Unit 3 Intellectual Property PDF

Unit 3 4 types of intellectual property Copyright Trademark Patent Trade Secret Intellectual Property Justification - based on deservedness and hard work Importance - encourages innovation, protects creators’ rights, and helps create jobs Competition - more compet...

Unit 3 4 types of intellectual property Copyright Trademark Patent Trade Secret Intellectual Property Justification - based on deservedness and hard work Importance - encourages innovation, protects creators’ rights, and helps create jobs Competition - more competition leads to more innovation Capturing - involves identifying and documenting IP Trade Secret Knowledge or Info - Kept secret (reasonable measures taken) - Economic value Uniform Trade Secrets Act Violated when one takes illegal measures to obtain trade secrets Obama signed a federal law in 2016 allowing individuals to sue for trade secret misappropriation Establishing the Existence of a Trade Secret Conduct a trade secret audit to identify confidential knowledge-based resources Preserve secrecy - Lock written material - Secure computer-stored knowledge with firewalls and encryption - Impose confidentiality restrictions - Regulate visitors - Ask employees, customers, and business partners to sign nondisclosure agreements Al Minor & Associates, Inc. v. Martin, 881 N.E.2d 850 (Ohio 2008) Martin was prepared to leave the company and start his own company and did not have a non-compete, so he memorized his client list and solicited 15 of AMA’s clients, which led AMA to sue. The court ruled in favor of AMA even though Martin didn’t specifically use a hard copy of the client list because it violated the Uniform Trade Secrets Act. Demonstrating Misappropriation Misappropriation occurs when one improperly acquires or discloses secret information Independent creation and reverse engineering are exempted Employee mobility and trade secrets - Confidentiality contracts forbid employees from disclosing the knowledge obtained in workplace  - Employers can enforce agreements not to compete only when there is a valid business purpose for the contract Protect Trade Secrets - SILENT Security protocols: Identify TS: Limit access: Educate employees: Nondisclosure agreements: Talk carefully: Patent Law Patent: a legal right that gives an inventor the exclusive ability to prevent others from making, using, or selling their invention for a set period of time New invention → Legal monopoly Types of Patents Utility patent - New, non-obvious, useful processes, machines, compositions of matter or improvements thereof Design patent - New, original and ornamental design for an article of manufacture Plant patent - New, variety of plant that can be reproduced asexually Obtaining a Patent 1. File application 2. Filing fee 3. Explain invention 4. Show difference from prior art 5. Describe patentable aspects 6. Evaluation by the patent examiner Characteristics of Patents Novelty - Something new and different from prior art Nonobviousness (MOST difficult) - Ability of an invention to produce surprising or unexpected results Utility - Must do something useful Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107 (2013). Association claimed Myriad could not patent because DNA is naturally occurring, and Court said that naturally occurring DNA cannot be patented, but cDNA is patent eligible Alice Corporation Pty. Ltd. v. CLS Bank Int’l 134 S.Ct. 2347 (2014).  Alice owned several patents on programs. Supreme Court decided against Alice because they ruled that abstract ideas can’t be patented just because it's on a computer. Patent Enforcement Patent owner can sue against infringement for injunction and damages Inventions can cover methods and articles that can overlap Overlapping rights provide an opportunity for firms to purchase patent rights and sue companies - Patent Trolls Patent awards inventions NOT investments Trademarks Marks on what is produced to represent the origin of goods and services Recognizability or distinctiveness Protection against confusion Marks Protected by the Lanham Act of 1946 Trademark - a recognizable sign, design, or expression that identifies a product from a recognizable source Service mark - a mark associated with a service, not a product Certification mark - meant to be used by others, and shows that the goods or service have met certain standards Collective mark - not meant to be used by other people, represents a member of a collective organization such as a union Trade dress - visual image Sound Trademarks “Sound Marks” A recognizable sound used by a company Trademark Registration Usage of mark in interstate commerce is required for registration with PTO Can PTO deny registration? - Same or similar to another mark - Prohibited or reserved names or designs - Names or likeness without permission - Descriptive* - Generic - Disparaging - Immoral, scandalous names or symbols PTO places the mark in the Official Gazette Registered on the Principal Register if the mark is acceptable If listed on the Supplemental Register for five years and acquires a secondary meaning, a name or descriptive term can acquire full trademark status Matal v. Tam, 582 U.S. _, 137 S. Ct. 1744 (2017) Is the Disparagement Clause in the Lanham Act invalid under the First Amendment? Yes. Iancu v. Brunetti, 588 U.S. _, 139 S. Ct. 2294 (2019). FUCT Does Section 2(a) of the Lanham Act, which prohibits the federal registration of “immoral” or “scandalous” marks, violate the Free Speech Clause of the First Amendment? Yes. Trademark Enforcement Law protects the owner from unauthorized use of the mark Infringement: Civil violation of a trademark - Remedies include damages and injunctions and orders to destroy infringing products Generic marks cannot be protected Manufacturing and trafficking counterfeit trademarked products is a criminal violation Infringement, Dilution, Fair Use of Trademark as Parody? Jack Daniel’s Properties, Inc. v. VIP Products LLC, 599 US _ (2023) - The court ruled the dog toy was not fair use, so they infringed and diluted on Jack Daniel’s ***Generic Marks Cannot be Protected*** Trademark Dilution Federal Trademark Dilution Act, 1995 - Prohibits the usage of a mark same as or similar to another’s trademark to dilute its significance, reputation, and goodwill Types: - Blurring - When usage of a mark blurs distinctiveness of a famous mark - Tarnishment - When usage of a mark creates a negative impression about the famous company Copyright Monopoly - Copying and marketing - Limited period of time - Original expression Copyright Ownership Copyright law grants property in certain creative expressions and prohibits others from reproducing it w/o permission Criteria for copyright protection: - Work must be original - Must be fixed in a tangible medium of expression  - Must show creative expression Individuals: author’s life plus 70 years Company: 95 years from publication OR 120 years from creation of the work, whichever expires first Public Domain Day: Jan. 1 of each year As of Jan 1, 2024, works published in or before 1928 are in Public Domain Copyright Infringement The owner has to establish that defendant violated his or her exclusive rights of: - Reproduction - Creation of derivative works - Distribution - Performance - Display Copyright Fair Use Includes copying for: - Criticism - Comment - News reporting - Teaching - Scholarship - Research - Factors for “fair use” considered on case-by-case basis Google LLC v. Oracle America Inc. The “Copyright Lawsuit of the Decade” pitted Google against Oracle in a titanic legal battle over smartphone software SCOTUS decided Google had not violated Oracle’s copyright Business Organizations Closely Held - Family-Owned Publicly Held - Owned by hundreds/thousands Forms of Business Organizations Basic - Sole proprietorship - Partnerships - Corporations Hybrid - Limited partnerships - S corporations - Limited liability companies  - Limited liability partnerships Factors to Consider When Selecting a Business’s Organizational Form Cost of creation Continuity of the organization Managerial control of decision Owner liability Taxation Sole Proprietorships Least expensive business organization to create Proprietorship’s continuity is tied directly to the will of the owner Sole proprietor is in total control of the business’s goals and operations Owner has unlimited liability for the obligations of the business organization Not taxed as an organization Over 75% of business organizations are sole proprietorships Partnerships Agreement between two or more persons to share a common interest in a commercial endeavor Second cheapest and easiest business organization to create States Assumed Name Statute - Law in each state that requires businesses that operate under a different name other than their legally registered name to file a public document disclosing the ture identity of the business owner and the assumed name they are using All partners have an unlimited liability shield Partners are jointly and severally liable Corporations Artificial and intangible entity created under the authority of a state’s law Types: - Domestic - Foreign - do business in another state - Alien - corporation from another country that does business in the US Articles of Incorporation - Legal document filed with a state government to officially establish a corporation Delaware Court of Chancery 1 chancellor 6 vice chancellors Very prestigious Georgia State-wide Business Court Has state-wide jurisdiction to focus on complex business litigation that would otherwise land in county courts  Judge appointed by Governor (not elected) and approved by majority vote of senate and house judiciary committees Corporate Managerial Control Shareholders elect the board of directors who hire officers who then hire employees Managerial Control Proxy: an agent appointed by a shareholder for the purpose of voting shares Fiduciary Duties: an obligation to act in the best interest of another party; it exists when one has special trust, confidence, or reliance on a fiduciary to exercise discretion or expertise. (attorney has fiduciary duty to a client; corporate officer has fiduciary duty to shareholders) - Directors/officers have fiduciary duties to the corporation and minority shareholders in closely held corporations Derivative Suit A minority shareholder who believes that a majority shareholder has acted in his or her personal interest to the detriment of the corporation may bring a derivative suit against the majority shareholder on behalf of the corporation. Corporate Liability/Piercing the Corporate Veil Notwithstanding the limited liability enjoyed by corporate shareholders, creditors of a closely held corporation may be able to reach shareholders’ personal assets in the following situations: - The shareholders used the corporation to defraud customers and/or counterparties - The shareholders commingled corporate and personal assets Alli v. U.S., 83 Fed. Cl. 250 (2008) Should the court pierce the corporate veil and strip away the liability protection of the Allis? The court said the Allis commingled, and they committed wrongs, so they permitted the piercing of the veil. Limited Partnerships Includes all the attributes of a partnership Limited partners: Not responsible for the debts of the business organization/limited liability General partners: Personally liable for the organization’s debts/management control S Corporations Shareholders of certain corporations unanimously elect to have the organization treated like a partnership for income tax purposes Has all legal features of a corporation  Shareholders have to account on their individual income tax returns for shares of profits or losses Shareholders avoid having a tax assessed on the corporate income Cannot have more than 100 shareholders/must be individuals/must be a domestic corporation Limited Liability Organizations Limited Liability Partnership (LLP) - Variation of the LLC - Have characteristics of both a partnership and a corporation Limited Liability Company (LLC) - Treated as a nontaxable entities like partnerships - Limited liability for members like corporations - Owners have more flexibility compared with S corporation Operating the Organization through Agents Principal, agent, third-party, independent contractor Actual, implied, and apparent authority Respondeat Superior/Vicarious Liability Frolic and Detour Trends in Management of the Organization Benefit Corporation vs B. Corps Corporate Personhood - Federal Communications Commision v. AT&T Inc - Do corporations possess “personal privacy” rights as defined by the Federal Freedom of Information Act (FOIA) exemption 7(c)? No Director Liability - Marchard v. Barnhill - Did Blue Bell Creameries Board breach their fiduciary duties by disregarding the contamination risks? Yes Administrative Agencies Boards, bureaus, commissions, and organizations that make up the governmental bureaucracy Types of regulatory authority - Quasi-legislative - Quasi-judicial Create and enforce laws constituting the legal environment of business Reasons for Agencies Provide Specificity Provide Expertise Provide Protection  Provide Regulation Provide Services Functions of Agencies Rule-making Adjudicating Advising Investigating Power of Agencies Legislative - Power to create rules and regulations Executive - Power to investigate, prosecute, advise, supervise Judicial - Power to decide controversies Administrative agencies can have all three Organization of Agencies 5–7 members Appointments require Senate confirmation Appointees are not permitted to engage in other employment during the terms Agencies have distinctive organizational structure to meet its responsibilities Free Enterprise Fund v. Public Company Accounting Oversight Board ALJs - judges inside the agencies Free Lucia v. SEC: Is an ALJ an “employee” or “officers of the US?” Securities and Exchange Commissions v. Jarkesy - US Supreme Court found that when the Securities Exchange Commission seeks civil penalties against a defendant for securities fraud, 7th Amendment entitles the defendant to a jury trial and thus the SEC must bring the action in federal court Influencing Agencies Agencies give public notice of proposed rules and hold public hearings Interested parties present evidence in support or opposition to the regulation Agencies react to the force of public opinion Each branch of government has control over the administrative process Judicial Review of Agency Decisions Standing to Sue? Review of Rule Making (is delegation valid? Authority exceeded?) Review of Factual Determinations FDA v. Brown & Williamson Tobacco Corporation  Ruled that FDA did not have authority to regulate tobacco as a drug under the Food, Drug, and Cosmetic Act; got overturned later on Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al. - consolidated with Relentless, Inc v. Department of Commerce The Administrative Procedure Act requires courts to exercise their independent judgement in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous Chevron v. Natural Resources Defense Council is overruled. Criticisms of Administrative Agencies Relating to personnel - Difficulty in hiring and retaining the best-qualified people - Difficult to discharge unsatisfactory employees - Personnel in top positions are selected for political reasons Relating to procedures - Delay in the decision-making process - Administrative process is overwhelmed with paperwork and meetings - Rules and regulations are written in complex legal language - Dictatorial in nature Relating to substance - Rules and regulations overlap and conflict - Actions for illegal conduct end only with consent orders - Enforcement of laws varies over time Financial and Securities Regulations What is a Security? Any interest or instrument that offers the right to subscribe to or purchase stock, bond, or any certificate of interest Security includes more than corporate stock Investment in a common enterprise with profits to come solely from the efforts of persons other than the investor. SEC v. Howey Co., 328 US 293 (1946) The sales of the trees were deemed sales of securities Securities and Exchange Commission Responsible for administering the federal securities laws Created in 1934 Consists of five commissioners Possess quasi-legislative and quasi-judicial powers Securities Act of 1933 Requires the disclosure of information to the potential investors Applies to the initial sale of the security Information must not be untrue or misleading; “truth in securities” law Regulates anyone who is involved with or promotes the initial sale of securities; especially with the following four: issuer; underwriter; controlling person; and seller 1933 Act Documents Registration statement: Detailed disclosure of financial information about the issuer and controlling individuals Three time periods involved in the registration process: - Prefiling period - Waiting period - Posteffective period Prospectus: sets forth the key information contained in a company’s registration statement - Provided to interested investor - Must conform to the statutory requirements 1933 Act Liability Sanctions for violations - Criminal punishment - Civil liability - Equitable remedy of an injunction Section 11: false or misleading reg. Statement Section 12: no reg. Statement; false or misleading prospectus Section 17: device, scheme, fraud, omission, deceit Securities Exchange Act of 1934 Regulates transfers of securities after the initial sale Created the Securities and Exchange Commission (SEC) Illegal to sell unregistered securities on national exchange Registration requires filing prescribed forms with stock exchange and SEC Section 10(b) and Rule 10b-5: Antifraud Provisions Rule 10b-5 is the principal antifraud rule relating to the secondary distribution of securities Rule 10b-5 provides that a civil action for damages may be brought by any private investor who purchased or sold a security and was injured because of false, misleading, or undisclosed information. Rule 10b-5 applies to all securities Insider Trading Insider: A person who owns more than 10% of any security  A director or officer of the issuer of the security Salman v. United States, 580 US (2016) Salman was convicted of securities fraud because his brother-in-law gave him inside information from his brother which led to Salman making over $1 million Supreme Court decided that a close family relationship is sufficient to sustain a conviction for insider trading. Salman got the bulk of the punishment, while Maher and his brother Michael received a slap on the wrist Private Securities Litigation Reform Act (PSLRA) of 1995 SEC can pursue claims against third parties not directly responsible for the securities law violation Requires private plaintiff to allege with specificity when filing a claim under Section 10(b) and Rule 10b-5 Securities Litigation Uniform Standards Act of 1998 (SLUSA) - Prevents abusive securities fraud litigation in state courts State Blue Sky Laws State statutes designed to protect the public from the sale of fraudulent stocks and bonds Protect the potential investor from buying risky securities without financial and other information Apply to securities subject to federal laws and securities exempt from federal statutes Uniform Securities Act, 1956 - Provides a model for blue sky laws Sarbanes-Oxley Act (SOX) of 2002 Applies to all public companies in the US and international companies registered with the SEC Primary purpose is to ensure the accuracy and integrity in the financial reporting of public companies Revitalization of SEC - Increased power over governance issues - Congress empowered the SEC to increase corporate accountability Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Addresses many issues of financial reform Congress authorized the creation of MANY new administrative agencies to achieve the goals of the Dodd-Frank Act Seeking to avoid future tax-payer bailouts, predatory mortgage ending, and much more Aiding Whistleblowers  Dodd-Frank strengthened and expanded the existing whistleblower program promulgated by the Sarbanes-Oxley Act (SOX). Specifically, the Act: Established a mandatory bounty program under which whistleblowers can receive from 10 to 30% of the proceeds Economic Growth, Regulatory Relief, and Consumer Protection Act Did not repeal Dodd-Frank; instead provided certain limited amendments and modifications Considered most significant change to US banking regs since Dodd-Frank Eased regulations on “small banks”