CrimesIntentional Torts

Negligence & Strict LiabilityIntellectual Property & Unfair

Competition

© 2010 The McGraw-Hill Companies, Inc. All rights reserved.

Intellectual Property and Unfair

Competition

I dream for a living.

Steven Spielbergquoted in Time

magazineJuly 1985

© 2010 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

Infringement of intellectual property rights

Misappropriation of trade secretsUnfair competition - intentional tortsUnfair competition – the Lanham Act

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PATENT: Engine design,

business methods

TRADEMARK Logo, trade

name COPYRIGHT

Sales materials, artwork

Types of Intellectual Property

Marketing materials for Case Construction Equipment

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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, 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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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 the Copyright Term Extension Act

http://www.copyright.gov/

Copyright

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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, which ever comes first

Copyright

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Work-for-Hire

A work-for-hire exists when (1) an employee, in the course of her

regular employment duties, creates a copyrightable work; or

(2) an individual or corporation and an independent contractor (i.e., nonemployee) enter into a written “hire” agreement under which the non-employee creates a copyrightable work for the individual or corporation

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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 state or fed.

government recommended, but not required

Trademark

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Trademark

“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

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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

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Proof of Infringement

Generally, infringement requires proof that: (1) defendant had access to protected work; (2) defendant engaged in enough copying

(deliberately or subconsciously) that resemblance between allegedly infringing work and protected work could not be coincidental; and

(3) substantial similarity exists between the works

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The “Fair Use” Defense

For copyright and trademark infringement, a fair use defense or exception exists when the copyrighted work or trademark is used without the property holder’s permission “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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The “Fair Use” Defense

A court weighs factors in a fair use determination: (1) purpose and character of the use, (2) nature of the copyrighted work, (3) amount and substantiality of portion

used in relation to copyrighted work as a whole,

(4) effect of use on the potential markets for the copyrighted work or on its value

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Exceptions/Defenses

Fair use may include parody

In Campbell v. Acuff-Rose Music, Inc., Supreme Court held that 2 Live Crew’s version of Roy Orbison’s “Pretty Woman” was a parody and could be a fair use if use not excessive and did not harm market for the original Case remanded to determine whether

use was excessive or harmed the market, but parties eventually settled

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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

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 Example: Jefferson County School District

v. Moody’s Investor’s Services, Inc.

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

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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

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