Intellectual Property Prospectives:
Copyrights and Pushing the Legal Envelope—Intellectual Capital
by Brian Elfman, Contributing Editor

Currently running with this column, we have Grayson Barber's guest editorial essay Rethinking Intellectual Property Rights: An Invitation to Debate advocating a review of how intellectual property (IP) rights are granted. Who are the losers and who wins?

Well for one, IP lawyers are certainly winners. Right now IP lawyers are in big demand. Why this is can be answered in two magic words: intellectual capital. Today's high-tech management must understand the concepts of intangible assets. In order to compete effectively, a company today needs to ascertain and exploit its knowledge base. One result is a pressing drive for a company to maximize its patent portfolio. Another result is an equaling pressing drive for a company to carefully identify nonpatent IP assets–trade secrets, copyrights, and other federal and state IP rights. These results mean lots of IP work such as Patent prosecution, IP transactions, and IP litigation. In sum, a company's IP lawyer, whether intended or not, is the cornerstone of a high-tech company's management team and its IP strategy.

Sometimes when a company pushes the envelope of IP law, it winds up betting the farm on its IP lawyer. Recently in what's become a major IP case, copyright infringement defendant Napster retained David Boies as its lead attorney. Mr. Boies comes into the Napster case just off his sweeping antitrust victory over Microsoft. Napster now is not the same company sued by plaintiff Recording Industry Association of America last December. They have a superstar quality VC investor, Hummer Winblad, and a former Disney counsel as their new CEO. They also have a first round $15 million in their vault. The fight is over whether downloading music by the Napster process infringes copyrights held by the Plaintiffs. Napster is betting the farm on Boies.

We as design engineers are likely to be more conversant with patents and less with copyrights. That's because the nature of engineering engenders patents as the big prize. Patents comprise well-defined specifications and claims to stake out the inventor's property. Copyrights are a much different sort of property. However, both patent and copyright legislation were powers granted to Congress by the Constitution, and actually descend out of precisely the same clause: the Patent and Copyright Clause (Article I, Section 8, cl.8, U.S. Constitution). In music, which is at the heart of Napster's business, copyrights are the sole form of IP protection for writers and composers.

Most of us understand that patents are granted by the United States Patent and Trademark Office, where copyrights are granted by the Copyright Office, which is part of the Library of Congress. Its administration is directed by the Register of Copyrights, who register copyright claims and accept deposits of copies. Copyright law is codified under Title 17 of the United States Code. (Patent law is codified under Title 35.) These codes are easily assessable through any number of Web sites. I use generally the Cornell collection of U.S. Code, http://www4.law.cornell.edu/uscode/.

In the main, courts have construed copyright law strongly in favor of the artist. Just this week there was a copyright case appealed where the court found that certain kinds of architectural drawings do not fall within copyright law. I haven't read the case, so it would not be fair to apply anything in it, if anything, to the Napster case. The next act for this case is a July 26, 2000, date by which a U.S. District Court in San Francisco will decide on whether to grant the Plaintiffs an injunction against Napster. Here I think the arguments and odds favor Napster. This means a trial in a few months. Nevertheless, Napster's swimming uphill. What do you think? Join us at Discussion Group. We have a Napster discussion going on right now.

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