Flashcards About Business Law Chapter 11

- establishes a relationship of legal exclusion between an owner and other people regarding limited resources

- includes the application of property in the areas of trade secrets, patents, trademarks, and copyrights - it represents protection of some of the most valuable resources that businesses possess, yet it's pretty easy to deprive a business of its intellectual property merely by copying and selling or using a protected resource

- property serves the common good because property relationships produce what people need and want in greater quantities than other relationships dealing with limited resources - The poor in a nation with a strong property system under the rule of law are often wealthy by the average per person standards of the poor in nations without such laws

- they're perhaps the most valuable resources of modern businesses - how to make things, do things, get things, sell things, buy things, and how to manage people - law applies the exclusive right of property to both tangible and intangible resources - different kinds of intangible, mostly knowledge-based assets that businesses posses include: employee skills and talents, production designs, innovations, and technologies, processes and methods of business operation, reports, manuals, and databases, relationships with customers and suppliers, software, new product or service research, and marketing plans

- one of the most common ways of asserting property in knowledge intangible business resources is through the trade secret. - trade secret is any form of knowledge or information that the owner, usually a business owner, has taken reasonable measures to keep secret, and that has economic value from not being known to the public.

- to protect something as a trade secret, the business must take reasonable measures to keep the knowledge secret - first step is to identify knowledge-based resources - useful for all businesses to conduct a trade secret audit, which simply lists all the valuable forms of information possessed by the business - the business must next assert its property by preserving secrecy including firewalls, locking away info, etc.

- businesses have to take reasonable measures to protect trade secrets even from employees - employees required to sign confidentiality agreements - law states that employers can enforce agreements not to compete only when there is a "valid business purpose" for the contract.

- businesses can claim trade secret only if the knowledge protected has economic value - multiple business competitors may have trade secret property in substantially the same knowledge

- the owner of a trade secret can go into court and get an injunction to prevent others, often former employees, from divulging or using a trade secret. - injunction: an order by a judge either to do something or to refrain from doing something. - the injunction orders those who have misappropriated the trade secret to refrain from using it or telling others about it - trade secret owners can obtain damages against those who misappropriate trade secrets

- criminal prosecution can result from misappropriation of trade secrets - primary criminal prosecutions today result under the Economic Espionage Act - the act makes it a crime to steal, intentionally misappropriate, trade secrets and provides for fines and up to 10 years' imprisonment for individuals and up to 5 million fine for organizations

- patent: specific legal monopoly in the intangible resource of copying and marketing a new invention - ideas are not themselves patentable. Only invention that applies new ideas is patentable

- a patent is an exclusive right created by statue and recognized by the US Patent and Trademark Office for a limited period of time - to obtain a patent, an inventor must pay a filing fee and file an application with the PTO. - the application must in words and drawings explain how to make and use the basic invention, show why the invention is different from prior art, and precisely describe what aspects of the invention, called claims, deserve the patent. - PTO assigns a patent examiner to consider the application

- After the PTO issues a patent, the patent owner may have to defend its property against infringers, those who make, use, or sell the invention without a license from the owner. - when the patent owner files the lawsuit, it is common for the alleged infringer to respond by attacking the validity of the patent - patentable subject matter includes: processes, machines, compositions of matter, and improvements to processes, machines, compositions of matter, nonfunctional designs of a manufactured article, and certain plants - process is a way of doing something through a series of operations

- to be patentable an invention must be nonobvious, novel, and useful - characteristic of nonobviousness refers to the ability of an invention to produce surprising or unexpected results, that is, results not anticipated by prior art (the previous state of knowledge in the field) - nonobvious standard is measured in relation to someone who has at least an ordinary understanding in prior art - novelty indicates that something is new and different from the prior art - the test is met when no single prior element of art meets all of the invention's claims - an invention fails the novelty test if it has been previously described in a publication or put to public use more than one year before a patent application is filed ( the one-year rule) - usefulness is also defined as utility, and patents that are not plant or design patents are called utility patents - the importance of patenting software as opposed to just copyrighting is that the copyright protects only the actual programming code; what the code does, however, can be easily copied using different code

- when a patent expires, the patent is in the public domain, and others may use it without limitation - US constitution states that the property represented by patents runs for limited duration - statute limits utility patents to 20 years, plant patents to 17 years, and design patents to 14 years. - for the duration of a patent, the owner can sue those who infringe on it. If successful, the owner can get an injunction prohibiting future infringement, damages, including triple damages for intentional infringement, and an order requiring that any infringing items be destroyed.

- business method patent licensing and enforcement is increasingly done by patent holding companies - the companies threaten to sue other companies that fail to pay a patent royalty (license fee) on the patents held by the holding companies - individuals or companies that own patents but do not develop them, and merely sue others who violate the patents, are called patent trolls

- to patent a gene really means that its owner has only an exclusive right to use certain information for 20 years

- when trademarks indicate a specific producer, the law protects them against use by others - they're a form of intellectual property - like patents, you can register them with the PTO and they're also some of the most valuable properties that businesses own - recognizability or distinctiveness is the function of trademarks - they're an information property, exclusively distinguishing the reputation and goodwill of a particular business from that of all other businesses - they protect both businesses and consumers from confusion regarding who makes or provides what

- trademark: any mark, word, picture, or design that attaches to goods to indicate their source - service mark: a mark associated with a service, for example, Monster.com - certification mark: a mark used by someone other than the owner to certify the quality, point of origin, or other characteristics of goods or services - collective mark: a mark representing membership in a certain organization or association

- also protected by the Lanham act - refers to a colored design or shape associated with a product or service - also includes distinctive store decorating motifs or package shapes and colors - trade dress can't be copied as long as it's distinctive. If it is distinctive and registered, the law protects it even when the public has not yet come to identify the trade dress with a specific source

- Under the lanham act, a person must qualify a trademark for registration with the PTO by using it in interstate commerce. - posting the trademark on an internet website meets this qualification. - An intent-to-use application may be filed, followed by an amended application when actual use begins - the PTO will deny registration if: - the mark is the same or similar to a mark currently used on similar related goods - the mark contains certain prohibited or reserved names or designs including the US flag, other governmental symbols, immoral names or symbols, the names or likeness of living persons without their consent, and the names or likenesses of deceased American presidents without the permission of their spouses. - the mark merely describes a product or service - the mark is generic and represents a product or service - PTO places a proposed mark in the Official Gazette, which gives existing mark owners notice and allows them to object that the proposed mark is similar to their own - if someone objects, the PTO holds a hearing to resolve it and possibly deny registration - if the PTO deems the mark acceptable, it registers the mark on the principal register - unlimited protection period, but after 6 years the owner must notify the PTO that the trademark is still in use - secondary meaning refers to a public meaning that is different from its meaning as a person's name or as a descriptive term

- trademark law protects the trademark's owner from having the mark used in an unauthorized way - the law establishes both civil and criminal trademark violation - infringement: civil violation of a trademark or patent. The violator infringes on the trademark's property right through an unintentional or willful unauthorized use, misappropriating the goodwill and reputation that the trademark represents and confusing the public about the identity of the user. - A trademark can become generic when an owner does not defend against unauthorized use and when the public becomes confused as to whether a term refers to a particular product/service or refers to a general class of products/services. - to win a trademark infringement lawsuit a defendant will say the mark is not distinctive, there is little chance of the public being confused by use of a term trademarked by someone else, or the use is a "fair use." - fair use of a registered trademark is allowed by the lanham act and relates to a discussion, criticism, or parody of the trademark, the product, or its owner

- law prohibits you from using a mark the same as or similar to another's "famous" trademark so as to dilute its significance, reputation, and goodwill - trademark dilution: the impact of something that reduces the distinctiveness of a trademark - even if the owner of a famous trademark cannot prove that the public is confused by another's use of a similar mark, called a junior mark, the owner of the senior famous trademark can still get an injunction prohibiting further use of the junior mark on the basis of trademark dilution

- like a patent, copyright gives those who have this property a monopoly over copying and marketing for a limited period of time - copyright deals with expression rather than invention, like a patent. - copyright law grants property in certain creative expressions that keep others from reproducing it without the owner's permission. - the copyright attaches not to an idea or to facts but to the original expression of an idea or facts. - three criteria are necessary for copyright protection to occur: a work must be original; created, not copied. The work must be fixed in a tangible medium or expression like a book, canvas, compact disk, tape, or computer disk, and the work must show some creativity. - copyright laws protect authors rather than inventors

- an action for federal copyright infringement cannot be begun unless the author has properly filed copies of the protected work with the copyright office - the copyright act specifies that a fair use of copyrighted materials is not an infringement of the owner's property. - fair use includes copying for "criticism, comment, news, reporting, teaching, scholarship, or research." - an important part of what copyright holders own is a limited resource in the market for their music or other expressions. That means the object of their property right is the market itself. - in determining whether a particular use is a fair one the courts will consider: the purpose and character of the use, including whether such use is for commercial or nonprofit education purposes, the nature of the copyrighted work, the amount of substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for the copyrighted work.

- digital millennium copyright act makes illegal the effort to get around devices used by copyright owners to keep their works from being infringed. - the act will be used to prevent the production marketing, or sales of a product or service designed to get around technological protections of computer software, videos, and compact disks. - act also restricts the import, distribution, and sales of analog video recorders and camcorders that lack certain features making it difficult to copy copyrighted material