Intellectual property is knowledge or expression owned by an individual or a corporate entity. Intellectual property consists of three customary domains: copyright, patent, and trademark. A fourth designation, trade secrets, emerged as a legal construct over the past two centuries. The term intellectual property became popular in legal doctrine, in congressional debate, and with U.S. computer specialists in the early 1980s. Europeans first used the term in the late nineteenth century to describe several disciplines of creative arts and design using a single, broad definition.
The identification and cataloging of ideas across borders and within trading zones through legalized intellectual property protection grew from English tradition and slowly infiltrated common law in the American colonies in the seventeenth and eighteenth centuries. Federal standards for intellectual property protections expanded with the adoption of the U.S. Constitution in 1789. Interest in the protection of specific goods and services flourished in the nineteenth century as the American consumer market grew, new technologies spawned new products, and advertising methods promoted unique brands. Powerful trading organizations and lobbying groups called for international guidelines designed to mediate legal barriers to knowledge and expression. A growing business press, which recorded the economic impact of invention and chronicled the entrepreneurial development of products from inception to incarnation, fortified these efforts in nineteenth-century America.
U.S. copyright law protects original forms of expression, such as the movie Star Wars or the play Rent. Patent law protects commercial designs or formulas produced by inventors and the law is designed to dissuade other individuals or firms from copying their work. Patent law protects inventions and processes (via “utility” patents) and ornamental designs (via “design” patents). Patent protections developed long before copyrights became controversial. The first American patent was granted by a special 1641 act of the Massachusetts colonial government for the development of a saltworks. At the beginning of the twenty-first century, the United States granted utility patents for a period of 17 years and design patents for 14 years. Anyone can make, use, or sell the invention or design in question once the patent for an invention or design expires.
Trademarks and service marks include words, names, symbols, or devices used by manufacturers of goods and providers of services to identify their goods and services and to distinguish them from those manufactured and sold by others. The brand Taco Bell or the contours of a BMW hood ornament are examples of trademark designations. Historically, U.S. trademark law has not restricted the use of a trademark that is unlikely to cause confusion, mistake, or deception among consumers. However, the 1996 Lanham Act introduced legislation that protected famous marks from uses that dilute their distinctiveness, even in the absence of any likelihood of confusion or competition. Marks qualify as famous if they promote such powerful associations in the consumer’s mind that even noncompeting uses can impinge on their value. Before November 1989, a U.S. trademark’s owner could file a trademark application only after he or she actually used the trademark in commerce. U.S. law allows a person who has a bona fide intention to use a trademark in commerce to apply to register the trademark. Certificates of federal trademark registration usually remain in effect for 10 years. A federal registration may be renewed for any number of successive 10-year terms as long as the mark is still in use in commerce. The duration of state registration varies.
Trade-secret law only protects information that a company has tried but failed to conceal from competitors. Unique formulas for soft drinks and confidential marketing strategies are examples of trade secrets. Unlike the law in other areas of intellectual property, such as copyright or patent law, trade-secret law imposes liability only when the appropriator acquires, reveals, or uses secrets in a wrongful manner. A wide variety of materials may be protected by trade-secret law, including the following types of technical and business information: customer lists, designs, instructional methods, manufacturing processes, document-tracking processes, and formulas for producing products. Inventions and processes not patentable might also receive protection under trade-secret law. Patent applicants generally rely on trade-secret law to protect their inventions while the patent applications are pending.
Framers of the U.S. Constitution reviewed over 200 years of English law while formulating language addressing the rights of ideas and inventions. Merging European common law principles with American policies designed to promote individual rights proved difficult. In 1557, Queen Mary I assigned all printing and book sales to a single guild, the Stationers’ Company. Guild members purchased manuscripts from writers and held the exclusive right to print and sell them forever. The Crown also granted exclusive rights to print the works of deceased writers, and the guild censored books it considered seditious or heretical. England’s guild monopoly frustrated several writers, and eventually, Parliament withdrew royal monopolies. Stationers’ Company officials responded by purchasing perpetual licenses to manuscripts. By the eighteenth century, the English considered the independent rights for authors a legitimate protection, and Parliament enacted the Statute of Anne, the first modern copyright law, in 1710. The act gave authors the rights to their work and limited the duration of protection to 14 years, a standard unchallenged until late in the twentieth century in Europe and the United States. The guild spent decades trying to recapture its legal monopoly by embarking on a series of lawsuits that maintained the Crown could not strip businesses of their property after 14 years or any other arbitrary length of time. In 1774, the House of Lords clarified that authors and publishers possessed no absolute property rights over their works. Members determined that rights to products of the mind remained temporary and should be in the public domain after a short period of time, available for use by all.
Framers of the U.S. Constitution considered the merits of independent state laws when assessing whether to define clear national policy or ignore provisions for intellectual property. Before 1787, state assemblies could grant rights to inventions or ideas, but South Carolina was the only state that passed general legislation allowing grants of patents without special acts of the legislature. Although discarding the ineffective Articles of Confederation and proceeding with a drafted version of the Constitution at the Constitutional Convention in Philadelphia, beginning on May 14, 1787, participants reviewed inconsistent decisions in respect to intellectual property. When searching for samples or templates of how to incorporate ideas and inventions as protected commodities, they found that England showcased a more consistent policy than any single American state.
The debate did not address provisions for ideas, inventions, or any other language now associated with intellectual property until the Committee Detail submitted its recommendations. Virginia’s James Madison harked back to English law on August 18, 1787, and suggested adding the right “to secure to literary authors their copyrights for a limited time” (Debates in the Federal Constitution). On the same day, South Carolina delegate Charles Pinckney recommended a provision “to grant patents for useful inventions” and “to secure to authors exclusive rights” (Debates in the Federal Constitution). On August 31, the assembly referred these proposals and others to a committee composed of one member from each state. On September 5, 1787, the committee, which included Madison, reported that Congress should have the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The clause surfaced verbatim in what became Article 1, Section 8, Clause 8 of the Constitution.
Madison’s writings demonstrated his belief that federal oversight of ideas and inventions remained a necessary evil as the burgeoning national economy forced goods to pass across borders efficiently. His theories differed from those of Thomas Jefferson, who remained more interested in ensuring that inventions became available to the public. “The copyright of authors has been solemnly adjudged in Great Britain to be a right of common law. … The public good fully coincides … with the claims of individuals,” Madison lectured (Introduction to the Debates). He believed that state leaders were poised to give up control of knowledge and ideas for the good of federalism. “The States cannot separately make effectual provision for either of the cases, and most of them have anticipated the decision of this point by law passed at the instance of Congress,” he reminded his compatriots.
The pursuit of protection for intellectual property symbolized a national debate stirred by Thomas Jefferson, Alexander Hamilton, and James Madison during the late eighteenth century, after the American Revolution. As American lawmakers moved away from governance via a loose confederation of states managed by separate laws and added centralized control relying on English common law, a fusion of local and national intellectual property protections emerged. The framers of the Constitution pursued a middle ground that protected state autonomy while simultaneously promoting centralized banking, international trade, and interstate commerce. The result of this middle passage resulted in a collision of values and legal interpretations that shifted some power to state authorities and some to federal managers. Judicial interpretation expanded the federal oversight of copyrights and trademarks as the national economy grew and private investment in distant trade surged. American writers discovered new markets for their works, and large, private corporations prospered. Market expansion led independent trade groups and business interests to seek even broader protection for intellectual property ownership. At the twilight of the eighteenth century, the compromise position of part state and part federal protection articulated by American delegates to the Constitution Convention tilted toward a federal approach. Madison’s call to “encourage by premiums and provisions, the advancement of useful knowledge and discoveries” trumped Jefferson’s conclusion that products of the human mind “cannot, in nature, be a subject of property” (Introduction to the Debates).
Building from the language of England’s Statute of Anne, the U.S. Copyright Act of May 31, 1790, provided creators of books, maps, and charts a 14-year copyright, with the option of renewing for another 14 years. The act became the first major legislative form of intellectual property protection in the United States. On February 3, 1831, the first general revision of the copyright law added music as a category of works protected against unauthorized printing and vending. The first term of copyright could also extend to 28 years, with the privilege of renewal for a term of 14 years. Until the middle of the nineteenth century, U.S. copyright owners enjoyed little more than protection against verbatim copying of language. A federal circuit court rejected the claim of Harriet Beecher Stowe that a German translation of Uncle Tom’s Cabin infringed her copyright in 1853, finding the Constitution shielded literal text alone. Only 17 years later did Congress include translations (thereby allowing for legal interpretation of story lines or ideas borrowed from a written work in addition to literal copying) in the revised Copyright Act of July 8, 1870. The new law protected authors from infringement related to close approximations of plots or use of characters to create an unauthorized sequel, beginning a period of more liberal interpretation, championed by artists such as Mark Twain.
Copyright law was further refined in Baker v. Selden (1879), when the Supreme Court ruled that describing a system of accounting in a textbook did not confer copyright protection on the system itself. The Court wrote: “Recurring to the case before us, we observe that Charles Selden, by his books, explained and described a peculiar system of book-keeping, and illustrated his method by means of ruled lines and blank columns, with proper headings on a page, or on successive pages. Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey instruction in the art, any person may practice and use the art itself, which he has described and illustrated therein. The use of the art is a totally different thing from a publication of the book explaining it.”
As the Supreme Court fine-tuned copyright law, established writers lobbied for continued protection. Mark Twain noted the publishers would not pay for works produced by unrecognized authors when they were not even required to pay famous authors for their works. He astutely co-opted Jefferson’s public domain argument by suggesting that extending rights to major authors remained critical for preserving American icons and values. More recently, spokespersons at Disney and other corporations emulated his approach when advocating long-term control of icons such as Mickey Mouse. “It is not merely a question of copyright. … It is a question of maintaining in America a national literature, of preserving national sentiment, national politics, national thought, and national morals,” announced Twain in the New York Times. On July 1, 1909, a third general revision of the copyright law became effective and extended the renewal term from 14 to 28 years. Generally, copyright standards have continued to be extended in respect to duration in America, and in the 1980s and 1990s, copyright doctrine also included detailed legal language addressing computer programs. The December 1, 1990, Computer Software Rental Amendment Act granted the owner of a copyright in computer programs exclusive rights to authorize or prohibit the rental, lease, or lending of the program for direct or indirect commercial purposes.
The U.S. government enacted the first federal patent law on April 10, 1790. The new law placed complete power over the granting of patents in the hands of the secretary of state, the secretary of war, and the attorney general. Secretary of State Thomas Jefferson personally examined each patent application filed. As the number of patents submitted for analysis increased, federal officials became overwhelmed. On February 11, 1793, Congress passed a new patent law, intended to place the burden of evaluating the validity of the claim of original invention on the courts and keep Cabinet officers, who lacked time, from having to examine patent submissions. The new law, which remained in effect until 1836, introduced the U.S. Patent Office. An inventor simply submitted a description of the invention, drawings, and a model and paid a fee. In 1842, Congress extended the reach of the patent statute to cover “new and original designs for articles of manufacture.” The new act engaged inventor interest in various types of goods that had received little attention before that time. Products such as display racks received protection. In 1849, control over the Patent Office was transferred from the Department of State to the newly created Department of the Interior. The 1952 Patent Act made only general revisions to the law, not substantive changes.
Prior to the Civil War, manufacturers infrequently used trademarks on general merchandise. As a result, members of Congress paid little attention to the trademark issue. However, lobbying by private business interests began to reduce local government oversight of trade within cities and counties. New York State became the epicenter of this shift toward universal American trademark applications. Until the 1840s, the inspection of traded goods in New York cities was treated as a monopoly of the state government. By the middle of the decade, 372 inspectors and 109 weighers, who were responsible for part of the inspection process, occupied 22 percent of the 2,238 political appointee positions filled by the New York governor, and state inspections raised over 30 percent more revenues than state taxes. In response, business leaders lobbied for marks that would signal acceptable products, requiring no review or inspection. State leaders joined the businesspeople who claimed that the collection of inspection fees led to grotesque patronage and remained akin to imposing a commercial surcharge on goods and trade. Laws passed in 1844 and 1845 forbade private inspection in the city and county of New York and in Kings County. In 1845, New York became the first state to legislate private trademark protection for a variety of goods and services, enabling voluntary inspections overseen by company officials and municipal authorities. New York abolished all inspections and weighings in November 1846.
Federal trademark legislation, based on the copyright clause of the Constitution, surfaced in 1870. Averill Paints received the first mark under this act. However, the Supreme Court declared the measure unconstitutional in 1879 on the grounds that it impermissibly affected intrastate affairs. The Court held that the basis of any trademark rested on the commerce clause, which allowed for regulation of interstate commerce, not intrastate commerce. In response, New York business leaders sprang into action again, now calling for uniform trademark guidelines at the national level to reduce any trade restraints across the United States. Twelve New York industrialists founded the U.S. Trademark Association (USTA) in 1878 and lobbied for enactment of the Trademark Act of 1881, arguing that manufacturers should be able to protect their brands as a necessity of commerce when engaging in foreign trade.
By 1887, the association expanded its activities by publishing The Bulletin to circulate articles of interest to trademark owners and law students. Interaction with elected officials and campaign donations resulted in USTA’s president, Francis Forbes, being appointed by President William McKinley to head a commission empowered to revise statutes relating to patents, trade, and other marks. The commission’s report, submitted to Congress in 1900, made recommendations that formed the basis of the Trademark Act of 1905, a law adopted on the principle of prior ownership and use. Companies establishing marks in the previous 10 years received authorization to consolidate ownership through procedural registration. The new law precipitated 16,224 applications for the year, nearly a sevenfold increase from 1904. In 1906, USTA officials expanded the geographic scope of their advice and initiated trademark planning in other nations. Officials in Argentina were counseled to liberalize national law, and the association drafted trademark law for Ecuador in 1908, a model later used in other South American jurisdictions.
The 1946 Trademark Act introduced legislation governing federal trademark registration. Thereafter, USTA officials launched a major campaign to reduce the effect of mandatory state trademark registration, which resulted in the 1949 Model State Trademark Bill, approved by the National Association of Secretaries of State and the Council of State Governments. Enactment in 46 states confirmed that all jurisdictions would incorporate uniform registration practices and share information. American state and federal trademarks shifted toward national, rather than regional, data management. In 1993, the USTA recast itself as the International Trademark Association and claimed approximately 3,000 members drawn from 110 countries.
Private business representatives did not have to work as hard when advocating legal protections for trade secrets. Nineteenth-century legal decisions regarding the shipment of goods established that packages, cases, and vessels containing commodities could shield their identity. Courts also mandated that imitations of goods as diverse as team uniforms and stationery remained unacceptable. Likewise, competitive companies could not distribute goods that caused consumer confusion or “tarnished” private trademarks. In the Dow Jones case, the Supreme Court of Illinois held that the Chicago Board of Trade (CBOT) could not develop a stock index futures contract keyed to the Dow Jones Industrial Average without first obtaining permission from the company that created the market index. Officials at the CBOT used similar reasoning to their advantage as they successfully argued that the organization’s price quotations were “like a trade secret,” thereby suppressing the sharing of insider pricing with potential competitors. Unlike patent, copyright, and trademark law, no private federal civil cause of action existed in U.S. trade-secret law. In 1979, the American Bar Association approved the Uniform Trade Secrets Act (UTSA) as a model for states to adopt.
Nineteenth- and twentieth-century American popular literature, commerce, and shopping introduced copyrighted books, patented industrial designs, and trademarked consumer goods to millions of consumers across the country. Business journals, engineering specialists, corporate officers, and government officials helped inventors and producers understand the legal terminology serving as the foundation of intellectual property. Marketing efforts ensured that consumers became aware of new brands as they entered the national marketplace, and independent inventors received inspiration from firms such as Munn and Company, the parent firm of Scientific American Magazine. Munn officials developed the first professional services organization in the United States dedicated to submitting patent applications. Thomas Edison, the quintessential American inventor and protector of special designs and schemes, was said to never miss an issue of Scientific American as a young boy. In 1877, he entered the New York offices of the magazine and demonstrated an early version of his phonograph to great fanfare.
Scientific American captured readers such as Edison by promoting the captivating nature of scientific curiosity and invention. Dreams and success stories dominated every issue, and creative capitalist enterprise abounded. The masthead of the first edition stated: “This paper is especially entitled to the patronage of Mechanics and Manufactures, being the only paper in America, devoted to the interest of those classes.” Former painter, schoolmaster, and inventor Rufus Porter launched the magazine on August 28, 1845, and sold the publication to Alfred Ely Beach and Orson Desaix Munn the following year for a small profit.
Beach grew up as the son of Moses Yale Beach, who owned the New York Sun and developed the rag-cutting machine for the manufacture of paper. Munn, who had been one of Alfred’s classmates at Monson Academy, ran a general store in Monson, Massachusetts, at the time of the purchase. Together, the two men increased the magazine’s circulation to 10,000 by 1848, 20,000 by 1852, and 30,000 by 1853. The journal championed the growth in the number of people working in technology across the United States and promoted Munn and Company as the experts necessary for planning and protecting inventors’ ideas and design concepts. At the end of 1845, the U.S. Patent Office had issued 4,347 patents throughout its history. By 1890, the number of patents accepted (approximately one-third as many additional applications were denied) by the same office numbered 402,166, and over 20,000 were being granted each year. During the early 1860s, Munn and Company generated one-third of all patents issued in America. By 1924, the firm’s number of patents exceeded 200,000, more than one-seventh of all patents ever issued by the Patent Office to that time. Firm officials became active lobbyists. Throughout the 1850s, Beach, who secured several patents of his own (including one for a typewriter enhancement for the blind), traveled to the District of Columbia every two weeks to personally deliver applications. Munn and Company also opened a branch office in Washington, across the street from the Patent Office. Personnel from the firm wrote letters of advice to Congress members and U.S. presidents, and they tutored government officials interested in technology. The company also published several editions of a handbook specific to patent law. A former patent commissioner even became one of the company’s attorneys.
As independent inventors became more sophisticated, corporate leaders followed suit. They received aid from court rulings that further eroded municipal controls over trade and business transactions. Courts ruled that cities could no longer regulate the hours of business within their confines. The Supreme Court decision in Santa Clara v. Southern Pacific Railroad (1886) finalized a legal revolution that resulted in corporations being declared “persons” entitled to the constitutional rights and protections guaranteed by the Fourteenth Amendment. Through the emergence of “substantive due process,” corporations achieved “natural” economic status as ordinary, private, constitutionally protected enterprises rather than special, public creations of the state. Nineteenth-century corporate officials used these new legal findings to justify closely held control over ideas and inventions. For instance, the DuPont Company developed postemployment covenants designed to prevent the dissemination of knowledge, thereby restricting the spread of workplace knowledge outside the job site. When courts upheld these contracts, company officials drafted comprehensive agreements stipulating that firms legally owned the rights to any employee-developed ideas.
Nineteenth-century U.S. efforts to develop policy relating to ideas and knowledge-based products were consistently influenced by international advocates for protection. Many foreign exhibitors refused to attend the International Exhibition of Inventions in Vienna in 1873 because they were afraid their ideas would be stolen and exploited commercially in other countries. Ten years later, the Paris Convention for the Protection of Industrial Property led to the major international treaty of the same name, which was designed to help individuals in one nation obtain protection in other countries for their inventions, usually patents, trademarks, and industrial designs. The Paris Convention became codified in 1884 with 14 members, and it created an international bureau designed to organize policy across the world. The 1886 Bern Convention for the Protection of Literary and Artistic Works enhanced this effort. The meeting allowed nationals of member states to plan for international protection of their rights to control and receive payment for the use of creative works such as novels, stories, poems, plays, songs, operas, musicals, sonatas, drawings, paintings, sculptures, and architectural works. Emulating the Paris meeting, the Bern Convention established an international bureau to direct tasks. In conjunction with Paris Convention officials, the bureau formed an organization called the United International Bureau for the Protection of Intellectual Property (BIRPI). A staff of seven, based in Bern, Switzerland, preceded what became the World Intellectual Property Organization (WIPO) over 60 years later.
In the twentieth and twenty-first centuries, persistent market expansion and lobbying of government officials resulted in new U.S. law expanding the duration of knowledge protection and a greater focus on world trade standards. Intellectual property increasingly served as a key commodity that American inventors, artists, and business owners used to control uses of their products and to raise investment money. Intellectual property definitions increasingly became key underpinnings for general agreements on trade, drawing interest from business leaders and policymakers. In the wake of other new multilateral institutions dedicated to international economic cooperation, notably the Bretton Woods institutions (now known as the World Bank and the International Monetary Fund), the General Agreement on Tariffs and Trade (GATT) surfaced in 1946. Early GATT negotiations resulted in 45,000 tariff concessions affecting $10 billion—or about one-fifth—of world trade, and they began a worldwide transition toward detailed provisional rules governing trade. A special charter for the International Trade Organization (ITO), a short-lived agency of the United Nations, even set rules relating to employment, commodity agreements, restrictive business practices, and international investment. GATT, officially activated in January 1948, established a forum that world leaders used to develop international principles of trade and business, including intellectual property.
In 1960, BIRPI moved from Bern to Geneva, and a decade later, the organization became the World Intellectual Property Organization. In 1974, WIPO became a specialized agency of the United Nations and received a mandate to administer intellectual property matters recognized by members. GATT remained the only multilateral instrument governing international trade until the Marrakesh Agreement established the World Trade Organization (WTO) in 1994. The latter body established a council for trade-related aspects of intellectual property rights (TRIPS), operating under the guidance of the WTO’s General Council. This interaction codified intellectual property rights within industrial nations in the same fashion the U.S. Constitution merged English law with state law in America. Today, WTO officials encourage global intellectual property provisions and agreement among major trading nations, and government leaders follow the organization’s advice. When the European Union, in the mid-1990s, adopted the German copyright standard, which called for a duration based on the author’s life plus 70 years, U.S. Congress members increased the U.S. duration from 50 to 70 years. In 1996, WIPO officials entered into a cooperative agreement with WTO administrators. At the beginning of the twenty-first century, the organization had 179 independent member states and a staff of over 800, representing 84 countries around the world.
U.S. corporations became huge supporters of a worldwide agreement regarding intellectual property standards and the protection of these business assets (the property itself) as their own business interests expanded into outlying markets. Federal spending on semiconductor research in northern California in the latter half of the twentieth century led to the rise of Silicon Valley and high-tech areas outside Boston. Other cities and metropolitan areas sought to capture high-tech growth industries fueled by technological expansion, and several cities and states promoted research labs and development centers sometimes affiliated with major universities. These growing R&D centers sprouted new technology designed to convert ideas and products into wealth. Firms relying on medicine, weaponry, and computing systems remained especially popular.
In the 1970s, Popular Mechanics, a magazine similar to Scientific American, provided inspiration to Microsoft founders Paul Allen and Bill Gates, who discovered the Altair, a home computer kit, in the pages of the magazine. Allen and Gates fastidiously programmed software for the machine and launched a vast empire designed to license ideas through software (Microsoft). As several other companies eschewed business models based on selling machines (hardware, in the case of computers) or services and consulting, licensing software to operate networks, computers, and manufacturing systems became accepted practice. Buying and selling software and technology as commodities, as opposed to using the technology to build something more tangible, was popularized, and the term intellectual property emerged as an American definition of knowledge-based assets such as copyrights, patents, trademarks, and trade secrets. Law schools began offering special programs for intellectual property studies, and the term consistently turned up in congressional debates and within proposed congressional bills in the 1980s. The term was eventually replaced by a shortened usage, IP, a popular expression incorporated by business executives, investors, technologists, and attorneys.
American venture capital firms seeding start-up companies with capital often focus more on the intellectual property associated with a business or idea than on the company itself. The intellectual property is treated as the critical asset behind the business and as the only tangible, valuable commodity. Intellectual property-related trade has grown into one of the largest economic sectors within the nation’s economy. In 1998, high-tech industries accounted for 11 percent of the $12.5 trillion worth of goods produced in the United States, and they grew much faster than other sectors. Management of this growth mandated intense interest by private and public authorities in intellectual property. At the dawn of the twenty-first century, some estimates conclude that copyrighted material alone contributes over $400 billion to the U.S. economy each year, arguably making it the country’s single most important export.
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