Course No.: 9200 710 801
Course ID:  17261
Tu 6:30-9:30 p.m.
Room W-215
Professor Jay Dratler, Jr.
Room 231D (IP Alcove)
(330) 972-7972
Copyright © 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2008   Jay Dratler, Jr.  
For permission, see CMI.

Notes and Questions on Religious Technology Center v. Lerma and Trade Secrets on the Web

1.  This case involved "off the Web" copying, not on-line copying.  Although some on-line copying preceded the central events in this case, RTC sued the The Washington Post for copying RTC's "Advanced Technology" materials both in the newpaper article and in preparing to write it.  Indeed, The Post admitted copying of short quotes (totalling 46 words) in its article and copying the AT materials in preparing to write it.  Since The Post admitted copying, its only defense was to prove an exception to copyright liability, in this case fair use.  In this respect the case resembled many on-line cases of alleged copyright infringement, although the copying alleged here was not on line.

Off-line cases of alleged infringement often involve difficult questions of comparison.  The judge or jury must determine whether the defendant's work, which resembles the plaintiff's but is far from an exact copy, is "substantially similar" to the plaintiff's work.  For two classic decisions of this sort, involving literary works and penned by a master of both intellectual property law and judicial style, see Nichols v. Universal Pictures Corp., 45 F.2d 119, 122-123, 7 U.S.P.Q. (BNA) 84 (2d Cir. 1930), cert. denied 282 U.S. 902 (1931) (finding no infringement because defendant took only "ideas," and not expression); Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49, 54-56, 28 U.S.P.Q. (BNA) 330 (2d Cir.), cert. denied 298 U.S. 669 (1936) (finding infringmement where defendant took details of incident, plot, sequence, and characterization) (L. Hand, J.).

In the on-line environment, however, such "comparison" cases are relatively rare.  Most on-line copying occurs "at the click of a mouse."  With the aid of modern computer technology, the defendant copies an entire digital file representing the copyrighted work, with every sentence, word, character, byte and bit intact.  The resulting copy is as exact as modern technology can make it.  Under that circumstance, the question is not whether the copy is "substantially similar" to the original—of course it is!—but whether there is any excuse for the copying.  Therefore on-line infringement cases usually, but not always, revolve around the questions whether the copyright owner gave express or implied permission ofrwhether the copyright statute provides an exception for what the defendant did.  Fair use is an exception that is commonly claimed in this regard.

2.  Like the question of likelihood of confusion in trademark law, fair use in copyright law is subject to a multifactor analysis.  The court must analyze all four factors mentioned in Section 107 and then weigh and balance them on the scale of equity.  No single factor is necessarily decisive, and, as the words "shall include" in the preamble suggest, the listed factors are nonexclusive; other relevant facts may be considered, too.  See Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 560-561, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985).

The Supreme Court, however, has unanimously endorsed the fouth or "market effect" factor as the most important of the four.  See id., 471 U.S. at 566 & n.9 (majority opinion); id., 471 U.S. at 602 (dissenting opinion, agreeing on this point).  If a use impairs the market for the copyrighted work, or for derivatives of it, that use is unlikely to be found fair.  The impairment, however, must come from that fact that the use usurps or supplants the market for the copyrighted work; market diminution from criticism or comment in not a cognizable market effect.  See Campbell v. Acuff-Rose Music, 510 U.S. 569, 591-592, 114 S.Ct. 1164, 127 L.Ed.2d 500, 29 U.S.P.Q.2d (BNA) 1961 (1994).  Was The Post's publication of its article containing 46 words from the RTC's AT materials likely to impair the market for those materials among Scientology adherents by usurping or supplanting that market?  Were the "intemediate" copies that The Post apparently made in its offices in preparing the article?

3.  The preamble to Section 107 and factor (1) mention certain favored uses, including criticism, comment, news reporting, and nonprofit education.  Are these uses automatically fair, or do they still require analysis of all the relevant factors?  Would the analysis of fair use have changed appreciably if the defendant had not been The Washington Post, but a rival "New Age" religion, seeking to criticize its rival, Scientology, as an off-beat cult?  Which factors, if any would/should have been analyzed differently, and would they have produced a different result?

4.  As Lerma illustrates copyright is not the only type of intellectual property for which the Internet has some peculair consequences.  Another is trade secrets.  Section 1(4) of the Unitform Trade Secrets Act, adoped in a majority of the States (and in Ohio in amended form), read as follows:
    "'Trade secret' means 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 readiily 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 circumstnces to maintain its secrecy."
Can a work of authorship that is disseminated publicly over the World Wide Web, without encryption or other technological protection, ever be considered "not generally known" or "not readily ascertainable by proper means"?  If the work's proprietor so disseminates it, has she taken "efforts that are reasonable under the circumstances to maintain its secrecy"?  Isn't the Web, with its openness, expandability, transparency, and universal liking the antithesis of secrecy?

5.  On the other hand, is the Internet, as distinguished from the Web, the kiss of death for secrecy?  Suppose information is disseminated over the Internet only to persons with authorized access, for example, through password protection.  Might it then be "not generally known" and "not reasdily ascertainable by proper means"?  Could the owner so disseminate the information without failing to make the necessary "reasonable efforts"?  If not, then how can multinational firms both provide their numerous employees worldwide with access to secret and proprietary information without giving up the flexibility and versatility of Internet communication?

Back to Top