State Power Affecting Patents and Copyrights

Displacement of state police or taxing powers by federal patent or copyright has been a source of considerable dispute. Ordinarily, rights secured to inventors must be enjoyed in subordination to the general authority of the states over all property within their limits. A state statute requiring the condemnation of illuminating oils inflammable at less than 130 degrees Fahrenheit was held not to interfere with any right secured by the patent laws, although the oil for which the patent was issued could not be made to comply with state specifications.1571 In the absence of federal legislation, a state may prescribe reasonable regulations for the transfer of patent rights, so as to protect its citizens from fraud. Hence, a requirement of state law that the words “given for a patent right” appear on the face of notes given in payment for such right is not unconstitutional.1572 Royalties received from patents or copyrights are subject to nondiscriminatory state income taxes, a holding to the contrary being overruled.1573

State power to protect things not patented or copyrighted under federal law has been buffeted under changing Court doctrinal views. In two major cases, the Court held that a state could not use unfair competition laws to prevent or punish the copying of products not entitled to a patent. Emphasizing the necessity for a uniform national policy and adverting to the monopolistic effects of the state protection, the Court inferred that, because Congress had not extended the patent laws to the material at issue, federal policy was to promote free access when the materials were thus in the public domain.1574 But, in Goldstein v. California,1575 the Court distinguished the two prior cases and held that the determination whether a state “tape piracy” statute conflicted with the federal copyright statute depended upon the existence of a specific congressional intent to forbid state protection of the “writing” there involved. Its consideration of the statute and of its legislative history convinced the Court that Congress in protecting certain “writings” and in not protecting others bespoke no intention that federally unprotected materials should enjoy no state protection, only that Congress “has left the area unattended.”1576 Similar analysis was used to sustain the application of a state trade secret law to protect a chemical process, that was patentable but not patented, from use by a commercial rival, which had obtained the process from former employees of the company, all of whom had signed agreements not to reveal the process. The Court determined that protection of the process by state law was not incompatible with the federal patent policy of encouraging invention and public use of patented inventions, inasmuch as the trade secret law serves other interests not similarly served by the patent law and where it protects matter clearly patentable it is not likely to deter applications for patents.1577

Returning to the Sears and Compco emphasis, the Court unanimously, in Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,1578 reasserted that “efficient operation of the federal patent system depends upon substantially free trade in publicly known, unpatented design and utilitarian conceptions.”1579 At the same time, however, the Court attempted to harmonize Goldstein, Kewanee, and other decisions: there is room for state regulation of the use of unpatented designs if those regulations are “necessary to promote goals outside the contemplation of the federal patent scheme.”1580 What states are forbidden to do is to “offer patent-like protection to intellectual creations which would otherwise remain unprotected as a matter of federal law.”1581 A state law “aimed directly at preventing the exploitation of the [unpatented] design” is invalid as impinging on an area of pervasive federal regulation.1582

Footnotes

1571
Patterson v. Kentucky, 97 U.S. 501 (1879). [Back to text]
1572
Allen v. Riley, 203 U.S. 347 (1906); John Woods & Sons v. Carl, 203 U.S. 358 (1906); Ozan Lumber Co. v. Union County Bank, 207 U.S. 251 (1907). [Back to text]
1573
Fox Film Corp. v. Doyal, 286 U.S. 123 (1932), overruling Long v. Rockwood, 277 U.S. 142 (1928). [Back to text]
1574
Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964); Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234 (1964). [Back to text]
1575
412 U.S. 546 (1973). Informing the decisions were different judicial attitudes with respect to the preclusion of the states from acting in fields covered by the Copyright Clause, whether Congress had or had not acted. The latter case recognized permissible state interests, id. at 552–560, whereas the former intimated that congressional power was exclusive. Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 228–31 (1964). [Back to text]
1576
In the 1976 revision of the copyright law, Congress broadly preempted, with narrow exceptions, all state laws bearing on material subject to copyright. 17 U.S.C. § 301. The legislative history makes clear Congress’s intention to overturn Goldstein and “to preempt and abolish any rights under the common law or statutes of a state that are equivalent to copyright and that extend to works coming within the scope of the federal copyright law.” H. REP. NO. 94–1476, 94th Congress, 2d Sess. (1976), 130. The statute preserves state tape piracy and similar laws as to sound recordings fixed before February 15, 1972, until February 15, 2067. (Pub. L. 105–298 (1998), § 102, extended this date from February 15, 2047.) [Back to text]
1577
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974). See also Aronson v. Quick Point Pencil Co., 440 U.S. 257 (1979). [Back to text]
1578
489 U.S. 141 (1989). [Back to text]
1579
489 U.S. at 156. [Back to text]
1580
489 U.S. at 166. As examples of state regulation that might be permissible, the Court referred to unfair competition, trademark, trade dress, and trade secrets laws. Perhaps by way of distinguishing Sears and Compco, both of which invalidated use of unfair competition laws, the Court suggested that prevention of “consumer confusion” is a permissible state goal that can be served in some instances by application of such laws. Id. at 154. [Back to text]
1581
489 U.S. at 156 (emphasis added). [Back to text]
1582
489 U.S. at 158. [Back to text]