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 P A R T

8-3 Intellectual Property and Unfair Competition PA E TR HC 8 I dream for a living. Steven Spielberg quoted in Time magazine July 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 – Patent

8-7 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.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

8-8 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

8-9 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.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

8-10 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 OfficeU.S. Copyright Office

8-11 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

8-16 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 ActLanham Act Registration with government recommended, but not required Trademark

8-18 “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

8-19 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

8-20 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.Coleman v. Retina Consultants, P.C. Misappropriation

8-21 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

8-22 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 caseLewis-Gale Medical Center

8-23 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?