Chapter Twenty One | Intellectual Property: Copyrights

Purpose Of Copyrights

Copyright law, as with all laws made pursuant to the authority granted by Article 1, Section 8 of the Constitution, is “… [t]o promote the Progress of Science and useful Arts …”. Justice Douglas, writing for the majority in U.S. v. Paramount Pictures, wrote “The copyright law, like the patent statutes, makes reward to the owner a secondary consideration.” In Fox Film Corp. v. Doyal, 286 U.S. 123, 127, (1932) Chief Justice Hughes spoke as follows respecting the copyright monopoly granted by Congress, “The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors.”

Justice Douglas continued, “It is said that reward to the author or artist serves to induce release to the public of the products of his creative genius. But the reward does not serve its public purpose if it is not related to the quality of the copyright. Where a high quality film greatly desired is licensed only if an inferior one is taken, the latter borrows quality from the former and strengthens its monopoly by drawing on the other. The practice tends to equalize rather than differentiate the reward for the individual copyrights.” (See U.S. v. Paramount Pictures, 334 U.S. 131, 158 (1948)).

Copyright law protects “… original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” A work of authorship includes (1) literary works; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works; (6) motion pictures and other audiovisual works; (7) sound recordings; and (8) architectural works (17 U.S.C. §102(a)).

The owner of a copyright has “… the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.” (17 U.S.C. §106).


There are, however, limitations on how far that protection extends beyond the original work. According to the statute, copyright protection does not “… extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied …” that is embodied in such an original work (17 U.S.C. §102(b)).

Subject Matter

The subject matter of a copyright, as described above, includes “… compilations and derivative works …” but protection of “… preexisting material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully.” Protection of such works only includes material “… contributed by the author …” rather than “… preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.” (17 U.S.C. §103(a) and (b)).

Reproduction And Derivatives

The owner of a copyright has exclusive rights to reproduce, prepare derivative works based upon the copyrighted work, distribute copies by sale or other transfer of ownership, or by rental, lease, or lending, perform the copyrighted work publicly, display the copyrighted work publicly, and perform the copyrighted work publicly by means of a digital audio transmission (17 U.S.C. §106).


Anyone who creates a work is considered the author of that work. In the event that the work is created as a “work for hire” then the organization that sponsored the work is considered the author. A “work made for hire” is defined in §101 as “a work prepared by an employee within the scope of his or her employment …” For example, the coders who created the MacOS did so as employees or independent contractors of Apple. As a result, their work and the cumulative product outcome known as MacOS are considered “works made for hire” pursuant to §101 of the Copyright Act. Thus, the “author” of the MacOS is considered to be Apple.

However, remember an important distinction, copyright embraces only the original expression not any extensions of the original idea. The Feist case examines the necessity of originality when granting a copyright.


Case Study

Feist Publications, Inc. v. Rural Telephone Service Co., Inc.

Supreme Court Of The United States, 499 U.S. 340 (1991)

Procedural Posture

Petitioner publishing company sought review by certiorari of a judgment of the United States Court of Appeals for the Tenth Circuit, which affirmed a grant of summary judgment in favor of respondent phone company in a suit by respondent against petitioner for copyright infringement that arose after petitioner published a directory compiled with information taken from the white pages compiled and published by respondent.


Respondent sued petitioner for copyright infringement because petitioner had used information contained in its white pages in the compilation of its own directory. The court reversed a grant of summary judgment in favor of respondent because the selection, coordination, and arrangement of respondent’s white pages did not satisfy the minimum constitutional standards for copyright protection. Specifically, the court found that respondent’s white pages, which contained only factual information, i.e., phone numbers, addresses, and names listed in alphabetical order, lacked the requisite originality because respondent had not selected, coordinated, or arranged the uncopyrightable facts in any original way.


A telephone company that was a certified public utility providing telephone service to several communities in Kansas, and that was subject to a state regulation requiring all telephone companies operating in the state to issue annually an updated telephone directory, published a typical telephone directory, consisting of white pages and yellow pages. The white pages listed in alphabetical order the names of the telephone company’s subscribers, together with their towns and telephone numbers. The telephone company obtained the data for its white pages from the company’s subscribers, who were required to provide their names and addresses when applying for telephone service from the company. A publishing company, which specialized in areawide telephone directories covering a much larger geographical range than did directories such as that of the telephone company, offered to pay the telephone company for the right to use its white pages listings, but the telephone company refused to license its listings to the publishing company. Subsequently, the publishing company used the telephone company’s white pages listings without the telephone company’s consent. Although the publishing company sought to obtain additional information, such as street addresses, for the listings that it took from the telephone company’s white pages, many of the listings in the publishing company’s areawide directory that covered part of the telephone company’s service area were identical to listings in the telephone company’s white pages. In a copyright infringement suit brought by the telephone company against the publishing company, the United States District Court for the District of Kansas, explaining that courts had consistently held that telephone directories were copyrightable, granted summary judgment to the telephone company (663 F Supp 214). The United States Court of Appeals for the Tenth Circuit, in an unpublished opinion, affirmed the District Court judgment for substantially the reasons given by the District Court (916 F2d 718).

On certiorari, *** it was held that (1) the names, towns, and telephone numbers listed in the white pages were not protected by the telephone company’s copyright in its combined white and yellow pages directory, because the listings in the white pages were not original to the telephone company, since (a) the listings, rather than owing their origin to the telephone company, were uncopyrightable facts, and (b) the telephone company has not selected, coordinated, or arranged these uncopyrightable facts in an original way sufficient to satisfy the minimum standards for copyright protection–under either the Federal Constitution’s Article I, 8, cl 8, which authorizes Congress to secure for limited times to authors the exclusive right to their respective writings, or the Copyright Act of 1976 (17 USCS 101 et seq.), which provides copyright protection for original works of authorship–given that the telephone company’s selection and alphabetical arrangement of the listings lacked the creativity necessary to demonstrate originality; and (2) because the telephone company’s white pages listings lacked the requisite originality for copyright protection, the publishing company’s use of the listings could not constitute copyright infringement.


Alphabetical listings of names, accompanied by towns and telephone numbers, in telephone book white pages held not copyrightable; thus, nonconsensual copying of listings held not to infringe on copyright.


The court reversed the judgment.

The Supreme Court in Feist affirmed that owners’ original expression is not only protected but also that copyright “… encourages others to build freely upon the ideas and information conveyed by a work.” The Court noted that the principle known as the idea/expression or fact/expression dichotomy, is appropriately applied to all works of authorship. And, where applied to a factual compilation, “… assuming the absence of original written expression, only the compiler’s selection and arrangement may be protected; the raw facts may be copied at will. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art.” (See Feist, 499 U.S. 340 at 349-350).

Sources of Law

The Copyright Act of 1790, passed by the Second U.S. Congress, was the first federal copyright statute and established U.S. copyright protection with term of 14 years and provided living owners with an option for one 14-year renewal. This act provided protection only to U.S. citizens. The Copyright Act of 1831 was the first major statutory revision of copyright law. It added musical compositions to the list of protected works and extended the initial term of protection to 28 years with an option for one 14 year renewal. The Copyright Act of 1909 represented a substantial revision, extending the initial term to 28 years with the option of renewal for one additional 28-year term. The Townsend Amendment of 1912 added a new form of expression, motion pictures, to the list pf protected works. Although the 1909 Act was revised by the Copyright Act of 1976, it remains the effective for all copyrights granted before the 1976 Act took effect.

The Copyright Act of 1976 (17 U.S.C. §102, et seq.) remains the primary federal law governing copyrights and has been amended several times. The Act regularized the term of copyright protection by eliminating the potential of multiple terms and creating a system of one term running from the work’s creation and continuing for a term consisting of the life of the author plus 70 years after the author’s death. The Act also provides protection for unpublished works and preempts state laws governing copyright. (17 U.S.C. §301, 303).

Two more amendments to the 1976 acre have been adopted by Congress. The Copyright Renewal Act of 1992 eliminated the need for affirmative action by the copyright holder, i.e., filing a renewal application. This amendment had the effect of providing protection for the full term available without the owner’s action. The Copyright Term Extension Act of 1998 (CTEA), often ridiculed as the “Mickey Mouse Protection Act,” extended copyright protection terms to 95/120 years or life plus 70 years. So, the term of protection for works “… created on or after January 1, 1978 …” there is presently “… a term consisting of the life of the author and 70 years after the author’s death.” In the case of a joint work prepared by two or more authors who did not work for hire the Act provides “… a term consisting of the life of the last surviving author and 70 years after such last surviving author’s death.” And, for anonymous works, pseudonymous works, or works made for hire the Act provides “… a term of 95 years from the year of its first publication, or a term of 120 years from the year of its creation, whichever expires first.” (17 U.S.C. §302).

Notice, Registration and Enforcement

Copyright protection of a work arises automatically at the moment of fixation; in other words, as soon as the work appears in some fixed and tangible form. “A work is “fixed” in a tangible medium of expression when its embodiment … is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” (17 U.S.C. §101).

Pursuant to the Berne Convention, signed by the U.S. in 1989, there is no requirement for completion of a registration process. However, completion of the federal registration process provides some distinct advantages. Certain damages are only available where the work was registered within ninety days of initial publication or prior to any alleged infringement.

Even though a work is protected once it is created and fixed in a tangible form, there are advantages to registration. Registration establishes a public record of the copyright claim and is necessary for works of U.S. origin before an infringement suit may be filed in court. If registration is completed before or within five years of publication, it establishes prima facie evidence in court of the validity of the copyright. Statutory damages and attorney’s fees will be available to the copyright owner in court actions if registration is made within three months after publication of the work or prior to an infringement of the work. If not, only an award of actual damages and profits will be available to the copyright owner.

The inclusion of a copyright notice on materials distributed in the U.S. is optional. If a notice is included on the work, §401 requires that it be “… affixed … in such manner and location as to give reasonable notice of the claim of copyright” and must include:

  1. the symbol © (the letter C in a circle), or
  2. the word “Copyright, or
  3. the abbreviation “Copr.”; and
  4. the year of first publication of the work; in the case of compilations, or derivative works incorporating previously published material, the year date of first publication of the compilation or derivative work is sufficient. The year date may be omitted where a pictorial, graphic, or sculptural work, with accompanying text matter, if any, is reproduced in or on greeting cards, postcards, stationery, jewelry, dolls, toys, or any useful articles; and
    the name of the owner of copyright in the work, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the owner. (17 U.S.C. §401).

Correct examples of copyright notices would include:

  • © 2017, I A.M. Owner, or
  • Copyright 2017, I A.M. Owner, or
  • Copr. 2017, I A.M. Owner


Any copyright owner has the right to bring a legal action against an alleged infringer. Copyright infringement arises whenever a work is distributed, copied, displayed, modified, a derivative is prepared work or performed in public. “In order to establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” (See Feist, 499 U.S. 340, 362).

Direct Infringement

Direct infringement arises when a person deliberately, and without authorization, engages in the activities described above. For example, if you make a copy of this textbook without the copyright owner’s permission, you will have violated the exclusive right to reproduce and have therefore committed copyright infringement. Likewise, if a music listener makes a copy of a digital music file and shares it with friends, a violation of the exclusive right to reproduce and distribute has occurred. (See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (2001). Of course, proof of infringement may be difficult, particularly with digital materials. For instance, a copyright owner would be required to show that the alleged infringer both had access to the original work and that they were substantially similar.

The Aereo case resolved a dispute between a provider of an innovative rebroadcasting technology and traditional broadcast media providers. Aereo’s service allowed its subscribers to view over-the-air television on Internet-connected devices. The Court found that the service violated the copyrights of the owners.


Case Study

American Broadcasting Companies, Inc. v. Aereo, Inc.

Supreme Court Of The United States, 134 S. Ct. 2498 (2014)

Procedural Posture

Petitioners, a group of television producers, distributors, and broadcasters, sued respondent, an entity that streamed petitioners’ programs to subscribers over the Internet, claiming copyright infringement. The district court denied petitioners’ request for an order enjoining respondent from providing copyrighted programs to subscribers, and the U.S. Court of Appeals for the Second Circuit affirmed. The U.S. Supreme Court granted certiorari.


Petitioners claimed that respondent violated their rights under the Copyright Act by selling a service that allowed subscribers to watch television programs over the Internet at about the same time the programs were broadcast over the air. A divided panel of the Second Circuit found that respondent did not perform “publicly” within the meaning of the Transmit Clause of the Copyright Act, 17 U.S.C.S. § 101, because it used technology which allowed it to stream programs to each subscriber by sending a private transmission that was available only to that subscriber. The U.S. Supreme Court disagreed. Changes Congress made to the Copyright Act in 1976 were intended to overturn the Supreme Court’s decisions in Fortnightly Corp. v. United Artists Television, Inc. and Teleprompter Corp. v. Columbia Broadcasting System, Inc., and under those changes respondent performed petitioners’ copyrighted works publicly when it streamed the works to subscribers.

The Copyright Act of 1976 gives a copyright owner the exclusive right to perform a copyrighted work publicly. 17 U.S.C.S. § 106(4). The Act’s Transmit Clause defines that exclusive right as including the right to transmit or otherwise communicate a performance of a copyrighted work to the public, by means of any device or process, whether the members of the public capable of receiving the performance receive it in the same place or in separate places and at the same time or at different times. 17 U.S.C.S. § 101.


Business that sold service which allowed subscribers to watch television programs over Internet at about same time programs were broadcast held to violate copyrights of television producers and broadcasters.


The Supreme Court reversed the Second Circuit’s judgment and remanded the case. 6-3 Decision; 1 dissent.

The question before the Court in Aereo was whether the copyright clause of the Constitution allows a company to transmit television programs to its paying viewers over the internet without the permission of the broadcasting network being viewed. The Court found that Aereo’s actions violated the rights of the owner of the copyrights in question.

Contributory Infringement

Contributory infringement is really a form of secondary liability for direct infringement. A person need not engage in behavior that directly infringes on another’s copyright, “… one infringes contributorily by intentionally inducing or encouraging direct infringement, (see Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (CA2 1971), and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it,” (see Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (CA2 1963)). Although “[t]he Copyright Act does not expressly render anyone liable for infringement committed by another, these doctrines of secondary liability emerged from common law principles and are well established in the law… .” (see Sony Corp. v. Universal City Studios, 464 U.S., at 434, 486).

The Sony case resolved one of the early disputes raised by the introduction of a disruptive technology that posed a challenge to an entrenched system and addressed the issues of contributory infringement.


Case Study

Sony Corporation Of America v. Universal City Studios, Inc.

Supreme Court Of The United States, 464 U.S. 417 (1984)

Procedural Posture

Petitioners appealed a judgment of the United States Court of Appeals for the Ninth Circuit holding petitioners liable for contributory infringement in respondents’ suit against petitioners for copyright infringement in violation of the Copyright Act, 17 U.S.C.S. § 101 et seq.


Petitioners manufactured and sold home video tape recorders. Respondents owned the copyrights to television programs broadcast on public airwaves. Respondents sued petitioners for copyright infringement, alleging that because consumers used petitioners’ recorders to record respondents’ copyrighted works, petitioners were liable for the copyright infringement allegedly committed by those consumers in violation of the Copyright Act, 17 U.S.C.S. § 101 et seq. The district court held in favor of petitioners. The appellate court reversed. The U.S. Supreme Court held that petitioners demonstrated a significant likelihood that substantial numbers of copyright holders that licensed works for broadcast on free television would not object to having such broadcasts recorded for later viewing by private viewers. The recorders were therefore capable of substantial non-infringing uses and respondents’ sale of the recorders to the general public did not constitute copyright infringement.


Sale of home video tape recorders to the general public did not constitute contributory infringement of copyrights on television programs since there was a significant likelihood that substantial numbers of copyright holders who license their works for broadcast on free television would not object to having their broadcasts time-shifted by private viewers and the plaintiff copyright holders did not demonstrate that time-shifting would cause any likelihood of non-minimal harm to the potential market for, or the value of, their copyrighted works.


The judgment in favor of respondents was reversed where petitioners, as manufacturers of video recorders, did not infringe copyrights.

Vicarious Infringement

Vicarious infringement is another form of secondary liability for direct infringement. A party “… is vicariously liable for the actions of a primary infringer where the defendant (1) has the right and ability to control the infringer’s conduct, and (2) receives a direct financial benefit from the infringement.” (see Fonovisa, Inc. v. Cherry Auction, Inc.; Richard Pilegard, Et Al, 76 F.3d 259 (1996)).

Shapiro is a landmark case on vicarious liability. The court there was faced with a copyright infringement suit against the owner of a chain of department stores where a concessionaire was selling counterfeit recordings.


Case Study

Shapiro, Bernstein & Co., Inc., Et Al. v. H. L. Green Company, Inc.

United States Court Of Appeals For The Second Circuit, 316 F.2D 304 (1963)

Procedural Posture

Plaintiffs challenged a district court’s dismissal of their claims against defendant, a record seller accused of copyright infringement.


Plaintiffs were the copyright proprietors of several musical compositions. Defendant was a company with a record department in each of its stores. Third party defendant was a record manufacturer and dealer who sold records in defendant’s stores. Plaintiffs sued third party defendant for manufacturing knock off records, which were copies of plaintiffs’ records, and selling them without a license. Plaintiffs prevailed on their claims against third party defendant but their suit against defendant was dismissed. The appellate court held defendant liable for illegal sales, even in the absence of intent to infringe, on the basis that knowledge was imputed to defendant. The court further stated that defendant’s liability would stem from a finding that third party defendant was also liable for unlawful sales. The case was reversed and remanded.


The court granted plaintiffs’ claim for relief from the district court’s dismissal of their claims against defendant, a record seller accused of copyright infringement, and the case was remanded for further proceedings on the issue of illegal sales.

Inducing Infringement

Inducement arises when a person persuades or influences someone to act. Grokster developed a second generation peer-to-peer file sharing software that allowed users to share digital music, and other types of digital files, knowingly providing the means for users to engage in infringing behavior. The Court found that Grokster facilitated copyright infringement. This case addresses an issue raised by the rise of new and different ways to infringe on copyrights.


Case Study

Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.

Supreme Court Of The United States, 545 U.S. 913 (2005)

Procedural Posture

Petitioner copyright holders sued respondent software distributors, alleging that the distributors were liable for copyright infringement because the software of the distributors was intended to allow users to infringe copyrighted works. Upon the grant of a writ of certiorari, the holders appealed the judgment of the United States Court of Appeals for the Ninth Circuit which affirmed summary judgment in favor of the distributors.


Two companies that distributed free software, which allowed computer users to share electronic files through peer-to-peer networks (that is, directly with each other, rather than through central servers), were sued by a group of copyright holders–who (1) alleged that the distributors had knowingly and intentionally distributed their software to enable users to infringe copyrighted works in violation of the Copyright Act (17 U.S.C.S. §§ 101 et seq.), and (2) sought damages and an injunction–where, although the distributors’ software could be used to share any type of digital file, users of the software had mostly used it for unauthorized sharing of copyrighted music and video files.

Discovery revealed that (1) billions of files were shared across peer-to-peer networks each month; and (2) the distributors were aware that users of their software used it primarily to download copyrighted files. Moreover, the record included evidence that the distributors (1) clearly had voiced the objective that software recipients use the software to download copyrighted works; and (2) had actively encouraged infringement by, for example, promoting themselves as alternatives to another file-sharing service that had been sued by copyright holders for allegedly facilitating copyright infringement.

Although the distributors received no revenue from users of their software, the distributors generated income by selling advertising space, and then streaming the advertising to the users (so that, as the number of users increased, the value of the distributors’ advertising opportunities increased). There was no evidence that the distributors had tried to filter copyrighted material from users’ downloads or otherwise to impede the sharing of copyrighted files. ***


The distributors were aware that users employed their free software primarily to download copyrighted files, but the distributors contended that they could not be contributorily liable for the users’ infringements since the software was capable of substantial noninfringing uses such as downloading works in the public domain. The U.S. Supreme Court unanimously held, however, that the distributors could be liable for contributory infringement, regardless of the software’s lawful uses, based on evidence that the software was distributed with the principal, if not exclusive, object of promoting its use to infringe copyright. In addition to the distributors’ knowledge of extensive infringement, the distributors expressly communicated to users the ability of the software to copy works and clearly expressed their intent to target former users of a similar service which was being challenged in court for facilitating copyright infringement. Further, the distributors made no attempt to develop filtering tools or mechanisms to diminish infringing activity, and the distributors’ profit from advertisers clearly depended on high-volume use which was known to be infringing.

Under the “inducement rule” being adopted, for copyright, by the United States Supreme Court in the case at hand, one who distributed a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, going beyond mere distribution with knowledge of third-party action, was liable for the resulting acts of infringement by third parties using the device, regardless of the device’s lawful uses, as:

(1) One infringed contributorily by intentionally inducing or encouraging direct infringement–and infringed vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it–for, although the Copyright Act (17 U.S.C.S. §§ 101 et seq.) did not expressly render anyone liable for infringement committed by another, these doctrines of secondary liability had emerged from common-law principles and were well established.

(2) Although Sony Corp. of America v. Universal City Studios, Inc. (1984) 464 U.S. 417 *** in which the Supreme Court had absolved a distributor of video cassette recorders (which the court had found capable of substantial noninfringing uses) from copyright liability for third parties’ use of the recorders–limited imputing culpable intent as a matter of law from the characteristics or uses of a distributed product, (a) nothing in Sony required courts to ignore evidence of intent if there was such evidence; and (b) the case had not been meant to foreclose rules of fault-based liability derived from common law.

(3) Thus, where evidence went beyond a product’s characteristics or the knowledge that the product might be put to infringing uses–and showed statements or actions, such as advertising, a directed to promoting infringement–Sony’s “staple-article rule” would not preclude liability.

(4) Because the inducement rule premised liability on purposeful, culpable expression and conduct, the rule did nothing to compromise legitimate commerce or discourage innovation having a lawful promise, for under the rule a distributor would not be subjected to liability for merely (a) knowing of infringing potential or of actual infringing uses; or (b) performing ordinary acts incident to product distribution, such as offering customers technical support or product updates.


One who distributes product, capable of lawful and unlawful use, with clearly shown object of promoting copyright infringement held liable for copyright infringement by third parties using product.


The judgment affirming the grant of summary judgment to the distributors was vacated, and the case was remanded for further proceedings.

Defenses to Infringement

The “Fair Use” and the “First Sale” doctrines are defenses to claims of copyright infringement. §107 of the Copyright Act states that the “… fair use of a copyrighted work … for purposes such as criticism, comment, news reporting, teaching, scholarship, or research …” is not copyright infringement. The determination of fair use must consider:

  1. the purpose and character of the use, including whether such use is commercial,
  2. the nature of the copyrighted work,
  3. the amount and substantiality of the portion used, and
  4. the effect of the use on the potential market for the copyrighted work.

The Campbell case evaluated whether the commercial nature of a parody of a Roy Orbison song was fatal to the application of the fair use standard.


Case Study

Campbell v. Acuff-Rose Music, Inc.

Supreme Court of the United States, 510 U.S. 569 (1994)

Procedural Posture

Petitioners, a rap music group being sued by respondent, the corporate owner of an original rock ballad, sought review of the judgment of the United States Court of Appeals for the Sixth Circuit, which reversed a grant of summary judgment in favor of petitioners after finding the commercial purpose of petitioners’ parody of respondent’s song had prevented it from being a fair use under the Copyright Act of 1976, 17 U.S.C.S. § 107.


Petitioners, a rap music group, were sued by respondent, the corporate owner of an original rock ballad, for copyright infringement. Petitioners claimed the song was a parody entitled to fair use protection under the Copyright Act of 1976, 17 U.S.C.S. § 107. The court below found the commercial purpose of petitioner’s parody had prevented it from being a fair use. That judgment was reversed on appeal because the Court found it was error for the court below to have concluded that the commercial nature of petitioners’ parody had rendered it presumptively unfair. The Court held that no such evidentiary presumption was available to address either § 107(1), the character and purpose of the use, or § 107(4), market harm, in determining whether transformative use, such as parody, was a fair one. The Court held that a parody’s commercial character, which tended to weigh against a finding of fair use, was only one element that should be weighed in a fair use enquiry. Therefore, the court below was found to have given insufficient consideration to the nature of the parody under the fair use factors as set forth in § 107 in weighing the degree of copying.


The judgment was reversed and remanded upon the Court’s finding that the court below had erred in concluding the commercial nature of petitioners’ parody had rendered it presumptively unfair. The Court held that a parody’s commercial character was only one element that should be weighed in a fair use enquiry.

The “First Sale” Doctrine also limited the rights of copyright owners. §109(a) of the Act describes an exception to the exclusive right to distribute copies of the protected work. Essentially, this doctrine limits the ability of the copyright owner to its resale, transfer, or use by a purchaser. That said, it only limits the distribution right, not any of the others, including copy, public performance, creation of derivative works, etc. In order for the doctrine to apply ownership is necessary. The doctrine does not “… extend to any person who has acquired possession of the copy or phonorecord from the copyright owner, by rental, lease, loan, or otherwise, without acquiring ownership of it.” (17 U.S.C. §109(d)).

Of course, as with many things, the advent of digital versions of various products present challenges to the existing legal regime. There are two important questions to address when considering the “sale” of a digital work.

First, is it a sale of the original work or just a transfer of a copy. In other words, digital works can be copied easily and at near-zero cost. So, if the purchaser of the physical music record, or physical book for that matter, sells or gifts their copy, they would be delivering their original, and only, owned copy. In the digital space, however, the purchaser of a music file from iTunes or an eBook from Amazon could simply make a copy of that digital file and sell that duplicate rather the original.

The second question that must be addressed relates to whether a “purchaser” of a digital work is actually taking an ownership interest when the work is sold. In the pre-digital age, the purchase of a product, e.g., a book, record, or picture, would actually mean taking possession of a physical manifestation of that product. The sale would represent a transfer of ownership from the seller to the buyer thus meeting the statutory requirement of “ownership” mentioned above. In a digital marketplace, most commercial sellers of digital content use an End User License Agreement (EULA). The use of the EULA means that the transaction grants a license to use the digital product rather than a transfer of ownership. Since the transaction is not a “sale” but the grant of a “license,” the First Sale Doctrine will not apply.

Remedies for Infringement

The Copyright Act prescribes certain remedies for infringement including injunctions and money damages.

§502 authorizes “Any court having jurisdiction of a civil action …” under the Act to “… grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” A plaintiff might seek a temporary injunction in an effort to prevent the infringing behaviors and reduce the damage those behaviors might cause to the plaintiff’s office. The temporary injunction might become permanent if the plaintiff prevails.

While an infringement action is pending, §503 allows a court to take into its custody any infringing copies of the protected works, any articles that may have been used to produce the infringing copies, and any records documenting the manufacture, sale, or receipt of things involved in the alleged infringement.

Infringers are liable for “… actual damages and any additional profits of the infringer … “ or statutory damages under §504. In order to establish to “… the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” These kinds of damages may be difficult to prove so §504 provides for statutory damages “… in a sum of not less than $750 or more than $30,000 as the court considers just.” In the event that the infringement is committed willfully, the court in its discretion “… may increase the award of statutory damages to a sum of not more than $150,000.” Further, §505 authorizes the court, in its discretion, to allow “… the recovery of full costs by or against any party …” and reasonable attorney’s fees as part of the costs.

The Act also provides for criminal penalties where the infringement was committed willfully:

  • for purposes of commercial advantage or private financial gain;
  • by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or
  • by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution. (17 U.S.C. §506).

Digital Issues in Copyright

The transition to a digital economy has, and will, continue to impact copyright law. There are several statutes that address these digital developments.

No Electronic Theft Act of 1997 (NET Act)

Congress, in an effort to address increasing claims of “piracy”, i.e., infringement of digital copyright protected works, amended the Copyright Act with passage of the NET Act. These amendments addressed a loophole in the criminal penalties available under the Copyright Act by amending §506 to make criminal prosecution available even where there was no “… commercial advantage or private financial gain …” shown. (17 U.S.C. §506). It is a federal crime to reproduce, distribute, or share copies of electronic copyrighted works even if the person acts without commercial purpose and/or receives no private financial gain. Prior to the NET Act, intentional infringers of digital works over the Internet did not face criminal penalties unless they enjoyed “… commercial advantage or private financial gain …” (17 U.S.C. §506). Copyright infringement by electronic means now carries a maximum penalty of three years in prison and a $250,000 fine.

Digital Millennium Copyright Act of 1998 (DMCA)

The DMCA addressed several issues of importance in the digital space. It amended the Copyright Act to bring it into conformance with two World Intellectual Property Organizations (WIPO) treaties, the Copyright Treaty and the WIPO Performances and Phonograms Treaty.

It also added Chapter 12, Copyright Protection and Management Systems to the Copyright Act. This chapter prohibits person(s) from circumventing “… a technological measure that effectively controls access to a work …” and producing and sharing “… any technology, product, service, device, component, or part thereof, that is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work …” protected by the Act. The term “… to “circumvent a technological measure” means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner …”

In other words, the revisions make the creation or uses of anything that allows a person to hack the Digital Rights Management (DRM) controls that limit access to digital products subject to civil and criminal penalties, even if no actual infringement occurs.

Most notable, though, is the creation of “safe harbors” for online service providers (OSP) and internet service providers (ISP). One of the great strengths of the internet is its use as a platform to share information. Of course, that strength provides nearly unlimited opportunities for infringement of copyright protected works.

Pursuant to the DMCA, a service provider is “… an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received…” or “… a provider of online services or network access, or the operator of facilities therefor …“ (17 U.S.C. §512(k)).

Service providers “… shall not be liable for monetary relief, or … for injunctive or other equitable relief, for infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider …” (17 U.S.C. §512(a)). For example, if an OSP or ISP acts only as a conduit, meaning they do modify the user’s traffic, they are free from liability.

Service providers will also not be liable where they provide “… storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider does not have actual knowledge that the material or an activity using the material on the system or network is infringing … is not aware of facts or circumstances from which infringing activity is apparent; or upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material …” Note, the service provider cannot receive a financial benefit directly related to the infringing activity. If or when a service provider is notified of claimed infringement, pursuant to the “notice and takedown” provision in the Act, the provider must respond “… expeditiously to remove, or disable access to, the material that is claimed to be infringing …” (17 U.S.C. §512(c)).


Ethical Considerations

Blackwood’s Book

Professor Blackwood has worked all summer to curate the supplementary materials for her new course, Climate Change: Hoax or Catastrophe. She has, to a large degree, relied on only two sources for her curation work. She has reproduced, and plans to use, materials that are only remotely related to the specific subject matter of her course. Also, unfortunately, she has not made a concerted effort to accurately source those materials and will likely be unable to offer attribution for most of the curated materials. What ethical issues are present in these circumstances?



  1. What is the purpose of a copyright?
  2. What are the exclusive rights of the owner of a copyright?
  3. When does a work become fixed?
  4. What is the difference between direct and contributory infringement of a copyright?
  5. Why is the DMCA important?

Chapter Twenty Two | Intellectual Property: Trademarks & Trade Secrets


A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. There are many famous trademarks including the Nike swoosh, Disney’s Mickey Mouse and the golden arches of McDonalds. A service mark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods. The lion’s roar used by Metro-Goldwyn-Mayer is an example of a service mark. An unregistered service mark is symbolized by the service mark symbol (℠). A trade name is a fictitious name, often different from the registered name of a business entity, that is used as an alternative for identification.

Since the law considers a trademark to be property, ownership can reside in an individual or any legal entity. Rights to a trademark can be created by registering the mark with the appropriate trademark registry or through its use in commerce. The United States Patent and Trademark Office (USPTO) is the registry in the United States.

An unregistered trademark is symbolized by the trademark symbol (™) and a registered trademark is symbolized by the letter “R” in a circle (®). The purpose of a trademark is to support the brand identity (brand name) of an individual, company and/or product in order to provide differentiation in the marketplace.

Trade dress refers to those characteristics of a product that are related to the visual appearance of a product or its packaging that symbolize the source of the product to consumers. It includes its size, shape, color, design, and texture as well as its packaging and labeling. It also includes advertising, including marketing strategies and distinctive graphics.

Sources of Law

Lanham Act

The primary federal law on trademarks is the Trademark Act of 1946 (Lanham Act) (15 U.S.C. §1051 et seq.).

The Lanham Act established the remedies available when a trademark is infringed upon. These remedies include damages and block imports of goods that infringe on registered trademarks, and authorized the use of injunctions to prevent the use of false descriptions and trademark dilution.

The Act has been amended several times:

  • the Trademark Counterfeiting Act of 1984 (TCA) (18 U.S. Code §2320),
  • the Federal Trademark Dilution Act (FTDA) (Pub. L. No. 104-98, 109 Stat. 985 (1996))
  • the Anticybersquatting Consumer Protection Act of 1999 (ACPA) (15 U.S.C. § 1125(d))
  • the Trademark Dilution Revision Act (TDRA) (Pub. L. No. 109–312, 120 Stat. 1730 (2006)


The registration process in the United States requires that the trademark owner:

  • file an application to register the trademark with the USPTO
  • the application is then reviewed by the USPTO to assure compliance with the rules included in the Trademark Manual of Examination Procedure (TMEP)
  • if the application is approved it will be “published for opposition”, a thirty day period when those who would be affected by the registration can object by filing an opposition proceeding that will result in a hearing by the Trademark Trial and Appeal Board (TTAB) to resolve questions related to the grounds for opposition and the applicant’s ability to register the mark
  • the mark will be approved if no objection is filed or if the TTAB finds for the applicant


There are various categories of trademarks depending on the mark’s distinctiveness. The court, in Abercrombie & Fitch, 537 F.2D 4 (1976), pointed out that registration requires a mark to be distinctive and then described both four different categories that supported trademark protection and a “spectrum of distinctiveness”. As the court noted:

“… Arrayed in an ascending order which roughly reflects their eligibility to trademark status and the degree of protection accorded, these classes are (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful.”


A generic mark will never be protected because the identifying term is a common, hence generic, name for the product, or service, in question. For example, generic terms would include elevator, salt and aspirin.


A descriptive mark speaks to the specific characteristics of the product or service in question. A mark “… which (1) when used on or in connection with the goods of the applicant is merely descriptive or deceptively misdescriptive of them …” will not be protected. (15 U.S.C. § 1052(e)(1)). So, “salty” crackers would not be protected. In order to gain protection for a descriptive mark it must develop a “secondary meaning”. In other words, over a period of years consumers may come to identify a product or service with a particular trademark.


Suggestive trademarks are the most common category and merely evoke the quality or characteristics of goods and services. These trademarks require a customer exercise some amount of imagination in order to understand the nature of the goods. Of course, there is a fine line between what qualifies as “descriptive” or “suggestive” because the difference is “in the eye of the beholder” leading to different interpretations of the same mark. Examples of suggestive trademarks include Tesla for electric autos and 7-Eleven that identifies the hours of operation for a convenience store.


An arbitrary trademark is one whose meaning is unrelated to the goods or services identified by the mark. It is often a word with a common meaning. Among the most well known arbitrary trademarks is Apple, the technology firm. Apple, the fruit, does not usually evoke a computer, at least until Apple was launched by the Steves (Jobs and Wozniak) became a global brand.


A fanciful trademark is one that is created only to be used as a trademark. Its very lack of meaning is its greatest strength. Since the mark is created for a singular purpose, i.e., to be a trademark it cannot be confused with something else which is a weakness in the other categories of mark. Examples of fanciful trademarks include Kodak, Starbucks, Exxon and Verizon.

It is also important to note that the categories are fluid and that the kind of usage of a particular mark over time may result in a change in the appropriateness of the mark’s assigned category.

The Zatarains case discusses the “spectrum of distinctiveness” and secondary meaning discussed above.


Case Summary

Zatarains, Inc. v. Oak Grove Smokehouse, Inc. and Visko’s Fish Fry, Inc.

United States Court Of Appeals For The Fifth Circuit, 698 F.2D 786 (1983)

GOLDBERG, Circuit Judge:

This appeal of a trademark dispute presents us with a menu of edible delights sure to tempt connoisseurs of fish and fowl alike. At issue is the alleged infringement of two trademarks, “Fish-Fri” and “Chick-Fri,” held by appellant Zatarain’s, Inc. (“Zatarain’s”). The district court held that the alleged infringers had a “fair use” defense to any asserted infringement of the term “Fish-Fri” and that the registration of the term “Chick-Fri” should be cancelled. We affirm.



Zatarain’s is the manufacturer and distributor of a line of over one hundred food products. Two of these products, “Fish-Fri” and “Chick-Fri,” are coatings or batter mixes used to fry foods. These marks serve as the entree in the present litigation. *** Zatarain’s products are not alone in the marketplace. At least four other companies market coatings for fried foods that are denominated “fish fry” or “chicken fry.” Two of these competing companies are the appellees here, and therein hangs this fish tale.

Appellee Oak Grove Smokehouse, Inc. (“Oak Grove”) began marketing a “fish fry” and a “chicken fry” in March 1979. Both products are packaged in clear glassine packets that contain a quantity of coating mix sufficient to fry enough food for one meal. The packets are labelled with Oak Grove’s name and emblem, along with the words “FISH FRY” OR “CHICKEN FRY.” Oak Grove’s “FISH FRY” has a corn flour base seasoned with various spices; Oak Grove’s “CHICKEN FRY” is a seasoned coating with a wheat flour base.

Appellee Visko’s Fish Fry, Inc. (“Visko’s”) entered the batter mix market in March 1980 with its “fish fry.” Visko’s product is packed in a cylindrical eighteen-ounce container with a resealable plastic lid. The words “Visko’s FISH FRY” appear on the label along with a photograph of a platter of fried fish. Visko’s coating mix contains corn flour and added spices. ***


Zatarain’s first claimed foul play in its original complaint filed against Oak Grove on June 19, 1979, in the United States District Court for the Eastern District of Louisiana. The complaint alleged trademark infringement and unfair competition under the Lanham Act ***

The case was tried to the court without a jury. Treating the trademark claims first, the district court classified the term “Fish-Fri” as a descriptive term identifying a function of the product being sold. The court found further that the term “Fish-Fri” had acquired a secondary meaning in the New Orleans geographical area and therefore was entitled to trademark protection, but concluded that the defendants were entitled to fair use of the term “fish fry” to describe characteristics of their goods. Accordingly, the court held that Oak Grove and Visko’s had not infringed Zatarain’s trademark “Fish-Fri.”

With respect to the alleged infringement of the term “Chick-Fri,” the court found that “Chick-Fri” was a descriptive term that had not acquired a secondary meaning in the minds of consumers. Consequently, the court held that Zatarain’s claim for infringement of its trademark “Chick-Fri” failed and ordered that the trademark registration of “Chick-Fri” should be cancelled.

Turning to Zatarain’s unfair competition claims, the court observed that the evidence showed no likelihood of or actual confusion on the part of the buying public. Additionally, the court noted that the dissimilarities in trade dress of Zatarain’s, Oak Grove’s, and Visko’s products diminished any possibility of buyer confusion. For these reasons, the court found no violations of federal or state unfair competition laws.


The district court found that Zatarain’s trademark “Fish-Fri” was a descriptive term with an established secondary meaning, but held that Oak Grove and Visko’s had a “fair use” defense to their asserted infringement of the mark. The court further found that Zatarain’s trademark “Chick-Fri” was a descriptive term that lacked secondary meaning, and accordingly ordered the trademark registration cancelled. Additionally, the court concluded that Zatarain’s had produced no evidence in support of its claims of unfair competition on the part of Oak Grove and Visko’s. Finally, the court dismissed Oak Grove’s and Visko’s counterclaims for antitrust violations, unfair trade practices, misbranding of food products, and miscellaneous damages.

Battered, but not fried, Zatarain’s appeals from the adverse judgment on several grounds. First, Zatarain’s argues that its trademark “Fish-Fri” is a suggestive term and therefore not subject to the “fair use” defense. Second, Zatarain’s asserts that even if the “fair use” defense is applicable in this case, appellees cannot invoke the doctrine because their use of Zatarain’s trademarks is not a good faith attempt to describe their products. Third, Zatarain’s urges that the district court erred in cancelling the trademark registration for the term “Chick-Fri” because Zatarain’s presented sufficient evidence to establish a secondary meaning for the term. For these reasons, Zatarain’s argues that the district court should be reversed. *** We now turn to an appraisal of these issues.



1. Classifications of Marks

The threshold issue in any action for trademark infringement is whether the word or phrase is initially registerable or protectable. *** Courts and commentators have traditionally divided potential trademarks into four categories. A potential trademark may be classified as (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. These categories, like the tones in a spectrum, tend to blur at the edges and merge together. The labels are more advisory than definitional, more like guidelines than pigeonholes. Not surprisingly, they are somewhat difficult to articulate and to apply. ***

A generic term is “the name of a particular genus or class of which an individual article or service is but a member.” *** A generic term connotes the “basic nature of articles or services” rather than the more individualized characteristics of a particular product. *** Generic terms can never attain trademark protection. *** Furthermore, if at any time a registered trademark becomes generic as to a particular product or service, the mark’s registration is subject to cancellation. *** Such terms as aspirin and cellophane have been held generic and therefore unprotectable as trademarks. ***

A descriptive term “identifies a characteristic or quality of an article or service,” *** Descriptive terms ordinarily are not protectable as trademarks, *** they may become valid marks, however, by acquiring a secondary meaning in the minds of the consuming public. *** Examples of descriptive marks would include “Alo” with reference to products containing gel of the aloe vera plant, *** and “Vision Center” in reference to a business offering optical goods and services ***. As this court has often noted, the distinction between descriptive and generic terms is one of degree. *** The distinction has important practical consequences, however; while a descriptive term may be elevated to trademark status with proof of secondary meaning, a generic term may never achieve trademark protection. ***

A suggestive term suggests, rather than describes, some particular characteristic of the goods or services to which it applies and requires the consumer to exercise the imagination in order to draw a conclusion as to the nature of the goods and services. *** A suggestive mark is protected without the necessity for proof of secondary meaning. The term “Coppertone” has been held suggestive in regard to sun tanning products. ***

Arbitrary or fanciful terms bear no relationship to the products or services to which they are applied. Like suggestive terms, arbitrary and fanciful marks are protectable without proof of secondary meaning. The term “Kodak” is properly classified as a fanciful term for photographic supplies, ***; “Ivory” is an arbitrary term as applied to soap. ***

2. Secondary Meaning

As noted earlier, descriptive terms are ordinarily not protectable as trademarks. They may be protected, however, if they have acquired a secondary meaning for the consuming public. The concept of secondary meaning recognizes that words with an ordinary and primary meaning of their own “may by long use with a particular product, come to be known by the public as specifically designating that product.” *** In order to establish a secondary meaning for a term, a plaintiff “must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.” *** The burden of proof to establish secondary meaning rests at all times with the plaintiff; this burden is not an easy one to satisfy, for ” ‘ [a] high degree of proof is necessary to establish secondary meaning for a descriptive term.’ ” *** Proof of secondary meaning is an issue only with respect to descriptive marks; suggestive and arbitrary or fanciful marks are automatically protected upon registration, and generic terms are unprotectible even if they have acquired secondary meaning. ***

3. The “Fair Use” Defense

Even when a descriptive term has acquired a secondary meaning sufficient to warrant trademark protection, others may be entitled to use the mark without incurring liability for trademark infringement. When the allegedly infringing term is “used fairly and in good faith only to describe to users the goods or services of [a] party, or their geographic origin,” a defendant in a trademark infringement action may assert the “fair use” defense. The defense is available only in actions involving descriptive terms and only when the term is used in its descriptive sense rather than its trademark sense. *** In essence, the fair use defense prevents a trademark registrant from appropriating a descriptive term for its own use to the exclusion of others, who may be prevented thereby from accurately describing their own goods. *** The holder of a protectable descriptive mark has no legal claim to an exclusive right in the primary, descriptive meaning of the term; consequently, anyone is free to use the term in its primary, descriptive sense so long as such use does not lead to customer confusion as to the source of the goods or services. ***.

4. Cancellation of Trademarks

Section 37 of the Lanham Act, ***, provides as follows:

“In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action. Decrees and orders shall be certified by the court to the Commissioner, who shall make appropriate entry upon the records of the Patent Office, and shall be controlled thereby.”

This circuit has held that when a court determines that a mark is either a generic term or a descriptive term lacking secondary meaning, the purposes of the Lanham Act are well served by an order cancelling the mark’s registration.

We now turn to the facts of the instant case.


1. Classification

Throughout this litigation, Zatarain’s has maintained that the term “Fish-Fri” is a suggestive mark automatically protected from infringing uses by virtue of its registration in 1962. Oak Grove and Visko’s assert that “fish fry” is a generic term identifying a class of foodstuffs used to fry fish; alternatively, Oak Grove and Visko’s argue that “fish fry” is merely descriptive of the characteristics of the product. The district court found that “Fish-Fri” was a descriptive term identifying a function of the product being sold. Having reviewed this finding under the appropriate “clearly erroneous” standard, we affirm. ***

We are mindful that ” [t]he concept of descriptiveness must be construed rather broadly.” *** Whenever a word or phrase conveys an immediate idea of the qualities, characteristics, effect, purpose, or ingredients of a product or service, it is classified as descriptive and cannot be claimed as an exclusive trademark. *** Courts and commentators have formulated a number of tests to be used in classifying a mark as descriptive.

A suitable starting place is the dictionary, for ” [t]he dictionary definition of the word is an appropriate and relevant indication ‘of the ordinary significance and meaning of words’ to the public.” *** Webster’s Third New International Dictionary 858 (1966) lists the following definitions for the term “fish fry”: “1. a picnic at which fish are caught, fried, and eaten; …. 2. fried fish.” Thus, the basic dictionary definitions of the term refer to the preparation and consumption of fried fish. This is at least preliminary evidence that the term “Fish-Fri” is descriptive of Zatarain’s product in the sense that the words naturally direct attention to the purpose or function of the product.

The “imagination test” is a second standard used by the courts to identify descriptive terms. This test seeks to measure the relationship between the actual words of the mark and the product to which they are applied. If a term “requires imagination, thought and perception to reach a conclusion as to the nature of goods,” *** it is considered a suggestive term. Alternatively, a term is descriptive if standing alone it conveys information as to the characteristics of the product. In this case, mere observation compels the conclusion that a product branded “Fish-Fri” is a prepackaged coating or batter mix applied to fish prior to cooking. The connection between this merchandise and its identifying terminology is so close and direct that even a consumer unfamiliar with the product would doubtless have an idea of its purpose or function. It simply does not require an exercise of the imagination to deduce that “Fish-Fri” is used to fry fish. *** Accordingly, the term “Fish-Fri” must be considered descriptive when examined under the “imagination test.”

A third test used by courts and commentators to classify descriptive marks is “whether competitors would be likely to need the terms used in the trademark in describing their products.” *** A descriptive term generally relates so closely and directly to a product or service that other merchants marketing similar goods would find the term useful in identifying their own goods. *** Common sense indicates that in this case merchants other than Zatarain’s might find the term “fish fry” useful in describing their own particular batter mixes. While Zatarain’s has argued strenuously that Visko’s and Oak Grove could have chosen from dozens of other possible terms in naming their coating mix, we find this position to be without merit. As this court has held, the fact that a term is not the only or even the most common name for a product is not determinative, for there is no legal foundation that a product can be described in only one fashion. *** There are many edible fish in the sea, and as many ways to prepare them as there are varieties to be prepared. Even piscatorial gastronomes would agree, however, that frying is a form of preparation accepted virtually around the world, at restaurants starred and unstarred. The paucity of synonyms for the words “fish” and “fry” suggests that a merchant whose batter mix is specially spiced for frying fish is likely to find “fish fry” a useful term for describing his product.

A final barometer of the descriptiveness of a particular term examines the extent to which a term actually has been used by others marketing a similar service or product. *** This final test is closely related to the question whether competitors are likely to find a mark useful in describing their products. As noted above, a number of companies other than Zatarain’s have chosen the word combination “fish fry” to identify their batter mixes. Arnaud’s product, “Oyster Shrimp and Fish Fry,” has been in competition with Zatarain’s “Fish-Fri” for some ten to twenty years. When companies from A to Z, from Arnaud to Zatarain’s, select the same term to describe their similar products, the term in question is most likely a descriptive one.

The correct categorization of a given term is a factual issue, *** consequently, we review the district court’s findings under the “clearly erroneous” standard of Fed. R. Civ. P. 52. *** The district court in this case found that Zatarain’s trademark “Fish-Fri” was descriptive of the function of the product being sold. Having applied the four prevailing tests of descriptiveness to the term “Fish-Fri,” we are convinced that the district court’s judgment in this matter is not only not clearly erroneous, but clearly correct.

2. Secondary Meaning

Descriptive terms are not protectable by trademark absent a showing of secondary meaning in the minds of the consuming public. To prevail in its trademark infringement action, therefore, Zatarain’s must prove that its mark “Fish-Fri” has acquired a secondary meaning and thus warrants trademark protection. The district court found that Zatarain’s evidence established a secondary meaning for the term “Fish-Fri” in the New Orleans area. We affirm.

The existence of secondary meaning presents a question for the trier of fact, and a district court’s finding on the issue will not be disturbed unless clearly erroneous. *** The burden of proof rests with the party seeking to establish legal protection for the mark–the plaintiff in an infringement suit. *** The evidentiary burden necessary to establish secondary meaning for a descriptive term is substantial. ***

In assessing a claim of secondary meaning, the major inquiry is the consumer’s attitude toward the mark. The mark must denote to the consumer “a single thing coming from a single source,” *** to support a finding of secondary meaning. Both direct and circumstantial evidence may be relevant and persuasive on the issue.

Factors such as amount and manner of advertising, volume of sales, and length and manner of use may serve as circumstantial evidence relevant to the issue of secondary meaning. *** While none of these factors alone will prove secondary meaning, in combination they may establish the necessary link in the minds of consumers between a product and its source. It must be remembered, however, that “the question is not the extent of the promotional efforts, but their effectiveness in altering the meaning of [the term] to the consuming public.”***

Since 1950, Zatarain’s and its predecessor have continuously used the term “Fish-Fri” to identify this particular batter mix. Through the expenditure of over $400,000 for advertising during the period from 1976 through 1981, Zatarain’s has promoted its name and its product to the buying public. Sales of twelve-ounce boxes of “Fish-Fri” increased from 37,265 cases in 1969 to 59,439 cases in 1979. From 1964 through 1979, Zatarain’s sold a total of 916,385 cases of “Fish-Fri.” The district court considered this circumstantial evidence of secondary meaning to weigh heavily in Zatarain’s favor. ***

In addition to these circumstantial factors, Zatarain’s introduced at trial two surveys conducted by its expert witness, Allen Rosenzweig. In one survey, telephone interviewers questioned 100 women in the New Orleans area who fry fish or other seafood three or more times per month. Of the women surveyed, twenty-three percent specified Zatarain’s “Fish-Fri” as a product they “would buy at the grocery to use as a coating” or a “product on the market that is especially made for frying fish.” In a similar survey conducted in person at a New Orleans area mall, twenty-eight of the 100 respondents answered “Zatarain’s ‘Fish-Fri’ ” to the same questions.

The authorities are in agreement that survey evidence is the most direct and persuasive way of establishing secondary meaning. *** The district court believed that the survey evidence produced by Zatarain’s, when coupled with the circumstantial evidence of advertising and usage, tipped the scales in favor of a finding of secondary meaning. Were we considering the question of secondary meaning de novo, we might reach a different conclusion than did the district court, for the issue is close. Mindful, however, that there is evidence in the record to support the finding below, we cannot say that the district court’s conclusion was clearly erroneous. Accordingly, the finding of secondary meaning in the New Orleans area for Zatarain’s descriptive term “Fish-Fri” must be affirmed.

3. The “Fair Use” Defense

Although Zatarain’s term “Fish-Fri” has acquired a secondary meaning in the New Orleans geographical area, Zatarain’s does not now prevail automatically on its trademark infringement claim, for it cannot prevent the fair use of the term by Oak Grove and Visko’s. The “fair use” defense applies only to descriptive terms and requires that the term be “used fairly and in good faith only to describe to users the goods or services of such party, or their geographic origin.” Lanham Act Sec. 33(b), 15 U.S.C. § 1115(b) (4) (1976). The district court determined that Oak Grove and Visko’s were entitled to fair use of the term “fish fry” to describe a characteristic of their goods; we affirm that conclusion.

Zatarain’s term “Fish-Fri” is a descriptive term that has acquired a secondary meaning in the New Orleans area. Although the trademark is valid by virtue of having acquired a secondary meaning, only that penumbra or fringe of secondary meaning is given legal protection. Zatarain’s has no legal claim to an exclusive right in the original, descriptive sense of the term; therefore, Oak Grove and Visko’s are still free to use the words “fish fry” in their ordinary, descriptive sense, so long as such use will not tend to confuse customers as to the source of the goods. ***

The record contains ample evidence to support the district court’s determination that Oak Grove’s and Visko’s use of the words “fish fry” was fair and in good faith. Testimony at trial indicated that the appellees did not intend to use the term in a trademark sense and had never attempted to register the words as a trademark. *** Oak Grove and Visko’s apparently believed “fish fry” was a generic name for the type of coating mix they manufactured. *** In addition, Oak Grove and Visko’s consciously packaged and labelled their products in such a way as to minimize any potential confusion in the minds of consumers. *** The dissimilar trade dress of these products prompted the district court to observe that confusion at the point of purchase–the grocery shelves–would be virtually impossible. Our review of the record convinces us that the district court’s determinations are correct. We hold, therefore, that Oak Grove and Visko’s are entitled to fair use of the term “fish fry” to describe their products; accordingly, Zatarain’s claim of trademark infringement must fail.


1. Classification

Most of what has been said about “Fish-Fri” applies with equal force to Zatarain’s other culinary concoction, “Chick-Fri.” “Chick-Fri” is at least as descriptive of the act of frying chicken as “Fish-Fri” is descriptive of frying fish. It takes no effort of the imagination to associate the term “Chick-Fri” with Southern fried chicken. Other merchants are likely to want to use the words “chicken fry” to describe similar products, and others have in fact done so. Sufficient evidence exists to support the district court’s finding that “Chick-Fri” is a descriptive term; accordingly, we affirm.

2. Secondary Meaning

The district court concluded that Zatarain’s had failed to establish a secondary meaning for the term “Chick-Fri.” We affirm this finding. The mark “Chick-Fri” has been in use only since 1968; it was registered even more recently, in 1976. In sharp contrast to its promotions with regard to “Fish-Fri,” Zatarain’s advertising expenditures for “Chick-Fri” were mere chickenfeed; in fact, Zatarain’s conducted no direct advertising campaign to publicize the product. Thus the circumstantial evidence presented in support of a secondary meaning for the term “Chick-Fri” was paltry.

Allen Rosenzweig’s survey evidence regarding a secondary meaning for “Chick-Fri” also “lays an egg.” The initial survey question was a “qualifier:” “Approximately how many times in an average month do you, yourself, fry fish or other seafood?” Only if respondents replied “three or more times a month” were they asked to continue the survey. This qualifier, which may have been perfectly adequate for purposes of the “Fish-Fri” questions, seems highly unlikely to provide an adequate sample of potential consumers of “Chick-Fri.” This survey provides us with nothing more than some data regarding fish friers’ perceptions about products used for frying chicken. As such, it is entitled to little evidentiary weight.

It is well settled that Zatarain’s, the original plaintiff in this trademark infringement action, has the burden of proof to establish secondary meaning for its term. *** This it has failed to do. The district court’s finding that the term “Chick-Fri” lacks secondary meaning is affirmed.

3. Cancellation

Having concluded that the district court was correct in its determination that Zatarain’s mark “Chick-Fri” is a descriptive term lacking in secondary meaning, we turn to the issue of cancellation. The district court, invoking the courts’ power over trademark registration as provided by section 37 of the Lanham Act, 15 U.S.C. § 1119 (1976), ordered that the registration of the term “Chick-Fri” should be cancelled. The district court’s action was perfectly appropriate in light of its findings that “Chick-Fri” is a descriptive term without secondary meaning. We affirm. ***


The last morsels on our plate are the counterclaims filed against Zatarain’s by Oak Grove and Visko’s. One group of counterclaims alleges violations of federal antitrust statutes and Louisiana law prohibiting the restraint of trade. In addition, the counterclaims pray for awards of attorneys’ fees under the Lanham Act Sec. 35, 15 U.S.C. § 1117 (1976), due to Zatarain’s alleged bad faith in instituting this infringement action. The district court found these allegations to be clearly without merit, noting that Oak Grove and Visko’s had introduced absolutely no evidence at trial to support the counterclaims. Our review of the record fully supports the district court’s judgment in this regard, and it is hereby affirmed.

Finally, Oak Grove and Visko’s assert a counterclaim based on the federal regulations governing the identity labelling of packaged foods, 21 C.F.R. Sec. 101.3 (1982). The counterclaim alleges that Zatarain’s sale of 100% corn flour under the name “Fish-Fri” is deceptive and misleading to the public. In particular, Oak Grove and Visko’s maintain that the size of the product identification “corn flour” on the “Fish-Fri” box is not reasonably related to the most predominate words on the box as required by the regulations. After examining the “Fish-Fri” package, the district court found this counterclaim to be without merit. The court initially noted that the size of the words “corn flour” complies with the specifications of 21 C.F.R. Sec. 101.2(c) (1982), which sets a minimum requirement for information appearing on the principal display panel of packaged foods. The court then found that the identification of Zatarain’s “Fish-Fri” as a corn flour product was reasonably related in size to the words “Fish-Fri.” This finding is not clearly erroneous and therefore is affirmed.

We agree with the district court that this smorgasbord of counterclaims by Oak Grove and Visko’s is without merit, and we affirm their dismissal by the district court. Sadly, for Oak Grove and Visko’s at least, these are “the ones that got away.”


And so our tale of fish and fowl draws to a close. We need not tarry long, for our taster’s choice yields but one result, and we have other fish to fry. Accordingly, the judgment of the district court is hereby and in all things



According to the USPTO, trademark infringement is the unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods and/or services. Essentially, infringement occurs when an infringing party uses a trademark identical to one that is protected. Infringement can also occur where the infringing trademark is similar enough to a protected trademark that it confuses consumers.

The Lanham Act also established the “likelihood of confusion” standard for infringement of an unregistered trademark or trade dress allowing for a civil action:

  1. Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which:

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. (15 U.S.C. §1125)The Federal Trademark Dilution Act (FTDA) (15 U.S.C. § 1125(c) and the Trademark Dilution Revision Act (TDRA) (15 U.S.C. § 1125(c) are the primary federal statutes governing dilution.


Trademark dilution arises when a famous mark is used in a way that damages the mark through blurring or tarnishment. The capacity of a famous mark to serve its purpose, i.e., to identify and distinguish products or services is in some way reduced. A mark is famous “… if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” (15 U.S.C. §1125(c)(2)(A)). Dilution by blurring is an “… association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.” (15 U.S.C. §1125(c)(2)(B)). Dilution by tarnishment is an “… association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” (15 U.S.C. §1125(c)(2)(C)).

Remedies include injunctive relief and actual damages. The court has discretion to award the owner attorneys’ fees and profits in addition to actual damages where there is proof that the infringing party willfully intended to trade on the owner’s reputation or to cause dilution of the famous mark. (15 U.S.C. §1125(c)(5)).

The Starbucks case examines whether, and under what circumstances, the owner of a “famous, distinctive” mark can recover damages for dilution.


Case Study

Starbucks Corp. v. Wolfe’s Borough Coffee, Inc.

588 F.3d 97 (2d Cir. 2009)

Procedural Posture

Plaintiffs, including a trademark owner, sued defendant competitor, alleging federal trademark infringement, dilution, and unfair competition under the Lanham Act, state trademark dilution under N.Y. Gen. Bus. Law § 360-l, and unfair competition under New York common law. The United States District Court for the Southern District of New York entered judgment in favor of the competitor. Plaintiffs appealed.


The trademark owner sold coffee products in retail locations and supplied coffees to restaurants, supermarkets, and other businesses. The competitor was a relatively small company that began selling a coffee with a name similar to the trademark owner’s mark. The appellate court determined that remand was warranted as to plaintiffs’ claim of trademark dilution by blurring under 15 U.S.C.S. § 1125(c)(2)(B) because (1) the district court erred to the extent it required “substantial” similarity between the marks, and (2) the determination of an “intent to associate” did not require the additional consideration of whether bad faith corresponded with that intent. However, the claim for dilution by tarnishment failed because the competitor’s line of coffee was marketed as a product of “very high quality,” which was inconsistent with the concept of “tarnishment.” The trademark infringement and unfair competition claims failed under the Polaroid test because, inter alia, (1) the “bridging the gap” factor was irrelevant and thus did not favor plaintiffs where the two products were in direct competition with each other, and (2) there was no likelihood that consumers would confuse the marks.


The appellate court vacated, in part, the district court’s decision and remanded for further proceedings on the issue of whether plaintiffs demonstrated a likelihood of dilution by “blurring” under federal trademark law. The appellate court affirmed the district court’s judgment in all other respects.


There are defenses to trademark infringement available. The “fair use” defense finds its basis in the freedom of speech guarantees of the First Amendment. Since trademark protection is generally limited, “… the “fair use” defense applies only to descriptive terms and requires that the term be “used fairly and in good faith only to describe to users the goods or services of such party, or their geographic origin.”” (See Zatarains, Inc. v. Oak Grove Smokehouse, Inc., et al, 698 F.2D 786 (1983), discussed earlier).

“Nominative fair use” is a defense to a claim of infringement. The nominative use test essentially states that one party may use or refer to the trademark of another if:

  1. The product or service cannot be readily identified without using the trademark (e.g. trademark is descriptive of a person, place, or product attribute).
  2. The user only uses as much of the mark as is necessary for the identification (e.g. the words but not the font or symbol).
  3. The user does nothing to suggest sponsorship or endorsement by the trademark holder. (New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992))

When describing a business, it is permissible to identify services or products that may be used by that business. It is not permissible to use the reputation of those products or services in an effort to trade on their reputation for the benefit of the business using the referenced services or products.

Domain Name Issues

The rise of the internet saw an increase in cybersquatters who registered, and frequently, warehoused domain names. They did so, not for the purpose of creating an authentic website, but to essentially hold the legitimate owner of a trademark hostage for a higher price. In response, Congress adopted the Anticybersquatting Consumer Protection Act (ACPA) that targeted those who “… registered, trafficked in, or used a domain name …” that is “… is identical or confusingly similar …” to a trademark or personal name and has “… bad faith intent to profit from the mark.” The ACPA also allows a prevailing plaintiff to “… recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” (15 U.S.C. §1117(d)). The Zuccarini case is an excellent example of the activities the ACPA addresses.


Case Study

Electronics Boutique Holdings Corp. v. John Zuccarini

United States District Court For The Eastern District Of Pennsylvania, 2000 U.S. Dist. LEXIS 15719 (2000)

Procedural Posture

Plaintiff brought an action against defendant, alleging violations of the Anticybersquatting Consumer Protection Act of 1999, 15 U.S.C.S. § 1125(d), violations of § 43(a) of the Lanham Act, 15 U.S.C.S. § 1125(a), dilution, common law service mark infringement, and unfair competition.


Plaintiff filed a complaint against defendant, alleging Internet cybersquatting. Plaintiff alleged that defendant purchased several Internet domain names similar to its trademarked names, in violation of the Anticybersquatting Consumer Protection Act of 1999 (ACPA), 15 U.S.C.S. § 1125(d). After it became apparent that defendant had knowledge of the lawsuit but was avoiding service, the court held a hearing on the merits in defendant’s absence. The court found that plaintiff was entitled to a permanent injunction under the ACPA. Plaintiff’s marks were distinctive and famous, defendant’s domain misspellings were confusingly similar to plaintiff’s marks, and defendant registered the domain misspellings with a bad-faith intent to profit form them. Defendant registered the domain misspellings in order to generate advertising revenue for himself, and did not sell any product. Plaintiff was also entitled to statutory damages of $100,000 per infringing domain name, attorney’s fees, and costs. Defendant’s conduct was particularly egregious; he continued to register domain misspellings after being enjoined from doing so in other cases.


Judgment was entered in favor of plaintiff on its claims under the Anticybersquatting Consumer Protection Act. Defendant was required to transfer the misspelled domain names to plaintiff, and was enjoined from using any domain name substantially similar to plaintiff’s marks. Plaintiff’s remaining claims, brought under other federal statutes and common law, were dismissed without prejudice.

Trade Secrets

A trade secret is any information that a business controls that gives it an advantage over its competition. Protecting trade secrets is relatively straightforward. When a business seeks to protect a trade secret, it must keep it a secret. The owner should create a process that identifies the information as private, limits access, and maintains the appropriate level of security necessary to prevent misappropriation. Unlike most other intellectual property rights, protection of trade secrets does not require completion of a lengthy and/or complicated application process.

There are many examples of famous trade secrets, including the secret recipes for Coca-Cola, Kentucky Fried Chicken, and Krispy Kreme donuts. Trade secrets need not be famous and may include lists of suppliers and clients, manufacturing processes, consumer profiles, sales and distribution methodologies.

§1.4 of the Uniform Trade Secrets Act defines a “trade secret” as information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

According to the World Intellectual Property Organization (WIPO), a trade secret is “… any confidential business information which provides an enterprise a competitive edge…”

In fact, trade secret law is presumed to encourage societal benefit as described by the U.S. Supreme Court which stated that trade secret law “… promotes the sharing of knowledge, and the efficient operation of industry; it permits the individual inventor to reap the rewards of his labor by contracting with a company large enough to develop and exploit it.” (Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470)

The Supreme Court of Ohio, in Plain Dealer (80 Ohio St.3d, 687 N.E.2d 661), established a six-factor test for determining whether information constitutes a trade secret:

  1. The extent to which the information is known outside the business;
  2. the extent to which it is known to those inside the business, i.e., by the employees;
  3. the precautions taken by the holder of the trade secret to guard the secrecy of the information;
  4. the savings effected and the value to the holder in having the information as against competitors;
  5. the amount of effort or money expended in obtaining and developing the information; and
  6. the amount of time and expense it would take for others to acquire and duplicate the information.”

Review the Nowogroski case carefully. The court differentiates between customer lists that are memorized, and those that are physically available, addressing the question of what constitutes a trade secret.


Case Study

Ed Nowogroski Insurance, Inc. v. Rucker

Supreme Court Of Washington, 137 Wash.2D 427 (1999)

Procedural Posture

Defendant former employees and competitor appealed from a decision of the Washington Court of Appeals, which reversed the judgment of the trial court in an action, brought by plaintiff former employer, alleging misappropriation of memorized customer lists, in violation of the Uniform Trade Secrets Act, Wash. Rev. Code §19.108, and ruled that memorized confidential information was protected by the Act.


Defendant former employees were hired by defendant competitor after leaving their jobs with plaintiff former employer, an insurance company. Plaintiff then sued defendants for misappropriation of plaintiff’s trade secrets by retaining and using its confidential client lists. The trial court found that, while the lists were trade secrets, defendants did not violate the Uniform Trade Secrets Act, Wash. Rev. Code § 19.108, by using information that they had memorized, as opposed to taking written information. The court of appeals disagreed and reversed.

Defendants appealed, not contesting that the lists themselves were trade secrets or that the lists were “appropriated” by memory. Rather, they argued that information in the memory of an employee about the lists was not a trade secret. In affirming, the court rejected defendants’ arguments and ruled that the protections of § 19.108 and the common law applied not only to written information, but to memorized information as well. The “memory rule” of agency law, which allowed use of memorized information, was rejected as inconsistent with promoting commercial ethics and fair dealing.


The judgment in favor of plaintiff was affirmed because the protections of the Act were not limited to written information, as asserted by defendants; there was no legal distinction, under the Act or common law, between written and memorized trade secrets; each was protected from disclosure by defendant former employees to defendant competitor.

Sources of Trade Secret Law

Sources of law related to trade secrets are primarily found in state law through the common law (Restatement of Torts (First) and the Restatement (Third) of Unfair Competition), uniform laws (Uniform Trade Secrets Act (UTSA)). At the federal level, the Economic Espionage Act (EEA) (1996) and the Defend Trade Secrets Act (DTSA) (2016) provide for both civil and criminal actions.

Restatement (First) of Torts (1939)

§757, comment b, states that a trade secret “… may consist of any formula, pattern, device, or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for chemical compound, treating or preserving materials, a pattern for machine or other device, or a list of customers.”

Restatement (Third) of Unfair Competition

§39 states that “A trade secret is any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.”

Uniform Trade Secrets Act (UTSA)

Like most uniform statutes, the UTSA, adopted by most states codifies the common law related to trade secrets as it has developed in various jurisdictions. The UTSA regularizes the standards and remedies available at common law.

The UTSA provides for several civil remedies including injunctive relief, damages, and attorney’s fees.

Economic Espionage Act (EEA) (18 U.S.C. §§1831–1839)

The EEA provides for the protection of trade secrets by criminalizing the misappropriation of trade secrets for the benefit a foreign power. §1839 of the Act defines “trade secret” to include “… all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing …”

Defend Trade Secrets Act (DTSA) (18 U.S.C. §§1839 et seq.)

The DTSA provides a basis in federal law for trade secret misappropriation and gives the federal courts jurisdiction over those actions. It does not eliminate remedies available in state courts. Remedies include:

  • injunctive relief “… to prevent any actual or threatened misappropriation …” (18 U.S.C. §1836(b)(3)(A) et seq.)
  • damages for “actual loss” or “unjust enrichment” caused by the misappropriation of the trade secret (18 U.S.C. §1836(b)(3)(B) et seq.)
  • “ … seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” (18 U.S.C. §1836(b)(2)(A)(i))


The owner of a trade secret must take reasonable measures to protect its secrecy. Owners may use a variety of mechanisms to secure trade secrets. They will frequently include work-for-hire and non-compete clauses in employment agreements and will require their employees to sign non-disclosure agreements (NDAs) in an effort to protect these valuable assets. Of course, these employment related initiatives are subject to the constraints of employment law discussed in Chapter 17.

§1.2 of the UTSA defines “Misappropriation” as:

(i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(ii) disclosure or use of a trade secret of another without express or implied consent by a person who

(A) used improper means to acquire knowledge of the trade secret; or

(B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was

(I) derived from or through a person who had utilized improper means to acquire it;

(II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

(III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
before a material change of his [or her] position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

The Rivendell case examines whether a trade secret is a question of fact.


Case Study

Rivendell Forest Products, Ltd. v. Georgia-Pacific Corporation And Timothy L. Cornwell

United States Court Of Appeals For The Tenth Circuit, 28 F.3D 1042 (1994)

Procedural Posture

Plaintiff sought review of the decision of the United States District Court for the District of Colorado, granting defendant’s motion for summary judgment in plaintiff’s action for wrongful appropriation of a trade secret.


Rivendell brought suit against G.P. for wrongful appropriation of a trade secret. The suit was also against Cornwell for a violation of confidence. The suit centers on a computer software system which Rivendell had developed over the years, and which system it asserted to be a trade secret under Colorado law. It asserts that this system enabled Rivendell to provide its customers with special service, and to manage its distribution centers as no competitor could do. This was a computer system which enabled Rivendell employees to give immediate answers to customers’ questions and phone inquiries as to prices, quantities, places, and delivery time as to various lumber sizes and types without any computations which required a delay and a call back to the customer. It asserted that at the pertinent time no other wholesaler could provide such service and management, and this gave Rivendell a large advantage over its competitors including G.P. It is this software system that Rivendell asserts was its trade secret.


Plaintiff and defendant were competitors in the lumber business. Over nine years, plaintiff developed a unique computer system that enabled its employees to immediately answer customers’ questions about inventory. Defendant hired away one of plaintiff’s employees, who was not a computer expert but had helped develop plaintiff’s system. Within four months, defendant had a virtually identical computerized inventory system.

Plaintiff sued for wrongful appropriation of a trade secret under Colorado’s Trade Secret Act, Colo. Rev. Stat. § 7-74-102(4) (1986). The district court granted defendant summary judgment. On appeal, the court held that, unlike with patents, novelty and invention were not elements of a trade secret claim. A trade secret could consist of a combination of elements that were, separately, in the public domain. Plaintiff’s computer system was arguably a trade secret since the evidence showed the system gave plaintiff a competitive advantage. The court reversed and remanded for trial.


The court reversed defendant’s grant of summary judgment and remanded for trial because the issue of whether plaintiff’s computer system for managing inventory was a trade secret was genuine and material.

The court in Rivendell found that there were essential disputed issues of fact that were unresolved by the trial court. These were “… the value of the information to the plaintiff company …” and “… the reasonable precautions taken by the holder of the trade secret to guard the secrecy of the information.” The failure to resolve those issues resulted in the court’s reversal of the lower court’s decision.

Ethical Considerations

The Special (Secret) Rocky Road Recipe

Mary is CEO of Ice Cream Heaven (ICH), a manufacturer of specialty ice cream products. ICH is known internationally for its extraordinary Magnificent Rocky Road ice cream which is a registered ICH trademark. ICH has worked for years to refine the recipe and considers the recipe a trade secret. Mary and ICH’s chief flavor developer are the only individuals who know, and have access, to the recipe.

Larry, an assistant in the flavor development department, recently gained access to the Rocky Road recipe. Larry has decided to share it by posting it to his social media accounts. Are Larry’s actions ethical?

Analytics And Ethics: Perfect Together?

Boron Systems Corp. develops data analytics tools for corporate clients. Boron has just hired a new software engineer, Jeanine Patrick. Jeanine is considered to be one of the best coders of her generation and was heavily recruited by several companies. She was a key employee on several highly confidential projects while at her previous employer, Secret Systems, Inc. Those projects were focused on the development of analytics tools that represent significant advances in the field.

While Jeanine is absolutely thrilled to be working on bleeding edge analytics tools she is unaware that one of the primary reasons that Boron hired her was her work on Secret Systems’ confidential projects. While working diligently on Boron’s application, Jeanine realizes that the knowledge she gained while at Secret Systems would be enormously beneficial to Boron. Jeanine is really uncertain about using the knowledge she acquired at Secret Systems to benefit Boron. Of course, she is not aware that Boron was hoping that she would do exactly that when they hired her.

What are the ethical challenges facing both Jeanine and Boron?




  1. Can catch phrases can be trademarked?
  2. Describe the differences between trademarks and trade dress.
  3. What is the Lanham Act?
  4. What are the four classes of distinctiveness required for protection?
  5. What is the “likelihood of confusion” standard for infringement of an unregistered trademark?
  6. What is the “fair use” defense” to trademark infringement?

Trade Secrets

  1. What is a trade secret?
  2. How can a company protect a trade secret?
  3. What are the primary sources of trade secret law?