The Intangible Advantage: Understanding Intellectual Property in the New Economy

183 Pages·2016·0.8 MB·English

The Intangible Advantage: Understanding
Intellectual Property in the New Economy
By:
The Michelson 20MM Foundation

The Intangible Advantage: Understanding
Intellectual Property in the New Economy
By:
The Michelson 20MM Foundation
Online:
< http://cnx.org/content/col12008/1.1/ >
OpenStax-CNX
This selection and arrangement of content as a collection is copyrighted by The Michelson 20MM Foundation. It is
licensed under the Creative Commons Attribution License 4.0 (http://creativecommons.org/licenses/by/4.0/).
Collection structure revised: May 25, 2016
PDF generated: May 31, 2016
For copyright and attribution information for the modules contained in this collection, see p. 175.
Table of Contents
1 Preface: The Intangible Advantage .......................................... ...................1
2 Chapter 1: Patent Basics .........................................................................5
3 Chapter 2: Patent Enforcement ................................................................43
4 Chapter 3: Copyright Basics ....................................................................71
5 Chapter 4: Trademark Basics ..................................................................105
6 Chapter 5: Trade Secret Basics ................................................................129
7 References .......................................................................................149
8 Glossary ..........................................................................................169
Index ...............................................................................................174
Attributions ........................................................................................175
iv
AvailableforfreeatConnexions<http://cnx.org/content/col12008/1.1>
Chapter 1
Preface: The Intangible Advantage1
I did not start out to be an inventor.
I wanted to be a doctor. That’s all I ever wanted to be, ever since the day I sat at my grandmother’s
kitchentable(cid:22)Imusthavebeensevenyearsold(cid:22)andsmelledher(cid:29)eshburningonthestove. Yousee,my
grandmothersu(cid:27)eredfromsyringomyelia,acripplingspinaldiseasethatresultsinterriblebackpainandthe
loss of sensation to pain and temperature in the extremities, especially the hands. When I saw the (cid:29)ames
licking up through her (cid:28)ngers that day, I screamed, and she quickly doused her hand in the sink.
(cid:16)Don’t worry,(cid:17) she told me. (cid:16)One day you’ll become a doctor and you’ll (cid:28)x me.(cid:17)
Some 20 years later, I had graduated medical school and completed a residency in orthopedic surgery,
andwasdoingafellowshipinspinalsurgeryatSt. Luke’sMedicalCenterinHoustonwhenIstumbledupon
a problem in an otherwise routine case. The case was a discectomy (cid:22) the removal of a ruptured disk that
is pressing on a nerve root. I noticed that because the disc had ruptured slowly over time, it had created a
bone spur, which was like a little rhinoceros horn of bone, as hard as ivory. So I asked myself, How is taking
out that disc going to help the patient if the bone spur is going to cause him pain for the rest of his life?
I wanted to take that bone spur out, but I knew of no way to do that because it was sticking straight up
about (cid:28)ve inches down inside a narrow little hole in the patient’s back. So I asked a very famous surgeon in
the hospital, (cid:16)How do you get that bone spur out?(cid:17)
(cid:16)Do not put a high speed burr in there and attempt to grind it down,(cid:17) he said. He had tried that once,
and ended up damaging the patient’s spinal cord and paralyzing her for life. That sounded to me like a
pretty strong argument against trying that approach again.
Then I asked the head of my fellowship program, (cid:16)How do I get that bone spur out?(cid:17) He explained that
heoncetriedusingagrabberinstrumentcalledaronguertotrytobreako(cid:27)thebonespur. Butthepressure
exerted on the instrument caused it to explode, sending fragments all throughout the dural sac. Luckily, he
was able to retrieve the pieces and repair the damage. But once again, here was an approach that didn’t
exactly recommend itself.
No matter which spine expert I asked, the response was always the same. They all told me what not to
do. Leave the bone spur alone, they said (cid:22) just sew up the patient and send him home, even if it means
dooming him to a lifetime of pain. Be content to follow the age-old motto of the physician, (cid:16)First, do no
harm.(cid:17)
Be content? George Bernard Shaw once said that inventors are a disgruntled lot. And I must have been
pretty disgruntled with the lack of any solution for that bone spur, because I decided to invent a solution
myself.
Instead of trying to grind down the spur (with potentially disastrous results) or break it o(cid:27) (again, with
potentially disastrous results), I came up with a counterintuitive approach. You see, I realized that while a
bone spur itself is the hardest bone known to man, it sits atop the vertebrae, the inside of which is much
softer and more mesh-like. What if I tried tapping the spur into the softer vertebrae?
1Thiscontentisavailableonlineat<http://cnx.org/content/m61655/1.2/>.
AvailableforfreeatConnexions<http://cnx.org/content/col12008/1.1>
1
2 CHAPTER 1. PREFACE: THE INTANGIBLE ADVANTAGE
I found a tool normally used for an entirely di(cid:27)erent purpose and thought it might su(cid:30)ce for the job.
And the next time I had a discectomy case with a bone spur, I tried out my new tool.
Itappedthebonespurlightlywithit, butnothinghappened. Itappeditagain, harder, butstillnothing
happened. Then I tapped it really hard, and that’s when I heard a (cid:16)pop(cid:17) and felt the instrument suddenly
sink down. Now, I knew I couldn’t have damaged any nerves or structures because I had retractors holding
thenerveandtheduralsacoutoftheway. ButwhenIlookedinside,Icouldnotseethebonespuranywhere.
It was gone. And I thought, (cid:16)Uh-oh.(cid:17)
So I brought in an x-ray machine and looked for the bone spur. It turned out the spur had corked the
very hole that I had created when I broke it o(cid:27) and pushed it into the vertebrae (cid:22) like a cork in a bottle.
There wasn’t a drop of blood anywhere, and no damage to any tissue. In other words, my procedure was
self-sealing! To this day, it remains the best solution for this problem.
Overthenextfewmonths,Idesignedasetofinstrumentsbettersuitedtoremovingbonespursnomatter
where they were located in the spinal canal. I gave the drawings to a machinist, and he created the tools
according to my design. Soon I was using them routinely on bone spur cases, and getting such good results
that other surgeons started sending me their bone spur cases.
But eventually, these surgeons began asking me to provide them with a set of tools of their own. I said
sure, and for each request, I would ask my machinist to fabricateanother set of tools. Finally, the machinist
told me that it would be cheaper just to make a hundred sets at once, since the major cost of fabricating
the tools was in setting up the jigs on the machine.
I thought that made perfect sense. After all, the demand for the tools from other surgeons was growing.
Inaddition, IwasdisgruntledenoughwiththestandardofcareinotherareasofspinaltreatmentthatIhad
already invented several other new spinal surgery tools. So I started a little company to sell my tools and
devices.
I quickly realized, of course, that I needed to patent my inventions to protect all the time, money, and
e(cid:27)ort that I had invested to develop them. After all, if you don’t patent your inventions, especially in a
competitive industry like medical devices, others will simply copy those inventions with impunity and sell
them at a lower cost because they didn’t have to invest anything to develop them in the (cid:28)rst place. That’s
a great wayto drive theinnovatorsout of any industryand haltanyfurther technical advances in that (cid:28)eld.
Over the next 15 years or so, I continued to invent various new spinal surgery tools and techniques,
eventually obtaining more than 950 patents worldwide for innovations that fundamentally changed the
practice of spinal surgery. These innovations are today employed in the vast majority of spinal surgeries
worldwide.
In fact, they became so widely adopted and so central to modern spinal treatment that in 2005 the
giant medical device company Medtronic purchased the majority of my patent portfolio of spinal surgery
inventions for $1.35 billion. Having retired from medical practice, I now devote my energy and philanthropy
to inventing new solutions to problems beyond orthopedics.
TheMichelsonMedicalResearchFoundation,launchedwitha$100milliongrant,isdedicatedtofunding
cutting-edge medical research that would be considered to avant-garde to receive funding from the National
InstitutesofHealthorotherconventionalfundingsources. Injustoneareaofmedicalresearch,wecommitted
tofundingtheprestigiousSabinVaccineInstitutewithaninitial$5million(cid:28)ve-yeargranttodevelope(cid:27)ective
vaccines against the parasitic worms that infect 1.4 billion of the world’s poorest people with devastating
e(cid:27)ect.
My Found Animals Foundation promotes pet adoption and o(cid:27)ers $50 million in research grants as well
as a $25 million prize to any scientists who discover a way to chemically spay and neuter animals via a
single, low-cost injection. Found Animals Foundation may be the largest privately-funded animal welfare
foundation in the world, with a annual budget of $15 million, 65 full-time employees, and hundreds of
dedicated volunteers.
My wife Alya and I also donated $50 million to the University of Southern California for a convergent
bioscience center to pursue medical breakthroughs in cancer and other diseases.
The Michelson 20MM Foundation works to make higher education more accessible, a(cid:27)ordable, and e(cid:27)ec-
tive, in part by making textbooks and new forms of interactive educational content available for free online
AvailableforfreeatConnexions<http://cnx.org/content/col12008/1.1>
3
to college students.
Whichbringsmetotheimportantbookyouarenowreading. TheIntangibleAdvantage: Understanding
Intellectual Property in the New Economy is the (cid:28)rst-ever text on intellectual property (IP) aimed at
ordinary citizens, especially college students. As such, it is an important innovation in and of itself (cid:22) one
that hopefully will solve a big problem in American education.
Until now, intellectual property has been taught only in law schools or the occasional business school
seminar. In today’s knowledge economy, however, this is no longer su(cid:30)cient. That’s because over the last
40 years, intellectual property has grown from an arcane, narrowly-specialized legal (cid:28)eld into a major force
in American social and economic life. It comprises an astonishing 45 percent of total U.S. GDP today, and
represents 80 percent of the market value of all publicly-traded companies in the U.S.
Put simply, intellectual property is now the chief engine of wealth creation and economic growth in the
world. Andassuch,ithasbecomeasubjectofvitalimportanceforallAmericans,notjustthoseinthelegal
profession.
Remember that scene in the 1967 movie (cid:16)The Graduate(cid:17) when Mr. McGuire (Walter Brooke) o(cid:27)ers
career advice to a young Benjamin Braddock (Dustin Ho(cid:27)man)?
(cid:16)Plastics!(cid:17) he says. (cid:16)There’s a great future in plastics. Will you think about it?(cid:17)
Half a century later, intellectual property has become the new watchword for almost any career of the
future. Look around and you’ll see IP’s imprint everywhere. The business pages are (cid:28)lled with headlines
of corporate (cid:16)patent wars.(cid:17) Art journals debate whether the artist Richard Prince’s appropriation of other
people’s work is infringement or fair use. Music critics discuss the implications of the $7 million copyright
infringement verdict against Robin Thicke and Pharrell Williams for allegedly borrowing certain musical
themes from the work of soul singer Marvin Gaye. Indeed, from Silicon Valley startups to Fortune 500
boardrooms, fromMITengineeringlabstoWallStreettradingdesks, andfromcollegebusinessseminarsto
debatesinCongressoverglobaltradepolicy, intellectualpropertyissuesnowlieattheheartofalmostevery
arena of modern life today.
And as a result, any young person today who does not understand at least the basics of intellectual
property (cid:22) and its value and role in science, business, arts, and the professions (cid:22) will (cid:28)nd him or herself
at a distinct disadvantage in the world of tomorrow.
This book comes in several forms, suitable for di(cid:27)erent uses. The traditional ebook version of The
Intangible Advantage contains the full text (cid:22) including the hidden history of the U.S. patent system, the
world’s (cid:28)rst democratized patent system (cid:22) as well as links to the (cid:28)rst-ever series of popular animated
2
videos on the basics of intellectual property. These videos answer such common questions as (cid:16)Can I Patent
3 4
That?(cid:17) and (cid:16)What If Someone Infringes Your Trademark?
The enhanced ebook version of The Intangible Advantage contains the full text and links to the videos
plusillustrativephotographs andotherrichmedia. Italsocontainscomprehensivelearningassessment tools
such as targeted Q&As for each section of every chapter. We believe the enhanced version of the ebook will
be most useful to college students in particular.
Finally,TheIntangibleAdvantage alsocomesasanonlinecoursefordirectedlearners(cid:22)whethercollege
students in an intellectual property fundamentals course, users of the United States Patent and Trademark
O(cid:30)ce and the U.S. Copyright O(cid:30)ce, or young executive trainees working in corporate law and engineering
departments in (cid:28)rms both large and small.
Such a ground-breaking body of work would not have been possible without the extraordinary contribu-
tions of some of the leading lights in the intellectual property world over the past four years.
PrincipalauthorDavidKlinedidamasterfuljoboftranslatingthehiddenhistory,complexlegaldoctrines,
andpracticalworkingsoftheU.S.intellectualpropertysystemintopopularandengagingprose. Itprobably
helped that he is not a lawyer by background, but rather a former war correspondent-turned-business
journalist who wrote (cid:16)Rembrandts in the Attic,(cid:17) the seminal work on patent strategy in corporate America
published by Harvard Business Press.
2https://www.youtube.com/playlist?list=PLDE5rhcpiAt_GDTYORzG11FAVhrHzkEjE
3https://www.youtube.com/watch?v=Pt9muKwVNxo&list=PLDE5rhcpiAt_GDTYORzG11FAVhrHzkEjE&index=1
4https://www.youtube.com/watch?v=GQFXOGyXBMU&list=PLDE5rhcpiAt_GDTYORzG11FAVhrHzkEjE&index=9
AvailableforfreeatConnexions<http://cnx.org/content/col12008/1.1>
4 CHAPTER 1. PREFACE: THE INTANGIBLE ADVANTAGE
Contributing author Robert G. Krupka is one of the foremost patent litigators in the nation. Anyone
who wants to understand the complex (and controversial) American system of patent litigation can do no
better than read his chapter on (cid:16)Patent Enforcement.(cid:17)
ContributingauthorsRandallE.Kahnke’sandKerryL.Bundy’sexpertrenditionoftheroleandimpor-
tance of trade secret law in the American economy will be much appreciated by students as well as business
leaders in every industry. This is especially the case now that the (cid:28)rst federal trade secret act was (cid:28)nally
signed into law on May 11, 2016.
To be sure, a book that explains the complex workings of patent, copyright, trademark, and trade secret
law in popular, non-legalese prose (cid:22) especially one largely written by a non-lawyer (albeit a recognized
expert in the (cid:28)eld) (cid:22) needs careful vetting. And for our (cid:16)peer-reviews(cid:17) we relied on the advice and counsel
of a number of leading IP academics and practitioners, (cid:28)ve of whom stand out most strongly for their
contributions.
ChiefJudge(ret.) PaulR.MicheloftheU.S.CourtofAppealsfortheFederalCircuit,thenation’smain
court for patent appeals, made enormous contributions in reviewing the manuscript not only for its legal
theories but for its explanations of practical aspects of the patent system as well. His carefully-reasoned
insider’s explanation of how the patent system really works made all of us who worked on this project feel
privileged to sit at the feet of such a patient master.
Professor Richard Epstein is the Laurence A. Tisch Professor of Law at New York University, a senior
fellow at the Hoover Institution, and professor emeritus and senior lecturer at the University of Chicago.
Considered one of the most in(cid:29)uential legal thinkers of modern times, Professor Epstein’s detailed review of
the manuscript proved vital to this project.
Professor Paul M. Janicke teaches in the Intellectual Property and Information Law Program at the
UniversityofHoustonLawCenter. Hiscritiqueandguidanceearlyoninthedevelopmentofthemanuscript
was invaluable.
Inventor and entrepreneur Louis Foreman is the founder and CEO of Edison Nation, an invention com-
mercializationorganization,andcreatorandexecutiveproduceroftheEmmyAward-winningPBSTVshow,
Everyday Edisons. His insights into the commercialization challenges faced by independent inventors were
extremely helpful.
Finally, former U.S. Undersecretary of Commerce and Director of the U.S. Patent and Trademark O(cid:30)ce
David Kappos served as executive editor of the book. Especially for a subject like intellectual property that
is so sharply de(cid:28)ned by subtle nuances of law and practice, his unique expertise at the very center of the IP
system helped to sculpt the manuscript’s (cid:28)nal shape.
IwouldberemissifIdidnotmentionthetirelessleadershipofMichelson20MMexecutiveproducerPhil
Kim, who was both midwife and guiding hand of this project from its inception four years ago until its (cid:28)nal
realization in April of 2016. He reminds us all just how valuable clear vision and calm steadiness in the face
of trials really are in an e(cid:27)ort such as this.
Similar praise and gratitude must be o(cid:27)ered to Mayra Lombera and Marisa Moosekian, the Michelson
20MMproducerswhosomehowmanagedtomakeallthemyriadmovingparts(andpeople)inthisproject(cid:28)t
together successfully. Whatever personality or production challenges arose, they somehow (cid:22) I don’t really
know how (cid:22) made this whole thing work.
The Founding Fathers of America created the world’s (cid:28)rst democratized intellectual property system for
the common man. Now, the brightest minds in intellectual property have collaborated to democratize this
once-inscrutable subject and bring you the world’s (cid:28)rst intellectual property textbook, online course, and
videos series for readers and learners like you.
I hope you will (cid:28)nd it enlightening (cid:22) and useful.
Gary M. Michelson, M.D.
April, 2016
AvailableforfreeatConnexions<http://cnx.org/content/col12008/1.1>