FALL 2005

Introduction to Intellectual Property

Course No. 9200 700, 9200 800	Tu 6:30 - 9:30 p.m.	Room W-206
Professor Jay Dratler, Jr.	Room 231D (IP Alcove)	(330) 972-7972	dratler@uakron.edu, dratler@neo.rr.com

Introduction to Intellectual Property, Fall 2005

University of Akron School of Law

Final Examination

Instructions

1. E-mail At-home Examination. This is an e-mail, at-home examination. Subject to the limitations stated below, you are free to take it at any time and place of your choosing.

2. Limitations. Your completion of this examination will be subject to the following limitations:

a. Time-spent limitation: three hours.

b. Elapsed-time limitation: 36 hours.

c. Word limit: 2,000 words.

If you inadvertently exceed the word limit, it will be to your advantage to delete less important material and to keep more important material that is likely to garner you more points. (Most word-processing programs count words automatically; check "Properties" under "File" or consult your program's "Help" screens.)

d. No Consultation.

e. No "canned" answers.

f. Honor system.

3. Materials. Because this is an at-home exam, you may use any written materials that you have on hand, provided they are: (1) published or (2) prepared by you. You may also use your computer to browse the Web, including the material posted for this course on the Law School's Website. However, the questions have been designed so that the following materials should be sufficient: (1) the casebook, supplement, and Website for this class (including any materials from it that you have downloaded, printed out and annotated), (2) any statutory supplement that you have used for this class (including your own, but no one else's, annotations); and (3) an outline that you have prepared. I encourage you to make your outline short, both so it will be usable and so you will have an "overview" of the course.

4. Strategy for Answering the Questions.

a. Outlines.

b. Additional facts.

c. Organization.

d. Legal authority.

Qualitex Co. v. Jacobson Products Co.

Qualitex

e. Fact pattern questions: using IRAC.

Try to weave as many specific facts as possible into your analysis, make and evaluate arguments for both sides, and determine the relative importance of issues and arguments. Where alternative legal rules exist, you should state them and indicate which is the majority view, the current trend, or otherwise the better rule, and why. (Stating why one variant rule is better than another often involves policy.)

You will not have enough time or space to cover all issues or arguments in exhaustive detail. Therefore you should focus your discussion on the issues, rules, and arguments that are most important. Grading will be based in part on your judgments of relative importance and how specifically you address the stated facts. Analogies to and distinctions from precedent, if useful and relevant, will receive extra points.

f. Logical "Trees."

If an issue clearly raised by the facts is easy to resolve, you may say so without extensive discussion, as long as you say why. You should not waste time and space elaborating "giveaway" issues. Where the issues are close or not clearly resolved, however, you should analyze them completely.

g. Policy.

5. Call of the Question. BE SURE TO READ THE CALL OF EACH QUESTION CAREFULLY AND TO ANSWER ONLY THE QUESTION(S) ASKED.

6. Submitting your Answers. Detailed instructions for submitting your answers are at the end of the examination. Please follow them carefully.

Good luck!

Question 1
(100 Minutes)

A
You are chief outside counsel for Copycat Novelty Co. (CC). Your client’s CEO has an unshakable belief in the free market and the economic power of imitation. Over the last two decades, she has made a successful business copying others’ gift and novelty items and marketing the copies. She loves to serve the same market as novelty innovators by “inventing around” their creations and beating their prices. She considers her products to be “generic” versions of more expensive brand-name novelties.

Although your client often has “pushed the envelope” of intellectual property protection, its CEO is intelligent, cautious, and heedful of legal advice. So far, you have been able to keep her and CC out of serious legal trouble by cautionary advice and (on occasion) effective negotiation of quick settlements. As her latest saga in her quest for “generic” novelties, CC’s CEO tells you the following story:

B
In August 2005, CC was seeking to hire a technician skilled in injection molding, (i.e., making plastic items of various shapes by extruding fluid plastic into molds before it hardens). CC interviewed a man named David Dorsey (DD), who had great experience in that field.

At the time of the interview, DD had been working for Paramount Novelty Co. (Paramount), the nation’s leading producer and innovator of plastic novelty items. During the interview, DD explained that he had had a severe falling out with his boss at Paramount. He then explained that he had the details of Paramount’s plans for a revolutionary new novelty product, and he gave CC’s interviewer a paper copy of an e-mail message from Paramount’s CEO outlining the plan.

C
Although addressed to all of Paramount’s staff, the e-mail began with the salutation “Hi Percy!” Percy was the name of Paramount’s chief product planner and marketing strategist. Apparently Paramount’s CEO had inadvertently sent the message to the entire list of Paramount’s staff, rather than to Percy alone. DD said that the Paramount’s CEO had sent a second e-mail message asking all but Percy to erase the first one, but that DD had not done so.

The e-mail described a production and marketing plan for a “memory boosting” novelty item to be sold to aging Baby Boomers. This device was to be a hand-held, computer-based device with search routines to recall miscellaneous bits of information quickly. It was to be entirely self-contained and enclosed in a grey plastic package designed in the shape of an elephant. A small keyboard was to be placed on the elephant’s belly, inside shortened legs, and a little screen was to appear on the elephant’s elongated and somewhat flattened head. The idea was that a user could type in search terms—even inaccurate and misspelled ones—and the computer’s screen would display alternatives for what the user was trying to remember.

The e-mail from Paramount’s CEO contained a complete description of this product and a marketing plan. The product was to be known as the “Elephantuter,”— a contraction of “elephant” and “computer” also reminiscent of “tutor.” The advertising for it was to center around the following message:

Stop those “over fifty moments” and remember things again! Our “ELEPHANTUTER” hand-held memory device will help you recall things like a youngster. Just type in a guess or a category for a name, place, or event, and the computer will suggest of a list of possibilities to prompt your memory. Recall your youth with our “ELEPHANTUTER” memory aid!”

The e-mail described details of the device’s construction and programming and a marketing plan, including a tentative retail price of $150. It also included a draft patent claim, as follows:

Draft Claim 1.

The e-mail closed with the following admonition: “For the time being, Percy, please keep this project close to your vest; it could be one of our more profitable products.” The e-mail was dated in April 2004.

D
Not only did DD give his interviewer a copy of this e-mail. He also revealed Paramount’s plans for intellectual property protection. Although he had no documentary evidence, he had heard company scuttlebutt that Paramount had filed in the USPTO a utility patent application and an intent-to-use trademark application for the mark “ELEPHANTUTER” for “computer-based memory assistance devices.” DD reported that Paramount had filed the patent application some time in May 2005 and the application for trademark registration in early August 2005.

DD was quite eager to compete with his former firm, and he offered some ideas on how to do so. He also had heard some talk at CC about how others might“get around” CC’s patent, even if it issued, and he summarized those ideas to CC’s interviewer.

E
Your client CC hired DD in late October 2005 and assigned him to work with CC’s senior product manager. Together, the technician (DD) and this senior manager developed a plan to make and market a competing memory-aid device, to be called the “ELEPHANTER.” Like Paramount’s device, it would be housed in a grey plastic body designed to look like an elephant, but with shorter than normal legs to accommodate a keyboard on its belly. Also like Paramount’s device, it would have a slightly flattened and elongated head for the screen.

To reduce production cost, this device would have no internal computer processing power but would have to be connected to a general-purpose computer, such as a PC. It would have only a keyboard, screen, random-access memory (RAM), and search software contained in read-only memory (ROM). It also would lack a pre-programmed list of facts and trivia and so would rely on the user to “load up” the memory with useful information. Upon connection to a PC through a “plug and play” connection, the software contained in the device’s memory would automatically install itself on the PC and launch, allowing the user to add information to the device’s memory and later search it despite mistakes and misspellings.

Still greater saving in production cost would come from the form of the device’s memory. CC’s “ELEPHANTER” memory device would use small hard disk drives for its memory, rather than the lighter and more expensive flash memory chips which (according to DD) Paramount planned to use. By eliminating internal processing power and using cheaper hard drives, rather than flash memory, CC hoped to be able to offer its device at a retail price of only $75, thereby substantially undercutting Paramount’s proposed price as reported by DD. Furthermore, since CC’s proposed device could be built with off-the-shelf ships and hardware, CC had every hope of beating Paramount to market.

Together, DD and CC’s senior product manager proposed a marketing plan based on the following copy:

Stop those “senior moments” and blast your memory back to your youth! Our “ELEPHANTER” memory device can help you recall forgotten facts and trivia with ease. Just plug it into any PC and let it boost your memory. You’ll recall things like a youngster. Don’t be fooled by more expensive copies; the “ELEPHANTER” original memory booster has everything you need to boost your memory, and at an unbeatable price!!!”

F
After hearing this history, you did a preliminary patent search. Your search revealed only the following “prior art”:

(a) Computer search engines, like LEXIS, that allow full-text and (by keyword) contextual searching of documents;

(b) Portable special-purpose devices that allow lookup of words in a dictionary or possible translations of English words into other languages;

(c) Portable special-purpose devices that include means for looking up contacts’ names, addresses and telephone numbers from internally stored lists; and

(d) Computer programs, for use on general-purpose computers, that allow those computers to perform the functions in (a), (b) and (c). You also interviewed DD. In that interview, he said he had had no written agreement with Paramount and had only worked there for eighteen months.

G
Your client’s CEO has approved implementation of the plan developed by DD and CC’s senior product manager. Production and marketing are to begin next February. So far, however, planning has been your client’s only expense. CC’s CEO has asked you to render legal advice quickly, before expenses begin to mount.

Write a memo to your client, analyzing all significant legal risks (discussed in this course!) in implementing the proposed plan and hiring DD. Be sure to discuss all legal claims that Paramount might reasonably bring against CC and/or DD, and all reasonable defenses to those claims. Finally, recommend a course of action for CC. Should CC: (1) implement the plan as is; (2) drop the plan entirely; or (3) implement it with modifications, and if so, what modifications?

Question 2
(Forty Minutes)

A
Patty is a lawyer and David a businessman. They have been friends for over a decade. When Patty was a second-year law student, she wrote a paper on the legal aspects of “outsourcing” white-collar jobs from state and local government. Patty showed her paper to David, and it sparked David’s interest in outsourcing.

During David’s last year in business school, he had to write a business plan as his “senior thesis.” He wrote a plan for an outsourcing firm that would “hire out” legal work from law firms, such as legal research, to outside lawyers working as independent contractors.

In writing his plan, David relied heavily on trends and statistics he had learned from reading Patty’s paper. His plan was of course very different in form and substance from a law-review paper like Patty’s: it was a plan for a business, not an analytical piece; and it dealt with outsourcing from private law firms, not government. David’s plan, however, did reproduce two paragraphs of statistics and one statistical table on outsourcing from Patty’s paper. Footnotes in David’s plan gave Patty proper credit as the source.

Patty had encouraged David to focus his required business plan on outsourcing and had discussed outsourcing legal work with David extensively. She even reviewed David’s plan and made a few suggestions for changes, which David made. When submitted as David’s “senior thesis” in his business school, David’s plan received an “A” grade and favorable comment from David’s business-school professors.

B
As David and Patty prepared to join the working world, they had numerous discussions about actually starting an outsourcing firm for lawyers. They discussed David serving as CEO and Patty serving as general counsel, and each promised not to begin such a business without consulting the other. They put these plans on hold after graduation, however, when David took a job with a multinational business consulting firm and Patty became an associate at a large regional law firm.

C
After two years, Patty left the big law firm and began looking for other work. While looking, she reviewed her copy of David’s outsourcing business plan and updated it. In particular, she added two pages discussing the impact of the Internet, which David’s original plan had not discussed at all. She proposed using the Internet to outsource legal research projects, including patent searches, to foreign lawyers in English-speaking countries like India.

After making these revisions, Patty showed the revised business plan to David, who became excited about the prospects for implementing it. David was so enthused that he began making plans to quit his consulting job and start the business. Both he and Patty thought the prospects for such a business bright, and at the time each believed that no one else had had the same ideas.

D
Shortly thereafter, Patty got an attractive offer from a labor-law firm doing cutting edge legal work, including lobbying for labor-protective legislation. She began to represent clients put out of work by outsourcing, and soon her attitudes toward outsourcing changed. She saws participating in an outsourcing business as a conflict of interest with her primary work, representing her clients. Moreover, she became legally, politically, and professionally opposed to outsourcing in any form. She even entered the “speaking circuit,” lecturing around the country on the evils of outsourcing.

Fired with the idea of the new business, David quit his consulting job and began working on setting up a legal-outsourcing business along the lines of the business plan as revised by Patty. He circulated the plan to a number of venture-capital firms, seeking money to begin the business. He wrote Patty of his efforts, and, to his astonishment, she wrote back objecting to use of “her” plan and the formation of any such business.

David has now quit his consulting job and believes the he can get venture capital to start the proposed business. Write a memo to David analyzing what liability he might have to Patty if he continues to circulate the business plan to seek investment, receives investment based on the plan, and ultimately starts an Internet-outsourcing business along lines suggested in the plan. Is there anything he can do to reduce his legal risk?

Question 3
(Forty Minutes)

“Once the heart of American economic success, intellectual property (IP) has become a cancer on the body politic. There is too much IP now, and its scope is too uncertain. Rather than encouraging innovation, IP now limits our freedom, our liberty, and innovation itself.”

“It doesn’t matter what field of IP you consider; the bleak picture is the same. Take patents, for example. Once they covered simple, concrete, tangible mechanical and electrical inventions, and their claims were clear. Now firms can patent abstractions like computer software, business methods, gene sequences, and even methods for swallowing pills. Furthermore, patent claims have become completely elastic. A clever lawyer can stretch them to cover anything he can get a confused judge or jury to believe. With a system like this, it is open season on any firm that makes or markets products or services, because anyone can patent anything, and what a patent covers is as clear as mud.”

“Copyright and trademark law are not much better. Supposedly, copyright doesn’t cover ‘ideas.’ But deciding what is ‘idea’ and what is ‘expression’ requires scholastic debate worthy of medieval scholars. When that debate takes place in a courtroom, it causes delay and expense sufficient to drag down creative industries. You never really know what copyright might cover until the lawyers charge their exorbitant fees and a court rules—often after years of delay.”

“Similarly, trademark law now covers much more than words: it covers packaging and the shape of products themselves. The test for trademark infringement is so general and uncertain as to require litigation in virtually every case. As for trade secret law, it is the worst of all. There is no clear rule for what ‘secrets’ can be protected, and the touchstone of misappropriation—improper means—is entirely in the eye of the beholder.”

“This misbegotten system has turned an engine of innovation into a mighty brake on progress. Today virtually no business can exploit the ‘free’ market without someone standing in the way with a piece of paper or a legal claim, saying ‘This idea is mine!’ Then the lawyers with their high fees take over direction of the business. Not even speech, let alone business, is ‘free’ anymore. After the lawyers take their pound of flesh and the courts confuse the situation, the poor, benighted business entrepreneur is left shackled, bound and drained of energy and spirit.”
Write an essay analyzing and/or criticizing this passage. Be sure to address all aspects of the passage, including: (1) its underlying assumptions (including the law’s clarity, certainty, and effect); (2) its implied prediction of consequences; and (3) its judgments as to what is good policy and what is practically doable. Your grade will depend not upon your point of view, but upon how carefully and specifically you support and document your analysis, with reference to the statutes, cases and statutory and constitutional policies that we have studied and the underlying trends that they reveal. The more specific and focused your analysis, the better your grade will be.

END OF EXAMINATION

INTRODUCTION TO INTELLEECTUAL PROPERTY, FALL 2005

INSTRUCTIONS FOR SUBMITTING YOUR ANSWERS

Please take all of the following steps in submitting your answers, before the deadline for submission:

1. Include honor-code statement. Make sure that your honor-code statement appears at the end of your answer file. (Your examination number and e-mail header will constitute your signature under UETA.)

2. Include your examination ID number. Type your examination ID number at the end of your answer file and double-check it. To avoid accidental breach of anonymity, make sure that your answer file contains no other identifying information.

3. Spell-check and finalize. Spell-check your answer file and make any necessary changes. Check world length and modify as necessary.

4. Save answer file with anonymous ID. Save your answer file on your hard drive, with your honor-code statement and examination ID number at the end of the file. When you save your file, use the file name "2005 Intro to IP Exam" and no other. (If you use another file name, anonymity may be compromised.)

5. Convert answer file to Rich Text Format. If necessary, save your answer file again in Rich Text Format. (Use the "Save As" feature of your Word Processor; then click on the down arrow to the right of the "File Type" field in the "Save As" dialogue box and select the "Rich Text Format (RTF)" option. Be sure to verify that this option appears in the "File Type" field before you click the "Save" button. Then check to see that a file with the name "2005 Intro to IP Exam.rtf" and a plain logo appears in your file folder. You may have to click on "View" : "Details" to see the .rtf file extension.)

6. Attach your RTF answer file to an e-mail message. Send your answer file, in .rtf format, as an e-mail attachment to your message, not as part of the message itself. The "Subject" line for your e-mail message should be "2005 Intro to IP Exam," and the text of the message should read "Attached are my answers."

(I will use your e-mail cover messages only to check that everyone has submitted answers. I will not grade any exam until an assistant has "anonymized" the answers by separating the attached files from the e-mail messages and sending the attachments to me with no identifying information other than the examination ID number included in each file at the end.)

7. Submit your answers by e-mail. Send your cover message, with your .rtf answer file attached, to all of the following addresses:

dratler@neo.rr.com

dratler@uakron.edu

abthong@yahoo.com

mrh5@uakron.edu

(To avoid typing errors, please cut and paste this list into your e-mail program's "address" or "TO" field; then double-check all addresses and punctuation. You may wish to prepare an address list in advance.)

8. Print and retain a paper copy of your answer file. Immediately after sending your e-mail message, print out a copy of your answers and staple the pages together. Then sign and date your answers and record the exact time of your printout on the title page. (If there is an e-mail mixup, this paper copy will serve to demonstrate what you wrote and when, in accordance with the honor system.)

HAVE A HAPPY HOLIDAY SEASON AND A GOOD WINTER BREAK!