Business Law

How does common law apply to partnerships?

- Under common law, two persons doing business as partners puts them in a special relationship -- this is similar to an agency relationship because each partner is deemed the agent of the others partners and of the partnership (ie, can act on their behalf when dealing with third parties) - Like in an agency relationship, partners have a fiduciary duty to each other (act in each other's interest) - Unlike in an agency relationship, partners have an ownership interest, meaning they commit resources to the business and share profits and losses

When can a franchise be terminated early?

- Usually this is determined by the franchise agreement - Typically must be "for cause," like death/disability, breach of franchise agreement, insolvency, etc. - Usually the franchisor must give the franchisee reasonable notice of termination so they can wind up the business, and the opportunity to cure an ordinary, curable breach that's not a breach of fidelity or honesty like fraud

When can members of an LLC become personally liable?

- When a member has significantly contributed to the LLC's tortious conduct - When an individual guarantees payment of a business loan to the LLC - When a member fails to comply with certain formalities, ie, commingling personal and business funds - When a court "pierces the veil" under alter ego theory (member is treating the LLC as an extension of their own self and dominating it)

What employment law issues should be covered in a franchise agreement?

- Whether franchisor is responsible for paying any salary or benefits to workers employed by franchisee - Whether franchisor provides any employee training, HR materials, or employee conduct rules to franchisee - Whether franchisor can remove any of franchisee's executives or staff - Whether franchisor can assess service, management, and conduct as a part of franchisee site inspections

How is dissociation for LPs different than for traditional partnerships?

- While legally a limited partner can withdraw from the partnership with 6 months notice, usually the agreement says the limited partner has no right to withdraw - A general partner's voluntary dissociation or incapacity normally leads to dissolution, but incapacity of a limited partner doesn't

When might a partnership be dissolved?

- Acts of partners (partners agree to dissolve or an event occurs that contractually obligates dissolution) - Operation of law (partnership for a term expires, a partner dies, new laws make the business illegal or impractical, the partnership goes bankrupt) - Judicial decree (insanity, impracticality, incapacity, improper conduct)

How does dissolution work for LPs?

- Creditors' claims, including those of partners who are creditors, take first priority - Partners and former partners then receive unpaid distributions of partnership assets, and a proportional return of their contributions - Partners abide by terms in the buy-sell agreement

What factors should you consider when choosing a business entity?

- Difficulty of formation - Liability and risk - Tax considerations - Continuity and ability to transfer ownership - Management and control - Financing - Licenses - Location

What are the 3 main types of franchise?

- Distributorship (a manufacturer licenses a dealer to sell its product, often in an exclusive territory, like car dealerships and beer distributors) - Chain-style business operation (franchise operates under franchisee's trade name and is identified as a member of a select group of the franchisor's dealers in exchange for following the franchisor's methods of operation and performance standards, and sometimes getting its materials exclusively from the franchisor, like McDonald's and Chipotle) - Manufacturing agreement (franchisor gives franchisee the essential ingredients or formula to make a product, and the franchisee markets it in accordance with the franchisor's standards, like Pepsi-Cola)

What are a partner's fiduciary duties?

- Duty of care (refrain from grossly negligent or reckless conduct, intentional misconduct, or knowing violations of the law) - Duty of loyalty (must account for any benefit you derive in the conduct of the partnership's business or from use of its property, can't compete with the partnership)

How do state laws define a franchise?

- Franchisee pays a franchise fee to the franchisor for the right to sell and distribute the franchisor's goods and services under the franchisor's prescribed marketing plan, as well as royalties and sometimes other payments outlined in the contract - Franchisor exercises significant control over the franchisee's business and may require franchisee to buy and/or sell a certain amount of the franchisor's products, and the franchisee is given in exchange exclusive rights to operate in a certain territory - Franchisee's business is substantially associated with the franchisor's, like by using its trademark or slogan

What federal regulations exist for franchises?

- Franchisees in certain industries, like car dealerships, are protected from unreasonable demands and bad-faith terminations - Antitrust laws sometimes apply to prohibit anticompetitive agreements - FTC's Franchise Rule requires franchisors to disclose facts about the business, like projected earnings for franchisees, obtained on a reasonable basis with actual data, and explain some key terms so that franchisees can make an informed choice about their purchase

What is the scope of a partner's authority in a partnership?

- If the partner acts within the scope of their actual authority, their commitments are binding for them and the firm - If the partner is doing partnership business with third parties, apparent authority exists and the partner shares authority and liability with the firm - If the partner is doing business with a third party that the third party knows isn't within their authority, only the partner is liable, not the firm - If the partner is exercising their implied powers that are reasonably necessary and customary to carry on business, their commitments are binding for them and the firm

How long does a partnership last?

- If the partnership agreement specifies the duration of the partnership and ends it on a specific date or upon completion of a project, it's called "partnership for a term" and creates liability for partners who withdraw prematurely - If the duration isn't specified, it's called a "partnership at will" and partners can withdraw or dissolve it without liability

What are the advantages of an LLC?

- Limited liability for members - Can choose between getting taxed as a corporation or partnership (if 2+ members) or as a corporation or sole proprietorship (if only 1 member) - Can attract foreign investors

What are partners' rights in a partnership (unless agreed otherwise)?

- Management (equal rights in management, one vote regardless of capital contribution) - Interest in partnership (proportion of business profits and losses specified in the partnership agreement, or an equal proportion all around if unspecified) - Compensation (if agreed upon) - Inspection of books (access to all partnership books and records on demand and full information on the conduct of all aspects of partnership business) - Accounting (can ask a court to account for their assets during the partnership or when it dissolves) - Property rights (can only use partnership property on behalf of the partnership, can't co-own it or sell it)

What goes in an LLC's operating agreement?

- Management structure (who will manage, how future managers will be chosen/removed) - Selection of new members - Division of profits - Transferability of membership interests - Dissociation/dissolution (which events cause each, method of calculating a buyout price for a dissociation) - Meetings (if former members' meetings will be held) - Voting rights (based automatically on capital contributions or alternatively one vote per member)

What state regulations exist for franchises?

- Many states require pre-sale disclosures like the costs of operation, recurring expenses, and profits earned - States may regulate how franchisors advertise to potential franchisees - States may prohibit terminations without "good cause" - Franchisees may be protected against fraud, but in some cases, like Bixby's Food Systems v. McKay, it's only if the franchisee reasonably relied on a false statement

What are the advantages of a sole proprietorship?

- Owner owns the entire business and gets all profits - Easy and cheap to start because you don't have to fill out any government documents - Full management and decision-making power gives the owner flexibility - Taxes: owner only pays personal income taxes, not extra taxes for the business, and can establish tax-exempt retirement accounts

What are the disadvantages of a sole proprietorship?

- Owner personally faces unlimited legal liability for any lawsuits against the business or its employees - Owner can even be held liable for loan debts after filing for bankruptcy if there's no recorded evidence that the loan was used only for the business (Dewhurst) - If the owner's liability exceeds the limits of your insurance policy, creditors can pursue their personal assets to pay the judgment - When the owner dies, the business is automatically dissolved - Owner can only raise capital from their personal funds and any loans they can obtain

What events can cause dissociation of a partner?

- Partner gives notice that they want to withdraw - The partnership dissolves altogether - An event agreed to in the partnership agreement occurs - Unanimous vote of the other partners - Court or arbitrator order if the partner engaged in wrongful conduct that affects the partnership business - Partner declares bankruptcy or has other capacity issue, like incapacitation or death

What are the effects of dissociation?

- Partner loses right to participate in management - Partner's duty of loyalty ends - Partner's duty of care continues with respect to events that occurred before the dissociation, unless the partner participates in "winding up" - Partner's interest in the partnership must be purchased according to the buyout price (the $ that would have been distributed to the partner if the partnership had been wound up on the date of dissociation, offset by amounts owed by the partner to the partnership) - Partnership can be bound by acts of the dissociated partner based on apparent authority for two years, so partnership should release a statement of dissociation

How does liability work in an LLP?

- Partners aren't personally liable for other partners' malpractice - Partners are liable for their own wrongful acts or supervising someone who committed a wrongful act - When doing business in another state, most states apply the law of the state where the LLP was formed - Some states provide for proportionate liability if more than one partner commits malpractice

What does "winding up" mean?

- Partnership has dissolves but continues to complete work begun but not finished at the time of dissolution - Partnership distributes assets by paying third-party debts, refunding loans made by partners to the partnership, returning capital contributions, and distributing any profits or losses to the partners

What issues are typically addressed in a franchise contract?

- Payment for the franchise (initial franchise license fee, expenses covered by franchisee, % of sales reserved for the franchisor) - Business premises (lease/purchase/construction) - Location (exclusive in a territory vs non-exclusive) - Business organization (capital structure, sales quotas, record-keeping requirements, training, etc.) - Quality control (degree of supervision, limits on ability to sell franchise to another party) - Pricing arrangements (franchisor can set a price for purchase of certain supplies for the franchise, but can't mandate prices for the franchisee to resell goods)

What are the essential elements of a partnership?

1. A sharing of profits and losses 2. A joint ownership of the business 3. An equal right to be involved in the management of the business

What legal requirements are there to start a business?

1. Register the name 2. Get an occupational license 3. State tax registration 4. Health and environmental permits 5. Zoning and building codes 6. Import/export regulations

What are copyright owners protected against?

1. Reproduction of the work 2. Development of derivative works 3. Distribution of the work 4. Public display of the work

What must a plaintiff prove to make a trademark dilution claim?

1. The plaintiff owns a famous, distinctive mark 2. The defendant has begun using a mark in commerce that's allegedly diluting the famous mark 3. The similarity between the defendant's mark and the famous mark gives rise to an association between the marks 4. The association is likely to impair the distinctiveness of the famous mark or harm its reputation

What is a trademark?

A distinctive mark, motto, device, or implement that a manufacturer affixes to the good it produces so it can be identified on the market and its origins made known

What would be considered a strong mark?

A fanciful mark (like an invented word), an arbitrary mark (common words or letters used or stylized in an uncommon, non-descriptive way), or a suggestive mark (indicates something about the product without describing it directly and requiring imagination) -- basically a mark that acts as a source identifier, not a descriptor

What is a limited liability partnership (LLP)?

A hybrid form of business that allows a partnership to continue as a pass-through entity for tax purposes but limits the personal liability of the partners

What is a limited liability company (LLC)?

A hybrid legal entity that combines the limited liability aspects of a corporation and the tax advantages of a partnership, owned by "members" who are shielded from personal liability above the amount of their investment

What is licensing with regard to marks?

A license is an agreement allowing the use of a trademark (or copyright/patent/trade secret) for certain purposes, usually in exchange for royalties and only covering very specific uses

When is a partnership treated as an aggregate of the individual partners?

A partnership is an aggregate for federal income tax purposes, so the partnership is a pass-through entity with no tax liability and the partners pay taxes on the business's income or losses on their own tax returns

What is a limited liability limited partnership (LLLP)?

A partnership that provides for limited and general partners like an LP, but extends general partners liability limited to only the amount of their investment, like limited partners are given in an LP

What is a limited partnership (LP)?

A partnership with at least one general partner, who assumes management responsibility for the partnership and has full responsibility for the partnership and its debts, and at least one limited partner, who contributes cash or other property, owns an interest in the firm without being involved in management, and isn't personally liable for partnership debts beyond the amount of their investment

What is a sole proprietorship?

A single-owner business where the owner hasn't created a separate business organization and therefore "is" the business

What is joint and several liability?

A third party has the option of suing all the partners together or one or more of the partners separately, but if they only sue select partners, they can only collect judgment from their assets, not the partnership

What is joint liability?

A third party must sue all the partners as a group, but each partner can be held liable for the full amount

How does the FTC define a franchise?

According to the FTC, a franchising agreement is when: - A trademark owner grants a businessman permission to use a trademarked good or service in the conduct of a business enterprise - The businessman pays the trademark owner royalties - The trademark owner is given significant control over the operations of the business making use of the trademark - Sometimes the trademark owner must give significant assistance, like training, to the business making use of the trademark

What remedies are possible for copyright infringement?

Actual damages, fines up to $150,000, prison time, and permanent injunctions if necessary to prevent future infringement

What was the ruling in Coca Cola v. Koke?

After Coca Cola sued Koke and other soda companies for using its mark, Koke claimed that Coca Cola couldn't be represented because its name fraudulently implied that it contained cocaine. SCOTUS ruled that Coca Cola was protected because like other marks under common use, they represent a widely known brand to most people, not a broad product group like "sodas with cocaine"

What was the ruling in Holiday Inn v. Hotel Associates?

After a long, good-faith working relationship, Holiday Inn told Buddy House that if he renovated a hotel and ran it appropriately, he'd have his franchise extended after 10 years. House did so and operated it as Hotel Associates, refusing offers to sell it for a high price on the assumption that his hotel would be franchised again. A Holiday Inn executive then developed a plan to license a different hotel in the area instead of continuing to franchise Hotel Associates without informing House. Hotel Associates spent $3 million to renovate as part of its application for franchise extension, and then Holiday Inn did not renew its license and granted it to the other hotel. The court ruled that Holiday Inn wrongfully terminated the license because their honest, good-faith relationship meant Holiday Inn should have let House know about such pertinent information so he wouldn't spend millions on renovations for an extension that wouldn't occur

What was the ruling in Mekonen v. Zewdu?

After a management disagreement, some members of Green Cab withdrew without the consent of other members, and some did not withdraw. Both sides kept driving under Green Cab's' name. The withdrawing members sued the staying members, seeking the right to operate as Green Cab. Since the withdrawing members were no longer members in good standing of Green Cab, having defaulted on their operating agreement, and were no longer making contributions toward the company's operating expenses, the court ruled they had no legal right to use a Green Cab license

What was the ruling in Century 21 v. All Professional Realty?

All Professional Realty signed a franchise agreement to operate offices with the Century 21 mark and system in various cities and pay royalties. Four years later, All Professional stopped paying royalties and debt payments to Century 21 and closed one of the offices in the contract. Century 21 terminated the franchise agreement. The court ruled that this termination was lawful because All Professional was in breach of their contract, which certainly counts as "for cause"

What is a family limited liability partnership (FLLP)?

An LLP where the partners are related to each other or acting in a fiduciary capacity for persons so related, usually used for family-owned farms because it can exempt families from some property transfer taxes

What is a buy-sell agreement?

An agreement where partners decide how the assets will be valued and divided upon dissolution, potentially allowing some partners to buy out others and/or letting partners decide whether to buy or sell

What is a partnership?

An agreement, express or implied, between two or more persons to carry on a business for a profit

What is a franchise?

An arrangement in which the owner of intellectual property -- such as a trademark, a trade name, or a copyright -- licenses others to use it in the selling of goods or services

What is a copyright?

An intangible property right granted to the author or originator of a literary or artistic production of a specified type, automatically given to the work for a period of decades, after which it enters the public domain

What is a partnership agreement?

An oral, written, or implied-by-conduct agreement to form a partnership and determine partners' rights and duties (called articles of partnership if written)

What is intellectual property?

Any property that results from intellectual, creative processes, products of someone's mind

What jurisdiction does an LLC fall under?

Courts generally regard an LLC as a citizen of every state of which its members are citizens, so a third party can only sue the LLC in federal court with diversity jurisdiction if ALL of the members are from another state different from the third party's

How is an LLP formed?

Must file the appropriate form with a central state agency under a name that includes "LLP," and must file an annual report to remain qualified as an LLP

How is an LLC formed?

File articles of organization with a state agency, naming the company as an LLC and detailing members and management

How does patent infringement work in foreign commerce?

Foreign firms can apply for US patents and vice versa, but in general, if a patented product is made and sold in another country, patent infringement isn't happening under US law

What was the ruling in Gadley Enterprises v. Department of Labor?

Gadley Enterprises bought out nearly all the business assets of a child care center operating as a sole proprietorship. The original owner of the child care center had a liability of over $40,000 to the PA Department of Labor for not paying unemployment compensation taxes and interest. Gadley took on that liability by purchasing the business's assets without getting a certification that the original owner didn't have outstanding tax liabilities. The court ruled that despite the business being a sole proprietorship, Gadley's purchase of the majority of the business's assets implied its acquisition of its liabilities too -- if the majority of assets and liabilities move, a sole proprietorship isn't equated to its original ownership

Are generic terms ever protected?

Generic terms, which refer to a whole class of products like "bicycle," can't be protected as trademarks, but if a strong mark becomes generic due to broad use, like Google, it's still protected

What are counterfeit goods?

Goods that copy or imitate trademarked goods but aren't the genuine product

What is the difference between a member-managed and manager-managed LLC?

In a member-managed LLC (assumed), all members participate in management and decisions are made by majority vote, while in a manager-managed LLC (specified), the members designate a group of people to manage the firm, which may include nonmembers

When is a partnership treated as an entity?

In statutory law under the UPA and federal procedural laws, most states treat partnerships as an entity, meaning that a partnership can sue or be sued, hold title to property, etc. in its collective name rather than in the names of the individual partners

What is a trade secret?

Information of commercial value, like customer lists, plans, R&D, pricing info, marketing methods, production techniques, and anything that makes an individual company technique and would have value to a competitor

What does the Stop Counterfeiting in Manufactured Goods Act (SCMGA) do?

It criminalizes trafficking counterfeit goods/services and/or the labels associated with them and knowingly using a counterfeit mark on goods/services, at risk of up to a $2 million fine or 10 years in jail, and having to forfeit the counterfeit products and pay the victim their lost net profits

How similar does a mark have to be for dilution?

It doesn't have to be identical, just similar enough to create confusion for customers and reduce the value of the famous mark, like if you started a restaurant called "Sambuck's" that offered similar products to Starbucks in a similar format (Starbucks v. Lundberg)

What determines the duration of a franchise contract?

It's determined between the parties to the contract

What was the ruling in LFP IP, LLC v. Hustler Cincinnati, Inc?

Jimmy Flynt, brother of Larry Flynt, had opened up a store called "Hustler Cincinnati" and paid licensing fees to Larry's corporation to use the "Hustler" mark. When he stopped paying the fees, Larry filed for an injunction against Jimmy. Jimmy then opened a store called "Flynt Sexy Gifts," so the court modified the injunction to cover this conduct as well because it was likely to cause confusion with the "Larry Flynt" mark

Can fiduciary duties be waived?

No, a partnership agreement can't waive a partner's fiduciary duties. It can specify what acts the partners agree violate a fiduciary duty. Pursuing personal interests doesn't automatically violate a fiduciary duty as long as the partner discloses it to the other partners

What was the ruling in DeWine v. Valley View?

Ohio sought penalties from the owner of a company and the sole general partner of an LP. While the owner claimed the company wasn't liable because it had no relation to the LP and he wasn't liable because he acted in good faith, the court decided he was liable because he was acting as a general partner of the LP when he authorized activities that violated the law

When can descriptive or geographic terms and personal names be protected as trademarks?

Only if they've acquired a secondary meaning, where it's been used long enough and exclusively enough that customers associate the term with specific trademarked items by that company and would get confused

What is indemnification?

Operating under joint and several liability, a partner who commits a tort unrelated to the normal course of partnership business can be required to reimburse the partnership for any damages it pays

What's the difference between the right and power to dissociate?

Partners always have the power to dissociate, but sometimes they don't have the right to dissociate, like if their dissociation breaches the partnership agreement, in which case they're liable to the partnership and partners for damages caused by the dissociation

What is one disadvantage of traditional partnerships with regard to liability?

Partners are personally liable for the debts of the partnership, though the partnership's assets normally must be exhausted before creditors can reach the partners' individual assets

How is an LP formed?

Partners must file a certificate of limited partnership including information about and designation of each general and limited partner

What is dissociation?

When a partner ceases to be associated in the carrying on of the partnership business, entitling them to have their interest purchased by the partnership and terminating their authority to act for the partnership and participate in running the business

What was the ruling in Meinhard v. Salmon?

Salmon and Meinhard were working together on a joint venture, Salmon having negotiated a 20-year lease for a hotel and Meinhard having agreed to assume half the cost in exchange for half the profits and losses. Salmon would have the sole power to manage the building. 4 months before the lease ended, Salmon was informed about a project to raze the structure and other surrounding lots and create one huge building, and he signed a new lease in his own business's name to work on that project without telling Meinhard. The court ruled that Salmon breached his fiduciary duty of undivided loyalty because he should have communicated any benefit he received to Meinhard and instead he abused the special opportunity he had as a manger of the building. This ruling means that in a partnership, partners must abide by the highest standard of loyalty

What are the disadvantages of an LLC?

State LLC statutes are not uniform, so interstate LLCs may not receive consistent treatment, though usually states will just apply the law of the state where the LLC was formed

What statute federally protects trademarks?

The Lanham Act protects trademarks by banning trademark infringement under federal law

How does statutory law apply to partnerships?

The Uniform Partnership Act (UPA) applies to partnerships of two or more persons without an express agreement and allows corporations to be partners in a partnership and requires intent to associate as a key element of a partnership

What is a charging order?

When a partner's creditor petitions the court to attach the partner's interest in the partnership to pay an obligation

What is partnership by estoppel?

When a third person has reasonably and detrimentally relied on the representation that a non-partner was part of a partnership, that non-partner now has liability but doesn't earn partnership rights

What is a patent?

The exclusive right to make, use, or sell your invention, discovery, design, or process for a period of 14 (for a design) or 20 (for an invention) years, as long as you can prove it's novel, useful, and non-obvious

What was the ruling in Hodge v. Strong Built?

The family of a man who died from a fall when a deer stand broke tried to sue the LLC manufacturing the deer stand, as well as the sole member of the LLC himself. The court did not hold the sole member liable for the man's death because there was no indication that his wrongful actions were "something more" than his duties as a member and manager of the LLC

What is the relationship between franchisor and franchisee?

The franchisee is generally legally independent of the franchisor, but economically dependent on the franchisor's integrated business system. This means the franchisee can operate as an independent businessman but still obtain the advantages of a regional or national organization

What is trade dress?

The image and overall appearance of a product and the impression it gives -- this is protected in the same way as trademarks, you can't just copy the Cheesecake Factory's interior design

What is the First Sale doctrine?

The owner of a copyrighted item can sell or dispose of it without the authority of the copyright owner (if you buy a book from a copyright-owning publisher, you can sell it or throw it out anytime)

What happens if a limited partner starts taking part in management?

They forfeit their limited liability for partnership debts

How liable is a new incoming partner for partnership obligations?

They're not personally liable for any partnership obligations incurred before they became a partner

What is trademark infringement?

When a trademark is copied to a substantial degree or used in its entirety by another, intentionally or unintentionally -- to succeed in a trademark infringement suit, you only have to show that the defendant's use of the mark created a "likelihood of confusion" about the origin of the defendant's goods/services, and then you may be able to get an injunction, have goods with the unauthorized trademark destroyed, and/or recover damages and the wrongful profits the defendant made

What fiduciary duties do managers owe to members and the LLC?

Under the ULLCA (which only 10 states have adopted), managers in a manager-managed LLC owe fiduciary duties (loyalty and care) to the LLC and its members, but under some state laws, managers only owe fiduciary duties to the LLC, not to its members

When is a franchise termination considered wrongful?

Usually the franchisor has much more favorable terms regarding termination than the franchisee, but they can be held liable for terminating a contract if they haven't acted in "good faith and fair dealing," like if they terminate a contract with a franchisee that's performing well

What is patent infringement?

When a firm makes, uses, or sells another's patented invention, discovery, design, or process without the patent owner's permission, even if the patented item hasn't been put into commerce yet

When are you federally liable for disclosing or using someone else's trade secret?

When you discovered the secret by improper means or your disclosure or use of the trade secret constitutes a breach of a duty owed to the other party

What was the ruling in Shamburger v. Shamburger?

Where two provisions of a contract conflict, the specific provision controls over a more general provision, as it is assumed that the specific provision expresses the parties' intent

When can a franchisor be held liable for a franchisee's torts?

While a franchisor has the right to strictly supervise the franchisee for quality control, he may be held liable for the franchisee's torts under respondeat superior if he exercises too much control over their operations

What was the ruling in Winstead v. Jackson?

Winstead, an author, claimed that Jackson's music and film had infringed on his copyright because they used some similar plot points and phrases. The court ruled that Jackson had not committed infringement because the phrases were commonplace and the plot points "copied" were widespread themes, and so a "lay-observer" would not believe that the copying was of protectable aspects of the book

What can and can't be copyrighted?

You CAN copyright original works of literature, music, drama, choreography/movement, graphics/images, motion pictures, sounds, architecture, non-utilitarian design, and compilations of facts, but NOT ideas, functional design, or obvious, unoriginal facts

How do you register a trademark?

You can apply through the Patent and Trademark Office if it's currently in commerce or if you intend to put it into commerce within 6 months

What is the penalty for patent infringement?

You can get an injunction, sometimes damages or even treble damages if the court determines the infringement was willful, but you can't get a permanent injunction unless you can prove you've suffered irreparable injury and the permanent injunction wouldn't be a public disservice

What is the Fair Use doctrine?

You can legally reproduce copyrighted material without paying royalties in some cases, depending on the purpose/character of the use (commercial vs nonprofit), the nature of the work, the amount and substantiality of the portion used, and the effect of the use on the market for or value of the work -- for example, it's often okay to reproduce copyrighted work for teaching or news reporting