The world today is based more and more on information and information technology. Information is defined as “knowledge gained through study, communication, research, or instruction” ( When someone creates this knowledge using their brains, who owns this information? Does this intellectual information become public domain, benefiting society, or can this information be protected so that monetary gain can occur because of this idea?

Designers of new products and technologies must understand the different types of intellectual property so that they can both protect their creations and avoid infringing on the creations of others. However, a broader impact often occurs when a new product or technology is used in ways that were not anticipated by its original designers but which impact intellectual property owners and society at large. When this occurs, intellectual property law and policy do not remain static, but change in response to the new conditions.

The tightening of laws governing intellectual property has been paralleled by a steady increase in the economic and cultural importance of intellectual-property rights. The entertainment industry has long been heavily dependent on intellectual property; the fortunes of record companies and movie studios are closely tied to their ability to enforce the copyrights on their products. Similarly, pharmaceutical companies have used the monopoly power created by their patent rights to charge high prices for their products, which has enabled them both to cover the enormous costs of developing new drugs and to make considerable profits. Other, newer industries have become equally or even more dependent on intellectual-property rights. The developers and distributors of computer software, for example, insist that their ability to remain in business is dependent on their power to prevent the unauthorized reproduction of their creations. Intellectual-property protection is widely thought to be even more important to the rapidly growing biotechnology industry, where the development of new techniques of genetic engineering or of new life-forms employing such techniques can be extremely expensive. Biotechnology firms argue that, if they were unable to prevent rivals from imitating their creations, they would not be able to recoup their costs and thus would have no incentive to invest in the research and development necessary for scientific breakthroughs. Companies selling goods and services over the Internet have made similar claims concerning the importance of their domain names.

The strengthening of intellectual-property rights has not met with unanimous approval. Some critics argue that it is immoral for pharmaceutical companies to use their patent rights to set prices for their AIDS drugs at levels that cannot be afforded by most of the people in Africa and Latin America who are afflicted by the disease. Others point out that many patented drugs are developed by using the genetic material of plants found in tropical regions and the knowledge of indigenous groups concerning the plants’ medicinal powers. Current patent law, however, awards the exclusive right to market and profit from such drugs to the pharmaceutical companies, leaving uncompensated the countries and indigenous groups whose contributions were essential to the finished products.

Perhaps it is a tremendous supposition to suggest that one should not steal what others have created. Yet, in some ways, that principle is what the intellectual property laws imply we honor. However, the matter is not that simple in its application. We may have a basic sense of right and wrong. In addition, we have the intellectual property system to support that sense, but there may also be in practice little harmony between the two. Greedy elements may wish to control information that others may consider essential to their ability to function in society. As Moor observes:

In order to narrow the gap between morality and the law, we must turn to ethics, which has an edifying function. The purpose of ethics, recall is to make our morality more effective. Respect for intellectual property is an ethical principal that can enhance the common goals of intellectual property and our moral instincts. It is similar enough to our morality to be able to boost in into action. Principled ethics, in this instance, must stand half way between the law and morality. (p. 36-37)

This paper will examine intellectual property along with the ethical (and unethical) ways that people and businesses use property rights to their advantage. Specific examples of companies using intellectual property for profit and the ethical issues that they face will be revealed, along with the decisions that these companies have made on what is ethically right.


Need the definition of a patent.

According to the United States Patent and Trademark Office, the 35 U.S.C. 112 Specification states that the owner of the patent is granted a complete or exclusive monopoly for the duration of the patent. This is a substantial ownership right. In return, the patent holder must, as part of the patent application process make a complete disclosure in sufficient detail so that a person skilled in the art to which the invention pertains can practice the invention. (MPEP). This is an uncompromising duty. In the patent application one must disclose to the Patent Office all information known to that individual to be material to patentability. If it is later discovered that full disclosure was not forthcoming, it may be grounds for rejection of the patent application.

The Supreme Court is examining the rights of patent owners in new technologies and the types of invention subject to patentability. The question of software patentability offers a case in point. Just this month, the Supreme Court is hearing testimony on what types of inventions should be eligible for a patent. Their decision will have huge ramifications in the software community.

In a worst-case scenario for the high-tech industry, the ruling could invalidate many existing software patents or at least make them more difficult to defend in lawsuits. In addition, it could make such patents harder to obtain in the future because software is generally patented as a process for doing something rather than as a physical invention.

“Some of the best-known business-method patents in technology come out of electronic commerce, including Inc.’s “1-Click” tool for completing online purchases and Inc.’s “Name Your Own Price” model. Yet many big companies, particularly in technology and financial services, argue that such patents are too broad and too often used as weapons in costly infringement lawsuits to extract licensing fees.” (Tessler)

The number of software patents has been climbing sharply in recent years — a reflection of the technology industry’s explosive growth and the increased reliance on software in all industries. Insert a graph here. A series of court rulings upholding software patents in the 1990s, including a key case in 1998 that opened the floodgates to business-method patents as well, also helped drive up software patent numbers. Not everyone agrees software patents are a good thing, though.

Rob Tiller, assistant general counsel for software company Red Hat Inc., maintains that software patents actually discourage innovation because software developers are at constant risk of infringing on existing patents. Red Hat embraces the open-source movement, which makes software code freely available for anyone to modify, improve and use and is fundamentally at odds with software patents. Patents are not just for software companies though.

A troubling scenario is unfolding in the pharmaceutical sector in the U.S.: pharmaceutical companies are increasingly resorting to a range of abusive and anti-competitive practices in an effort to preserve monopoly profits and maintain market share. By exploiting loopholes in a law originally passed to facilitate the speedy entry of generic drugs into U.S. markets, some pharmaceutical companies have been able to either suppress or delay generic competition.

Pharmaceutical companies (both brand-name and generic) have attempted to “game” a system originally designed to increase generic competition and improve consumer welfare. By exploiting loopholes in a law passed to increase generic competition, drug manufacturers in the U.S. have become more profitable without providing any corresponding benefit to consumers (To Promote innovation p 5). The degree of abuse in the U.S. pharmaceutical industry is reflected in the increasing number of private lawsuits against brand-name companies and/or generic companies for abuse of patent rights. Abuse is also reflected in the growing number of antitrust enforcement actions affecting both brand name and generic drug manufacturers that the Federal Trade Commission is pursuing (FTC p 17)

One popular form of abuse is through anti-competitive agreements between brand-name and generic drug companies. Another form of abuse is the improper listing of patents by brand name companies coupled with frivolous lawsuits against generic companies, which have the effect of delaying FTC approval of a generic drug. Some companies also engage in false and deceptive advertising and marketing practices aimed solely at discouraging use of generic drugs once they are on the market.

One of these abusive practices is the use of collusive agreements between brand-name manufacturers and generic manufacturers, which are aimed at keeping the first generic off the market, thus blocking all subsequent generics from getting to the market.

An agreement between a generic drug manufacturer and a brand-name drug manufacturer can effectively prevent generic competition for the brand-name drug for an indefinite period. In exchange for agreeing not to enter the market, the generic drug manufacturer is given a cut of the profits by the brand-name manufacturer, which enjoys a continued monopoly. In one case, a brand-name drug company reportedly paid $4.5 million a month to a generic manufacturer so that it would not market its generic (Leuenberger-Fisher p 420).

Overall, by illegally manipulating the patent process and the FDA approval process to delay generic marketing, brand-name companies, sometimes in collusion with generic companies, accumulate millions in additional sales (Pollack p 27). The ultimate victims in the patent game are consumers who are denied access to cheaper drugs.


Copyright is a form of intellectual property that gives the author of an original work exclusive right for a certain time period in relation to that work, including its publication, distribution and adaptation, after which time the work is said to enter the public domain. Copyright applies to any expressible form of an idea or information that is substantive, discrete, and fixed in a medium. Some jurisdictions also recognize “moral rights” of the creator of a work, such as the right to be credited for the work.

The concept of copyright originates with the Statute of Anne (1710) in Great Britain. An example of the intent of copyright, as expressed in the United States Constitution, is “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” (Constitution).

Copyright has been internationally standardized, lasting between fifty to a hundred years from the author’s death, or a shorter period for anonymous or corporate authorship.

The Statute of Anne was the first real copyright act, and gave the authors rights for a fixed period, a fourteen year term for all works published under the statute, after which the copyright expired. Copyright has grown from a legal concept regulating copying rights in the publishing of books and maps to one with a significant effect on nearly every modern industry, covering such items as sound recordings, films, photographs, software, and architectural works. Copyright does not cover ideas and information themselves, only the form or manner in which they are expressed.

A copyright, or aspects of it, may be assigned or transferred from one party to another. For example, a musician who records an album will often sign an agreement with a record company in which the musician agrees to transfer all copyright in the recordings in exchange for royalties and other considerations. The creator and original copyright holder benefits, or expects to, from production and marketing capabilities far beyond those of the author. In the digital age of music, music may be copied and distributed at minimal cost through the Internet. If this is done illegally, then the process is called digital piracy.

The music recording industry, along with the motion picture and gaming industries, are at the forefront of any discussion relating to this issue. The Recording Industry Association of America (RIAA) have been quick to cast judgment on the new technologies and their users, damning any individual who illegally acquires copyrighted digital materials and claiming that these people are responsible for the industry losing “millions of dollars a day” (RIAA 2007).

In the last few years the music industry has been dealing with the issue of ethics in copyrighting as it pertains to downloading songs without the compensation to the owners who hold the copyright for the material. Using material that another artist has copyrighted is unethical, but should the music industry have copyrighted protection for music that is heard? The music industry is losing millions, if not billions, from material that is free to download, as this takes away a source of income from the music industry as the person listening to the copyrighted music is not purchasing the content but downloading or burning it without the industry making a profit off it. Critics state that with more copyright protection a handful of corporations will severely hinder creativity in the digital age.

The music industry believes it is unethical to download, swap, or burn music in which they have the copyright on. According to Wired Magazine, the music industry is “on the brink of collapse, waging an unwinnable war against technology” (p ?). The way fans get music has changed from in the past with the advent of Internet file sharing as the music industry feels this is stealing music. The music industry’s response has been to hire many lawyers to file lawsuits against those, who they feel, are stealing the music through file sharing. The Recording Industry Association of America has brought copyright infringing lawsuits against thousands of those who share files and have been trying to get Congress to penalize them as well as the technologies they use.

File sharing is the act of sharing files so others can download music from that individual file. It is shown that over 3.5 billion songs a month are downloaded illegally in the United States alone. The Music industry and the major labels are not taking this sitting down considering all the money they are losing.

In terms of copyrights, some believe that the music industry is using this argument of piracy to restrict and make more profit from data that should be available to all for free. Stanford University law professor Lawrence Lessig, a fighter of Internet freedom, said this on the issue of needing a new vision of copyright definitions by stating:

We don’t need a new vision. We just need to recognize what the traditional vision has been. The traditional vision protects copyright owners from unfair competition. It has never been a way to give copyright holders perfect control over how consumers use content. We need to make sure that pirates don’t set up CD pressing plants or competing entities that sell identical products. We need to stop worrying about whether you or I use a song on your PC and then transfer it your MP3 player.

Critics state that with more copyright protection and strengthening copyrights a handful of corporations will severely hinder creativity in the digital age.

Within the music industry, from songwriters to executives, there is a misunderstanding of the importance of copyright law has on their careers, as there are misconceptions about the basics of the law. An example of this is the belief that the law allows people to control ideas whichis wrong as copyright laws only protect the ways the idea is expressed not the actual idea. This is a fundamental argument by those who feel music should be able to be downloaded and burned without copyright protection.

Another way the industry is trying to deal with piracy is appealing to the government that this form of piracy is unethical, illegal and should be penalized. In 1998 U.S. Congress passed the Digital Millennium Copyright Act as the bill was originally supported by the software and entertainment industries, and opposed by scientists, librarians, and academics. The music industry has used this act, designed to stop piracy, to bring thousands of lawsuits against individuals which have downloaded illegally. The music industry has won many of these individual cases winning monetary compensation. The Recording Industry Association of America cited the 1998 Digital Millennium Copyright Act to bring legal action against Verizon trying to force them to reveal the names of subscribers possibly downloading illegally, arguing the act gives movie studios, record companies, software developers and other copyright owners the right to subpoena Internet service providers without having judicial approval. More and more of these cases are brought, but the thousands that the cases are against do not compare to the millions who still download. In the recent file sharing case of Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. The Supreme Court had the continuing copyright question of how are the interests of creators, innovators, and the public balanced best? Considering file sharing is increasingly used for legal purposes the Supreme Court sided with Grokster and refused to protect the music industry further.

The ethics in the form of copyright protection is seen through different lenses from the participants in the debate as the music industry is for more protection and others who feel that by more protection brings less freedom and the fact that the media giants will have a larger control over artists and hinder creativity. The fans that download music free and many times illegally have a say in it as well as they are obviously against more protection yet it is a form of piracy, or stealing, which is unethical.


How should society assess ethically those situations where intellectual property rights conflict with public access rights? It has been shown that the legal system provides different answers, and is influenced by national legislation. However, it is apparent that large corporations are spending huge amounts of money to influence this legislation, or finding ways to circumvent the legal system framework for intellectual property entirely.

These businesses are intent on maximizing their companies’ profits, while simultaneously turning a blind eye on the ethical issues that arise from limiting intellectual property that is a benefit to society. Their response to this moral dilemma is that these companies would not be able to stay in business because competition would copy all of their ideas and they would not be able to compete. However, this business model is flawed.

Only certain kinds of information are protected by copyright and patent law, yet information not protected can be the foundation for large business markets even though it can be freely copied. For example, ideas and facts are not protected by copyright and patent law: An individual or a business can spend thousands of hours and millions of dollars researching and testing new ideas to see what works best in a given situation, or on discovering and verifying facts (such as the listings in a telephone directory). In other words, there can be just as much effort put into coming up with an idea or discovering a set of facts such as those used in the medical, the legal, and business communities. A competitor can generally copy these results and it is currently legal. Yet it does not stop people from coming up with ideas or compiling facts and making huge profits off of them An example includes the delivery paradigms used by both FedEx and UPS.

Does this mean that people would make as much money as they would without copyrights or patents? The answer cannot be known, but there is evidence to indicate that business will go on as usual. This evidence includes the fact that some of the greatest works were created and published, while the creators were able to make a living, before copyrights and patents came about a few hundred years ago, and the fact that certain businesses are able to raise substantive revenues even though everything they create is freely copyable. An example of this would be Red Hat Software Company mentioned earlier, who created a lucrative business model around free, open source software.

There is a conflict between intellectual property rights and access to information that can better society. While there will always be gray areas about what ethical decisions should be made surrounding intellectual property, businesses today are leveraging their power so that there is no discussion on the subject. Society must be cognizant of these intellectual property issues and speak up about them, or corporations will continue their unethical practices