Developments in Intellectual Property

e are protective of our creative ideas. Musical and written creations are copyrighted. Product names and slogans are trademarked. Inventions are patented. These copyrights, trademarks and patents can be an extremely valuable part of an estate.¹

Intellectual property is a complex specialty of law.² In recent years, the rules of the game have been changing rapidly in response to technological advances. The Internet has created a global marketplace that consumes vast quantities of intellectual properties — art, music, books, film, news ... content. And all this "content" can be digitized and transmitted instantly around the world. Protecting intellectual property rights in this new world has forced us to adapt.

How We Got Here

Just as technology is driving the contemporary evolution of intellectual property, technological advances had created the need for copyrights in the first place. In the fifteenth century, the invention of the printing press between 1436 and 1450 by Johannes Gutenburg of Germany, made it possible to duplicate written materials effectively.³

By 1500, there were 1,000 printing presses in 200 locations throughout Europe. The age of mass communication had arrived. In England, the Licensing Act of 1662 established a register of licensed books and empowered a group of printers with the authority to censor unlicensed publications. After that statute lapsed, the approach was reconsidered.

In 1710, the Statute of Anne ushered in the modern era of copyrights. Significantly, there is a concept of ownership, i.e., that authors or creators would be owners of their own works. There would be specific terms of protection, i.e., 14 years initially, and then, if the author were alive upon expiration of the first term, a renewal term of an additional 14 years would be granted.

The U.S. Constitution that was adopted in 1787 included a clause stating, "the Congress shall have power . . . to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Article I, Section 8, Clause 8. Congress then based The Copyright Act of 1790 on the Statute of Anne, including the 14-year term with 14-year renewal.

The Rules Evolve

Major revisions to the law took place in 1831, 1870, 1909, and 1976. The 1909 revision doubled the protected terms to 28 years with a 28-year renewal. Between 1962 and 1974, Congress extended the renewal term by one year on nine occasions. The 1976 Act extended the term to the life of the author plus 50 years in anticipation of the 1979 amendments to the Berne Convention, an international copyright treaty signed by 96 nations.⁴

The 1998 enactment of the Sonny Bono Copyright Term Extension Act extended the term of U.S. copyrights for 20 years. This was the 12th extension Congress has provided to copyrights over the years, or the third major extension overall. These terms have brought the United States into conformity with current European standards.

Current Rules: In general, new copyrights now last for the lifetime of the author plus 70 years. Pre-1978 works are extended from 75 years to 95 years. Works created prior to 1923 are now in the public domain. In general, works for hire have a term of 95 years from the year of first publication, or a term of 120 years from the year of creation, whichever expires first.

A constitutional challenge to this 20-year extension of a copyright's term was rejected by the U.S. Supreme Court in, Eldred v. Ashcroft, 537 U. S. ____ (2003). Writing for a 7-2 majority, Justice Ruth Bader Ginsburg concluded that, based on the unbroken track record of congressional extensions, the latest exercise of power by Congress did not exceed Congress's power under the Copyright Clause and did not violate the First Amendment.

Justice Stevens, dissenting, cites Justice Black's unanimous opinion in, Sears, Roebuck & Co. v. Stiffel Co., 376 U. S. 225, 231 (1964), for the principle that a State cannot "extend the life of a patent beyond its expiration date." Stevens applied that reasoning to copyrights. He also distinguishes the authority of Congress to grant new copyright terms to an existing work from the retroactive extension of existing copyrights.

Justice Breyer's dissent notes that the 20-year extension is the longest blanket extension since the nation's founding. He argues that it makes the copyright term "virtually perpetual" and notes that "were the vesting of 19th-century real property at issue, it would typically violate the traditional rule against perpetuities." He also states that the law essentially grants an extension "not to authors, but to their heirs, estates, or corporate successors, " and this has the practical effect of inhibiting the progress of knowledge against the intent of the framers of the constitution.

A Digital Context

In the latest setback to the entertainment industry, a United States District Court recently permitted Grokster and StreamCast Networks to allow consumers to make copies of their own files. The Grokster service is reportedly used by 10 million people per month. The court said that unlike the Napster music swapping service, the latest services are merely serving as online VCRs to permit copies to be made. An appeal is certain, but regardless of how the case turns out, it is clear that the tools of mass duplication and distribution are already here.

Most developed countries signed the WIPO Copyright Treaty in Geneva in 1996. In essence, the WIPO exchanges certain copyright uses in return for certain electronic protections. It's a compromise that also establishes international copyright standards.

In addition to the Sonny Bono Copyright Term Extension Act, Congress also enacted the Digital Millennium Copyright Act (DMCA) in 1998. Together, these laws represented the first major reform of American copyright laws since 1976. The DMCA prepared U.S. copyright law for the long-anticipated ratification of World Intellectual Property Organization (WIPO) Copyright Treaty.

Under the DMCA, certain violations of copyrights are now subject to criminal prosecution. It is now a crime to circumvent anti-piracy measures that are built into most commercial software. The manufacture, sale, or distribution of code-cracking devices used to illegally copy software are also prohibited. There are a number of exemptions for libraries, law enforcement, reverse engineering, encryption research, privacy protection, and security testing. For example, the copyright law permits libraries to digitize analog materials without permission for archival purposes.

The case of, U.S. v. ElcomSoft, No. 20138, represents the first prosecution under the DMCA. ElcomSoft is a Russian company that developed a way to circumvent the anti-copying encryptions on Adobe's eBook reader. The company claimed the product was to aid people who own the Adobe software to make legal back up copies for their own purposes.⁵

ElcomSoft pulled the product from the market as soon as it was notified, and therefore sold only 25 copies. This may have influenced a jury, which, in December, 2002, found there was no criminal intent to flout the law. This was a significant setback to the prosecutors. In hindsight, had sales continued for a while with profits being raked in, a jury might have been less charitable. But the law itself was effective by prompting compliance. Prosecutors must now weigh prompt enforcement to stop distribution against building a better case.

The Madrid Protocol: In November, 2003, after 13 years of pondering, the United States will join 65 other nations in using the Madrid Protocol, a one-stop shopping approach for managing trademarks worldwide. The United States Patent and Trademark Office will forward applications to the World Intellectual Property Organization.

Americans trying to register trademarks in other countries have had an arduous task. It was recently estimated that it would cost $14,000 to register a single trademark in just 10 nations. Joining the Madrid Protocol will cut the expense of registering in 10 nations down to about $4,700 and eliminate the need for multiple applications in various languages.

IP Estates

An estate that contains copyrights, trademarks, patents or publicity rights has a variety of practical and legal considerations. Copyrights are the most likely type of intellectual property that an estate would contain.

Copyrights generally descend by inheritance to one's heirs. However, under prior law, various renewal rights applied to copyrights. Under the Sonny Bono Copyright Term Extension Act, the author's heirs are now able to terminate certain copyright interests of an assignee such as a publishing company.

Patents can be inherited, but they involve shorter terms than copyrights and are often acquired by or associated with businesses. Thus, an inventor may hold a patent that has a 20-year term, but he may outlive the term or sell the patent rights. Someone inheriting patent rights or a company that possesses patents must be aware of the limited window of time in which the patent rights can be exploited. Note: There are three types of patents with separate rules.

Trademarks that land in an estate must be protected in several ways. The trademark may be essential to one or more businesses and therefore may command fees that should be skillfully negotiated.

The trademark must be in continual use or it will be considered abandoned. Under the Lanham Act, three consecutive years without commercial use of a trademark will constitute prima facie abandonment. Registration of the trademark should be applied for and maintained in any states or foreign nations.

Finally, the trademark must be policed. Anyone attempting to use the trademark without permission must be stopped-with litigation if necessary. In a global marketplace, in a digital world, this will continue to grow more challenging.

TECHNICAL REFERENCES

¹ Moshman, "Estates and Intellectual Property", The Estate Analyst (April, 1998) (reprinted in Trusts & Estates, September, 1998 at p. 67).

² "Copyright, even more than other areas of law, is a special priesthood with its own rituals and incantations, incomprehensible to the uninitiated." See, Heins, "The Next Frontier: 'Intellectual Property' and Intellectual Freedom", at: http://www.fepproject.org/commentaries/coloradointellprop.html.

³ The Gutenberg press was a dramatic advance, but everything is relative. To produce the Gutenberg Bible, six compositors worked on six presses moving wooden blocks. It took three minutes to print each page. That's slow by modern office standards, but it was a revolutionary leap from having documents hand copied by monks. Production was completed in 1456 in Mainz, Germany. By one estimate, 180 bibles were printed over three years (the time needed for a monk to copy one bible). Unfortunately, having borrowed heavily to finance the invention, Gutenberg lost control of his press just after his greatest achievement. Yet his legacy is revered. A census of the Gutenberg bibles in 1985 identified 22 complete copies and 26 partial copies. One writer described these bibles as "the holy grail of rare books." Recent sales and estimates for the value of Gutenberg bibles have ranged from $12 million to $30 million. See, http://www.davidmcham.com/upload/IIItheoriginofprinting.html.

⁴ "Timeline: A History of Copyright in the United States," can be found on the Internet at http://arl.cni.org/info/frn/copy/timeline.html.

⁵ Dmitry Sklyarov is an unlikely candidate to be a folk hero. The 27-year-old Russian was married with a two-year-old daughter, a PhD, and a new job. He was fresh from the University where he had written his doctoral dissertation on breaking encryptions. Not by coincidence, Sklyarov was hired by ElcomSoft to engineer a new product, software that enables Adobe customers to crack the encryption and make a legal back up copy of Adobe software. Mr. Sklyarov succeeded…and was thrown in jail as a reward. He was the first person prosecuted under the new Digital Millennial Copyright Act. In the new tradition of the Internet, websites sprang up overnight. "Free Sklyarov" T-shirts sell for $15 on the Internet.

© R. Moshman

IP INTERESTS AND RULES CHART