Intellectual property (IP) in the United States

Overview

Intellectual property (IP) is a field of law that provides legal protections and ownership rights for products of human creativity and ingenuity. In the United States, IP law primarily covers a class of resources known as intangible assets, which are nonphysical assets that hold or have the potential to create economic value. Coverage under US IP law extends across four main categories: copyrights, patents, trademarks, and trade secrets.

In the United States, contemporary conceptions of copyright are defined in the Copyright Act (1976), which recognizes and protects the original works of authors, illustrators, musicians, and fine artists as well as sound recordings, musical and theatrical performances, motion pictures, software products, architectural designs, and numerous other forms of entertainment and creative expression. Patent law covers novel inventions, which must meet five requirements to qualify for protection: uniqueness, utility, novelty, non-obviousness, and the enablement that specifies the precise set of intended applications for the patented product. A trademark is a branding mechanism that serves to differentiate a company’s products from those of competitors. US trademark law recognizes two levels of trademark protection: a general set that protects trademark owners, and a broader set that covers trademarks that have been registered with the US Patent and Trademark Office (USPTO). Trade secrets are unique techniques, patterns, formulae, or other knowledge- or information-based drivers of economic value that derive from the singular skills, insights, or processes developed by the vendor of an original product or service and not commonly known outside that context.

The US Constitution includes a passage commonly known as the intellectual property (IP) clause, found in Article I, Section 8, Clause 8. Following from legal precedents rooted in seventeenth-century Great Britain, the clause empowers the US Congress to create laws designed to protect patents and copyrights. A 2021 analysis published by the Federalist Society for Law and Public Policy traced the origins of US intellectual property law to the Statute of Monopolies (1623), a British law prohibiting the country’s monarch from permitting industrial monopolies except in the case of novel inventions. The Statute of Monopolies allowed the monarch to grant exclusive rights over inventions for up to fourteen years, thus establishing the defining characteristic of modern IP law: Exclusive rights over the intellectual property, which are granted to its legally recognized creator(s) for a defined and limited time.

Legal commentators note that the US tradition of intellectual property law has largely been defined by a continuous trend of expansionism. The 1999 essay “The Growth of Intellectual Property: A History of the Ownership of Ideas in the United States,” written by Harvard University law professor William W. Fisher III, examined the gradual yet systematic expansion of all four main IP rights categories from the eighteenth century through the late twentieth century. Fisher noted that the original iteration of the US Copyright Act (1790) granted copyright protections for fourteen years, which notably matches the duration established by the Statute of Monopolies in an example of the latter’s direct influence on the development of US IP law. At the time the essay was written, the original standard had been extended to the lifetime of the author plus fifty years, and the US federal government was in the process of finalizing the Copyright Term Extension Act (1998). The 1998 update, which many observers credit in significant part to a sustained lobbying campaign by the Walt Disney Company, increased copyright protections to the lifetime of the author plus seventy years for individual rights-holders and granted copyrights to corporations for ninety-five years from the date of the work’s original publication or 120 years from its legally recognized date of conception, whichever is shorter. Fisher also cited an accompanying expansion of the types of works recognized under US copyright law, which grew from the precise language used by an author in an original written work to include translations, fictional characters, photographs, music compositions and recordings, computer programs, and architectural designs, among others.

According to Fisher’s analysis, expansions of US patent law have similarly focused on enlarging the number of inventions qualifying for patent protections. Initially exclusive to original inventions, US patent law began to expand in the nineteenth century to cover the unique aesthetic designs of manufactured objects before broadening further in the twentieth century to include medical and surgical techniques and additional protections for computer software, among other increases in scope. Fisher also tracked shifting sentiment within the US Patent Office and the evolving interpretation of patent law in US courts from the post-World War II (1939–45) era to the late twentieth century, which generally shifted in favor of patent-seeking applicants while working to inhibit corporate attempts at monopolistic control over the patents in their IP portfolios.

Fisher argues that the arena of trademark law has seen the most dramatic and impactful expansion of any area of US IP law, with the twentieth-century development of a legal concept known as trade dress carrying particular significance. Trade dress is defined as IP protection for the physical configuration, shape, appearance, and feel of a product or its unique packaging. The scope of the legal protections afforded to a trademark-holder have similarly expanded to include non-identical but similar marks used by any other commercial business, regardless of whether the product competes directly with the original trademark or not.

Notably, US intellectual property law also expanded during the twentieth century to include rights of publicity, which cover individually distinct characteristics such as the physical appearance, physical qualities, and unique catchphrases of popular entertainers. In the twenty-first century, debates over the further extension of IP protections have advanced into emerging developments in scientific fields such as genetics, with the Supreme Court of the United States (SCOTUS) issuing a 2013 ruling in the case of Association of Molecular Pathology et al. v. Myriad Genetics et al. that functioned to disallow patent protections for naturally occurring genes.

Intellectual property law has also emerged as an area of rising controversy in the integrated global economy of the twenty-first century, which has become increasingly dependent upon the value generated by information and data-based insights. IP protections for medications have become a particular target for reformists, who broadly argue that the existing international intellectual property regime functions to disadvantage developing countries in their ability to access proprietary drugs capable of improving the health-care outcomes of their citizens.

Applications

Copyright law specifically covers what are known in legal circles as original works of authorship (OWAs), which must be iterated in a fixed and tangible form to qualify for protection. This functions to disallow undeveloped ideas from being copyrighted. For example, a person cannot conceive of a story concept and tell it to an author and claim copyright infringement when the author develops the concept into a fully realized story, writes it down, and publishes it. Instead, copyright law requires two specific elements, which are often described as originality and fixation. Originality requires that a work qualifying for legal protection be novel, unique, and not derivative of another copyrighted work. The fixation standard mandates that the work be cast in a permanent form that can be both communicated and reproduced.

Patent law covers both industrial or commercial processes as well as devices, equipment, and machines that carry out unique functions. The USPTO issues patents in three categories: design patents, plant patents, and utility patents. Design patents cover the differentiating physical features of a product, its packaging, or its presentation. Examples include the shape of a Coca-Cola bottle and the unique aerodynamic styling of a Chevrolet Corvette automobile. The Plant Patent Act (1930) allowed individuals and businesses to file patents covering novel varieties of plants that reproduce asexually, with a 1970 update extending that protection to novel plant species that reproduce sexually. Plant patents cover both the unique visual features of engineered plants as well as their physical characteristics, with pest-resistant fruit trees serving as a high-profile example of the latter. Utility patents are arguably the most familiar to laypeople, covering novel inventions and improvements on existing inventions that serve a practical and particular purpose in the consumer market. Examples include industrial machines capable of novel functions, the formulations of new pharmaceutical drugs, and proprietary computer software platforms, among many others.

Trademark law extends to the visual and/or aural characteristics that businesses use to identify and differentiate their products and services from those of their competitors. The “golden arch” shape of the stylized letter M used by McDonald’s as its primary logo is a well-known example of a trademark. The primary federal US statute governing trademark law is the Trademark Act (1946), also known as the Lanham Act. It recognizes both trademarks and service marks, which are trademarks unique to services rather than to physical products, and also specifies the grounds upon which a trademark- or service mark-holder can sue competitors for infringement and other unauthorized uses. Trademarks are recognized by the registration symbol “TM,” while service marks use the registration symbol “R.”

US federal law defines a trade secret as a form of IP with tangible economic value that is not known to the public and contains a specific configuration of knowledge or information. Companies seeking to protect trade secrets must take concrete steps to safeguard the knowledge or information from becoming public, as trade secrets no longer qualify for legal protection if they become public knowledge. Trade secrets can cover business and production processes, technical and scientific information, financial and economic information, and the products of engineering methods, among other classifications. Commonly cited examples of valuable trade secrets include the “secret recipe” created for KFC’s fried chicken by Colonel Harlan Sanders and the algorithm used by Google to generate results for user search queries.

Issues

From an enforcement standpoint, one of the primary issues in intellectual property law centers on when and how violations occur, and the entitlements that impacted individuals and companies are entitled to in the event of a violation. Individuals and organizations that break intellectual property laws can potentially face both criminal and civil penalties, depending on the nature of the violation. For example, the Economic Espionage Act (1996) established the theft or deliberate misuse of a trade secret as a federal crime punishable by fines of up to $250,000 (for an individual) or $5 million (for a corporation). Copyright, patent, and trademark violations are mainly dealt with by civil law, which allows individuals and businesses to seek financial compensation for the damages caused by breaches and infringements. Disputes are typically resolved through cease-and-desist orders, the confiscation of unauthorized property or their financial proceeds, financial damages awarded by a civil court, or a combination of one or more of these redresses.

Common examples of copyright infringement include recording or distributing motion pictures, television shows, music, and written works without the legal authorization to do so. These types of violations have become a major issue in the digital age, as the pirating of copyrighted intellectual property has become widespread on the internet. Despite ongoing efforts to centralize and regulate distribution channels to prevent such unauthorized activity and the financial interests of legitimate copyright-holders, illegal actors continue to flagrantly circumvent US and international copyright law. According to estimates released in 2019 by the Global Innovation Policy Center, the global internet-based piracy market costs the US economy between $29.2 billion and $71 billion in annual revenue losses.

In many cases, trademark violations are perpetrated by businesses that specifically seek to deceive consumers into thinking they are purchasing an original product or service when they are actually buying an unauthorized derivative of it. Cross-jurisdictional issues can complicate efforts to stop the unauthorized activity or to win or collect financial damages to which the original IP holder would be entitled under US law. For example, if the trademarked products of a US-based company are copied and sold by a business operating in an international market not beholden to US intellectual property law, the impacted US-based business may have limited legal recourse.

Cybercrime has emerged as an area of increasing concern with respect to industrial and corporate espionage. Individuals and businesses increasingly store valuable trade secrets in networked information systems capable of being breached by hackers and other malicious actors, making them more vulnerable to theft and other forms of misappropriation. For example, a cybercriminal could use illicit means to obtain a trade secret, then leak that secret to the public and thus deprive it of the intellectual property protections it would otherwise have been afforded. Similarly, individual hackers and hacking groups may also work to obtain trade secrets illegally, and then demand a ransom from the IP rights-holder in exchange for the safe return of the proprietary information or seek to sell the information to a competitor.

By the early 2020s, as generative artificial intelligence (AI) became more accessible with the widespread release of technology such as chatbots like ChatGPT, issues also arose concerning how IP law should apply to such AI content. Debate revolved around possible violations related to the content used in AI training as well as the question of ownership in terms of the content produced by AI.

Bibliography

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