Business Law Exam 2

Copyright Enforcement

-The owner has to establish that defendant violated his or her exclusive rights of: - Reproduction - Creation of derivative works - Distribution - Performance - Display -Criminal penalties are applicable for willful infringement -Piracy: Large-scale copyright infringement

Likelihood of Confusion

-The trademark owner contends that consumers are likely to be confused about the source, sponsorship or approval of a product because of someone else's use of the trademark or a similar mark -Kraft and Cracker Barrel case

Trademark Dilution

-Trademark law concept giving the owner of a famous trademark standing to forbid others from using that mark in a way that would lessen its uniqueness Blurring: when firm uses another trademark in a way that blurs the distinctiveness of a famous mark Tarnishment: when a firm uses a trademark in a way that creates a negative impression about the famous company

Trade Dress

-Visual components that contribute to the overall look of a brand and association to that product or service -Ex: When you purchase an item from Globus Corp., they place the item in a paper bag with handles and vertical yellow, blue, and white stripes. Even without seeing the words "Globus Corp." on the bag, many people recognize that the purchase is from Globus.

Misappropriation

-When one improperly acquires secret information through burglary, espionage, or computer hacking -Also occurs when one discloses information that one had a duty to keep secret, even if the original acquisition was proper -Independent creation does *not* constitute misappropriation

Trademarks

-Words, symbols, names or devices used to specify goods to differentiate them from others and to indicate their source -Are a form of intellectual property -Recognizability and distinctiveness -Need to file to protect brand, no restrictions just have to file it every 10 years -If it becomes synonymous with everyday language then its no longer unique --> trademark dilution --> if it loses distinctiveness and becomes *generic*, it also loses status as a protected trademark -*In the context of intellectual property, the Facebook "f" and Burger King's crown is an example of a trademark*

Fraud

Creates criminal liability • Actionable under state criminal codes • Fines and/or imprisonment are exerted on individuals who knowingly and willfully defraud another - Scheme to defraud: Plan designed to take from a person the tangible right of honest services

Fifth Amendment: Double Jeopardy

• Individuals cannot be tried twice by the same governmental entity for the same crime • Does not prevent two prosecutions • Doctrine of *res judicata*: prohibits subsequent civil actions involving the same parties, claims or causes of action

*Patent Types*

*Utility*: new, nonobvious, useful processes, machines, compositions of matter or improvements thereof -Useful, functional inventions *Design*: New, original and ornamental design for an article of manufacture *Plant*: New variety of plant that can be reproduced asexually -Cannot patent natural phenomenas, abstract ideas, or mathematical algorithms

The Bill of Rights

-"civil liberties" that protect citizens from the power of government -Also protects businesses from excessive regulation

Patent Enforcement

-*When a patent expires, it is in the public domain and others may use it without limitations* • 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 (multiple patents in an iphone) • Patent trolls: non-producing patent owners who impose high costs by enforcement (just looking to see who uses what patents) -*Usually multiple intellectual property rights can cover the same article*

Lanham Act

-A 1946 law that spells out what kinds of marks (including brand names) can be protected and the exact method of protecting them -The fair use of a registered trademark defense is laid out in this act

Economic Espionage Act (EEA)

-A federal law that makes it a felony to copy, download, transmit, or in any way transfer proprietary files, documents, and information from a computer to an unauthorized person -Although various state laws make intentional trade secret misappropriation a crime, most criminal prosecutions today take place under it

The Grand Jury

-A group of citizens that decides whether there is sufficient evidence to accuse someone of a crime -23 citizens who live within the jurisdiction of the court -Determine probable cause: crime has been committed and there is sufficient evidence to warrant a standing trial -*Presumption of innocence*: Presuming that an indicted person is innocent until found guilty by a petit jury •Serve as an investigative body •Functioning depends upon the secrecy of the proceedings -*Grand jurors may subpoena business records* -*Defense counsel is not allowed to accompany a witness before a grand jury*

Collective Mark

-A mark used by members of a cooperative, association, union, or other organization to certify the region, materials, mode of manufacture, quality, or other characteristic of specific goods or services -NFL logo is example

Certification Mark

-A mark used by one or more persons, other than the owner, to certify the region, materials, mode of manufacture, quality, or other characteristic of specific goods or services -Ex. Good Housekeeping Seal of Approval

*Robbery*

-The action of taking property unlawfully from a person or place by force or threat of force -Thelma and Louise are out bar hopping on a Friday night. Thelma is driving to the next bar when Louise asks her to stop at a convenience store so she can "make a withdrawal." Thelma thinks that Louise is using an ATM when Louise pulls out a gun from her purse and holds up the store. Louise walks out of the store without firing any shots. The police arrest both at their next bar stop. Louise is guilty of robbery (under larceny)

Intellectual Property

-A product of the intellect, such as an expressed idea or concept, that has commercial value -*The justification for intellectual property is the same as for the private property system* -Exclusive right to intellectual property gives incentive to new inventions; society eventually receives benefit of invention -U.S. Constitution protects intellectual property for limited times -Once information is in the public domain, an intellectual property right cannot be applied to recapture it; strict application process in the first place -*The protections of property often do not apply automatically to ownership of intangible knowledge resources that are created*

Service Mark

-A trademark that is used to distinguish the services (rather than the products) of one person or company from those of another -A school's seal and logo are examples

Conspiracy

-Agreement or a partnership for criminal purposes -Each member becomes the agent or partner of every other member • *An offense occurs when one makes a conspiracy agreement and commits an overt act* • Overt act: Any event knowingly committed by a conspirator to accomplish some object of conspiracy • Circumstantial evidence can prove conspiracy

Injunction

-An order by a judge either to do something or to refrain from doing something -In cases of trade secrets, it orders those who have misappropriated the trade secret to refrain from using it or telling others about it -Can also obtain damages from misappropriating trade secrets

Racketeering

-Any act or threat involving specified state law crimes and federal offenses -Racketeer Influenced and Corrupt Organizations Act (RICO): Imposes criminal and civil liability on businesspersons who engage in prohibited activities and interstate commerce -Includes proof of pattern of racketeering activity or collection of an unlawful debt: two acts of racketeering in a ten-year period as proof

White-collar crime

-Any illegal offense that occurs in a business or professional setting -Committed to harm the business or for personal gains -Crimes cost over 100 billion annually

The 5th Amendment

-Before anyone can be tried for a capital or otherwise infamous crime, there must be a presentment or an indictment by a grand jury -This protection prevents political trials and unjustified prosecutions by placing a group of citizens between prosecutors and persons accused of major crimes -*The only business protected by the Fifth Amendment privilege against compulsory self-incrimination is a sole proprietorship*

Copyright Ownership

-Copyright law grants property in certain creative expressions & prohibits others from reproducing it w/o permission -Work must be original -Must be fixed in a tangible medium of expression -Must show creative expression -Protects authors rather than inventors *-Companies can be considered authors under copyright law*

Larceny

-Crime involving the unlawful taking of the personal property of another person or business -Aaron enters Stevenson's Supermarket and takes a loaf of bread from the shelf. He walks out of the store without paying for it. Which of the following is true of this situation? - Larceny *Burglary*: entry into a building illegally with intent to commit a crime, especially theft *Embezzlement*: theft or misappropriation of funds placed in one's trust or belonging to one's employer -It is a crime easily committed when there is a lack of internal control over funds

Classification of Criminal Conduct

-Crimes are felonies or misdemeanors; *based on the punishment imposed if the person is convicted of the alleged crime* -*Felonies* are punishable by fine or imprisonment in a penitentiary for a period of one year or more; commenced by a grand jury indictment; determines if there is sufficient evidence to warrant a trial -*Misdemeanor* cases are usually commenced when the government files a charge called an information; petit jury determines the guilt or innocence of the accused; fine or jail less than 1 year

Good faith

-Expression of an honestly held opinion or a belief which does not have fraudulent intent even though the opinion is erroneous or the belief is mistaken -A complete defense to fraud as it is inconsistent with the defendant's intent to defraud or willfulness, purposes essential to the charges

False Statement to a Federal Agency

-False statement must be related to a material matter • Defendant must act willfully and with knowledge ofthe falsity • *Exculpatory no*: Exception that protects an individual when the person's statement denies criminal wrongdoing

*Aiding and Abetting*

-Federal charge, a person acting under the direction of someone accused of criminal activities can be held responsible - Allegations indict persons only minimally involved with the actual crime •*Accessory*: State level charge; person can be an accessory before or after the crime is committed -Isla, a manager at a casino, assists a group of people to rob the place by drawing a floor plan of the casino. Isla did not take part in the actual robbery. Isla could be most likely found guilty of aiding and abetting

Trade Secrets

-Information owned by the company by which the company gains a competitive advantage from not being generally known to others, or readily ascertainable by proper means and has been the subject of reasonable efforts by the owner to maintain secrecy

Infringement

-Intentional use of the owner's mark or an accidental design of one's own mark too similarly to another's -Civil violation of a trademark or a patent

Patent

-Inventive act, and conveys a right to exclude other from making, using, selling, or importing the covered invention -The characteristic *novelty* indicates that something is new and different from the prior art -Nonobvious: ability of an invention to product surprising or unexpected results -Utility: must do something useful -*The Venetian Patent Act of 1474 is a source for many principles of modern patent law.*

Uniform Trade Secrets Act

-Protects employers from having former employees take trade secrets to new employer -Adopted by most states and provides a foundation for trade secret law

Copyright Law

-Specifies that 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 Purpose and character of the use: - Nature of work - Amount and substantiality of the portion used - Effect of the use upon the potential market

Steps to Obtain a Patent

1. File application 2. Filing fee 3. Explain Invention 4. Show difference from prior art 5. Describe patentable aspects 6. Evaluation by patent examiner

Pleas in Criminal Cases

1. Guilty 2. Not Guilty 3. Nolo Contendere ("no contest") : Gives the defendant the advantage of avoiding the cost of trial -Criminal conviction may be basis for civil damages suit

Basic Defenses against trademark infringement lawsuits;

1. The mark is not distinctive 2. There is little chance of the public being confused by use of a term trademarked by someone else 3. The use is "fair use"

Basic Concepts

Intent: willfully or knowingly; committed voluntarily and purposefully with the intent to do something and voluntarily + intentional -*Knowledge cannot be established by demonstrating the accused was negligent, careless or foolish*; can be inferred if the accused deliberately ignored the existence of a fact

Fourth Amendment

Protects individuals and corporations from *unreasonable searches and seizures by the government* - Requires the police to obtain a search warrant • Extends to certain civil matters • Expectation of privacy - Warrantless inspection of: • Commercial premises is reasonable • A private residence is unconstitutional

*Sixth Amendment*

Provides multiple protections that offer the right to: - Speedy and public trial - Trial by jury of peers - Be informed of the charge against oneself - Confront the accuser - Subpoena witnesses in one's favor - Have the assistance of an attorney

Fifth Amendment: Protection Against Self-incrimination

• Protects the accused from being compelled to testify against self • *Does not protect*: - Against being required to produce physical evidence - A person who is required to produce business records - Corporations • Sole proprietorship business: *The only business protected by the Fifth Amendment privilege against compulsory self-incrimination*

Securities and Health Care Fraud

• Securities Fraud - Securities Exchange Act and rule 10(b)5 of the Securities and Exchange Commission -Cover fraud in purchase or sale of a security • Health Care Fraud - Prosecution of false claims under the False Claims Act -Investigations are aided by information revealed by whistleblower suits