Case Studies and Examples

The following case studies show how the concepts discussed in this chapter are used. These case studies are real-world examples of how IP laws are applied.

Trade Secrets

In 2008, the U.S. government charged a design engineer with stealing trade secrets from Intel about its newest microprocessor. The value of the trade secrets was estimated at $1 billion.

The engineer worked at Intel in Massachusetts. He resigned from his job at the end of May 2008 and told Intel that he would use his accrued vacation time for 2 weeks until his final day at work. His employment with Intel would officially end on June 11, 2008. The engineer did not tell Intel that he had a new job with an Intel competitor, which he started on June 2, 2008.

Intel heard rumors that the engineer had accepted employment with its competitor. The company began to review logs to see his network activities during his last 2 weeks with the company. It notified law enforcement once it discovered that the employee had accessed sensitive company documents.

The U.S. FBI investigated the incident. Their investigation showed that the engineer remotely accessed the Intel system several times between June 8 and June 11, 2008. He downloaded highly sensitive Intel documents that contained data relating to the design of the new chip. However, the FBI found no evidence that he had disclosed or used the information that he downloaded from Intel.

In April 2012, the engineer pleaded guilty to charges of wire fraud for illegally accessing the Intel system and downloading documents. He was sentenced to 3 years in prison. The case highlights that even large companies must implement access control measures to protect their secrets.

Service Provider Liability for Copyright Infringement

Napster was an online music file-sharing software program. For a brief period in time, it was the most popular peer-to-peer program in use. Napster freely distributed its software, which allowed computer users to share their music collections online with other computer users.

In 1999, several music companies filed a lawsuit against Napster for copyright infringement under the DMCA. They argued that Napster users were directly infringing on their copyrights and that Napster was responsible for copyright infringement on several secondary liability theories. They argued that Napster engaged in copyright infringement as well because it provided the services used by its customers to engage in copyright infringement. The case, A&M Records, Inc. v. Napster, was filed in the U.S. District Court for the Northern District of California.

Napster offered several defenses. It claimed that its activities fell within DMCA safe harbor provisions. These defenses were not successful after the district court determined that Napster failed to meet all the safe harbor requirements.

The district court held that at least some of Napster’s users were engaging in activities that infringed upon the copyrights of others and that Napster knew about this activity. It also found that Napster provided services that its users used to engage in copyright infringement, as well as the fact that Napster profited financially from its users’ activities. Napster lost the case in district court.

Napster appealed to the Ninth Circuit U.S. Court of Appeals, which upheld the district court’s decision.⁶⁹ The court ordered Napster to monitor the activities of its network and to block access to infringing material when notified by copyright owners.

Napster shut down its service in July 2001 and declared bankruptcy in 2002. In 2003, it sold all of its assets. The Napster case is one of the most famous cases about service provider liability for copyright infringement under the DMCA.

Digital Collections

In 2008, several U.S. college and university research libraries formed the HathiTrust. The HathiTrust digitizes and stores the printed collections of its partner libraries to preserve them. Several different organizations, such as Google and Microsoft, are partners in digitizing the collections. Since its creation, the HathiTrust has digitized over 17 million books and 6 billion pages.⁷⁰ You can see a list of participating institutions at http://www.hathitrust.org/community.

The HathiTrust also provides access to this digitized content when a copyright holder has allowed it. It also provides access to digital resources where allowed by law, as in providing materials to individuals with visual disabilities, as well as access to works in the public domain.

In September 2011, the Authors Guild sued the HathiTrust. The Authors Guild, which helps writers learn about copyright and how to protect it, alleged that the HathiTrust was violating the copyright of guild members by creating a digital archive of copyrighted materials. They argued that the HathiTrust and its partners copied and provided access to the materials without the owners’ consent. The HathiTrust argued that the digitization of the materials was allowed under several different copyright law exceptions. It argued that its activities were fair use and fell under the preservation provision. In October 2012, a federal district court agreed with the HathiTrust and stated that the HathiTrust’s activities did not violate copyright laws.

In November 2012, the Authors Guild appealed the case to the Second Circuit Court of Appeals, which heard oral arguments on October 30, 2013. In June 2014, the Second Circuit ruled in favor of HathiTrust.⁷¹ It held the doctrine of fair use allowed HathiTrust to create a full-text searchable database of copyrighted works. It also held that HathiTrust could provide those copyrighted works in formats accessible to those with disabilities