Dave Fagundes and Aaron Perzanowski have just posted a very interesting and thought-provoking paper draft on SSRN called "How Intellectual Property Ends."
The paper, which follows up on their prior work on copyright abandonment, closely examines how IP rights come to an end through doctrines like "expiration," "forfeiture," or "abandonment." The paper seeks to provide a “taxonomy” for thinking about how IP rights end. The authors argue that imprecise or inconsistent uses of terms like "abandonment" and "forfeiture” deprives these terms of meaning and “obscures the underlying logic” of the doctrines as originally developed at common law (5). They instead posit a single unified framework for consistently conceiving of termination that can work across the four IP regimes.
The authors' taxonomy
The authors develop a taxonomy for how IP ends that is heavily influenced by real property theory. Importantly, they do not insist that the categories they "identify are the only plausible" ones, but they think theirs is a more "coherent and parsimonious typology of IP’s terminal mechanisms" than has previously been offered. (5).
Their categories are:
(1) expiration under a fixed statutory term length, such as where a utility patent that expires 20 years after the filing date;
(2) abandonment, by which the authors specifically mean voluntary and intentional relinquishment of a legal right, such as where a copyright owner plainly articulates a desire to give up ownership of copyright in their work (12), or where a patent owner deliberately dedicates their patent to the public, or deliberately sells their invention to the public without getting a patent (13);
(3) forfeiture, where a party fails to meet a formal, technical, and non-substantive requirement for acquiring an IP right, such as failing pre-1976 to use the (c) symbol when publishing a work, or failing to pay maintenance fees on a patent or trademark law; and lastly
(4) invalidation, either "ex-post" or "ab-initio," which the authors conceive of as an all-encompassing category consisting of any time subject matter fails to meet a criterion for protection, either before or after protection is initially granted.
This last category is split into two subcategories:
First, the authors define "ex-post invalidation" as occurring when an IP right terminates over time due to failure to meet ongoing substantive obligations or due to a change in circumstances that makes substantive criteria fail. For example, in trademark law, an owner can lose a trademark over time due to ceasing use in commerce or letting the mark fall generic. (24). In trade secret law, an owner can lost a trade secret over time because it is disclosed to the public or because the owner fails to take "reasonable" secrecy precautions," or because the secret stops deriving "independent economic value" from secrecy. (25-26).
The authors' term “ex-post invalidation” could cause confusion for some readers, so it’s worth spelling out their meaning. "Ex-post invalidation," as they define the term, can only occur in trademark and trade secret law. In fact, the authors write, "copyrights and patents are largely immune” to “ex-.post invalidation." (24). Their idea here is that once someone acquires a patent or copyright successfully they don't have continuing requirements to do anything (aside from formalities like paying renewal fees, which the authors classify as relevant to "forfeiture" but not to "ex-post invalidation.") This has to be distinguished from patent law’s post-grant invalidation mechanisms, such as post-grant review and inter partes review, because those are mechanisms for determining the right was improvidently granted in the first instance. A patent invalidation under post-grant reveiw would instead qualify as "ab-initio invalidation" (as defined below), even though the termination is effectuated "ex post" as to the patent grant. This could be confusing, since some commentators often call post-grant review mechanisms in patent law "ex post invalidation." So the authors are urging a marked shift in terminology.
Second, the authors define "ab-initio invalidation" as occurring when the owner’s asserted IP subject matter does not satisfy the substantive elements at the time of the initial grant, such as where: a patent application is denied because the examiner finds the invention is not novel (or a patent is invalidated in post-grant review later on for the same reason); a copyrighted work fails to be original at the moment of creation; a trademark is deemed generic from the get-go, like "pretzel crisps" for pretzel crackers; or where an asserted trade secret has been generally known for some time already, and so the person claiming to own a trade secret fails in their claim (e.g. an employer sues an employee for taking a well-known recipe for chocolate chip cookies). (26, 23).
In distinguishing between ex post and ab-initio invalidation, I thought the authors could talk a bit more about the distinction that commentators have made in trademark genericness law between marks that are "born generic” and marks that are victims of "genericide.” As Barton Beebe puts it in his casebook:
Trademarks may be deemed generic either (1) because they are born generic or (2) because they lose their source distinctiveness through a process of “genericide.” (Beebe, 64).
The authors mention both sorts of genericness, but they don't (unless I missed it) explain that this distinction is already commonly drawn. Highlighting this distinction might strengthen their argument that Congress has inaccurately used the term "abandonment" to discuss "genericide” in Lanham Act Sec. 45, as discussed below
Prior uses of the term "abandonment"
One of the major contributions of the paper is to highlight the difference between truly voluntary abandonment of an IP right, on the one hand, and the failure of an IP right to meet substantive criteria, on the other. The authors argue the latter is not abandonment but in fact "ex post invalidation."
For instance, the authors argue that what we often call "abandonment" in trademark law is actually “ex post invalidation.” When a trademark owner stops using a mark in commerce without intent to resume use, or when a trademark owner lets their mark fall "generic" by failing to police non-trademark use by others, this is not abandonment, they argue, because does not represent a voluntary intention to relinquish the legal right.
The authors recognize that they have an uphill battle here because Congress itself call this "abandonment" in the Lanham Act, Section 45. See 15 USC § 1127 ("A mark shall be deemed to be “abandoned” if ... its use has been discontinued with intent not to resume such use...[or] [w]hen any course of conduct of the owner, including acts of omission as well as commission, causes the mark to become the generic name for the goods or services on or in connection with which it is used or otherwise to lose its significance as a mark.").
If we adopt the authors’ taxonomy, then the label "abandonment" in Lanham Act Section 45 is inaccurate. Instead, cessation of use and "genericide" are better conceptualized as "ex post invalidation." The mark owner has not intentionally abandoned their legal rights; instead, they simply no longer meet the substantive requirements to own a trademark.
The authors make similar arguments in trade secret law. For example, in our article, Abandoning Trade Secrets, Mark Lemley and I argue that when a trade secret is disclosed to the public or when a trade secret holder fails to continue to derive "independent economic value" from maintaining secrecy, this is analogous to trademark "abandonment." Citing to both the trade secret statutes and to case law, we argue that, just as under the trademark statute a cessation of use without intent to resume ends a trademark right, so too does ceasing to derive independent economic value end a trade secret right. Thus, when a trade secret is fully disclosed, this is effectively "abandonment" due to loss of secrecy; likewise, when a trade secret holder's secrets no longer impart any economic advantage due to being kept secret, this is effectively "abandonment" too. Judge Posner has made a similar point with respect to failing to take "reasonable" secrecy precautions, asserting that when a trade secret holder does not work hard enough to protect their trade secret, this is akin to "abandoning" property, leaving it out for anyone to find and use.
But the authors reject this "abandonment" classification because, under their narrow definition of "abandonment," only a voluntary intention to relinquish a legal right counts. They argue that our approach, similar to Congress' under the Lanham Act, "does not acknowledge the key element that defines abandonment of tangible and intangible property at common law: the owner’s intention to relinquish rights." (18-19).
The authors' notion of abandonment as requiring an explicit intention to relinquish a legal right is counterintuitive to me. The statutes and the case law clearly consider a wide variety of actions or omissions—such as failing to use a trademark in commerce; failing retain a trademark's distinctiveness; failing to maintain the secrecy of a trade secret; or failing to derive economic value from a trade secret — as "constructive" intent to abandon a legal right. In other words, regardless of what the actors say, courts can look at the situation and say, "based on your conduct, if not your words, you have abandoned your rights.”
The notion of constructive or implied intent is extremely common in the law. Just to give one example, in contract law, it is well-established that a "repudiation" of the contract requires an explicit statement of one's intention to repudiate (breach) a contract. Yet, at the same time, the law accepts that a "voluntary affirmative act which renders the obligor unable or apparently unable to perform" is also a repudiation. Thus, for example, selling property to another party when you contracted to sell the property to the plaintiff impliedly demonstrates an intent to repudiate the contract; and so does failing to give adequate assurances that you will perform, when properly asked to do so. See Restatement (Second) of Contracts §§ 250, 251, 253.
The law allows courts to find constructive intent in all sorts of contexts. So I do not see why intent to abandon a trademark or a trade secret cannot be expressed through acts or omissions that amount to constructive intent to abandon one's legal rights.
Prior uses of "forfeiture"
The authors also wish to refine uses of the term "forfeiture." They argue that "forfeiture," like abandonment, is often "deployed as a catchall for any loss of rights." (4). They argue for a much narrower definition of forfeiture as occurring only “when a rights holder fails to comply with some formal requirement, like paying a fee, registering or depositing a work, or the like.” (8).
Other scholars have conceptualized forfeiture much more broadly than this. For example, in her recent article, "Forfeiting IP," Deepa Varadarjan argues that failing to meet trade secret law's "reasonable secrecy precautions" requirement is best conceived of as a "forfeiture" of legal protection. Citing to trade secret case law saying as much, Varadarajan argues that "a failure to engage in ongoing reasonable secrecy efforts leads to forfeiture of the trade secret right. For example, in Fail-Safe LLC v. A.O. Smith Corp, the Seventh Circuit found that a firm that shared information about its secret pool motor device design without imposing any non-disclosure obligations, confidential markings, or other restrictions had “forfeit[ed] any protection.”" (Varadarajan, 20).
The authors argue, however, that this is not forfeiture. In fact, they write, "trade secret rights do not turn on any formal requirements. As a result, there are no formal means by which [trade secrets] can be forfeited." (22). Instead, they suggest failing to take reasonable secrecy precautions would be an "ab initio" or an "ex-post invalidation," depending on when the failing occurs, because failing to maintain secrecy, like failing to derive economic value, "are all substantive, not formal, defects." (22).
The authors' distinction between failing "formalities" and "substantive" requirements is not fully fleshed out yet (which makes sense becaue this is a draft paper). More broadly, I don't fully understand why "forfeiture" cannot include the longer list of actions that Varadarajan discusses in her article. I thought she gave a clear framework for conceptualizing forfeiture that worked across the IP regimes. Varadarajan argues that, unlike abandonment, "forfeiture need not be intentional. It can even be unintentional. An owner need only perform or fail to perform an act, the consequence of which (and perhaps an unwelcome one) is to lose ownership rights." (Varadarajan, 4). Varadarajan then identifies three forms of "IP forfeiture mechanisms": (1) "a maintenance (renewal) fee requirement," as in patent law, for example; (2) a monitoring (guarding) requirement," which would include failing to take reasonable secrecy precautions in trade secret law or failing to police genericness in trademark law; or (3) "a use requirement," including the requirement to use the mark in commerce in trademark law and the requirement to continue to derive economic value in trade secret law. (Varadarajan, 4-5).
While Varadarajan's framework obviously differs from the one we used in Abandoning Trade Secrets, because it distinguishes fully-voluntary abandonment from non-voluntary forfeitures, I think it works well. So I'd be curious to see what the authors' objection is. Meanwhile, other scholars, like Sean Seymore, view "forfieture" in a completely different way. In sum, I thought the authors could address these other conceptions of forfeiture and explain why in their view they do not work.
In conclusion, this was an amazing article. I felt compelled to write a blog post on it, showing my excitement for the ideas expressed. I cannot wait to hear more from the authors and read the final version.
