Dynamic business law 4e kubasek 4e CH12

Chapter 12
Intellectual Property

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Overview
• LO12-1: What are trademarks, and how do we
protect them?
• LO12-2: What are copyrights, and how do we
protect them?
• LO12-3: What are patents, and how do we
protect them?
• LO12-4: What are trade secrets, and how do we
protect them?
• LO12-5: How do treaties expand protection of
intellectual property?

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Chapter 12 Hypothetical Case 1
• As this chapter indicates, one source of controversy for copyrighted works is the application
of the fair-use doctrine. This doctrine provides that others may reproduce a portion of a
copyrighted work for purposes of "criticism, comment, news reporting, teaching (including
multiple copies for classroom use), scholarship, and research." In determining whether the
fair-use doctrine provides a valid defense to a claim of copyright infringement, Section 107
of the Copyright Act requires that a court weigh the following four factors: (1) The purpose
and character of the use, including whether such use is of a commercial nature or is for
nonprofit educational purposes; (2) The nature of the copyrighted work; (3) The amount
and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) The effect of the use on the potential market for or value of the copyrighted work.
Suppose that without receiving permission from the course-required textbook's publisher,
your college math professor copies the chapter-end problems for each chapter and
distributes them to students, requiring students to write their answers on the copies and
return them as graded assignments. Students receive the copies at no charge.
• Is this a copyright violation, or is it fair use? (Be sure to apply the four-factor test set forth
in Section 107 of the Copyright Act to assist you in determining whether there is a
copyright violation in this case.)

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Chapter 12 Hypothetical Case 2
• Davidson's Microbrew, Inc. is a small beer manufacturer located in Denver, Colorado. The owner of
Davidson's Microbrew, Benjamin Davidson, takes great pride in offering the public a variety of
beers, including a particular one that is currently the subject of litigation. "Barley-Davidson" is a
dark brew closely resembling motor oil in its appearance. For the past three years, BarleyDavidson has been sold in orange cans. There is a bar-and-shield logo on the can's front closely
resembling the iconic Harley-Davidson logo; in the bar portion of the logo, the "Barley-Davidson"
name appears, and the words "Asphalt-Dark Beer" appear in the shield portion of the logo. On the
back of the can, in small but legible print, the following disclaimer appears: "Not affiliated with
Harley-Davidson Motor Company." Barley-Davidson has become Davidson's Microbrew's most
popular product, selling approximately 250,000 units per year.
In its lawsuit against Davidson's Microbrew, Harley-Davidson has requested an injunction
(temporary, pending litigation, and permanent, post-litigation) and money damages based on all
profits generated by the defendant in its sale of Barley-Davidson. Davidson's Microbrew's defense
is based on four contentions: first, its product (beer) is distinguishable from Harley-Davidson's
product (motorcycles); second, its product disclaimer (indicating its non-affiliation with HarleyDavidson Motor Company) is displayed on every can of Barley-Davidson it sells; third, the "Barley"
portion of its dark beer's name has nothing to do with Harley-Davidson; and fourth, the
"Davidson" portion of the beer's name is proudly associated with the name of the microbrew's
company, and the last name of the microbrew's founder himself.

• What is the likely result of the litigation?

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Intellectual Property
• Definition:
• Property that is the result of one's mental
creativity, rather than physical efforts;
protection for intellectual property includes
trademarks, trade secret protection,
patents, and copyrights

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Trademarks
• Definition:
• A distinctive mark, word, design, picture, or arrangement used by
producer in conjunction with a product, and that tends to cause
consumer to identify product with producer

• Trademarks must be registered with U.S. Patent and
Trademark Office; they must be renewed between fifth and
sixth years, and after initial renewal, every 10 years
• Remedies for trademark infringement:
• Money damages
• Injunction

• Trademarks used in interstate commerce protected under

Lanham Act

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Types of Marks
• Service mark
• Mark used in conjunction with a service

• Product trademark
• Mark affixed to a good, its packaging, or its labeling

• Collective mark
• Mark identifying producers as belonging to a larger group
(example: trade union)

• Certification mark
• Mark licensed by a group (examples: "U.L. Tested" and
"Good Housekeeping Seal of Approval")
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Copyright
• Protects the fixed form of the expression of an original,
creative idea
• Examples of copyrighted material include books, periodicals,
musical compositions, plays, motion pictures, sound
recordings, lectures, works of art, and computer programs
• Length of protection: Life of creator plus 70 years
• Remedies for copyright infringement:

• Money damages
• Injunction

• Fair Use: Most common defense against copyright
infringement
• Provides that a portion of copyrighted work may be reproduced
for purposes of reporting, teaching, scholarship, and research

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Fair-Use Factors
• Purpose and character of use, including
whether use is of a commercial nature or
for nonprofit educational purposes
• Nature of the copyrighted work
• Amount and substantiality of portion used
in relation to copyrighted work as a whole
• Effect of use on potential market for or
value of copyrighted work

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Patents
• Definition:
• Protects a product, process, invention, machine, or plant
produced by asexual reproduction that is patentable, novel,
useful, and non-obvious

• Length of protection: 20 years
• Remedies for patent infringement:
• Money damages
• Injunction

• Restrictions:
• Patent holder may license use of idea for royalties, provided
that holder does not enter into tying arrangement or
engage in cross-licensing

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Trade Secrets
• Definition:
• Process, product, method of operation, or
compilation of information that gives a
businessperson a competitive advantage.

• Remedies for trade secret infringement:
• Money damages
• Injunction

• Allows holder to sue for violation, if owner can
prove certain conditions exist.

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International Protection of

Intellectual Property
• Treaties administered by the U.N.'s World
Intellectual Property Organization
• Berne Convention of 1886
• Universal Copyright Convention of 1952
(revised 1971)
• Paris Convention of 1883
• 1994 Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS)

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Chapter 12 Hypothetical Case 3
• Bernie Sides is a restaurant entrepreneur and an avid Civil War buff. Over the years,
Sides has collected a treasure trove of Civil War memorabilia, and he decides to
combine his passions for restaurant ownership and Civil War history by opening a new
restaurant called the Hardtack Café ("hardtack" is a hard, unsalted biscuit used as a
staple for Civil War army rations). Sides has devised a logo for the restaurant, and the
logo (a yellow circle with red lettering for the name of the restaurant) bears a striking
resemblance to a certain rock-and-roll themed restaurant of a similar name and logo.
Upon discovering the existence of the new restaurant, attorneys for the rock-and-roll
restaurant immediately sue, requesting 1) a temporary injunction (a court order
mandating that the Hardtack Café cease and desist from using its name and logo,
pending the outcome of the litigation); 2) a permanent injunction (a court judgment
that the Hardtack Café forever cease and desist from using its name and logo); and 3)
money damages representing all profits the Hardtack Café has earned during its
existence.
• Who wins, and why?

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Chapter 12 Hypothetical Case 4
• Rival pharmaceutical companies AustinPharm and Dunning Pharmaceutical are
embroiled in a lawsuit. AustinPharm has initiated the suit, claiming that Dunning's
biosimilar drug Benasolve, which is used to treat lupus, violates many of the patents
AustinPharm holds for its very expensive biologic drug Vinubia.
In 2009, the U.S. Congress passed a law, the Biologic Price Competition and Innovation
Act, that was aimed to encourage competition among drug manufacturers and hasten
the FDA approval process for biologic drugs that were very similar to already approved
biologics. The similar drugs are known as "biosimilars."
Two years ago, Dunning petitioned the U.S. Patent Office to invalidate two of the
patents AustinPharm held on Vinubia, but the petition was denied.
• Research the Biologic Price Competition and Innovation Act and biosimilar drugs.
Does AustinPharm have a case, given the limits of the Act?

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