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8-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
8-2
2•Crimes
•Intentional Torts•Negligence and Strict Liability•Intellectual Property and Unfair
Competition
Crimes and Torts
PA
R
T
8-3
Intellectual Property and Unfair Competition
PA ET RHC 8
I dream for a living.
Steven Spielbergquoted in
Time magazineJuly 1985
8-4
Learning Objectives
• Differentiate the various intellectual property rights: patent, copyright, and trademark
• Describe infringement and defenses• Explain misappropriation theory and
the importance of trade secrets• Identify the elements a plaintiff must
prove in unfair competition claims
8-5
• PATENT:– Engine design,
business methods
• TRADEMARK– Logo, trade
name
• COPYRIGHT– Sales materials,
artwork
Types of Intellectual Property
Marketing materials for Case Construction Equipment
8-6
• Grant from federal government to an inventor in which inventor obtains exclusive right to make, use, and sell his invention for a period of 20 years (14 years for designs)
• U.S. Patent Act requires registration– http://www.uspto.gov/
Patent
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• A patent will not be issued if more than one year before patent application the invention was patented elsewhere, described in a printed publication, or in public use or on sale in the United States– Example: Pfaff v. Wells Electronics, Inc.
• Inventor sold patented item on April 8, 1981• Inventor applied for patent on April 19, 1982• More than one year passed, thus the patent
was invalid
Patent
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• Protection for: a process, a machine, a product or manufacture, a composition of matter (such as a new chemical compound), an improvement of any of the above, an ornamental design for a product, a plant produced by asexual reproduction, certain business methods
• Even though an invention fits one of the categories, it is not patentable if it lacks novelty, is obvious, or has no utility
Patent
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• Infringement occurs when defendant makes, uses, or sells patented invention without patentee’s authorization
• Remedy: monetary damages – Global-Tech Appliances, Inc. v. SEB S.A.
• Infringement established by literal infringement or doctrine of equivalents– Whether alleged infringer’s subject matter
performs substantially same function as protected invention in substantially same way for same result
Patent Infringement
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• Intangible right granted by statute to the author or creator of certain tangible literary or artistic productions– Can’t copyright an “idea”
• Applicable law: Copyright Protection Act and Copyright Term Extension Act
Copyright
Visit the U.S. Copyright Office
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• Protection automatic; registration not required, though recommended
• Works created after 1/78 are given protection for life of author + 70 years
• Protection for a work-for-hire (corporation owns copyright) is 95 years from first publication or 120 years from creation, whichever comes first
Copyright
8-12
Work-for-Hire
• A work-for-hire exists when – an employee, in the course of her
regular employment duties, creates a copyrightable work; or
– an individual or corporation and an independent contractor (nonemployee) enter into a written “hire” agreement under which the non-employee creates a copyrightable work for the individual or corporation
8-13
Infringement
• Violation of intellectual property right: when someone uses, makes, or sells another’s trademarked, patented, or copyrighted intellectual property without owner’s permission, license, franchise
• Penalties -- actual or statutory damages in civil proceedings or criminal penalties for willful violations
8-14
Proof of Infringement
• Infringement generally requires proof that: – defendant had access to protected work;– defendant engaged in enough copying
(deliberately or subconsciously) that resemblance between allegedly infringing work and protected work could not be coincidental; and
– substantial similarity exists between the works
8-15
The “Fair Use” Defense
• A fair use defense or exception exists when a copyrighted work or trademark is used without the property holder’s permission, but the use was:– “For purposes such as criticism, comment,
news reporting, teaching (including multiple copies for classroom use), scholarship, or research” Section 107 of the Copyright Act
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• A court weighs several factors in a fair use determination: – purpose and character of the use, – nature of the copyrighted work, – amount and substantiality of portion
used in relation to copyrighted work as a whole,
– effect of use on the potential markets for the copyrighted work or on its value
The “Fair Use” Defense
8-17
• Distinctive mark, motto, device, or emblem that a manufacturer or service provider stamps, prints, or affixes to products it produces or services it performs to distinguish products or services from those of competitors
• Applicable law: Lanham Act• Registration with government
recommended, but not required
Trademark
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• “Trademark” applicable to: – Trade name (e.g., McDonald’s, Nike)– Trade image (e.g., Ronald McDonald)– Trade logo (golden arches, swoosh)– Trade dress (orange & red of McDonald’s)
• Trademark dilution is the diminishment of the capacity of plaintiff's marks to identify and distinguish plaintiff's goods or services
Trademark
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• Trade secret: any secret formula, pattern, process, program, device, method, technique, or database used in the owner’s business that offers competitive advantage
• A firm must take reasonable measures to maintain secrecy
Trade Secrets
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• Misappropriation of a trade secret occurs when a person discloses or uses after acquiring the secret:– By improper means (theft, trespass, etc.)– Through another party who is known or
should have been known to have obtained the secret by improper means,
– By breaching a duty of confidentiality• See Coleman v. Retina Consultants, P.C.
Misappropriation
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• Commercial torts are intentional torts that involve business or commercial competition
• Injurious falsehood (product disparagement) involves publishing false statements that disparage another’s business, property, or title to property, harming economic interests
Commercial Torts
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• Intentional interference with contractual relations occurs when one party to a contract claims that the defendant’s interference with the other party’s performance of the contract wrongly caused the plaintiff to lose the benefit of that performance
Commercial Torts
See the Lewis-Gale Medical Center case
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• Intentional interference with prospective advantage parallels elements for interference with contractual relations, but prospective relations are focus (not existing contracts)
• Section 43(a) of the Lanham Act creates civil liability for unfair competition, including misleading, confusing, or deceptive representations made in connection with goods or services
Commercial Torts
8-24
Thought Questions
• Music is intellectual property. What do you think about people who download music illegally? Have they committed theft?
• If you create a new product at your workplace, is it yours?