isn't always tangible, and it isn't always easy to identify. There are five broad categories of intellectual property. You can review them by revisiting the lesson What is Intellectual Property? - Definition and Rights. Armed with that knowledge, read and analyze these scenarios to identify different types of intellectual property and their protections.

Scenario 1: Sharing's Only Fun When It's Not Your Stuff

''Sharing's only fun when it's not your stuff.'' If you can remember this TV commercial quote from rock band Metallica's drummer Lars Ulrich, you probably remember buying your music from a record store. If you wanted just one song, you bought the whole album, and buying the album would cost you upwards of $20. Today, people can purchase and download music by the song from online retailers like iTunes and GooglePlay, but that model wasn't independently conceived by brilliant music labels.

Today's model for music retailing was sparked by the music ''sharing'' platform known as Napster. Napster allowed users to digitize music from their CDs and upload it to the service. Other users could then download it, track by track, for free. Metallica filed suit against Napster in federal court after realizing that some of their unreleased music was being circulated - for free.

  • Did Metallica have a legitimate claim against Napster for violations of intellectual property laws?
  • If so, what were the factors that made their claim legitimate?

Metallica's lawsuit absolutely raised a legitimate complaint of copyright infringement. Napster and its users violated copyright laws by freely circulating creative material without permission (or compensating) the owners of the music.

Scenario 2: Keeping Secrets

Thomas is the IT Director of a provider-owned medical practice. He oversees all the technology assets of a neurology clinic that competes directly with two other area clinics. Recently, changes made by commercial insurance companies resulted in a group of nearly 1,000 patients who would need to find a new physician. Obviously, all three competing clinics wanted to capture this new revenue stream.

During this period, Thomas was contacted by a competitor who was offering him a ''consulting'' contract with the implication that he would provide ''business intelligence'' to help them gain an advantage in capturing these patients. Thomas found this offer too lucrative to turn down, and he agreed to provide the data being sought. Over the next few weeks, Thomas copied data from his company's servers and provided it to the competitor.

  • Did Thomas violate any intellectual property laws?
  • If so, what were they?

Since Thomas did not have permission to share confidential, internal strategy information, he was disclosing trade secrets. The unauthorized disclosure of trade secrets is, in fact, a clear violation of intellectual property laws.

Scenario 3: Protecting Ideas

Researchers all over the country are working on finding a cure for cancer. Many advances have been made, but none that rise to the level of a ''cure''. Let's imagine that a prominent university has a team of researchers who have made a significant breakthrough. They have, in fact, formulated a medication that works in a way that is unique. No other drug presently on the market uses the ingredients and synthetic compounds as the new breakthrough drug.

  • Do the researchers who developed the medication have to share their findings?
  • How would the researchers protect their unique medication so that no one else can profit from it (in the immediate future).

The researchers do not have to immediately share the technical details of their discovery. Although other companies will eventually have the opportunity to see and produce the drug, the Constitution provides for the exclusive right to profit from one's discovery. This is accomplished by obtaining a patent. Patents provide a period of time in which a creator or inventor can be the only entity who can profit from their intellectual property.

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