Chapter 21
INTELLECTUAL PROPERTY
Suggested Additional Assignments
Research: Trademarks
Ask students to do a trademark search. They should make up a name for a hypothetical product and then
look to see if anyone else has a trademark in that name. Their goal is to find a name that they could
trademark. Searches are free on the PTO’s Web site: http://www.uspto.gov/.
Action Learning: Trademarks
In preparation for a discussion of the Qualitex case (text p. 611), ask students to bring to class an example
of a product with a color that is so distinctive, it identifies the product. They should obscure the name of
the product to see if other students can identify the product simply by color.
Chapter Overview
Chapter Theme
Intellectual property is a major source of economic prosperity and individual wealth. New ideas increase
both productivity and pleasure. Where would we be, as a society, without intellectual property–patented
inventions, books, movies, computer software?
Quotes of the Day
“One of the greatest pains to human nature is the pain of a new idea.” –Walter Bagehot (1826–1877),
English economist and journalist.
“He who receives an idea from me, receives instruction himself without lessening mine; as he who lights
his taper at mine, receives light without darkening me.” – Thomas Jefferson (1742-1826), American
president.
Introduction
Key Issue: Thomas Jefferson’s quote
Question: Is it true that “he who lights his taper at mine receives light without darkening mine”?
Answer: This quote represents many people’s view of intellectual property. Unfortunately,
downloading my copyrighted music or software without paying a fee does indeed darken my light.
Patents
Key Issue: Types of Patents
A patent is not available solely for an idea, but only for its tangible application.
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Case: State Street Bank & Trust Co. v. Signature
Financial Group, Inc., p. 597
Facts: Signature Financial Group owns a patent on a computer software program that aids in the administration of mutual funds. The so-called Hub and Spoke System allows several mutual funds, or “Spokes,”
to pool their investment funds into a single portfolio, or “Hub.” In this way, the funds can share administrative costs. Each Spoke sells shares to the public, and the cost of these shares depends upon the value of
the assets pooled in the Hub. Therefore, each day within hours of the close of the stock market, each
fund’s administrator must know the value to the nearest penny of its pooled shares. The Signature software makes this calculation.
State Street Bank negotiated with Signature for a license to use its software. When negotiations broke
down, State Street brought suit alleging that the patent was invalid. The trial court granted State Street’s
motion for summary judgment.
Issue: Is data processing software patentable?
Holding: A mathematical formula can be patented only if it has been applied in a useful way. The transformation of data, through a series of mathematical calculations, into a final share price, constitutes a
useful application. Therefore, the patent is valid.
Question: Are mathematical formulas patentable?
Answer: A formula such as a2 + b2 = c2 is not patentable.
Question: What did Signature patent?
Answer: A method for calculating the value of pooled mutual funds.
Question: How is this different from a2 + b2 = c2?
Answer: A formula, by itself, is not patentable, but Signature was using the formula to perform a
specific task. That application is patentable. In other words, an abstract formula is not patentable, but
a useful application is.
Question: Will this patent (and others like it) promote the development of intellectual property by
protecting a novel idea or stifle innovation by limiting who can use it?
Answer: The issue is not whether State Street could use the patent, but whether it would pay for the
use. Remember that, before filing suit, State Street had been negotiating with Signature for a license
to use the software. If developers cannot patent software, less software will be created.
Question: What about Priceline’s claim (text p. 598) that it owns a patent for the idea of reverse
auction systems on the Internet? If that patent is valid, wouldn’t it greatly limit entrepreneurial activities on the Internet?
Answer: Patents can be granted only if the idea is novel and nonobvious. The question is whether
Priceline’s idea meets those criteria.
Copyrights
Key Issue: Infringement
Anyone who uses copyrighted material without permission is violating the Copyright Act.
Opening Scenario, p. 594
The chapter opens with an article about a 19-year-old college sophomore who routinely creates his own
CDs of copyrighted songs downloaded from the Internet.
Question: Why is this activity illegal?
Answer: He is using copyrighted material without permission.
Question: Come on, what’s the harm in copying a few songs off the Internet?
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Answer: In this case, it’s more than a few songs. But, no matter how many, it is still illegal. He is
using copyrighted material without permission. What he’s doing is no different from printing up his
own copy of the latest John Grisham thriller and selling or giving it away. In either case, he’s reducing the market for the original material.
Question: What’s the harm? Record companies make so much money anyway.
Answer: If record companies don’t make money and recording artists don’t get paid, there will be
fewer songs for us all to hear. The creative business–music, writing, art–is a business. It is just as
wrong to steal their output as it is to shoplift in a department store.
Current Focus
In November 2002, the U.S. Naval Academy confiscated the computers of 100 students who were
suspected of downloading copyrighted music from the Internet. The seizures took place while students
were in class. The Academy was acting in response to a request from the Recording Industry Association
of America to 2,300 colleges for a crackdown on the illegal use of copyrighted material. Students found
guilty will face punishment ranging from loss of leave time to expulsion.
Key Issue: Fair Use
Certain educational use is deemed fair under the statute. Ask students in what ways they and their
professors use copyrighted material. Does this comply with the fair use guidelines?
Key Issue: Parody
Parody is permitted under copyright law as long as it does not use an excessive amount of the original.
Nor may the parody harm the market for the original.
Current Focus
When the owners of the Roy Orbison Pretty Woman copyright sued 2 Live Crew, the group’s first
inclination was to withdraw the parody. The Capitol Steps, however, wanted the courts to establish once
and for all that parody is a protected form of speech. To persuade the Supreme Court to grant certiorari,
the Capitol Steps prepared an audiotape history of political parody in the United States. There is some
evidence that this tape was indeed influential in persuading the Supreme Court to grant certiorari. (The
Capitol Steps tape, entitled From Yankee Doodle to Pander Bear, is available from the Capitol Steps at
703-683-8330.)
If a recording of the Capitol Steps singing My Favorite Things is no longer available from their Web
site (http://www.capsteps.com/), I can e-mail the MP3 file to any faculty using this text. My e-mail
address is ssamuels@bu.edu. Both the Roy Orbison rendition of Pretty Woman and the 2 Live Crew
version are available on http://www.benedict.com/. Also, the Roy Orbison version is available on the
Pretty Woman movie soundtrack. The 2 Live Crew recording is from the CD As Clean As They Wanna
Be, which is generally available now on Internet music sites such as Amazon (http://www.amazon.com).
General Questions:



Did 2 Live Crew and the Capitol Steps make excessive use of the original recordings?
Did they harm the market for the original?
Should Rodgers and Hammerstein (if they were alive) have the right to prevent the Capitol Steps
from using his material to make fun of the President of the United States? Should Roy Orbison be
allowed (if he were alive) to prevent 2 Live Crew from using his material to mock women? What
if he finds this material offensive?
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Key Issue: The Digital Millennium Copyright Act
The Digital Millennium Copyright Act (DMCA) provides that:
 It is illegal to delete copyright information, such as the name of the author or the title of the article. It
is also illegal to distribute false copyright information.
 It is illegal to circumvent encryption or scrambling devices that protect copyrighted works.
 It is illegal to distribute tools and technologies used to circumvent encryption devices.
You Be The Judge: Universal City Studios, Inc. v. Eric Corley, p. 607
Facts: The Content Scramble System ("CSS") is an encryption method to prevent the copying of DVDs.
DeCSS is a program that can bypass CSS. Eric Corley wrote an article about DeCSS for his magazine and
posted the article on his Web site. The article included a copy of DeCSS and links to other Web sites
where DeCSS could be found. Eight movie studios brought suit against Corley seeking an injunction
under the DMCA that would prohibit him from posting DeCSS on his Web site or from linking to any
other Web site containing DeCSS.
Issue: Was Corley’s article entitled to protection under the First Amendment?
Holding: The court held for the studios, and retained a permanent injunction that prohibited Corley from
either posting DeCSS code or linking to other Web sites that did. Although the court acknowledged that
this ruling imposed some limitation on speech, on balance it found that the harm caused by Corley’s
article justified the limitation. It stated that we must “choose between two unattractive alternatives: either
tolerate some impairment of communication in order to permit Congress to prohibit decryption that may
lawfully be prevented, or tolerate some decryption in order to avoid some impairment of communication.
In facing this choice, we are mindful that it is not for us to resolve the issues of public policy implicated
by the choice we have identified. Those issues are for Congress. Our task is to determine whether the
legislative solution adopted by Congress, is consistent with the limitations of the First Amendment, and
we are satisfied that it is.”
Question: What is CSS?
Answer: It is the Content Scramble System, designed to prevent the copying of DVDs.
Question: What is DeCSS?
Answer: DeCSS is a program that can bypass CSS.
Question: What did Eric Corley do with DeCSS?
Answer: He wrote an article about it, which was published both in print and on his Web site. This
article contained links to Web sites where DeCSS could be found.
Question: What was Corley’s purpose in publishing this article?
Answer: His magazine, 2600: The Hacker Quarterly, focuses on computer security systems. A
typical article explains how to break into company computer systems.
Question: What argument did Corley make that his publication of this article was legal?
Answer: He argued that this publication was protected by the First Amendment. After all, the First
Amendment is designed protects unpopular speech. Popular speech doesn’t need protection.
Question: What counter argument did the studios make?
Answer: They argued that this speech causes unreasonable harm (akin to shouting fire in a theater)
and, thus, is not protected by the First Amendment.
Question: What solution did Corley propose?
Answer: He suggested that the studios go after people who illegally copy movies.
Question: What is the problem with this approach?
Answer: It is virtually impossible to locate everyone who illegal copies a movie on his own
computer.
Question: What harm would this case cause if the studios win?
Answer: Corley argues that a ban on the publication of DeCSS will disrupt scientific research. After
all, the Norwegian teen-ager first developed DeCSS while working to improve Linux, which many
consider to be the best hope for challenging Microsoft’s monopoly of operating system software.
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Question: Is the goal of the studios to censor speech?
Answer: No, as they point out, DeCSS is two things bundled together – both speech and function.
What the studios are censoring is the function – the ability to copy illegally. Presumably they would
not have brought suit if Corley had simply written articles advocating the development of DeCSS.
Question: How is DeCSS like a skeleton key? Why does that matter?
Answer: In essence, this software can open any DVD. A law prohibiting skeleton keys that unlock
jail cells would not be unconstitutional, even if the keys were printed with a slogan or other speech.
Trademarks
Key Issue: Valid Trademarks
To be valid, a trademark must be distinctive. Suggest to students to search the PTO website, listed in the
text, p. 609, for some very distinctive and barely distinctive trademarks.
Current Focus
Companies complain that finding names for new products has become increasingly difficult, especially if
the name must work in other languages and also requires a corresponding Internet address. The classic
example is the Chevrolet Nova, which might have been fine in the United States but did not work in Latin
America, because “No va” means “Doesn’t go” in Spanish. Panasonic cancelled the campaign slogan for
its Japanese Web browser that featured Woody Woodpecker: “Touch Woody–The Internet Pecker.”
General Magic couldn’t use “Regatta” or “Springboard” as a name for its digital assistant after discovering that the Web names were not available. (The company ultimately went with “Portico.”) Big Sky
Brewing Company named its ale “Whistle Pig Red,” but then found out that two Whistling Pig microbrews were already on the market. (What an obvious name for a beer!) Big Sky then went with Moose
Drool, only to be informed that another company owned the Moose family of names. No wonder that
advertising agencies often turn over the job of developing names to specialized consulting firms.
If you asked students to do the trademark search mentioned under Suggested Additional Assignments,
you could inquire now about the results of their search. Could they find names that were not already
taken?
Key Issue: Trademarking a Color
Case: Qualitex & Co. v. Jacobson Products, Inc., p. 611
Facts: Since the 1950s, Qualitex has used a special shade of green-gold color on the pads that it makes
for dry cleaning presses. After Jacobson Products (a Qualitex rival) began to use a similar shade on its
own press pads, Qualitex registered its color as a trademark and filed suit against Jacobson for trademark
infringement.
Issue: Does the Lanham Act permit a color to be trademarked?
Holding: Yes. Color alone can be used as a trademark where that color identifies and distinguishes a
particular brand (and thus indicates its “source”). Customers identified the color as Qualitex's.
Question: How did Qualitex distinguish its press pads from those of its competitors?
Answer: It made them a specific green-gold color.
Question: Why didn't Qualitex simply put its name on the pads?
Answer: It may have done that, too, but it obviously felt that using a color made the pads even more
distinctive.
Question: Can any color be trademarked?
Answer: Yes, as long as it is distinctive enough to identify the source of the product.
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Question: Can you give an example of a color that could not be trademarked?
Answer: White paper, for instance.
Question: Can you think of other colors that identify the sources of products?
Answer: The pink package of Sweet and Low, for instance.
Comment: If you asked students to do the Suggested Additional Assignment that required them to
bring in examples of products with distinctive colors, now would be the time to look at their products. We
have found that, when students hold up their products, classmates are remarkably skilled at identifying the
products.
Example
Suppose that you are a Warner Bros. executive. The company is about to make a movie called Eraser that
stars Arnold Schwarzenegger as an elite federal agent who “erases” the past lives of informers and relocates them to anonymous safety.
Question: Would you be worried about trademark issues?
Answer: In the script, a villainous computer company named Cyrex Corp. tries to kill Eraser. Warner
Bros. says that, before shooting began, it did a search to make sure the movie was not infringing anyone's trademark.
Question: The trademark search revealed no similar names, so Warner was safe, right?
Answer: Wrong. Cyrix Corp., a Richardson, Texas maker of microprocessors, filed suit, alleging
trademark infringement. Executives were particularly concerned about a line in the film where co-star
Vanessa Williams exclaims, “Cyrex and its co-conspirators will be put behind bars.” Investors began
calling the company, wondering why Cyrix was cast in such an unsavory role.
Question: What can Warner Bros. do now?
Answer: It changed the name to Cyrec Corp. and ordered that 1,793 frames of the film–about two
minutes’ worth–be edited out before the film opened. This included 84 scenes in which the name Cyrex Corp. was displayed on uniforms, hats, shirts, guns, and computer screens.
Current Focus
When the text went to print, the United States had not adopted the Madrid Protocol. It has since done so,
effective November, 2003. The good news is that the estimated cost for a U.S. trademark owner to
register a trademark in 10 countries will decline from $14,000 in fees to approximately $4,700. The bad
news is that a trademark search should now include not just U.S. records, but also those of other Madrid
Protocol signatories.
Trade Secrets
Key Issue: Protecting Trade Secrets
A trade secret is a formula, device, process, method, or compilation of information that, when used in
business, gives the owner an advantage over competitors who do not know it.
Case: Morlife, Inc. v. Perry, p. 615
Facts: Lloyd Perry signed an agreement not to disclose information about Morlife's customers if he ever
left the company. When he and Carl Bowersmith resigned to start a competing business, Perry took with
him the collection of business cards he had accumulated while at Morlife. When Perry began soliciting
these clients, Morlife filed suit, claiming that he had violated the Uniform Trade Secrets Act. The court
ordered Perry not to use Morlife’s trade secrets.
Issue: Did Perry violate the Uniform Trade Secrets Act?
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Holding: Yes. As a general principle, the more difficult information is to obtain, and the more time and
resources expended by an employer in gathering it, the more likely it is that a court will find that such
information constitutes a trade secret. Morlife developed its customer base by investment in telemarketing, sales visits, mailings, advertising, membership in trade associations, referrals, and research.
In addition, Morlife took reasonable steps to protect the information from disclosure. Customer
information was stored on computers with restricted access. Perry’s employment contract included a
confidentiality provision expressly referring to its customer names and telephone numbers. The employee
handbook forbid employees to use customer lists after leaving Morlife’s employment.
Question: What was Morlife trying to protect?
Answer: Information about its customers.
Question: Why shouldn’t Perry be allowed to compete with his former employer?
Answer: The court is very sympathetic to his desire to compete. But he may not do so with information that belongs to his former employer.
Question: What does one have to do to protect trade secrets?
Answer: Two things:
 Spend significant time and resources gathering the information, and
 Take reasonable steps to protect it.
Question: Did Morlife meet these two criteria?
Answer: Yes. The president testified about the time and expense the company spent gathering this information. The company also took reasonable efforts to protect it.
Question: If, rather than taking the business cards with him, Perry had memorized the customers’
names and phone numbers, would the court have allowed him to use the information?
Answer: Probably not. He would not be allowed to use trade secrets, no matter how he transported
them.
Question: Was there anything Perry could have done to gain access to this information legally?
Answer: Probably not. The company had control of the situation. As long as it met the court’s guidelines, Perry was out of luck.
Question: So what is the moral of this story?
Answer: If you have trade secrets, your fate is in your hands. You need to take adequate steps to
protect the information.
Example
Lest students think that stealing trade secrets is not a serious matter, consider this example. Petr Taborsky,
a former student research assistant at the University of South Florida, served seven months in prison,
including two months on a chain gang, for stealing trade secrets. Taborsky was an undergraduate in
chemistry and biology, working as a laboratory assistant at the College of Engineering when he took part
in a research project to make sewage treatment cheaper and more efficient. The research was sponsored
by Florida Progress, a utility holding company, which claimed that it had all rights to the research.
Taborsky discovered a way to turn a clay-like compound similar to cat litter into a reusable cleanser
of sewage, a process that has potentially valuable applications. The project leader maintains that Taborsky
was part of a research team that made the discovery but the student claims he made the discovery on his
own after the project had ended. A jury convicted Taborsky of grand theft of trade secrets. He was sentenced to a year's house arrest, a suspended prison term of 3½ years, and probation for 11½ years, as well
as 500 hours of community service. However, he was sent to prison when he violated the terms of his
probation by obtaining three patents related to the research.1
1
“Former Student in Patent Fight Leaves Prison,” New York Times, June 14, 1996, p. A14.
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Practice Test Update
Students sometimes ask about the plot of the story, My Mother Is the Most Beautiful Woman in the World,
in Practice Test Question 4. This the story:
A little girl is separated from her parents. Meeting a group of villagers unfamiliar to her, she describes her mother as the most beautiful woman in the world. The village leader sends boys to
bring back all the likely candidates; none, of course, is the mother. Finally, a homely woman, in
fact the girl's mother, approaches the crowd and is joyfully reunited with her child. The village
leader presents the moral of the story: “We do not love people because they are beautiful, but they
seem beautiful to us because we love them.”
Practice Test
1. For many years, the jacket design for Webster’s Ninth New Collegiate Dictionary featured a bright
red background. The front was dominated by a “bull’s eye” logo. The center of the bull’s eye was
white with the title of the book in blue. Merriam-Webster registered this logo as a trademark. Random
House published a dictionary with a red dust jacket, the title in large black and white letters, and
Random House’s “house” logo—an angular drawing of a house—in white. What claim might
Merriam-Webster make against Random House? Would it be successful?
Merriam-Webster alleged that Random House had violated its trade dress. The court found for
Random House because the logos and the color of the typeface were different. Merriam-Webster, Inc.
v. Random House, 35 F.3d 65 (2d Cir. 1994).
2. “Hey, Paula,” a pop hit that spent months on the music charts, was back on the radio 30 years later,
but in a form the song’s author never intended. Talk-show host Rush Limbaugh played a version with
the same music as the original but with lyrics that poked fun at President Bill Clinton’s alleged sexual
misconduct with Paula Jones. Has Limbaugh violated the author’s copyright?
The author withdrew his lawsuit against Limbaugh. Parody is a fair use of copyrighted material as
long as use of the original is not excessive. Tom Jackman, “Hey, Hey Limbaugh, I Hate Your
Parody,” Kansas City Star, Oct. 13, 1994, p. A1.
3. From the following description of Jean-Pierre Foissey’s activities one evening, can you guess what he
is doing and why?
Mr. Foissey waits until sundown. Then it is time to move. A friend whom he employs drops him off by car near
the plum orchard, turning off the headlights as they approach. Mr. Foissey and another operative move quickly
through adjacent cornfields and enter the orchard, careful not to leave footprints. Armed with a flashlight, his
associate crawls through the orchard reading aloud the numbers on labels attached to the trees by the grower.
Mr. Foissey picks leaves off the trees and marks the tree numbers on them. He takes those leaves back to an
expert who will examine their size, shape, color, and texture, and also test their DNA.
Mr. Foissey is a “fruit sleuth.” His task is to make sure that no one grows fruit without paying
royalties to those who have patented the plants. Thomas Kamm, “Patented Plums Give French Fruit
Sleuth His Raison D'être,” Wall Street Journal, Sep. 18, 1995, p. Al.
4. Rebecca Reyher wrote (and copyrighted) a children’s book entitled My Mother Is the Most Beautiful
Woman in the World. The story was based on a Russian folktale told to her by her own mother. Years
later, the children’s TV show Sesame Street televised a skit entitled “The Most Beautiful Woman in
the World.” The Sesame Street version took place in a different locale and had fewer frills, but the
sequence of events in both stories was identical. The author of the Sesame Street script denied he had
ever seen Reyher’s book but said his skit was based on a story told to his sister some 20 years before.
Has Sesame Street infringed Reyher’s copyright?
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The court held that Sesame Street had not infringed Reyher's copyright because Reyher could not
copyright the plot of a story, only her expression of the plot. Reyher v. Children's Television
Workshop, 533 F.2d 87, 190 U.S.P.Q. (BNA) 387 (2d Cir. 1976).
5. Roger Schlafly applied for a patent for two prime numbers. (A prime number cannot be evenly
divided by any number other than itself and 1, for example, 3, 7, 11, 13.) Schlafly’s numbers are a bit
longer—one is 150 digits, the other is 300. His numbers, when used together, can help perform the
type of mathematical operation necessary for exchanging coded messages by computer. Should the
PTO issue this patent?
The PTO patented these numbers because they were useful, they had never been used before by
anyone else, and their use for this particular technique was not obvious. Simson Garfinkel, “A Prime
Argument in Patent Debate,” Boston Globe, April 6, 1995, p. 69.
6. DatagraphiX manufactured and sold computer graphics equipment that allowed users to transfer large
volumes of information directly from computers to microfilm. Customers were required to keep
maintenance documentation on-site for the DatagraphiX service personnel. The service manual
carried this legend: “No other use, direct or indirect, of this document or of any information derived
therefrom is authorized. No copies of any part of this document shall be made without written
approval by DatagraphiX.” Additionally, on every page of the maintenance manual, the company
placed warnings that the information was proprietary and not to be duplicated. Frederick J. Lennen
left DatagraphiX to start his own company that serviced DatagraphiX equipment. Can DatagraphiX
prevent Lennen from using its manuals?
The court held that these manuals were DatagraphiX's trade secrets and issued an injunction
prohibiting Lennen from using them. Anacomp, Inc. v. Lennen, 1994 U.S. Dist. LEXIS 223 (S.D.N.Y.
1994).
7. A man asked a question of the advice columnist at his local newspaper. His wife had thought of a
clever name for an automobile. He wanted to know if there was any way they could own or register
the name so that no one else could use it. If you were the columnist, how would you respond?
The couple could not trademark the name unless they had or were intending to use the name attached
to a product in interstate commerce. So unless they had plans to manufacture a car, they could not
trademark the name.
8. Babe Ruth was one of the greatest baseball players of all time. After Ruth’s death, his daughters
registered the words “Babe Ruth” as a trademark. MacMillan, Inc., published a baseball calendar that
contained three Babe Ruth photos. Ruth’s daughters did not own the specific photographs, but they
objected to the use of Ruth’s likeness. As holders of the Babe Ruth trademark, do his daughters have
the right to prevent others from publishing pictures of Ruth without their permission?
The court held that Ruth's daughters could not prevent the use of all photographs of Ruth because
neither surnames nor descriptive marks can be registered. Pirrone v. MacMillan, Inc., 894 F.2d 579
(2d Cir. 1990).
9. Harper & Row signed a contract with former President Gerald Ford to publish his memoirs. As part
of the deal, the two agreed that Time magazine could print an excerpt from the memoirs shortly
before the book was published. Time was to pay $25,000 for this right. Before Time published its
version, Nation magazine published an unauthorized excerpt. Time canceled its article and refused to
pay the $25,000. Harper sued Nation for copyright infringement. What was Nation’s defense? Was it
successful?
Nation alleged “fair use.” The appeals court agreed, but the Supreme Court overturned the appeals
court, holding that the article was not fair use because it had damaged the market for the work.
Harper & Row v. Nation Enterprises, 471 U.S. 539, 105 S. Ct. 2218 (1985).
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10. Frank B. McMahon wrote one of the first psychology textbooks to feature a light and easily readable
style. He also included many colloquialisms and examples that appealed to a youthful student market.
Charles G. Morris wrote a psychology textbook that copied McMahon’s style. Has Morris infringed
McMahon’s copyright?
The court held that Morris had not infringed McMahon's copyright because a writer may not claim a
monopoly on a particular writing style. McMahon v. Prentice-Hall, 533 F.2d 87 (E.D. Mo. 1980).
11. ETHICS After Edward Miller left his job as a salesperson at the New England Insurance Agency,
Inc., he took some of his New England customers to his new employer. At New England, the
customer lists had been kept in file cabinets. Although the company did not restrict access to these
files, it claimed there was a “you do not peruse my files and I do not peruse yours” understanding.
The lists were not marked “confidential” or “not to be disclosed.” Did Miller steal New England’s
trade secrets? Whether or not he violated the law, was it ethical for him to use this information at his
new job?
The court held that these customer lists were not trade secrets because New England had not made
sufficient effort to keep them secret. New England Ins. v. Miller, 1991 Conn. Super. LEXIS 817
(1991).
12. YOU BE THE JUDGE WRITING PROBLEM Three inventors developed a software program
that generated a particularly clear screen display on a computer. The PTO refused to issue a patent for
this software. Do the inventors have a right to a patent? Argument for the PTO: This software is
merely a series of mathematical formulas that cannot be patented. Argument for the inventors: The
program is not merely a mathematical concept or an abstract idea, but rather a specific machine to
produce a useful, concrete, and tangible result.
The court held that the software had created a new machine and therefore was patentable. IN RE
Alappat, 33 F.3d 1526 (1994, Fed. Cir.).