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Two important limitations on the exclusivity of the copyright holder’s monopoly exist: the doctrines of first sale and fair use. The first sale doctrine allows a legitimate purchaser of copyrighted material to sell it to another person. If the purchasers of a CD later decide that they no longer cared to own the CD, the first sale doctrine gives them the legal right to sell the copyrighted material even though they are not the copyright holders.

Fair use is another limitation on the copyright holder’s exclusive intellectual property monopoly. The fair use doctrine allows someone to duplicate copyrighted material without requiring the payment, consent, or even knowledge of the copyright holder. There are no explicit requirements that must be met to ensure that a particular usage constitutes fair use, but there are established guidelines that a judge would use in determining whether the copyright holder’s legal rights had been infringed upon. The four factors defined in the Copyright Act of 1976 as criteria to determine whether a use would be covered by the fair use doctrine are: the purpose and style of the excerpt; the nature of the copyrighted work; the amount of content duplicated compared to the overall length of the work; and whether the duplication might reduce the value or desirability of the original work[^4].

Licenses

Software licenses are a contract between a provider of software and the consumer. Though there are licenses that provide explicit permission for the consumer to do virtually anything with the software, including modifying it for use in another commercial product, most commercial software licensing provides explicit limits on the use and distribution of the software. Software licenses such as end-user license agreements (EULAs) are an unusual form of contract because using the software typically constitutes contractual agreement, even though only a small minority of users read the lengthy EULA.

Trade Secrets

The final form of intellectual property that will be discussed is the concept of trade secrets. Trade secrets are business-proprietary information that is important to an organization’s ability to compete. The easiest to understand trade secrets are of the “special sauce” variety. Kentucky Fried Chicken could suffer catastrophic losses if another fried chicken shop were able to crack Colonel Sanders’ secret blend of 11 herbs and spices that result in the “finger licking goodness” we have all grown to know and love. Although the “special sauces” are very obviously trade secrets, any business information that provides a competitive edge, and is actively protected by the organization can constitute a trade secret. The organization must exercise due care and due diligence in the protection of their trade secrets. Some of the most common protection methods used are non-compete and non-disclosure agreements (NDA). These methods require that employees or other persons privy to business confidential information respect the organization’s intellectual property by not working for an organization’s competitor or disclosing this information in an unauthorized manner. Lack of reasonable protection of trade secrets can make them cease to be trade secrets. If the organization does not take reasonable steps to ensure that the information remains confidential, then it is reasonable to assume that the organization must not derive a competitive advantage from the secrecy of this information.