Test 2 Review
Price discrimination that is legal, if justified
- A difference in grade, quality, or quantity - The cost of transportation - Good-faith effort to meet competition - Differences in marginal cost - Deterioration of goods or closeout sale
What is a contract?
- A legally binding agreement - A promise that when breached has a remedy under law
What is negligent misrepresentation
- A statement made without reasonable care regarding information communicated to the other party without intent to deceive - The other party relies upon the information and is harmed, they may void the contract
What are the elements of a contract?
- An agreement - between competent parties - based on the parties' genuine assent - supported by consideration - made for a lawful purpose - in the form required by law (if any
What are the benefits of copyright registration?
- Establishes a public record of ownership - Required before an infringement claim can be filed in federal court - Required to send a meaningful cease & desist letter to an infringer - Establishes a record with US Customs & Border control
What is generic, categories of distinctiveness?
- Generic marks describe the general category of the product/service - No protection under trademark law - Cannot give one company control over use of the term
What is fraud?
- Making of a material misrepresentation or false statement of fact; - With the knowledge of its falsity or reckless indifference to its truth; - With the intent to cause another to rely on the statement; - Such person does rely on the statement; - And is harmed as a consequence
Vertical Restraints
- Price Discrimination (Robinson-Patman Act) - Exclusive Dealings and Territories (Sherman Act) - Mergers along the supply chain (Clayton Act) - Resale Price Maintenance (Sherman Act) - Tying (Clayton Act)
Horizontal Restraints
- Price-Fixing (Sherman Act) - Monopolization (Sherman Act) - Mergers among Competitors (Clayton Act)
Why is it important to have intellectual property laws?
- Provides an incentive to authors and inventors to produce works for the benefit of the public by regulating the public's use of such works to ensure that authors and inventors are compensated for their efforts. - Provides an opportunity to profit ➜ economic incentive to create and produce inventions & creative works that benefit the public - Gives businesses & individuals rights in information they produce & create
What is procedural unconscionability?
- Refers to conditions present in contract formation process - Inequalities result due to bargaining power, intelligence, age - Contracts of Adhesion are form contracts/boilerplate with no bargaining power
define Status Incapacity
- historically the law declares certain classes of persons to lack contractual capacity - Minors is a class of persons in current times that we say have status incapacity
How does a contract arise?
- offer and acceptance - intent to make a legally binding agreement.
How do you acquire rights for a trademark?
-1st to use the mark in commerce -Limited geographic area rights (common law rights) -1st to register the mark with the United States Patent & Trademark Office (USPTO)
What are some remedies for civil penalties (antitrust)?
-Injunction : to stop harmful & unlawful practice -Civil Action (lawsuit) for treble damages, brought by an individual or a company -Class Action may be brought by a State's Attorney General (consumers of the state are harmed)
What is resale price maintenance?
-Manufacturers attempt to control the prices that retailers can charge for their goods -"Suggested retail price" - okay, not a violation -Manufacturers want some control to stop sellers who price gouge consumers or charge too little and offer lower quality services to dilute the Manufacturer's brand
What does the Sherman Act- section 2 prohibit?
-Prohibits monopolization or attempts to do same -Price discussion among competitors can be an attempt to monopolize
What is the role of the patent system?:
-Protect inventions for a limited time -Encourage inventions -Stimulates investments by promising inventors exclusive rights for a limited time -Protects innovations so companies can gain a competitive advantage -Incentive to invent ➜ investors love patents; company make $$ thru patent licensing
What are some remedies for criminal penalties (antitrust)?
-Sherman Act provides for fine, imprisonment, or both -Up to $100 million fine for corporations -Up to $1 million fine for a natural person; OR up to ten years in prison; or BOTH
What does the Sherman Act regulate?
-regulates anticompetitive behavior among horizontal competitors - All-encompassing language, on its face invalidates most business arrangements - Supreme Court interprets and rules that the Sherman Act only applies to trade restraints that are unreasonable
What laws/acts make tying illegal?
-the Sherman Act, which prohibits "contracts in restraint of trade" -the Clayton Act, which prohibits exclusivity arrangements that may "substantially lessen competition" -the FTC Act, which prohibits "unfair methods of competition"
The Sherman Act
1) Prohibits contracts, combinations, and conspiracies in restraint of trade 2) Prohibits monopolies 3) Civil and Criminal penalties- MONEY$ and JAIL
What are likelihood of confusion factors?
1) Strength of the trademark 2) Similarity between the 2 trademarks (appearance, sound, connotation, meaning) 3) Proximity or similarity of the goods (same or related goods) 4) Evidence of actual consumer confusion 5) Similarity of marketing channels 6) Degree of caution exercised by purchaser (sophistication of buyer) 7) Defendant's intent (lack of good faith?)
How do you lose a trademark rights?
1. Abandonment 2. Failure to monitor third party usage a) Cease & Desist letters 3. Genericide 4. Improper licensing a) License agreement b) Franchise Agreement
Federal Trade Commission Act
1. Administered by FTC 2. A catch-all statute to fill loopholes in the more specific statutory scheme
What are the benefits of federal registration for trademarks?
1. Right to use mark nationwide 2. Constructive notice to third parties that the mark is owned by another 3. Ability to bring an infringement suit in federal court 4. Potential to recover treble damages, attorneys fees, other remedies 5. After 5 years of registration, mark may become incontestable a) Exclusive right to use the mark is clearly established; easier to defend in court 6. U.S. Customs and Border Protection to automatically confiscate counterfeit and infringing imported goods
What is privity of contract?
A doctrine of contract law that prevents any person from seeking the enforcement of a contract, or suing on its terms, unless they are a party to that contract.
define Factual Incapacity
A party has a mental condition and does not understand the very existence or subject matter of the contract (drugs, intoxication, illness, meds)
Why are trademarks important?
A trademark allows consumers to easily identify the source of goods & make their buying decision Trademark law gives companies an incentive to produce quality goods/services
What is definiteness?
An offer must have definite & certain terms - Indefinite, vague terms ⇢ no contract (not legally enforceable) - Court will not write the terms for the parties; try to determine intent
What is trademark infringement?
An owner of a federal registered trademark can sue others for trademark infringement if: 1) Valid mark 2) First to use and register 3) Owner of a famous or incontestable mark only needs to prove #4 4) Another's use is likely to cause confusion in the marketplace
What are the 4 categories of distinctiveness?
Arbitrary or Fanciful, Suggestive, descriptive, and generic.
Who is the author?
Author: the creator of the work; and usually the owner of copyright unless there is a written assignment agreement
What if a company has a large percentage of a market, is it still a monopoly?
Company with large percentage of a market is not always a monopoly- as long as market share is gained because of unmanipulated consumer preference, superior product/services, it is NOT a violation of Sherman Act
Who regulates copyrights?
Copyrights are exclusively regulated by Federal Law ➜ Copyright Act
What do courts look at to see if a merger will cause a monopoly?
Courts examine market share & relevant markets
What is intellectual property?
Creations of the mind that the law protects against unauthorized use by others.
What is the purpose of horizontal restraints?
Customers must be gained by good products and services, not by market or price manipulation.
What is vicarious infringement?
Defendant in a position to supervise infringing activity; and Direct financial interest gained from infringing activity
What must an offer have?
Definiteness
What does DMCA stand for?
Digital Millennium Copyright Act (1998)
define breach
Failure by one of the parties in a contract to act or perform in the manner specified in the terms of the contract
What is horizontal restraints?
It is by and between competitors
Do large companies need to give any notice before a merger?
Large companies must give notice of mergers to the FTC and the Antitrust Division of Department of Justice
What is the duration of copyright?
Life plus 70 years; Work for Hire? 120 years from creation
define void
NO legal effect, unenforceable- subject matter illegal
Are boycotts among competitors allowed?
No, it is a per se violation of the Sherman Act.
What are patents governed by?
Patents are exclusively governed by Federal Law ➜ Patent Act
What are patents?
Patents give inventors the right to exclude others from making, using, selling, offering for sale, or importing the claimed invention within the US for 20 years.
Mitigation
Plaintiff must take reasonable steps to limit the damages suffered A duty to mitigate
What is anticipatory breach?
Prior to the time of performance, one party in a contract indicates that they will not perform their contractual obligations
What is price discrimination and what act is it under?
Prohibited by Clayton Act and Robinson- Patman Act Occurs when a seller charges different prices to different buyers for similar goods ➞ reducing competition or move towards monopolistic tendencies
The Clayton Act (Amended by Robinson Patman Act)
Prohibits specific types of restraints on trade - Exclusive dealing arrangements - Tie-in Sales - Price Discrimination - Mergers and Acquisitions - Civil Penalties
Who are the parties to a contract?
Promisor and promisee offeror and offeree
What are the requirements of a trademark?
Requirements of a mark: a mark must be distinctive; it must be capable of identifying the source of goods or services
What is secondary meaning?
Secondary Meaning aka Acquired Distinctiveness through use of the mark in commerce Advertising & marketing Volume of sales Length & manner of use Consumer surveys
What are liquidated damages?
Terms of the contract specify what the damages award will be in the event of a breach.
What is substantive unconscionability?
Terms of the contract; substance of the contract Excessively harsh and oppressive
How does the Clayton Act help prevent a monopoly?
The Clayton Act prohibits mergers that will lessen competition or create a monopoly.
What is DMCA?
To bring copyright law into the digital environment; support growth of digital marketplace
What level are trademarks regulated at?
Trade secrets are primarily regulated at the State level, and are subject to the laws of unfair competition (business tort law)
What is a trademark?
Trademark: a word, symbol, or phrase, used to identify a particular seller's products and distinguish them from the products of another seller (also Trade dress)
Who regulates trademarks?
Trademarks may be regulated by Federal Law ➜ Lanham Act and State Laws
What is a copyright?
What is a Copyright? A form of IP protection provided by federal law to authors of creative works
What is tying?
When the seller makes a buyer who wants to purchase one product buy an additional product they do not want or prevents them from buying the 'tied' product from another seller.
define unilateral
a promise is made by one party in exchange for an act
What is the Uniform Trade Secret Act?
a uniform state law provides protection for the business tort: Misappropriation of Trade Secrets
The federal statute that governs trademark law is called the: a) Lanham Act b) America Invents Act c) The Trademark Act
a) Lanham Act
All of the following statements refer to an element of fraud under contract law except: a) the defendant desired to obtain a financial benefit. b) the defendant made a false statement. c) the defendant knew that the statement was false or was recklessly indifferent regarding its truth. d) the defendant intended for the other party to rely on the false statement.
a) the defendant desired to obtain a financial benefit.
Large companies must give notice of mergers to the FTC (Federal Trade Commission) and the Department of Justice. a) true b) false
a) true
What is misappropriation of trade secret?
acquire a trade secret of another by inappropriate means
define implied
acts and conduct of the parties
What is an offer?
an expression of willingness to enter into an agreement
What is quantum meruit?
as much as deserved
The ________ is a statute that brings copyright law into the digital environment a) America Creates Act (ACA) b) Digital Millennium Copyright Act (DMCA) c) Digital Works Protection America (DWPA) d) Uniform Digital Act (UDA)
b) Digital Millennium Copyright Act (DMCA)
On September 27, Summers sent Fox a letter offering to sell Fox a vacation home for $150,000. On October 2, Fox replied by mail agreeing to buy the home for $145,000. Summers did not reply to Fox. Do Fox and Summers have a binding contract? a) No, because Fox failed to sign and return Summers's letter. b) No, because Fox's letter was a counteroffer. c) Yes, because Summers's offer was validly accepted. d) Yes, because Summers's silence is an implied acceptance of Fox's letter
b) No, because Fox's letter was a counteroffer.
The international treaty for copyright law is: a) The Copyright International Act b) The Berne Convention c) Multi-country Copyright Cooperation Act
b) The Berne Convention
The following category of trademark is not inherently distinctive but can acquire distinctiveness or secondary meaning: a) generic marks b) descriptive marks c) suggestive marks d) arbitrary or fanciful marks
b) descriptive marks
Courts will apply the 'rule of reason' to boycotts and refusals to deal between competitors. a) true b) false
b) false
Sara Smith hired Wedding Bliss Photo, Inc. to document her wedding. Sara paid Wedding Bliss $5,000 to take hundreds of photos. Sara and Wedding Bliss did not sign any type of assignment agreement. Sara saw her photos displayed on Wedding Bliss's website and demanded they be removed. Wedding Bliss did not remove the photos. Sara sued and claimed she owned the photos and had exclusive rights to control their use. IS she right? a) Yes, Sara paid $$ and therefore owns the copyright in the photos and controls what can be done with the photos b) No, Wedding Bliss owns the copyright in the photos
b) no, wedding bliss owns the copyright in the photos.
define valid
binding and enforceable under law
Who can regulate the prices?
both the state and the federal government may regulate prices.
What is a trade secret?
business information that is generally not known outside of the company, which gives the company an economic advantage over its competitors
The standard applied to determine whether a third party's use of a trademark constitutes infringement is a several factor test called the : a) Inexcusable Copy Test b) Standard of Ownership Test c) Likelihood of Confusion Test d) National Infringement Determination
c) Likelihood of Confusion Test
Able Sofa, Inc., sent Noll a letter offering to sell Noll a custom-made sofa for $5,000. Noll immediately sent a letter to Able accepting the offer. However, the post office did not deliver the letter to the correct address even though it was properly addressed. Three days later, Able mailed a letter of revocation to Noll, which was received by Noll. Able refused to sell Noll the sofa. Noll sued Able for breach of contract. Able: a) Would have been liable only if Noll had sent the acceptance letter out a second time. b) Will avoid liability since it revoked its offer prior to receiving Noll's acceptance. c) Will be liable for breach of contract because Noll sent their acceptance of the offer in a properly addressed envelope. d) Will avoid liability due to the post office's error
c) Will be liable for breach of contract because Noll sent their acceptance of the offer in a properly addressed envelope.
Software may be protected by what form(s) of intellectual property. Choose the best answer. a) Patent Law b) Copyright law c) Both patent and copyright d) none of the above
c) both patent and copyright
If no termination date is specified for an offer, the offer will remain open: a) for one year b) for six months c) for a reasonable period of time d) until someone accepts it
c) for a reasonable period of time
When a written contract does not correctly reflect the agreement already made between the parties and there is a mistake in transcription, either party may seek relief from a court for a(n): a) rescission b) injunction c) reformation of the contract d) action for specific performance
c) reformation of the contract
Using his computer, Professor Bell makes 15 copies of a database in some software he purchased for personal research. He made the copies to provide his accounting students during his next lecture. The owner of the copyright in the software claims copyright infringement. Which of the following is most correct? a) This is infringement of copyright, since he bought the software for personal use b) This is not an infringement since software cannot be protected by copyright. c) This is not an infringement because of the fair use doctrine
c) this is not an infringement because of the fair use doctrine.
Assume Harvey buys a bull from Mike for the purpose of breeding, and Mike was aware of Harvey's purpose in purchasing the bull. Later, the bull was discovered to be sterile, although at the time of sale both Harvey and Mike believed the bull was not sterile. The contract is: a) voidable based on fraud b) voidable based on misrepresentation c) voidable based on mutual mistake d) voidable based on economical duress.
c) voidable based on a mutual mistake
What is rescission?
cancellation of the contract; put the parties back in the position prior to the contract
define executed
completed all requirements
define voidable
conditions are present that make an otherwise VALID contract rejectable by either party
what is mutual mistake of fact or law?
contract is voidable by the adversely affected party if the mistake will have a material effect on the agreement
What is the mailbox rule?
controls when parties are not in physically proximity - acceptance effective on dispatch
What is quasi contracts?
court imposes an obligation when there is no contract
What is contributory infringement?
defendant has knowledge of infringing activity & participates
define intoxicated person
degree of intoxication must be excessive to warrant avoidance of a contract; did the person realize a contract was made?
What is descriptive, categories of distinctiveness?
directly describe the product/service ➜ NOT inherently distinctive ➜ no protection unless acquire secondary meaning
What are preexisting legal obligation?
doing or promising to do what one is already under a legal obligation to do is not consideration
What is justifiable reliance?
fraud is only actionable if the other party relied on the fraudulent statement
What is the utility patent?
is how an invention works - Functionality - Inventions: processes, methods, machines, compositions of matter. - 20 year term
What is the design patent?
is how it looks - Ornamental, nonfunctional designs - 14 year term
define mentally incompetent person
lack contractual capacity due to a mental disorder; may avoid an otherwise valid contract
What is illusory promises?
legally binding contract must have a mutual promise; if mutual promise is lacking the contract fails for lack of mutuality
What is usury?
lending money at an interest rate higher than that allowable by law
What is failure to mitigate?
limits recovery of damages to the amount the injured party's loss should have been, if they had mitigated
What is a unilateral mistake?
mistake of fact known to one party to the contract does not affect the contract when it is unknown to other party
What is the plant, patent?
new varieties of plant - 20 year term
per se violation
no defense applies, even if the boycott is out of good intentions - still illegal
What are arbitrary or fanciful, categories of distinctiveness?
no relationship to underlying product/service ➜ inherently distinctive ➜ high level of protection
define executory
not completed
define bilateral
one promise is made for another promise
What are the two elements of unconscionability?
procedural and substantive unconscionability
what is determination of unconscionability?
some jurisdictions require the presence of 2 elements of unconscionability
What is material breach?
substantial breach that defeats the very object or purpose of the contract
What is suggestive, categories of distinctiveness?
suggests a characteristic of the product/service ➜ inherently distinctive ➜ high level of protection
Define express
terms are in spoken or written words
Monopoly
the exclusive possession or control of the supply or trade in goods or services.
what is economic duress?
threat of financial loss pressures the victim
What is physical duress?
threat of violence or physical harm ; no free will; enters into contract to avoid harm
What is a infringement claim?
to bring a claim in federal court, the copyright owner must register the work with the Copyright Office
What are the three types of patents?
utility, design, plant
What are agreements not to compete?
valid restrictive covenants are crucial in certain business contracts
What is undue influence?
when one party has control or dominance over another and this control interferes with their decision-making
Who can be secondary liability for infringement
when you're not the main actor but still liable for infringement
What is duress?
where a threat of harm exists to influence someone to act against their free will; the contract is voidable
Why is consideration important?
without consideration there is no legally binding contract
What is mistake in transcription?
→ Reformation: a remedy to correct a written contract when it fails to express the actual intent of the parties because of mistake, accident, or fraud