Intellectual Property Rights (IPR) | Copyright Infringement | Patent Infringement | Napster Research In Motion (RIM)’s Blackberry Case | Business Law
Case Question
In 1999-2000, online file sharing service Napster was sued for copyright infringement by various parties (including recording artists, record labels, and a recording industry trade association). Napster eventually was forced to shut down by court order and paid over $40 million for copyright infringement.
In 2006, Research in Motion (RIM) settled a patent infringement lawsuit filed by patent-holding firm NTP, Inc. in which NTP alleged that RIM’s Blackberry product used wireless email technology described in patents to which NTP owned the rights. The amount of the settlement was $612 million.
● Compare these two cases of intellectual property infringement, including comments on the parties being sued, the parties filing suit, the financial damages in each case (distinguish between actual and potential damages if needed), and the ability of the alleged infringing party to make financial restitution.
● What contractual, corporate, bankruptcy or other legal issues are implicated in the above?
Solution of the Given Case Question
Intellectual Property Rights (IPR)
Intellectual Property Rights (IPR) are defined as the legal rights that helps in protecting your intellect which include various creations, inventions ,literary or artistic works, name, design and symbols that are used in various sources. Only the person or the entity who is owner of idea or creation has the right to copy or duplicate their creation (Lanjouw & Schankerman). The other people do not hold right to copy or duplicate their work without the permission of the original creator and if they do so they are subject to Intellectual Property Infringement. The most common types of Intellectual Property Rights (IPR) include copyrights, patents, trademarks and trade secrets.
Intellectual Property Infringement is defined as the condition or situation where violation or breach of IPR takes place which means that the Intellectual Property (Copyright, Patent, etc.) that is protected under IP laws are misused, exploited or copied by the other people without taking the permission of the original creator of the work. The example of Intellectual Property Infringement can be Piracy and Counterfeiting. Piracy involves the practice of unauthorized copying of works as well as reproduction and distribution of those materials (K.Kwan & C.Lai, 2003). On the other hand Counterfeiting involves the practice of imitation of genuine goods to lower (inferior) quality for the purpose of taking advantage by using the original brand image. For example, we can see that there many companies who are imitating Nike shoes for the sake of their benefits.
Both the Copyright infringement and patent infringement are the part of Intellectual property rights infringement. Copyright infringement occurs when one person copying other’s work does not take permission from them to use their work as their work has been protected under IP laws. Patent Infringement occurs when another person uses the patented item without taking any permission from the patent holder.
Around the world, there are many cases for the intellectual property infringement which arises when one party throws allegations on other party for using their work without their permission. During this scenario there are lots of financial damages takes place but it’s very hard to identify those damages exactly in monetary value.
Case I: Napster sued for Copyright Infringement [Copyright Infringement]
This case is related to the issue of copyright infringement by Napster which was founded by Shawn Fanning in1999 .This Company basically dealt with the digital music services creating platform over the internet from where people were able to download their favorite songs with MP3 format for free. Though the people are able to download their favorite song easily with a single click as the use of internet was also growing which resulted several damages for the original creators. The internet at that time was growing with the rapid speed and many people were not even familiar regarding the IP laws.
The founder of Napster was a computer hacker who had worked out a way to share music for free. It was a cataloguing system where MP3 files were listed which is then accessible to anyone using the software without any cost (Ku, 2002). The founder saw a great idea the social media revolutionized the world. Different parties /companies has filed suit against Napster for involving in the practice of Copyright Infringement because it had resulted various loss and damages to the original music creators. Napster has made it easy by sharing the mp3 files among the users the around the world. And if people get access to the materials without any fee then who will pay to buy from the original artist which decreased the business of them almost exponentially.
| Parties who is sued for Copyright Infringement | Parties who filed suit for Copyright Infringement |
| · Napster | · Various Recording Artists, · Record labels, and · Recording Industry Association of America |
Financial Damages
Those parties who filed suit against Napster dealt with several financial damages. For example, once the recording track from the movie Mission Impossible 2 was leaked and reached the platform of Napster and then spread insanely before its official release. For this case, Metallica sued Napster for copyright infringement because they used their music without their consent and shared the music from their system making it easily available for everyone.
With this copyright infringement done by the Napster, Metallica suffered a huge financial loss because it decreased the sales as well as the company also did not received any kind of copyright royalties which was supposed to be given to the production team of Mission Impossible. The production team of Mission Impossible did not receive any kind of royalties for sharing their music which led to huge financial loss for the team.
The Federal Court based in San Francisco in the year 2002 charged Napster for the Copyright Infringement with an amount of $40 million because for developing the platform from where anyone can freely download music of various artists without even providing them any sort of royalties or other benefits (Landes & Lichtman, 2003). This violates the IP laws proposed by the state that protects the original creators. There is no accurate figure regarding how much potential loss has been occurred to the party who sued the copyright allegations to Napster. Therefore, the Federal Court charged the fees as per their knowledge and analysis.
Case II: Research In Motion (RIM)’s Blackberry Case [Patent Infringement]
This case is related to the Patent Infringement which was done by one of the Canadian company named Research in Motion (RIM) which was founded back then 1984 AD. In around 1996, the company developed wireless email technology and two-way pager in their Blackberry phones and because of that extra feature added in the product, the product has become more useful in the market. Another company involved in this case is NTP Inc. a Virginia based Patent holding Company who sued the case against RIM for patent infringement (Sookman, 2005).
The company holds a portfolio of 50 sets of patents which they use to sell patent rights to various companies. In the year 2000 the company went bankrupt but still operated their business where they sued various companies who violated their patent inventions.
| Parties who is sued for Patent Infringement | Parties who filed suit for Patent Infringement |
| · Research in Motion (RIM) | · NTP Inc. |
NTP Inc. filed against RIM regarding patent infringement upon almost eight of their patent works in their Blackberry products Blackberry stating that Blackberry infringed upon eight of NTP’s patented works. Around the countries like Asia, Europe and North America the company (RIM) has been flourishing with an increase in revenue by 33% but at the same time Blackberry was facing big issue from the NTP.
The increase in revenue of RIM gained more attention regarding the patent fees they look forward to charge. Though NTP was putting too much allegations on RIM regarding copyright infringement, RIM requested the court to re-evaluate the issue which went to US jury trial in the year 2002.
In the courtroom, the company claimed that they created the invention by presented the old device but they were unable to prove their demonstration because the old device that they presented in the court used the latest technology. The judge of the courts finds discrepancy from the RIM as well does not regard the evidence to be valid enough to take decision in support of RIM. When the RIM seems to be losing the case, then it argued that the founder of NTP claimed the invention of the patented item was in the year 1990 but the technical manual’s publication date was between the year1986-1989.The arguments that the RIM presented were kept aside by Supreme Court.
Financial Damages
The case between RIM and NTP Inc. was settled where RIM agreed to pay an amount of $612.5 million to NTP Inc. for the disrupt regarding Blackberry wireless email service. After the case has been settled the shares of RIM started rising (Paige, 2006). As soon as the news of settlement spread the market the price of share went from $13.93 to $85.85.
Bankruptcy and legal Issues in Case I and Case II
In both of the cases they have legal issues which violated the law of Intellectual Property Rights related to Copyright and Patent. There was no any formal contract agreement between any of these companies for using the creation which created the legal issues for company and ultimately leading to many financial damages. In the first case, Napster was sued for copyright infringement which led the company to pay an amount worth of $40 million as a settlement to the respective parties who had filed the suit against it. This led the company to go bankrupt. The company filed for chapter 11 bankruptcies as a part of restructuring their finances (DANSBY, 2002). The company did shut down its main service and later on worked on a new approach of subscribed-based music swapping service.
Conclusion
Intellectual Property Rights (IPR) are defined as the legal rights that helps in protecting your intellect which include various creations, inventions ,literary or artistic works, name, design and symbols that are used in various sources. Both the Copyright infringement and patent infringement are the part of Intellectual property rights infringement. Copyright infringement occurs when one person copying other’s work does not take permission from them to use their work as their work has been protected under IP laws. Patent Infringement occurs when another person uses the patented item without taking any permission from the patent holder. In both of the cases presented above related to Napster and RIM, they were subject to pay some penalties for infringing the IP laws which are made to protect the Intellectual Property.
References
DANSBY, A. (2002, June 4). Napster Files for Bankruptcy. Retrieved from Rolling Stone: https://www.rollingstone.com/music/music-news/napster-files-for-bankruptcy-246468/
K.Kwan, Y., & C.Lai, E. (2003, March). Intellectual property rights protection and endogenous economic growth. Journal of Economic Dynamics and Control, 27(5), 853-873.
Ku, R. S. (2002, May). The Creative Destruction of Copyright: Napster and the New Economics of Digital Technology. The University of Chicago Law Review, 69(1), 263-324.
Landes, W., & Lichtman, D. (2003, February). Indirect Liability for Copyright Infringement: Napster and Beyond. JOURNAL OF ECONOMIC PERSPECTIVES, 17(2), 113-124.
Lanjouw, J. O., & Schankerman, M. (n.d.). Protecting Intellectual Property Rights: Are Small Firms Handicapped? The Journal of Law and Economics, 41(1), 45-74.
Paige, M. (2006, March 3). RIM settles with NTP for $612.5 million. Retrieved from MarketWatch: https://www.marketwatch.com/story/research-in-motion-ntp-settle-patent-dispute
Sookman, B. (2005). Extra-Territorial Application of Patent Law: A First Look at the NTP v. Rim Litigation. Intellectual Property Journal, 18, 453-468.