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Intellectual Property: United States

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Mask worksMask works are a specialized category of IP protection designed for the semiconductor industry. The Semiconductor Chip Protection Act of 1984 (SCPA) grants exclusive rights to creators of mask works, which are the three-dimensional layouts of semiconductor chips. These designs are essential in manufacturing microchips and other semiconductor devices, which are integral to modern electronics.Obtaining mask work protection. To obtain protection for a mask work, the design must be registered with the U.S. Copyright Office within two years of the first commercial exploitation of the semiconductor chip. Protection lasts for a period of ten years, during which time the creator has exclusive rights to reproduce, distribute, and import the mask work.Mask work duration. The duration of protection for mask works under the Semiconductor Chip Protection Act is 10 years from the date of registration or from the date of the first commercial exploitation, whichever occurs first. After the expiration of the 10-year term, the layout design enters the public domain and can be freely used by others.Scope of protection. Mask work protection is limited in scope. It does not extend to the functionality of the semiconductor device, only to the layout design. Additionally, certain exceptions exist, such as reverse engineering for the purpose of education, research or evaluation, which are permitted under the law.Remedies for mask work infringement. The SCPA provides remedies for unauthorized reproduction or distribution of a registered mask work, including:Injunctions. Courts may prevent further infringement through injunctions.Monetary damages. The mask work owner may recover damages for unauthorized uses, including actual damages or statutory damages as provided under the SCPA.Seizure and destruction. Courts may order the seizure and destruction of infringing products.LicensingOverview. Licensing is a legal and contractual arrangement whereby the owner of intellectual property (IP) grants permission to another party to use that IP in exchange for some consideration, usually through royalties or lump-sum payments. Licensing is a crucial strategy for IP holders to monetize their intellectual assets without relinquishing ownership. It also allows businesses to expand the use of their innovations, brands or creative works while controlling how those assets are used by others. Licensing applies across all forms of IP, including patents, copyrights, trademarks, trade secrets and even rights of publicity.Licenses are generally governed by contract law, and the specific terms of a licensing agreement can vary widely depending on the nature of the intellectual property and the relationship between the licensor and licensee. Licensing can provide the flexibility to customize IP use to specific needs, including geographic, temporal and commercial limitations.Types of licensing. The scope of rights granted in a licensing agreement varies depending on the parties’ intentions and the specific intellectual property involved. The following are the most common types of licensing agreements:Exclusive license. An exclusive license grants the licensee the sole right to use the IP in a specified territory or field of use. Under an exclusive license, the licensor typically agrees not to use the IP themselves and not to grant licenses to any other parties. This type of license is common in industries where market exclusivity is critical, such as pharmaceuticals or technology.Non-exclusive license. In a non-exclusive license, the licensor retains the right to use the IP and may grant similar licenses to multiple licensees. This is often used when broad dissemination of the IP is desirable, such as in software or franchising.Sole license. A sole license allows the licensee to use the IP while the licensor retains the right to use the IP themselves but agrees not to license it to any other parties. This type of license offers a balance between exclusivity and flexibility.Cross-licensing. In a cross-licensing arrangement, two parties grant each other licenses to their respective IP. This is common in technology sectors where different companies rely on each other’s patents to develop new products, such as in the telecommunications or automotive industries. It’s also common in consumer products in the context of brand collaborations.Sub-licensing. A sub-license occurs when a licensee, who has been granted the right to use IP, further licenses those rights to a third party. Whether a sub-license is permissible depends on the terms of the original licensing agreement.Key provisions in licensing agreements. A comprehensive licensing agreement should include several critical provisions that address the rights and obligations of both the licensor and the licensee:Scope of license. This defines the exact rights being granted, including the geographic area, duration, field of use and whether the license is exclusive or non-exclusive. The scope can also specify whether the licensee has the right to modify or create derivative works, particularly in copyright or patent licenses.Compensation. Licensing agreements typically specify the form and frequency of payments. This may involve a lump-sum payment, ongoing royalties based on a percentage of sales, or milestone payments tied to specific achievements, such as regulatory approval or market entry.Quality control. Particularly in trademark licensing, the licensor must ensure that the quality of goods or services associated with the licensed mark is maintained, policed and enforced. Failure to include and enforce quality control provisions can result in the abandonment of trademark rights.Confidentiality. Many licenses, especially those involving trade secrets or proprietary information, contain confidentiality clauses that prevent the licensee from disclosing or improperly using the licensed IP. This is critical in protecting the competitive value of the trade secret or proprietary information.Indemnification. Licensors may include indemnification clauses to protect themselves from legal liability arising out of the licensee’s use of the IP. This is particularly important if the licensee’s use of the IP could expose the licensor to third-party claims, such as patent infringement.Termination and renewal. A licensing agreement should clearly outline the conditions under which the license can be terminated, such as breach of contract or failure to meet performance benchmarks. The agreement may also include provisions for automatic renewal or an option to renegotiate terms at the end of the license term.Licensing in specific IP contexts. Each type of intellectual property has unique considerations when it comes to licensing:Patent licensing. Patent licenses are prevalent in technology-driven industries like pharmaceuticals, software and engineering. Patent pools — where multiple patent holders bundle their patents for licensing — and standard-essential patents (SEPs) play a significant role in industries such as telecommunications, where compliance with technical standards is necessary.Copyright licensing. Copyright licenses are common in publishing, music, film and software industries. In addition to reproduction and distribution rights, copyright licenses may cover derivative works, public performance and synchronization rights (the use of music in visual media). Copyright licensing must be carefully managed to avoid infringement of both the original work and any derivative works.Trademark licensing. Trademark licenses are commonly used in franchising, brand extensions and merchandising. The licensor must exercise strict quality control over the use of the trademark to avoid weakening its rights. Licensing without adequate oversight risks invalidating the trademark.Trade secret licensing. Trade secrets are licensed under strict confidentiality provisions. The licensor must ensure that the licensee implements adequate security measures to protect the trade secret from being disclosed or misappropriated. Trade secret licenses often include non-compete and non-disclosure agreements to further protect the secret’s value.Right of publicity/privacy licensing. Celebrities and public figures frequently license their likeness, name or signature for use in advertising, merchandising and endorsement deals. These licenses often include strict approval and usage clauses to maintain control over the image and identity of the person being licensed.Benefits and risks of licensing. Licensing offers numerous benefits to both licensors and licensees. For licensors, it provides a way to monetize IP without direct commercialization, allowing them to expand into new markets or industries. For licensees, licensing offers access to valuable IP, reducing the time and cost associated with developing new technologies or products from scratch.However, licensing also carries risks. For licensors, these include the potential loss of control over the IP, particularly if quality control measures are not enforced. There is also the risk of creating a competitor if the licensee develops derivative works or improvements. For licensees, the primary risks are the potential for disputes over the scope of the license or the adequacy of the IP’s legal protection, such as if a licensed patent is later invalidated.Administrative and alternative enforcement mechanismsEnforcement of intellectual property (IP) rights is essential to protect the value of those rights and prevent unauthorized use or exploitation by third parties. In the United States, IP rights can be enforced through a combination of civil litigation, administrative actions and, in some cases, criminal prosecution. The choice of enforcement method depends on the type of intellectual property and the nature of the infringement. Successful enforcement requires a clear understanding of both the substantive IP laws and the procedural rules governing the legal actions.Customs enforcement. IP owners can register their trademarks and copyrights with U.S. Customs and Border Protection (CBP), which will help prevent the importation of counterfeit goods. CBP has the authority to seize infringing goods at the border and may also collaborate with other federal agencies to investigate and prosecute large-scale counterfeiting operations.Domain name disputes. Trademark owners may enforce their rights through the Uniform Domain-Name Dispute-Resolution Policy (UDRP), which provides a streamlined process for resolving disputes over domain names that infringe on trademarks. This is particularly important in cases where cybersquatters register domain names that are confusingly similar to established brands.Alternative dispute resolution (ADR). Many IP disputes can be resolved through ADR methods, such as arbitration or mediation, which offer a faster and often less expensive alternative to litigation. These methods are commonly used in commercial agreements that involve IP licenses, joint ventures or cross-border transactions.IP disputes processOverview. Intellectual property disputes can arise in various contexts, including claims of infringement, invalidity or misappropriation. The resolution of IP disputes often involves complex legal and factual issues, requiring specialized knowledge of both the applicable law and the underlying technology, business practices or creative works at issue. The process for resolving these disputes depends on the type of IP involved and may occur through civil litigation, administrative proceedings, alternative dispute resolution (ADR) or a combination of these approaches.Civil litigation. The most common method for resolving IP disputes is through civil litigation in federal court. Each type of intellectual property is governed by a different statutory framework, which dictates the applicable rules and procedures for disputes:Patent disputes. Patent infringement lawsuits are typically filed in federal district courts, as federal law governs patent rights. Parties may also seek declaratory judgments on issues such as patent validity or non-infringement. Patent cases often involve significant discovery and expert testimony, particularly on technical matters such as claim construction and infringement analysis. Cases can be further complicated by counterclaims for patent invalidity based on prior art or other grounds.Copyright disputes. Copyright infringement cases are also filed in federal district courts. The litigation process usually begins with the copyright owner filing a complaint alleging unauthorized use of the copyrighted work. Defendants may raise various defenses, such as fair use, independent creation or lack of access. Copyright owners who have registered their works may also seek statutory damages and attorneys’ fees, providing a strong incentive to register works with the U.S. Copyright Office.Trademark disputes. Trademark infringement, dilution and unfair competition cases are primarily litigated in federal courts. Trademark disputes may also include claims under state law, particularly in cases involving common law trademark rights. The central issue in many trademark disputes is whether the defendant’s use of a mark creates a likelihood of consumer confusion. Courts may also address issues of trademark dilution, particularly when the case involves famous marks.Trade secret disputes. Trade secret misappropriation claims are governed by both state law (under the Uniform Trade Secrets Act) and federal law (under the Defend Trade Secrets Act). Litigants typically file trade secret cases in federal court if the case involves interstate commerce or if federal trade secret law is invoked. Courts must determine whether the information at issue qualifies as a trade secret, whether it was misappropriated through improper means, and whether the plaintiff has taken reasonable steps to maintain the secrecy of the information.Stages of civil litigation. IP litigation generally follows a similar process across different types of IP disputes, which includes the following stages:Pleading. The process begins with the filing of a complaint by the plaintiff, outlining the claims of infringement, misappropriation or other violations of IP rights. The defendant then files an answer, raising any defenses or counterclaims.Discovery. During discovery, the parties exchange evidence and information relevant to the claims and defenses. Discovery may involve written questions (interrogatories), document requests, depositions, and expert reports. Given the technical nature of many IP cases, discovery is often extensive and costly.Pretrial motions. Before trial, parties may file various motions, such as motions to dismiss, motions for summary judgment, or motions to exclude certain evidence. These motions allow the court to rule on legal issues that may dispose of the case or narrow the issues for trial.Trial. If the case proceeds to trial, it may be decided by a judge or a jury, depending on the issues and the parties’ preferences. Patent cases, for example, often involve a “Markman hearing” to determine the meaning of disputed patent claims, a crucial issue that can significantly impact the outcome of the case.Appeal. After trial, either party may appeal the court’s decision to a higher court. In patent cases, appeals are typically heard by the U.S. Court of Appeals for the Federal Circuit, while other IP appeals may be heard by the regional circuit courts of appeal.Administrative proceedingsIn some cases, IP disputes are resolved through administrative proceedings rather than federal court litigation. These proceedings are typically faster and less costly than civil litigation, but they often have more limited remedies.Patent Trial and Appeal Board (PTAB). The PTAB is an administrative tribunal within the U.S. Patent and Trademark Office (USPTO) that hears challenges to the validity of issued patents through procedures such as inter partes review (IPR) and post-grant review (PGR). These proceedings allow third parties to challenge a patent’s validity based on prior art or other grounds without resorting to full litigation in federal court.Trademark Trial and Appeal Board (TTAB). The TTAB, also part of the USPTO, adjudicates disputes involving trademark registration, including opposition proceedings (where a third party challenges a pending trademark application) and cancellation proceedings (where a third party seeks to cancel an existing trademark registration). TTAB decisions are limited to the registrability of the mark and do not determine broader issues of trademark infringement or damages.International Trade Commission (ITC). The ITC hears cases involving the importation of products that allegedly infringe U.S. patents, trademarks or copyrights. The ITC can issue exclusion orders barring the importation of infringing goods into the U.S. ITC proceedings are particularly important in industries like consumer electronics and pharmaceuticals, where infringing products are often manufactured overseas.Alternative Dispute Resolution (ADR). Many IP disputes are resolved through alternative dispute resolution (ADR) methods such as arbitration and mediation. These methods offer a less formal and potentially less expensive way to resolve disputes without going through the full litigation process.Arbitration. In arbitration, the parties agree to submit their dispute to one or more arbitrators who render a binding decision. Arbitration is often faster than litigation, and the proceedings are private. Many commercial contracts involving IP, such as licensing agreements or joint ventures, include arbitration clauses requiring that disputes be resolved through arbitration rather than litigation.Mediation. Mediation involves a neutral third party who helps the disputing parties negotiate a mutually acceptable resolution. Mediation is non-binding, meaning the mediator does not issue a decision but instead facilitates discussion between the parties. Mediation can be particularly effective in cases where the parties have an ongoing business relationship that they wish to preserve.International IP disputes. Given the global nature of commerce, many IP disputes have cross-border elements, involving parties from different countries or IP rights that extend across national borders. International IP disputes are often governed by treaties such as the Paris Convention, the Berne Convention, and the TRIPS Agreement, as well as national laws.Disputes involving international IP rights may be resolved through litigation in foreign courts, international arbitration, or proceedings before international bodies such as the World Intellectual Property Organization (WIPO). In some cases, international enforcement of IP rights requires coordination between national IP offices and customs authorities to prevent the import or export of infringing goods.IP assignmentsAn IP assignment is a legal transfer of ownership of intellectual property from one party (the assignor) to another (the assignee). Unlike a license, which grants limited rights to use the IP, an assignment involves the complete transfer of ownership, including all rights associated with the IP. Assignments are common in various contexts, such as business transactions (e.g. mergers and acquisitions), employment agreements and settlement of IP disputes.Key provisions in IP assignment agreements. An IP assignment agreement typically includes several key provisions:Identification of the IP. The agreement must clearly identify the intellectual property being assigned, including any related rights, such as future improvements or derivative works.Consideration. The agreement should specify the consideration (i.e., payment or other compensation) provided in exchange for the assignment. This could be a lump-sum payment, ongoing royalties, or other forms of compensation.Warranties and representations. The assignor typically warrants that they own the IP and have the right to assign it. The assignor may also warrant that the IP does not infringe on any third-party rights and that no other encumbrances exist on the IP.Further assurances. Many assignment agreements include provisions requiring the assignor to take further actions, such as executing additional documents, to ensure that the transfer of rights is properly completed.Recording IP assignments. In many cases, it is essential to record the assignment with the relevant government authorities to ensure that the transfer of ownership is recognized and enforceable. For example, patent and trademark assignments should be recorded with the U.S. Patent and Trademark Office (USPTO), and copyright assignments can be recorded with the U.S. Copyright Office. Failure to record an assignment may affect the assignee’s rights, particularly if the assignor transfers the same IP to a third party without notice. It’s important to note that the assignment of intent-to-use trademark applications are generally not permitted to be assigned unless as part of a business sale in which case the assignee is a successor of the continuously operating/existing business.Works for hireIn the U.S., the concept of “work for hire” applies to certain works created by employees or under a contractual agreement. Under copyright law, the employer or commissioning party is considered the legal author and owner of the work, rather than the individual who created it.Categories of works for hire. There are two main categories of works for hire:Employee-created works. If an employee creates a work within the scope of their employment, the work automatically qualifies as a work for hire, and the employer owns the copyright.Commissioned works. For certain types of commissioned works, such as a contribution to a collective work or a specially ordered work for use in an audiovisual production, the parties can agree in writing that the work is a work for hire. Without such an agreement, the individual creator retains ownership unless the copyright is assigned.Legal implications. The work-for-hire doctrine has significant legal implications, especially in creative industries like film, advertising, and software development. Employers and companies that commission works must ensure that appropriate agreements are in place to clarify ownership. Failing to designate a work as a work for hire could result in the individual creator retaining ownership of the copyright, potentially complicating the commercialization or distribution of the work.Non-compete agreements. Non-compete agreements are contracts that restrict an individual’s ability to work for a competitor or start a competing business for a specified period of time after leaving their current employment. These agreements are commonly used to protect trade secrets, confidential information and other IP assets from being exploited by competitors.Enforceability of non-compete agreements. The enforceability of non-compete agreements has historically varied by state, but recent federal developments have introduced uncertainty into the future of these agreements across the U.S. Some states, such as California, have long prohibited non-compete agreements, except in limited circumstances, while others enforce them if they are reasonable in scope, duration, and geographic reach. Courts typically use a balancing test to determine the enforceability of a non-compete, considering factors such as:Legitimate business interests. Non-compete agreements are typically enforceable only to the extent necessary to protect legitimate business interests, such as trade secrets, proprietary information, or customer relationships.Reasonableness. The agreement must be reasonable in terms of time, geographic scope, and the types of activities restricted. For example, a non-compete that bars an employee from working in a specific industry for an overly long period or across an overly broad area is likely to be found unenforceable.Public policy. Courts also consider whether enforcing a non-compete would contravene public policy, particularly if it excessively restricts an individual’s ability to earn a livelihood.Recent developments and the federal ban on non-competes. In early 2023, the Federal Trade Commission (FTC) proposed a rule that would ban the use of non-compete agreements across the country, arguing that such agreements stifle competition and limit workers’ economic opportunities. The proposed ban was met with considerable support from worker advocacy groups, as well as strong opposition from businesses and industry groups concerned about the protection of confidential information and trade secrets.However, a federal court overturned the ban in 2024, stating that the FTC exceeded its authority in attempting to regulate non-compete agreements through administrative rulemaking. This decision has left the future of federal regulation in limbo, with the case likely to progress through appeals, and potentially reaching the U.S. Supreme Court. As the legal battles continue, the outcome remains uncertain, and businesses should monitor this issue closely.The uncertain future of federal non-compete bans. While the federal ban has been overturned for now, the debate over non-compete agreements is far from settled. The FTC has signaled its intention to challenge the court’s ruling, and lawmakers in Congress may attempt to pass federal legislation that limits or regulates the use of non-competes. The outcome of these efforts could lead to a major shift in how non-competes are treated nationwide, particularly if the Supreme Court weighs in or Congress passes a new law.Until the dust settles, non-compete agreements remain governed by a patchwork of state laws. Employers and employees alike should stay informed about both state-specific laws and potential federal developments, as the legal landscape surrounding non-competes may soon undergo significant changes.Non-competes in IP-related industries. In industries that rely heavily on intellectual property, such as technology, biotechnology and pharmaceuticals, non-compete agreements are commonly used to prevent the loss of competitive advantage through the transfer of confidential knowledge or IP to a competitor. However, companies should be cautious in drafting these agreements, ensuring they comply with applicable state laws and avoid being overly restrictive.