Ch 05

Fundamentals of Business Fundamentals of Business LawLaw

Summarized Cases, 8th Ed., and Excerpted Cases, 2nd Ed.

ROGER LeROY MILLERInstitute for University Studies

Arlington, Texas

GAYLORD A. JENTZHerbert D. Kelleher Emeritus Professor in Business Law

University of Texas at Austin

Copyright © 2010 South-Western Legal Studies in Business, a part of South-Western Cengage Learning.

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Learning ObjectivesLearning Objectives• What is intellectual property?• Why are trademarks and patents protected

by law?• What laws protects authors’ rights in works

they produce?• What are trade secrets, and what laws offer

protection for this form of intellectual property?

• What steps have been taken to protect intellectual property rights in the digital age?


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IntroductionIntroduction• Intellectual Property (I.P.) is any property

that is the product of an individual’s mind, e.g, books, software, movies, music.

• U.S. Constitution protects I.P. in Article I Section 8. Congress shall:“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.”

• Ownership of I.P. is strategically important in the global economy.


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Trademarks and Trademarks and Related PropertyRelated Property

• Trademark.– Distinctive motto, mark or emblem.– Stamped or affixed to a product.– So that it can be identified in the market.– CASE 5.1 The Coca-Cola Co. v. Koke Co.

of America (1920).• Statutory Protection of Trademarks.

– Federal Lanham Act of 1946.– Federal Trademark Dilution Act of 1995.


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• Trademark Registration.– U.S. Patent and Trademark Office

www.uspto.gov gives notice to 3rd parties.– A mark can be registered if in use or mark will

be used within 6 months.• Trademark Infringement.

– Unintentional or intentional substantial copying of mark.

– Strong marks vs. generic terms.

http://www.uspto.gov/


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• Distinctiveness of Mark: reduce likelihood of confusion.– Strong Marks: Xerox, Kodak, Dairy Queen.– Secondary Meaning.– Generic Terms. What happens when a

trademark becomes “common” like aspirin or escalator?


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Trademarks andTrademarks andRelated PropertyRelated Property

• Service Mark.– Similar to trademark but used for services.– Includes characters in TV and radio.

• Certification Mark.– Used to certify accuracy of owner’s goods or

services. “Good Housekeeping”.• Collective Mark.

– Certification used by members of an organization.


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• Trade Dress.– Image and appearance of a product or shop

(Example: Starbucks coffee stores).• Counterfeit Goods.

– Stop Counterfeiting in Manufactured Goods Act (2006).

• Trade Names.– Applies to a business (not a product).


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Cyber MarksCyber Marks• Domain Names.

– Trademarks in Cyberspace (example: Nike.com).

– Conflicts—ICANN.• Anticybersquatting Legislation.

– Cyber squatting occurs when 3d party registers a domain name that is the same or similar to another company’s own trade name.

– 1999 Anticybersquatting Consumer Protection Act.


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Cyber MarksCyber Marks• Meta Tags

– Keywords in web pages used by internet search engines.

• Dilution in the Online World.– Trademarks can be diluted on the web.– Hasbro v. IEG (over candyland.com).

• Licensing.– Permits use of trademark, copyright, or other

IP.


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PatentsPatents• Patent.

– A Government monopoly that gives inventor the exclusive right to make, use or sell and invention for 20 years.

• What is Patentable? – Invention.– Design.– Process (software patent).– CASE 5.2 KSR International Co. v.

Teleflex, Inc. (Supreme Court, 2007).


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PatentsPatents• Patent Infringement.

– Manufacture, use or sale of another’s product or design without permission (license).

• Remedies for Infringement.– Patent holder may sue for relief in federal

court.– Can also seek injunction and damages for

royalties, attorney’s fees.– If willful infringement, court may award treble

damages.


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CopyrightsCopyrights• Copyright:

– Intangible property right granted by federal statute to the author for life plus 70 years.

– Automatic protection.– Work must be original and “fixed in a durable

medium.” Ideas are not protected, but the expression of an idea is.


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CopyrightsCopyrights• Infringement.

– Form or expression is copied (does not have to be in its entirety).

– Penalties, damages and criminal action are possible.

• Exception: “Fair Use”.– Certain persons or organization can copy materials

without penalty (e.g., education, news, research).– CASE 5.3 Leadsinger, Inc. v. BMG Music

Publishing (9th Circuit 2008).


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• Copyright Protection for Software.– Computer Software Copyright Act (1980).

• Copyrights in Digital Information.– Copyrights is the most important IP on the

internet; internet requires the data/work be “copied” across the web to view/listen.

– Copyright Act of 1976: Copy of a program into RAM is infringement.

– Revision or re-sale of freelance authors works can be infringement.

Digital CopyrightsDigital Copyrights


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Further Developments Further Developments in Copyright Lawin Copyright Law

• No Electronic Theft Act of 1997: penalties for making copies for personal use (modifies fair use doctrine).

• Digital Millennium Copyright Act updates copyright law with World Intellectual Property Organization treaty.


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MP3 and File SharingMP3 and File Sharing• MP3 and File-Sharing Technology.

– Napster case.– P2P sharing, distributed network.

• Evolution of File Sharing.– New software decentralizes storage making it

difficulty to apply traditional doctrines of copyright infringement.

• Grokster decision.


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Trade SecretsTrade Secrets• Trade secrets are confidential, not filed

with the government.• Can be customer lists, formulas, pricing,

etc.• Theft of trade secrets is now a federal

crime under the Economic Espionage Act of 1996.

• Cyberspace: employees can easily email information to competitors.


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International Protection for International Protection for

Intellectual PropertyIntellectual Property• Berne Convention (1886).• TRIPS Agreement (1994).

– Each member must include domestic laws protecting intellectual property of other nation-members.

• World Intellectual Property Organization. (WIPO) (1996).– Provides for Dispute resolution.

• Madrigal Protocol.– Single application to secure international trademark

protection.

Documents

Ch 05