8-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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2•Crimes

•Intentional Torts•Negligence and Strict Liability•Intellectual Property and Unfair

Competition

Crimes and Torts

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Intellectual Property and Unfair Competition

PA ET RHC 8

I dream for a living.

Steven Spielbergquoted in

Time magazineJuly 1985

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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

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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, 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

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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

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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

• 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

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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

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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 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

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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?