Chapter

11

Business Concepts

i-NET+ EXAM OBJECTIVES COVERED IN THIS
CHAPTER:
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Explain the issues involved in copyrighting, trademarking, and
licensing. Content could include the following:
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How to license copyright materials
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Scope of your copyright
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How to copyright your material anywhere
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Consequences of not being aware of copyright issues, not
following copyright restrictions


Identify the issues related to working in a global environment.
Content could include the following:



Extranet


Internet
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

Define e-commerce terms and concepts. Content could include the following:
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EDI
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Business to business
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Business to consumer
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Internet commerce
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Merchant systems
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Online cataloging
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Relationship management

Practically speaking, intellectual property is any creative product—partic-
ularly one that has monetary value. Examples of intellectual property
include the following:
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The words to “Louie, Louie”
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The text of

Hamlet
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The cosmetic design of the iMac
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The source code for the OS/2 operating system
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The formula for making Coca-Cola
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visual art, or other creative products. Facts and short phrases cannot be
copyrighted (though certain short phrases may be protected under trade-
mark law). Copyright, in the United States, attempts to guarantee the creator
several benefits:
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The right to reproduce the work and distribute the copies
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The right to revise and improve the work


The right to perform or display the work publicly


The right to have some assurance that the work won’t be defaced or
used in a way the author did not intend
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The right to receive credit for others’ references to the work
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A copyright depends on the ability of a person or entity that is claiming pro-
tection to prove original creation of the work in question and to prove that
creation took place on a certain date. U.S. law actually allows two creators
to have copyright on identical creative works, provided they arrived at their

Note that it is possible to sell public domain works. This is what the publishers

of William Shakespeare’s plays do, for example.

Getting a Copyright

On one level, it’s very easy to get a copyright. If you create a work, and can
prove the date on which it was created, you have a legal copyright. This is
known as a common law copyright. Common law copyright protects you
from the moment that you create a work. Of course, proving original cre-
ation and its date can be tricky.
If you put a copyright statement on a document, you alert the world that
you claim ownership of the intellectual property contained in that document.
A suitable copyright statement looks like this:
Copyright © January 1, 2000, Billy Pilgrim.
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That copyright symbol is a tricky thing. The c-in-a-circle isn’t part of all
font packages, and it’s not clear that (c) is the legal equivalent of © just
because the former is easier to make with a computer. However, the spelled-
out word

copyright

. You need particular
forms for particular kinds of works. Here’s a list:

Form TX

Books, manuscripts, software, and games

Form PA

Music (in written form), plus films, video recordings, scripts,
and plays

Form SR

Music (recorded)

Form VA

Drawings, photos, and cartoons
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Under a treaty called the Berne Convention, copyrights registered in any
signatory country are valid in all others. All major countries of the world are
signatories.

FIGURE 11.1

Parody and satire
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Reproductions for personal, not-for-profit use
These aren’t cast in stone—the nature of fair use is constantly undergoing
revision as those accused of copyright violations claim (and sometimes prove
to a court) that their use was fair.
Though no precise statement of what is not fair use exists, the determining
factors seem to be the size of the excerpt and the profit motive of the party
using the copyrighted material. Courts tend to favor fair-use claims pre-
sented by nonprofit organizations over those put forward by organizations
that have made money from their use of copyrighted material. If you’re not
making money (or causing the rightful copyright holder to lose money) as a
result of your use of brief snippets, you’re probably okay.

Licensing Copyrighted Products

If you want to use a copyrighted work in your own products—and remem-
ber, it does not matter whether the copyright is registered with a govern-
ment—you must ask permission. The copyright holder is free to do three
things:


Refuse you permission to use the material

Allow you to use the material free of charge, provided you credit the
copyright holder

Require you to pay a fee for the use of the copyrighted material
The last of the three options is called licensing, and it’s a big part of the

of copyright holders who feel their rights have been infringed upon. Usually,
those using copyrighted material for purposes perceived to be unfair by the
copyright holders will receive stern letters from the copyright holder or his
lawyer, asking that the use stop. If the perceived problem continues, the
copyright holder can file suit and fight the matter in court. If an infringement
is determined to have occurred, the entity using the material without permis-
sion may be judged responsible for damages and made to pay money to the
copyright holder.
Trademarks
A trademark is much like a copyright except that trademarks apply to words,
phrases, and images used to describe products and services (technically, a
word, phrase, or logo that describes a service is called a servicemark, but the
legal concepts are pretty much the same). The following are examples of
trademark-protectable intellectual property:

A company’s name (e.g., Netscape Communications Corporation)
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A product’s name (e.g., Diet Coke)
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A logo (e.g., the AT&T globe image)
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A graphic device (e.g., the Izod alligator)
Oppenheimer Wolff & Donnelly LLP, a law practice, has put together a neat
FAQ on the topic. It’s on the Web at www.owdlaw.com/intprop/trademark/
faq/faq.html.
Registering a Trademark

the incidental appearance of trademarks in creative media. The producers of
a movie that features a scene in Trafalgar Square—where a giant Virgin
Records sign appears—probably would not infringe upon Virgin’s trade-
mark protection by showing the sign in the film as an incidental part of the
scenery.
Infringement Consequences
Trademark protection is a matter of civil law, and so enforcement of trade-
mark rights is similar to that of copyrights. Refer to the copyright section for
information on legal enforcement of intellectual property.
Patents
Patent law exists to protect physical devices and processes. You might patent
a cleaner-running engine for automobiles, a faster kind of memory chip, a
way of making harder steel, or a chemical formula for a more flexible plastic.
Essentially, patent law is the same as the law governing other kinds of intel-
lectual property. The difference is in the nature of the creative product. In
applying for a patent, you agree to make the details of your product or pro-
cess available to the public in exchange for a monopoly in profiting from
your invention. The monopoly is limited by time—design patents (on the
appearance of a product) last 14 years in the United States, while the time
limit on utility patents (on products and processes) lasts 20 years.
David Kiewit, a patent lawyer, has posted a good patent FAQ on the Web at
patent-faq.com/index.htm.
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Securing a Patent
Unlike other kinds of intellectual property, there are no implicit patents. You
can’t sue someone for patent infringement unless you have formally registered
your claim with your government’s patent office. Even if you and another

production companies (this business model is common in the biotechnology
industries). Often, a patent license may involve a compensation system that’s
based on the number of products sold. At the end of each accounting period,
the licensee pays the patent holder some royalty for each instance of the pro-
tected item it sold during the period.
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Open Source and Public Licensing
Most of the software industry is based on companies and individuals—soft-
ware publishers—writing software, compiling it, and selling the compiled
binary code to consumers. The publishers invest in the people and other
resources needed to create their products’ source code; they then keep that
source code secret. The idea is that a publisher deserves to profit from some-
thing in which it has invested money to produce.
But an alternative model has long been a part of the hobbyist and aca-
demic communities. These groups espouse the idea of writing software and
making the source code public, available for anyone to examine, modify, and
redistribute. Such freely distributed programs are called open source soft-
ware. The source code of certain Unix variants has always been available to
the public, and lots of Unix utilities are open source, too. But the idea hasn’t
started to translate into the world of Intel-standard processors until recently.
The Open Source Movement
The open source movement—an informal group of software publishers,
book publishers, academic institutions, and individuals—holds the belief
that software for which source code is freely available inspires innovation,
whereas closed source software stifles it. Opponents of the traditional micro-
computer business model and of Microsoft Corporation in particular, mem-
bers of the open source movement champions free software like the Linux