LEGL Test 3

Importance of Intellectual Property

-75% of the value of fortune 500 companies is in Intellectual Property -Research and development is very expensive and time consuming -Because intellectual property is protected, research and development is advantageous. Otherwise it would be a competitive disadvantage.

Misappropriation/Infringement

The wrongful taking of any kind of intellectual property is called ________/________ Civil enforcement of trade secrets

Regional Offices

(Northeast, Southeast, Midwest, Rocky Mountain, Southwest, Northwest)

Five factors to consider when selecting a business's organizational form

1. Cost of Creation 2. Continuity of the organization 3. Managerial Control of Decision 4. Owner Liability 5. Taxation

Trends in Management of the Organizational Form

1. Emergence of a Benefit Corp 2. Continued Defamation of a corporation's "Personhood" 3. Criminal Prosecutions for corporate wrongdoing may be declining due to the increased use of "deferred prosecutor agreements" DPAs by the federal government

Obtaining a Patent

1. File application 2. Filing fee 3. Explain invention 4. Show difference from prior art -Must show "how is this invention new" 5. Describe patentable aspects 6. Evaluation by the patent examiner

Trade Secret

A common way of asserting property in knowledge-based intangible business resources Any form of knowledge or information that has economic value 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. Owner has to make reasonable efforts to maintain secrecy.

Cases for Partnerships

A father and son own land and raise seed potatoes. -They split the profits and losses in a joint account. -Are the father and son partners such that they must share this loss? -Yes. -Although the intent of the parties is considered, the parties cannot escape the label of partnership by calling it something different.

Service Mark

A mark associated with a service rather than a product (ex: LinkedIn) Sm is unregistered R is registered

Trademark Registration

A trademark must be distinctive to be qualified for _______

Continuation of the Organization

Associated with the stability or durability of an organization The crucial issue with this continuity factor is the method by which a business organization can be dissolved.

Security

Broad not narrow An interest or instrument that offers the right to subscribe to or purchase stock, bond, or any certificate of interest

Alien Corp

Created under the authority of a foreign country A lot involved in incorporating; much more complex to create and operate than other forms of businesses.

Examples of Intellectual Property in Business

Employee skills & talents Production designs, inventions, and technologies Processes and methods of business operation Reports, manuals, and databases Customer lists and data about preferences and purchasing habits Relationships with suppliers and brand identity Software New product or service research Marketing plans

T/F: Ownership of a sole proprietorship can be transferred.

False

Liability for Limited Partnerships

General partners have unlimited personal liability Limited partners do not They give up management power to not be liable If they give up that passive management role, then they will gain unlimited liabilities

Misappropriation Exceptions

Innocently acquiring a secret from another without knowledge of their theft is generally not misappropriation. Independent Creation and Reverse Engineering

3 major types of Defenses for Civil Liabilities

Materiality Statue of Limitations Due Dilligence

Qualifications to be an S Corp

Needs to be a domestic corporation Need to be individuals (not "persons" like corporations, partnerships, etc.) If you have a corporation as a shareholder, it cannot be a S corporation No more than 100 shareholders Can only have one class of stock Can't be an ineligible institution

Securities and Exchange Commission SEC

Responsible for administering the Federal securities laws Consists of five commissioners- appointed by the President, 5-year terms Jay Clayton -Chairman Kara M. Stein Michael S. Piwowar Robert J. Jackson Jr. Hester M. Peirce Possess quasi-legislative and quasi-judicial powers

Corporate Managerial Control

Shareholders Board of Directors Officers Employees In publicly held corporations, control is maintained with a very small percentage of stock ownership through the use of corporate records and funds to solicit proxies. In closely held corporations, those who rule the majority have managerial control.

Business Organization Forms

Sole proprietorships Partnerships Corporations

Novelty

Something new and different from the prior art The test is met when no single piece of prior art meets all of the elements of an invention's claims. The claimed invention must not have been described in a publication, sold, or put to public use more than one year before a patent application on it is filed.

LLC Continuity

The owners of LLCs are called "members" rather than shareholders or partners Membership in LLCs is not limited to individuals. Unlike in the S corporation, a business organization can be an owner in any LLC. Transferability is restricted similar to that of a partnership

Tipper-Tippee Liability

Tipper: a person who discloses material non-public information to another person (illegal) Tippee- the person who receives material non-public information from a tipper (illegal)

Copyright Infringement

To make a case you must show that someone violated on of these author's exclusive rights 1. Reproduction 2. Creation of derivative works 3. Distribution 4. Performance 5. Display

Limited Liability Partnership (LLP)

Variation of the LLC Have characteristics of both a partnership and a corporation Has no general partners All of the owners have limited personal liabilities People who don't want to be liable for another person's problems like LLCs. You're not responsible for the other members of the ____. Licensed professionals like lawyers, accountants, doctors, etc. like ______s

Criteria for copyright protection:

Work must be original Must be fixed in a tangible medium of expression Must show creative expression

How to Sue a corp?

You serve the registered agent (the agent isn't sued, they just receive service) If the registered agent doesn't do anything when served, the party that they represent loses by default judgment.

Post Effective Period

becomes effective and can be sold at this point

Pre-Filling Period

legal for preliminary negotiation where offer cannot be made

Creation

the legal steps necessary to form a particular business organization The most significant creation-related issues are how long it will take to create a particular organization and how much paperwork is involved. A businessperson may be concerned with how much it will cost to have each form established, but the cost of creation is usually not a major factor in considering which form of business organization a person will choose to operate a business.

Trademark Dilution

Prohibits the usage of a mark same as or similar to another's trademark to dilute its significance, reputation, and goodwill Types: Blurring and Tarnishment

Continuity in Partnerships

A partnership is dissolved anytime there is a change in the partners This is why it's a good idea to have a buyout clause. In certain jurisdictions, you don't have to dissolve the partnership with a buyout (buy and sell agreement). Generally, partnerships are easily dissolved

Defenses for Trademarks in a Lawsuit

1. The mark is not distinctive -Argument that the mark is descriptive or generic and that the PTO should not have protected it in the first instance. 2. There is little chance of the public being confused by use of a term trademarked by someone else. -Argument that there is little chance of public confusion over two uses of the same mark. -Example from book: the public is not likely confused between the Ford Automobile and the Ford Modeling Agency. 3. The use is a "fair use" -Fair use of a registered trademark is allowed by the Lanham Act -Relates to a discussion, criticism, or parody of the trademark, the product, or its owner . -For example, in the news media, on the Internet, or in a textbook. -The courts have been explicit that the use of a rival's trademark in comparative advertising is also a fair use.

2003 Music Industry

100's of lawsuits toward those who would illegally file-share music College students were written up for violating university policy when doing this over university network Burtis Downs from Athens was the lawyer for R.E.M. He says that the people who get screwed in the end are the musicians.

Standing to Sue

Any party seeking the judicial review of any administrative agency's decision must be able to prove _________________. Must Show Review ability and Aggrieved Party

Publicly Held

Businesses held by hundreds or thousands of persons Examples: businesses whose stock is traded on a public exchange

Due Dilligence

A defense for experts. Popular defense for accountants. To establish this defense, the expert must prove that a reasonable investigation of the financial statements of the issuer and controlling persons was conducted. As the result of this investigation, an expert exercising due diligence must prove that there was no reason to believe any of the information in the registration statement or prospectus was false or misleading. Standard of reasonableness is the "prudent person" test

Case for piercing the corporate veil : Alli v. U.S.

-Husband (Dr. Alli) and wife's corporation contracted with HUD -They didn't feel like they were being paid appropriately by HUD -They sued HUD -HUD counterclaimed that the Alli's breached the agreement due to multiple health & safety violations -Court had to decide whether to pierce the corporate veil. -Court had to see if the Alli's were using the corporation for illegal activities -Court found that BSA corporation breached the contract (Alli's) -In order to get to the Alli's, they had to pierce the corporate veil -Ali's wanted the liability to fall on the corporation Went to US Supreme Court 3 Part test -The corporate entity must be a mere instrumentality of another entity or individual -The corporate entity must be used to commit a fraud or wrong -There must've been an unjust loss or injury to the party seeking to pierce the veil. The Alli's met all 3 parts of the test, the court pierced the corporate veil, and they held the Alli's personally liable.

Four Factors for "Fair Use"

-considered on a case by case basis 1. Purpose and character of the use 2. Nature of the copyrighted work 3. Amount and substantiality of the portion used in relation to the copyrighted work as a whole 4. The effect of the use upon the potential market for the copyrighted work

Factual Determinations; Courts will not:

-disturb the agency's decision. They don't reweigh the evidence. -Reweigh the evidence -Make independent determinations of fact -Substitute their view of the evidence for that of the agency

Advantages of Partnerships

-easily formed -costs of formation are low -not a tax paying entity -each partner has equal voice in management, unless contrary agreement -may operate in more than one state without obtaining a license to do business -generally are subject to less regulation and less governmental supervision than are corporations

Articles of Incorporation

-formal application for a corporate charter is called _______. The articles must contain the proposed name of the corporation, and the name must end with specific words such as "corporation, limited, incorporated, etc." The name has to be unique enough that it won't be the same as or deceptively similar to the name of any domestic corporation or that of a foreign corporation authorized to do business in the state to which the application is made. The articles must also include the proposed corporation's period of duration, the purpose for which it is formed, the number of authorized shares, and information about the initial corporate officials. In GA, you must include a registered agent and that agent's address Once you complete _________ you send them to the secretary of state.

Disadvantages to Partnerships

-limited number of people -dissolved anytime a partner ceases to be a partner, regardless of whether the reason is withdrawal or death -each partner's liability is unlimited -partners are taxed on their share of the partnership's profits, whether the profits are distributed or not

Officers

-president, VP, secretary, treasurer, etc. -manage the daily operations of the corporation in an attempt to achieve the stated organizational objectives or goals

3 types of Partnerships

1. General Partnership 2. Limited Liability Partnership -More complex than general -Used to attract investors -Supposed to have limited management decision making , but if they get their fingers in management too much, they can lose their limited 3. Joint Venture Partnership

4 categories of actors for Securities

1. Issuer The individual or business organization offering a security for sale to the public. 2. Underwriter Anyone who participates in the original distribution of securities by selling such securities for the issuer or by guaranteeing their sale. Often securities brokerage firms or investment bankers act as underwriters with respect to a particular transaction. 3. Controlling persons One who controls or is controlled by the issuer, such as a major stockholder of a corporation. 4. Seller Anyone who contracts with the purchaser or is a motivating influence that causes the purchase transaction to occur.

Avoid Double Tax by:

1. Payment of reasonable salaries to corporate officials -Works really well in closely held corporations -With all of these, the IRS knows that you're trying to avoid the tax, and they're watching. 2. Use of reasonable expense accounts for employees -Used to travel or to purchase food -IRS has tried to wrap this up -Expense has to be directly related to business activity -Meals can't be lavish; must have business right before/during/after a meal. 3. Instead of issuing stock in the full amount, the corporation can issue some stock and then borrow the rest of the money from shareholders; pay interest -Deductible as an expense 4. Not paying dividends and allowing income to accumulate in the corporation (so that only the corporation will pay tax on this) -When a corporation retains earnings in excess of $250,000, there is a presumption that these earnings are being accumulated to avoid a second tax on dividends. If the corporations cannot rebut this presumption, an additional tax is imposed. 5. A corporation can elect to become an S Corporation.

Criticisms of Agencies

1. 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 2. 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 3. Relating to substance -Rules and regulations overlap and conflict -Actions for illegal conduct end only with consent orders -Enforcement of laws varies over time

Successful Trade Secret Case consists of 2 things:

Establishing that a trade secret exists. Demonstrating misappropriation.

DPA (Deferred Prosecutor Agreements)

A _______ is used to encourage self-reporting and remediation of illegal acts before a criminal case is commenced. This alternative avoids some of the harsh consequences that can accompany prosecutions while still addressing the crime itself. There is some concern that the overuse of _______ could lead to an overly lenient environment for addressing corporate malfeasance. Perhaps some companies will be perceived as "too big" to jail.

Creation of a Corp

A corporation is _________ when a state issues a charter upon the application of individuals known as incorporators. More costly to form than partnerships Filing fees, license fees, franchise taxes, attorneys' fees, and the cost of supplies... also annual costs. Complete Articles of Incorporation Notice of this incorporation usually has to be advertised in the local newspaper in order to inform the public that a new corporation has been created. The initial board of directors then meets, adopts the corporate bylaws, and approves the sale of stock. At this point, the corporation becomes operational. If a corporation wishes to conduct business in states other than the state of incorporation, that corporation must be licensed in these foreign states.

Exhaustion of Remedies

A court-created rule that limits when courts can review administrative decisions. Avoids the premature interruption of the administrative process. Courts refuse to review administrative actions until complaining party has exhausted all of the administrative remedies and procedures available to him or her for redress. Reason: The court hopes that the agencies will get it right. Exceptions -When very fundamental constitutional guarantees such as freedom of speech or press are involved -When the administrative remedy is likely to be inadequate -When the agency is clearly acting beyond its jurisdiction or where it would result in irreparable injury to the petitioner -When an agency acts fraudulently

Provide Expertise

A reason many agencies are created is to refer a problem or area to experts for solution and management. Not everybody can be a pyrotechnic expert Provide continuity and consistency in the formulation, application, and enforcement of rules and regulations governing business. Examples of agencies with expertise beyond that of Congress or the executive branch: the Nuclear Regulatory Commission (NRC), the Federal Reserve Board (FRB), and the Food and Drug Administration (FDA).

Assumed-name statute

A rule for naming a partnership If the name is other than that of the partners, the partners must give notice as to their actual identity under the state's __________________.

Case: KSR v Teleflex Inc.

A variety of things can contribute to obviousness

Case: FCC v. AT&T

AT&T self-reported to the FCC. They come to a settlement. Then through the freedom of information act, AT&T's competitors asked for the documents that AT&T submitted. Competitors use FOYA AT&T made an objection that it would be a violation of "personal privacy." Try to use an exemption Government found that the use of the adjective "personal" applied to individuals. There are some rights that only individuals can possess. Corporations do not have "personal privacy" rights that individuals have

Only president to have a Patent

Abe Lincoln May 22, 1849 Lincoln received a patent for a device to lift boats and move them over shores.

Nonobviousness

Ability of an invention to produce surprising or unexpected results Not obvious if it is different enough from prior art that it wasn't common to someone with ordinary skill in the prior art Fought by experts

Dodd Frank Wall Street Reform and Consumer Protection Act of 2010

Addresses many issues in financial reform Congress feels a responsibility to react when crisis arises Congress authorized the creation of new administrative agencies to achieve the goals of the Dodd Frank Act Financial Stability Oversight Council(FSOC) Federal Insurance Office (FIO) Office of Housing Counseling (HUD) Office of Credit Ratings (SEC) Investment Advisory Committee (SEC) Office of Investor Advocate (SEC)

Trademarks potentially unlimited protection period

After 6 years the trademark owner must notify the PTO that the trademark is still in use. Currently, every 10 years the owner must renew the trademark registration.

CASE Food & Drug Administration v. Brown Williamson Tobacco Corporation

After never regulating tobacco, the FDA decided that tobacco was under its jurisdiction and wanted to regulate it. Brown Tobacco Corporation thought that the FDA was outside of its limits. Agencies cannot exceed their delegated authority. Court found that Congress had precluded the FDA from regulating tobacco progress. Under FDA rules and regulations, the FDA would have to get rid of tobacco altogether based on the evidence that they showed. However, Congress has gone out of its way to protect tobacco. The FDAs authority is to fill in legislative gaps. Because congress protects tobacco, and the FDAs job is to fill in legislative gaps, the FDA exceeded their authority.

Functions of Agencies

Agencies have been delegated functions from the 3 branches of government Most are a balance of all 3 functions: Legislative, Executive, Judicial Rule Making, Adjudicating, Advising, Investigating

Partnerships

Agreement between two or more persons to share a common interest in a commercial endeavor May be people or business organizations Corporations are considered "persons" in many laws A person can partner with a corporation A corporation can partner with a corporation 3 people can partner with each other

Liability and Partnerships

All partners in a partnership have unlimited liability for their organization's debts These partners' personal assets, which are not associated with the partnership, may be claimed by the partnership's creditors. Partners are jointly and severally liable. Someone can go after all of them individually.

Rule Making

An agency's quasi-legislative power to make rules that are law Rules may apply generally to all business or specifically to certain businesses Number of rules grow exponentially everyday Guidelines are also issued by agencies to supplement rules.

Sarbanes-Oxley Act (SOX) of 2002

Applies to all public companies in the U.S. and international companies registered with the SEC Revitalization of SEC -Increased power over governance issues -Congress empowered the SEC to increase corporate accountability

Securities Act of 1933

Applies to the Initial Sale of security; that is all -Requires the disclosure of information to the potential investors -Information must not be untrue or misleading -Sanctions for violators -Criminal punishment -Civil liability -Equitable remedy of an injunction -This law makes it illegal to sale securities by mail -If selling securities you have to see if it complies with this act -Does not prohibit the sale of useless stock -This is a disclosure law and it contains detailed provisions requiring that securities subject to its provisions be registered prior to ANY SALE and that a prospectus be furnished to any potential investor prior to ANY SALE being consummated.

Primary Jurisdiction

Applies when a claim is originally filed in the courts As opposed to exhaustion of remedies, which applies when a claim must go in the first instance to an administrative agency alone. Comes into play whenever enforcement of the claim requires the resolution of issues that, under a regulatory scheme, have been placed within the special competence of an administrative body. Ensures uniformity and consistency in dealing with matters entrusted to an administrative body. Invoked when referral to the agency is preferable because of its specialized knowledge or expertise in dealing with the matter in controversy. Example: A judge hearing a case involving a dispute over licensing requirements for a nuclear power plant likely would refer this case to the Nuclear Regulatory Commission (NRC).

Chairperson

Appointed by the president Belong to same political party as president almost always Presiding officer at agency meetings While an equal in voting, is somewhat more important than the other agency members because of visibility and the power to appoint staff.

Intellectual Property

Article 1 Section 8 of the Constitution grants Congress the power "to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Note that after "limited Times," the resources of new expression and invention, which were formally exclusive to "Authors and Inventors," will be freely available to everyone.

Corporations

Artificial and intangible entity created under the authority of a state's law

Case: National Credit Union Administration v. First National Bank & Trust

Banks were upset because it was taking away their customers. Did the banks have standing to challenge the agencies actions? Did the agency exceed its authority? The answer to both is yes. They're aggrieved

FCC and Delegation

Broadcasters wanted to be able to talk about excrement The Supreme Court held that... Judges should defer to the Administrative Agencies rulings unless the courts finds the administrator's action was arbitrary or capricious. Even though the FCC's ruling was controversial, the Supreme Court did not find that the FCC acted in an improper manner. It is highly unlikely that a court would hold a delegation invalid because of indefiniteness or lack of standards. From time to time courts do find that agencies exceed their authority.

Employee Mobility and Trade Secrets

Businesses have to take reasonable steps to protect information... even from their own employees. 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

Association for Molecular Pathology v. Myriad Genetics Inc.

Case for the importance of determining whether something is patentable: You can't patent naturally-occurring DNA. However, nonnaturally occurring or manufactured DNA sequences can be patented. She could've protected some unique method. Patent law is intended to reward invention, not investment per se. They essentially found a new flower in the field. They didn't create a new item.

Executive Directory for Administrationn

Chief operating official of an agency and supervises usual administrative functions such as accounting, budgeting, and personnel. Why do most agencies have a legislative liaison, reporting to the executive director for administration? Agencies spend a great deal of time lobbying with Congress. Accounting Budgeting Congressional Liaison EEO Personnel Planning Public Information Research

Infringement (Trademark)

Civil violation of a trademark The violator infringes on the trademark's property right through an unintentional or a willful unauthorized use, misappropriating the goodwill and reputation that the trademark represents and confusing the public about the identity of the user. Remedies include paying compensatory damages and injunctions and orders to destroy infringing products

Hobby Lobby Case in 2014 (Burwell v. Hobby Lobby Stores)

Closely held corporations have the rights to freedom of expression of religion

Managerial Control of Decision

Concerns who's in charge You have to consider potential conflicts and the mechanisms in place to resolve disputes The worst ever is family going into business together. Failure to consider these kinds of disputes can cause the business to suffer or die altogether. It's like a marriage. Everyone starts out happy and excited, but they must consider resolving potential problems in the future.

Organization of Agencies

Consist of five to seven members One member is appointed as chairperson Appointments require Senate confirmation Appointees are not permitted to engage in other employment during the terms Can be removed from office by the president for inefficiency, neglect of duty, or malfeasance in office. Agencies have distinctive organizational structure to meet its responsibilities

Copyright

Copyright law grants property in certain creative expressions & prohibits others from reproducing it w/o permission

Copyright Ownership

Copyright law grants property in certain creative expressions & prohibits others from reproducing it w/o permission

Digital Millennial Copyright Act:

Copyright law is the primary law of the internet Makes illegal the effort to get around devices used by copyright owners to keep their works from being infringed. Prevents the production, marketing, or sales of a product or service designed to circumvent technological protections of computer software, videos, and compact disks. Enlists the help of internet service providers (ISPs) to curb infringement.

Continued Defamation of a Corporation's Personhood

Corporations are considered legal persons under the law. The words "persons" and "whoever" include corporations, companies, etc. as well as individuals. Corporations and individuals have largely equal rights. But it's not always clear. Most of the time the law treats a corporation as a person, but here "personal" only applies to an individual, not a corporation.

Alter Ego Theory

Corporations can be considered the __________ for the corporate officers, directors, and stockholders. The ________________, by which the corporate veil can be pierced, may also be used to impose personal liability upon corporate officers, directors, and stockholders. If the corporate entity is disregarded by these officials themselves, so that there is such a unity of ownership and interest that separateness of the corporation has ceased to exist, the alter-ego theory will be followed and the corporate veil will be pierced. Simply alleging that a person is the sole owner of a corporation engaged in wrongful activity will not result in a piercing of the corporate veil.

Issue in Litigation challenging the validity of rule made by administrative agency; Has Agency exceeded its authority?

Courts will on occasion find that agencies have worked outside of the limitations given by Congress. Courts will hold that an agency ___________ if an analysis of legislative intent confirms the view that the agency has gone beyond that intent, however noble its purpose may be.

Issue in Litigation challenging the validity of rule made by administrative agency; Is Delegation Valid?

Delegation of quasi-legislative authority to administrative agencies is subject to 2 Constitutional limitations. 1. It must be definite. -Definiteness means that the delegation must be set forth with sufficient clarity so that all concerned, and especially reviewing courts, will be able to determine the extent of the agency's authority. -Broad language has been held sufficiently definite to meet this test. -Example: "unfair methods of competition" 2. It must be limited. -Must provide that the agency's power to act is limited to areas that are certain even if these areas are not specifically defined. -Procedural safeguards must exist to control arbitrary administrative action and any administrative abuse of discretionary power. -Broad standards meet the limited-power test. -May involve very broad language -Example: "public interest, convenience, and necessity may require"

When you have a corporation, which one of these categories has managerial control?

Depends on the size of the ownership base: if it is publicly held or closely held.

Materiality

Describes the kinds of information that an average prudent investor would want to have so that he or she can make an intelligent, informed decision whether or not to buy the security. A material fact is one that if correctly stated or disclosed would have deterred or tended to deter the average prudent investor from purchasing the securities in question.

Factual Determinations; Courts only:

Determine if there is substantial evidence to support the action taken. In their examination of the evidence, all that is required is evidence sufficient to convince a reasonable mind to a fair degree of certainty. Overturn if record was devoid of relevant data, or if the agency was so meager as to ignore issues before it or if it was influenced by improper considerations. In this case, a court may set aside the agency's decision because it is arbitrary and capricious.

LLC Creation

Distinct terminology from that of a corporation. Not incorporators, but organizers. Organizers craft articles of organization. The organizers file the articles of organization into the Secretary of State. Naming: has to include some form of LLC in the title An LLC must file annual reports with the states in which it operates.

Influencing Agencies

Due process rights require that before a rule or regulation can be passed by an agency, interested parties have to be given notice and be able to support or oppose the rule or regulation. The best way to influence Administrative Agencies is to participate in the adoption process. Agencies are not elected by the people, but the react to public opinion. Telling on them at the Congressional level can lead to inquiries, investigations, funding cutbacks.

Director of Operations

Duties and sub-organization varies greatly from agency to agency. These operating bureaus are assigned specific areas of activity. Bureaus Investigations Advisory Opinions Litigation

Taxation for Corporations

Even if the corporation retains some money, the shareholders don't have to pay taxes for money held by the corporation. Corporation can be taxed (unlike sole proprietorship or partnership). Net operating loss to a corporation can be used only to offset corporate income earned in other years. Can be good and can be bad

Provide Services

Ex: US Postal Service, Social Security & Welfare programs require personnel to operate them. These spring to life out of necessity The mere existence of most government programs automatically creates a new agency or expands the functions of an existing one. The Affordable Care Act required many Administrative Agencies to be created.

Egel & Barber

Example for "don't go into a partnership with a doe-doe because you will be responsible for them" -can one partner be liable for another's negligence? yes

Kraft vs. Cracker Barrel Old Country Store

Example for likelihood of confusion Kraft provides cheeses for Cracker Barrel Problem arose when Cracker Barrel started selling their products in grocery stores Kraft said that similarities could confuse consumers into blaming them for dissatisfaction with Cracker Barrel purchases Scenario: someone buys a Cracker Barrel product from the grocery store, doesn't like it, and never buys Kraft again. Courts ruled that consumers may become confused because the goods are for lower level consumers. Court agreed with Kraft.

4 Major Exemptions for Blue Sky Laws that have been identified (states vary on which they use)

Exemption for an isolated transaction Exemption for an offer or sale to a limited number of offerees or purchasers within a stated time period Exemption for a private offering Exemption for a sale if the number of holders after the sale does not exceed a specified number

2 Doctrines that Guid the Courts

Exhaustion of Remedies and Primary Jurisdiction

Campbell v. Acuff-Rose Music

Fair Use Case: When one song uses another song's lyrics The 2 Live Crew parody had taken too much of the Pretty Woman song The court reversed this under fair use.

T/F: In the corporate form of a corporation, the shareholders elect the officers.

False.

T/F: If a sole-proprietor holds money, it is not taxed.

False. If a sole-proprietor holds money, it is still taxed.

Marks Protected by the Lanham Act

Federal Law; Trademark Service Mark Certification Mark Collective Mark Trade Dress

Case Holly Farms

Holly Farms Corporation operates numerous poultry farm facilities. United State Court of appeals enforced the boards order Is the NLRBs determination of who is an employee reasonable? The court held that yes it is. Courts must respect the judgment of the agency with power to apply the law. For the board to prevail, the judgment just has to be "reasonable" not necessarily the best way.

Managerial Control for Limited Partnerships

General partners Limited partners do not lose the benefit of limited personal liability when performing they: -act as an agent or employee of the partnership -consult with or advise a general partner -act as a guarantor of the partnership's obligations -inspect and copy any of the partnership's financial records -demand true and full information about the partnership whenever circumstances render it just and reasonable -receive a share of the profits or other compensation by way of income -approve or disapprove an amendment to the partnership's certificate -vote on matters of fundamental importance such as dissolution, sale of assets, or change of the partnership's name -have contribution returned upon dissolution.

When people try register domain names containing well-known trademarks that do not belong to them:

Generally, it is a violation of trademark law to use another's registered mark in your domain name. Book: The Anticyber-squatting Consumer Protection Act of 1999 provides a remedy of statutory damages and transfer of a trademark domain name to its owner if it was registered in "bad faith." Book: ICANN, an international organization that administers the Internet's addressing system, has a formal dispute resolution policy. ICANN has the authority to cancel or transfer the registration of the losing party.

Jumpstart our Business Startups (JOBS) Act of 2012

Goals: -Ease burdensome federal regulations -Allow individuals to invest in start-ups through relaxed rules Title II -Allows companies to advertise that they are seeking investments Title III -Allows a company to raise up to $1 million by selling securities

General Counsel

Has a big influence on policy. So important that appointment usually requires Senate approval Chief law officer and legal advisor Represents the agency in court and often makes the decision to file suit or pursue other remedies Often as powerful as a commissioner or board member

Trade Secret Example

Her younger brother Travis is an engineer... youngest person to win some award for NASA. She's risk adverse. Her brother is a risk-taker. He has to go through major security just to get into the office in the morning on a daily basis. They're trying to protect their trade secrets. They had a rocket engine that they were designing and a deadline. Then they had to transfer it out west on a truck. They missed the deadline. Company decided that it'd be cheaper to do the testing locally and pay for damages than to drive it out west and back.

Examples of Partnerships

Hewlett & Packard They flipped a coin to see who's name would be first Ben Cohen & Jerry Greenfield Ben & Jerry's Sold for $326 million

Foreign Corp

If I incorporate in Georgia and practice in Alabama, I am foreign in Alabama In all other states other than the state in which it was incorporated, this corporation is called a foreign corporation.

Domestic Corp

If I incorporate in Georgia, I am domestic in Georgia A corporation is known as a domestic corporation in the state in which it is incorporated.

A sole proprietorship cannot be transferred

If I own a lawn care business and I die, it doesn't pass on to anybody. You can't transfer the business to another person, because you are the business. It's tied to a person.

Disadvantages for S corps

If net profits must be retained in the business, Subchapter S tax treatment is disadvantageous because income tax is paid on earnings not received, and there is danger of double taxation.

PTO can Deny registration for certain reasons:

If the mark is the same or similar to a mark currently used on similar related goods If the mark contains certain prohibited or reserved names or designs, including the U.S. flag, other governmental symbols, immoral names or symbols, the names or likenesses of living persons without their consent, and the names or likenesses of deceased American presidents without the permission of their spouses. -If it has immoral names or symbols -Names or likeness of other people without permission -Even if the president is dead, you cannot use their name, likeness, or signature without the consent of their wife. If the wife is dead, it's open, but descendants may have rights to it. If the mark merely describes a product or service Like "Salty Crackers" or "Fast Food" If it's generic and represents the product Social networking Cell phone If it is disparaging to a certain community. Ex: Washington Redskins

Independent Creation

If you just happen to recreate the same information that another considers to be a trade secret, misappropriation has not occurred.

Continuity of Corp

In contrast to a partnership, a corporation usually is formed to have perpetual existence. Perpetual existence doesn't ensure success.

General Partners

Personally liable for the organization's debts; have unlimited liability

Procedural Aspects of Administrative Indstries

In reviewing the procedures of administrative agencies, courts lack the authority to substitute their judgment or their own procedures for those of the agency. Judicial responsibility is limited to ensuring consistency with statutes and compliance with the demands of the Constitution for a fair hearing.

Copyright Fair Use

Includes copying for: Criticism Comment News reporting Teaching Scholarship Research

Administrative Agencies

Involves agencies at all levels of government: federal, state, local Boards, bureaus, commissions, and organizations that make up the governmental bureaucracy Examples include EPA, FAA, FDA, EEOC, etc. .

Reviewability

Is the action or decision of the agency subject to judicial review? Judicial review is provided except where -Statutes preclude judicial review -Agency action is committed to agency discretion by law.

3 tests in determining whether a person has purchased a security:

Is the investment in a common business activity? Is the investment based on a reasonable expectation of profits? Will these profits be earned through someone other than the investor? If the answer is yes, then you have the sale of a security The sale of an orange tree at a Florida orchard is a security by this definition.

Provide Specificty

It's impossible for congress to make a law to cover every possible issue that might arise. Congress cannot possibly legislate in minute detail, and as a consequence, it uses more and more general language in stating its regulatory aims and purposes. Also, courts cannot handle all disputes and controversies that may arise.

Knowledge of Info relating to Trade Secrets

Kept Secret (reasonable measures taken) Economic Value

Trademark Enforcement

Law protects the owner from unauthorized use of the mark The standard for liability is proof that a defendant's use has created a "likelihood of confusion" with the plaintiff's trademark.

New Invention --->

Legal Monolpoly

Administrative Agencies; Branches of Government

Legislative -Power to create rules & regulations Executive -Power to investigate, prosecute, advise, and supervise Judicial -Power to decide controversies Administrative Agencies have Executive, Judicial, and Legislative powers.

Creation for Limited Partnerships

Like a general partnership, a limited partnership is created by agreement. This certificate contains: the name of the partnership, the character of the business, its location, the name and place of residence of each member, those who are to be the general partners and those who are to be the limited partners, the length of time the partnership is to exist, the amount of cash or the agreed value of property to be contributed by each partner, and the share of profit or compensation each limited partner shall receive. The limited partner certificate is required to be recorded in the county where the partnership has its principal place of business. An additional copy has to be filed in every community where the partnership conducts business or has an office. The terms of the limited partnership agreement control the governance of the organization. Failure of the parties to state their agreement clearly may result in a court's interpreting the limited partnership agreement.

Hybrid Biz Organizations

Limited partnerships S corporations Limited liability companies Limited liability partnership

How to 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

Advisory Councils

Persons not employed by the agency but interested in its mission. Usually selected because of their expertise.

Provide Protection

Many governmental agencies exist to protect the public from bad businesses that injure the public. Business often fails to regulate itself, and the lack of self-regulation is contrary to the public interest. Example: Pollution of air, streams, etc. in 1970s led to the Environmental Protection Agency (EPA). Agencies that provide protection: SEC, Consumer Product Safety Commission (CPSC) Americans tend to turn to a governmental agency for assistance whenever a business or business practice may injure significant numbers of the general public. A prevailing attitude exists that the government's duty is to protect the public from harm.

Trademarks

Marks on what is produced to represent the origin of goods & services protection against confusion been used for thousands of years Protected under federal Law Any mark, word, picture, or design that attaches to goods to indicate their source On package Designated by the superscript Tm is unregistered R is registered __________

CASE Mcneal

McNeal filed a lawsuit to the United States in the courts McNeal filed with the agencies and was denied. Government filed to have it dismissed because he didn't exhaust administrative remedies. McNeal said that the agency killed it before he could exhaust administrative remedies. Must remedies be exhausted before the lawsuit is filed? The answer is yes. You can't go to the courthouse and file and then go to the agencies then go back to the courts Must go to the agencies first Example for why you must exhaust administrative agencies before filing a lawsuit

Why is Delaware such a popular place to incorporate?

More than 50% of publicly traded companies and 60% of Fortune 500 companies are incorporated in Delaware There is a stable legal environment. Court of Chancery Legislative support No income tax for businesses that do not operate in Delaware Incorporation is easy and efficient

Criminal enforcements of trade secrets

Most criminal prosecutions that take place today are under the Economic Espionage Act (EEA) which considers stealing trade secrets a crime. Punishment for individuals: fines and up to 10 years in prison Only the federal government can bring a case under the EEA. FBI Department of Justice Have dedicated lawyers and agents whose job is to find people for intellectual property violations

Copyright Requirements

Must be -Original Fixed in a tangible medium of expression -Like a book, canvas, compact disk, hard drive, or flash memory. Creative -Mere effort isn't enough -Protects expression, not an idea A mark is not required Assume something is copyrighted even if it does not have the mark. -If an employee creates something, the author is the employer.

Utility

Must do something useful Any utility is sufficient, even if it is not how they plan to commercialize and use it. This happens a lot.

Things not protected from a patent

Natural phenomenon Ex: You cannot patent a rare flower Mathematical algorithms that reveal truths about the universe Abstract ideas Humans

Utility Patent

New, non-obvious, useful processes, machines, compositions of matter or improvements thereof Term: 20 years from filing date What most apply to useful, functional inventions

Design Patent

New, original and ornamental design for an article of manufacture Term: 14 years from issue date Apply to the appearance of an article of manufacture, unrelated to its function.

Plant Patent

New, variety of plant that can be reproduced asexually Term: 20 years Apply to new varieties of asexually reproduced plants Just because it's a plant doesn't mean it's a Plant Patent. Specifically refers to new varieties reproduced asexually Patents must be granted by the PTO (Patent and Trademark Office)

Advisory Opinions

Not binding. Don't carry the same weight as actual rules. Just gives the business an indication of the view an agency would take if the practice in question were challenged formally. __________ are unique to Administrative Agencies because courts only deal with actual cases and controversies. "If we did this, then how would you Administrative Agencies handle it." Courts don't do this. You can submit a request for an __________

Limited Partners

Not responsible for the debts of the business organization, but they're not supposed to be involved in the management

3 characteristics of Patents

Novelty, Non obviousness, Utility

America Inverts Act

Obama signed the _________ which is the first substantial revision to U.S. patent law since 1999. Changes: Used to be a first-to-invent system Now it's a first-to-file system It's a race to the patent office. Other Changes in Book: Increases the ability of companies to keep some internal processes secret and avoid infringing another's patent through "prior user rights." Makes it harder to join several defendants together in a single case.

Administrative Law Judges (ALJ)

Often employed by the agency that brings the complaint Quasi-judicial staff Perform the adjudicative fact-finding functions Like other types of judges, ALJs are protected from liability for damages based on their decisions; they have immunity. Administrative law judges have been accused of being biased in favor of their employer (the agency). To reduce the likelihood of this accusation, several states have created an Office of Administrative Hearings. Such an office provides impartial administrative law judges for hearings involving all agencies in the state government.

Taxation

Often viewed as the most critical factor Some formations are single-tax, and others are double-tax. Which is better depends on your organization. A single tax is not always better than a double tax.

Investigating

One of the major functions of each agency is to investigate activities and practices that may be illegal. In exercising their investigative functions, agencies may gather information concerning a corporation's business practices by using subpoena power and requiring reports, examining witnesses under oath, and examining and copying documents, or they may obtain information from other governmental offices. Goes hand-in-hand with the power to adjudicate Don't forget that if you make a false and fraudulent statement to an Administrative Agency, you can go to jail (white collar crime)

Infringement

One who distributes a device with the object of promoting its use to infringe copyright is liable for the resulting acts of ___________ by 3rd Parties One can be liable for materially contributing to another's _________ with knowledge of the _____________ Obtaining financial benefit with the ability to supervise the _____________ also makes one vicariously liable.

Closely Held Business Organizations

Organizations that are owned by only a few persons Examples: family-owned and family-operated businesses

Sole Proprietorships

Owned and run by one individual; there is no legal distinction between the owner and the business. Individual and business are one and the same. Business owned by one person who is entitled to all of its profits Businesses owned by one person in which others work for them. More than 75% of all US businesses are __________ Writers, Consultants, Lawn care businesses, etc. One person must be in total control. No formal documentation is needed except for the business license. It's the easiest and least expensive business organization to create If you start a business without filing to become a business you still have a __________ Pros: ease of management Cons: unlimited liability, tax

Continuity of Limited Partnerships

Partnership continuity rules apply to general partners but not limited partners A limited partner may assign his interest to another without dissolving the limited partnership.

Taxation and Partnerships

Partnerships are not taxable, but the individuals are. Partnerships don't pay taxes, partners do. Sole proprietors don't pay taxes, sole proprietors do.

What can patent owners do with their patent?

Patent owner can maintain exclusivity or sell out rights to it.

Patent Trolls

Patents overlap. Companies that don't produce anything go around buying patents and enforcing them.

Three Stages of Registration and what you can do in each state of selling a security.

Pre-filling period Waiting Period Post Effective Period

Which is not an allowable fair use of copyrighted material?

Profit

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 Even if an owner of a famous trademark cannot prove that the public is confused by another's use of a similar mark, the owner of the famous trademark can still get an injunction prohibiting further use of the junior mark on the basis of trademark dilution. -The court has discretion to award the owner the infringer's profits, actual damages, and attorney's fees if the infringer "willfully intended to trade on the owner's reputation or to cause dilution of the famous mark." -Only the owner of the famous mark can prevail under the ___________

Justification

Property relationships are believed to be more productive in allocating scarce resources and producing new ones than legal relationships that merely divide resources equally. The __________ for "securing" an "exclusive Right" is "to promote the Progress of Science (knowledge and creativity) and the useful Arts (inventions)."

Sole Proprietor

Proprietorship's continuity is tied directly to the will of the owner _______________ is in total control of the business's goals and operations Owner has unlimited liability for the obligations of the business organization

Copyright and Law

Protect authors rather than inventors For individuals, they are valid for the author's lifetime + 70 years For companies, they are valid for 95 years from publication or 120 years from creation. Everything published before 1923 is considered in the public domain Registration and the word "copyright" is not required It attaches the moment something is created However, you cannot sue for infringement unless you've registered it. Subconscious copying is still copyright infringement. Willfulness is required for criminal activities.

Completion

Protection for intellectual property does not apply automatically. Some intellectual property forms have very strict deadlines for asserting rights or other formal requirements. The failure to follow the rules may mean that information that could have been captured is instead dedicated to the public domain, meaning that anyone can use it. Generally, once information is in the public domain, an intellectual property right cannot be applied to recapture it. Firms that do not have an intellectual property strategy risk losing valuable assets.

Reasons for Agencies

Provide Specificity Provide Expertise Provide Protection Provide Regulation Provide Services

Advising

Provide reports to the president or congress Can propose new legislation to congress May inform the attorney general of the need for judicial action due to violations of the law Report information to the general public

Uniform Securities Act of 1956

Provides a model for blue sky laws Despite the trend toward uniformity, enactment of blue sky laws has not been uniform.

Technically, a ___ is an agent appointed by a shareholder for the purpose of voting the shares.

Proxy

Adjudicating

Quasi-judicial function Fact finding and apply law (rules) to the facts

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

Provide Regulation

Replace competition with regulation Administrative Agency regulates monopolies When a firm is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine the provisions of its contracts. An Administrative Agency has the power to set the rate structure for the utility Regulation is often a substitute for competition

Collective Mark

Represents membership in a collective organization like a union or cooperative Used by the organization which owns them Can be used by anybody who complies with the standards defined by the owner Ex: NFL

Secretary

Responsible for the minutes of agency meetings and is legal custodian of its records Usually signs orders and official correspondence and is responsible for publication of all actions in the Federal Register.

The Verve "Bittersweet Symphony"

The Verve borrowed a 5 note sample from a lesser-known Rolling Stones song After the song got famous, the Rolling Stones' manager sued The Verve His case was that they used more than those 5 notes The Verve said that it was distinctively a new song Rolling Stones' manager won entire rights to the song The Verve was sued and lost again to another Rolling Stones manager

Review of Rule Making

Rule Making is essentially legislative in nature. An administrative agency must propose rules and regulations within the confines of its grant of power from the legislature, or a court will find the proposal void. Agency has to work within the confines of the Constitution for Rules & Regulations to be authorized -Constitution --> Agency --> Rules and Regulation An unwise or ineffectual rule adopted by an Administrative Agency can be corrected by the legislature that gave the agency power to make the rule in the first place.

Advantages for S Corps

S Corporations have distinct advantages for a business operating at a loss because the loss is shared and immediately deductible on the returns of the shareholders. It is also advantageous for businesses capable of paying out net profits as earned.

Private Securities Litigation Reform Act (PSLR) 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

Sections of 1934 Security Act

Sections 10b and 10b-5 - referred to as the anti fraud provisions Section 16 - makes insiders trading illegal -creates a presumption that any profit made within a 6 month time period is illegal; short swing profits

Liability in Corporations

Shareholders have limited personal liability. The legal ability to separate a corporation's shareholders from its managers means that the owners are liable for the debts of the corporation only to the extent of those shareholders' investment in the cost of the stock. Limited personal liability isn't guaranteed. When courts find that a corporate organization is being misused... "Piercing the corporate veil" Once the veil has been pierced, the shareholders are treated like partners with unlimited personal liability

S Corporations

Shareholders of certain corporations unanimously elect to have the organization treated like a partnership for income tax purposes A corporation whose shareholders elect to pass income, losses, etc. to their shareholders for income tax purposes -allow the S corp to avoid the double tax -may not be good if the profits are not distributed to the shareholders An S Corp allows shareholders to have an independent life Every year the shareholders have to elect to have the income tax on shareholders

State Blue Sky Laws

State regulations regarding securities laws 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 Federal laws do not preempt the existence of __________.

Statue of Limitations

Statutes that limit the amount of time you have to file a claim against someone Basic period is 1 year

Holder

The __________ of a copyright owns the right to exclude others from what is copyrighted.

Case: Free Enterprise Fund v. Public Company Accounting Oversight Board

Summary: Administrative Agencies have lots of authority but not over the constitution. This case highlights the constitutional requirements related to the appointment of administrative officials. The president not only has the constitutional power to appoint individuals to help execute laws, but must necessarily, then, have the power to remove individuals from their positions.

Patent Enforcement

The constitution states that patents expire. Patent owner can sue against infringement for injunction and damages Inventions can cover methods and articles that can overlap Simply owning a patent is not a license to produce a product or service Patents only convey the right to exclude others from making, using, selling and importing the invention. They do not include the right to use the invention. A single item can have several patents (think of an iPhone) Many licenses are usually required to produce a single phone. Apple used something that a university had rights to without getting a license and was sued for it recently. University's have departments for intellectual property protection. UGARF.

Establishing the Existence of a trade secret

The first step is to identify secrets, and then take reasonable efforts to maintain secrecy The failure to maintain secrecy, or to prove that the knowledge was secret in the first place, can mean that competitors may be able to access it. Trade secrets do not have to be unique; two businesses may have trade secret property in substantially the same knowledge.

Review of Factual Determinations

When it reviews the findings of fact made by an administrative body, a court presumes them to be correct. A court of review examines the evidence by analyzing the record of the agency's proceedings. It upholds the agency's findings and conclusions on questions of fact if they are supported by substantial evidence in the record.

Official Gazette

When one registers for a mark, PTO places the mark in the ________ This gives existing mark owners notice and allows them to object that the proposed mark is similar to their own Ex: her friend's "The Paw-a-day Inn" pet spa was challenged by the Holiday Inn after being posted in the ________

Creation in Partnerships

The key to a partnership's existence is satisfying the elements of its definition Two or more persons A common interest in business Sharing profits and losses Not very expensive 2nd easiest to create Should be registered with the state in the Secretary of State's office A few rules for naming a partnership You can't use words such as "company" and "corporation" which would imply the existence of a corporation If the name is other than that of the partners, the partners must give notice as to their actual identity under the state's assumed-name statute.

Trademarks and Law

The law protects the maker against use by others. One can have rights in an unregistered trademark and even sue for infringement. Can be registered with the PTO, but they don't have to be Common law and state law protect trademarks. Registered marks are protected by the Lanham Act.

Trade Dress

The look or design of a product or services Applies to the total visual image: color or shape associated with a product or service Includes distinctive store decorated motifs Ex: distinctive parts of a restaurant like the layout, pictures on the wall, menu, etc. More examples: Coke shaped bottle Heinz Ketchup shaped bottle

Uniform Trade Secrets Act (UTSA)

The majority of states have adopted the _______ for protection of Trade Secrets. Some states continue to rely on common law protection. Their elements are the same for the most part.

Blurring

When usage of a mark blurs distinctiveness of a famous mark Ex: Google Lawn Care McDowel's in Eddie Murphy's 'Coming to America'

Limited Partnerships

The same as a partnership except 1 or more partners are designated as limited partners Includes all the attributes of a partnership Limited and General Partners

Tarnishment

When usage of a mark creates a negative impression about the famous company Adult film distributer tried to name company Ben & Sherry's

Owner liability

To what degree is the owner of the business personally liable for the debts of the business organization When is the owner liable under the law for harm caused by the business organization? Most of the time owners want to limit their liability However, owners can be personally liable because of their actions

Al Minor & Associates (AMA) v. Martin

Trade Secrecy Martin didn't take any documents with him when he left AMA. He successfully solicited 15 of AMA's clients through information that he had memorized. AMA sued him for Trade Secret violation. Memorized information can be the basis for Trade Secrets violation. As long as memories are not protected as a Trade Secret, that's fine. However, these memories can be protected by the company and they were in this case.

T/F Family Owned Business and Organizations held by few people are closely held.

True

T/F: Is each partner in a partnership jointly and severally liable?

True

Managerial Control in Partnerships

Unless there is some sort of agreement that applies to the contrary, each partner has equal say This is bad. If there are 6 partners and a vote is split, there is no way to resolve the dispute. The possibility of deadlock among partners is very real. Care should be taken to design mechanisms to avoid or at least handle the disputes that will arise when partners share managerial control.

Certification Mark

Used by someone other than the owner to certify the quality, point of origin, or other characteristics of goods or services. Often owned by trade associations or similar associations Ex: the Good Housekeeping Seal of Approval

Civil Liability

Usually involves a buyer of securities suing for a refund of the investment (because investor's money is lost)

LLC Managerial Control

Vested in members unless the articles of organization provide for one or more managers Members are not liable to third parties When a member is in the minority with respect to decisions being made on behalf of the LLC, that dissenting member may have rights very much like a dissenting shareholder in a corporation. These rights include bringing a derivative lawsuit against the controlling members of the LLC. Ultimately, a dissenting member has the right to sell the membership interest to the other members of the LLC. It's much harder to pierce the corporate veil of an LLC than that of a corporation. You must show that members commingle their funds with the LLC.

Judicial Review of Agency Decisions

What alternatives are available to a person, business, or industry unhappy with either rules and regulations that have been adopted or with the quasi-judicial decisions? What are the powers of courts in reviewing decisions of administrative agencies? What chance does a party upset with an agency's decision have in obtaining a reversal of the decision? How much deference is given to an agency's decisions?

Guidlines

________ are administrative interpretations of the statutes that an agency is responsible for enforcing. help businesses determine whether certain practices may or may not be viewed as legal. can be helpful in understanding an agency's policy, these _________ do not have the same force of law as rules and regulations do. Because of the vast volume of rules and regulations, many business organizations struggle to know all the legal requirements. By allowing time periods for public comments on proposed regulations, interested parties have an opportunity to be heard on the desirability and legality of the proposals.

Reverse Engineering

__________ a secret by looking at a product and figuring out how it works or how it is formulated is not misappropriation.

Discretion

__________ is given by the Legislature to the Agencies, and it will not be taken w/o Constitutional violations judiciary gives much _________ to the Administrative Agencies (not to the judiciary)

Patent Registration

_______________ is just registration. It is not legally protected until a court establishes so when the patent is challenged.

Quasi Judicial Authority

agencies can make decisions like a court

Waiting Period

after filing documents with SEC, waiting for SEC to investigate accuracy (usually lasts 20 days); offers can be made at this time

Quasi-Legislative Authority

agencies can issue rules and regulations that have the same impact as law

Proxy

an agent appointed by a shareholder for the purpose of voting the shares; publicly held corporations Management can, at corporate expense, solicit the right to vote the stock of shareholders unable to attend the meetings at which the directors of the company are elected. An outsider must either own sufficient stock to elect the directors or must solicit ________ at his or her own expense. The management of a large corporation usually can maintain control with only a small minority of actual stock ownership.

Injunction

an order by a judge either to do something or to refrain from doing something orders those who have misappropriated the trade secret to refrain from using it or telling others about it.

Cease & Desist Order

an order that a violator must stop the objectionable activity (cease) and refrain from continuing to do the activity (desist)

Dissolution

any change in the owner of an organization that changes the legal existence of the organization Not to be confused with "terminating" Termination is not the same as ___________. Terminating involves the winding up or liquidating of a business In __________, the legal form of the corporation no longer exists. can take a very long time, but termination is effective immediately.

Color Trademarks

apply to unique situations We have a limited number of colors, so all colors cannot be trademarked. With very specific circumstances, they can be permitted. Example: Tiffany & Co. uses Robin Egg Blue for their boxes & bags You can paint your house this color, but if you open a jewelry store with boxes and bags this color, that is not ok. John Deere's green and yellow Courts: you cannot trademark John Deere green. It's a functional color in nature. Decades later, with very specific specifications, John Deere has been able to get specific schemes trademarked. Ex: yellow rims, yellow stripe on side, green base, yellow hydraulic system, etc.

Patent

associated with an inventive act It conveys the right to exclude others from making, selling, or importing the covered invention. an exclusive right created by statute and conveyed by the U.S. _______ and Trademark Office (PTO) for a limited period of time. The U.S. is the world leader in ________ law Once ______ expires it's public domain This would be bad for Coca-Cola's formula, whereas keeping a Trade Secret is better for them because they do not expire.

Patent Lawyer

must take a special bar exam They're really particular about your background (undergraduate degree) Obtaining a patent can take several years so hiring a _______ can save time and effort

Benefit Corporation

combines aspects of non-profit and profit organization Push forward social-oriented goals while permitting the business to make a profit Comes from the perception that traditional corporate forms place too much emphasis on profit maximization

Trade secret audit

conduct a _______ to identify confidential knowledge-based resources

Economic Espionage Act (EEA)

considers stealing trade secrets a crime. makes one liable for standard trade secret misappropriation, another provision addresses misappropriation to benefit a foreign government - true espionage. It's not always easy to prosecute those who commit espionage from abroad due to jurisdictional issues.

Patentability

determine if your material is even patentable; very important

Board of Directors

directors set the objectives or goals of the corporation, and they appoint the officers

Shareholders

elect the members of the board of directors

Copyright gives the ___ right to exclude others from copying and marketing for a limited period of time.

exclusive

Station Nightclub Fire

fireworks now have to follow many laws from administrative agencies cause of this Concert - pyrotechnics set off by tour manager were aimed at foam on wall Fire engulfed club in just 5 minutes Everyone headed to the front door even though there were 4 other fire exits that they were unaware of. This blocked the exit. There were more people in attendance than the fire safety capacity. People turn to the government to make laws after tragedies. Administrative agencies with expertise in the subject enforce laws made by the government and make laws themselves.

Three Sections of Securities; Section 17

forbids the use of interstate commerce Three defenses under this section- materiality, statute of limitations (one year), due diligence

Court of Chancery

he Delaware court of chancery is unmatched The main reason why so many people incorporate in Delaware is because of the great jurisdiction coming out of the Delaware Court of Chancery. Female African American from UGA on the Court of Chancery: Tamika Montgomery-Reeves (Vice Chancellor)

Preemption

if an inventor's patent would go beyond protecting something she invented and lock down an entire field of discovery, the patent claims have overstepped the Court's limits on appropriate subject matter.

Principal Register

if the mark is acceptable registered on the ________ Generally, the PTO will not accept a person's name or a descriptive term for protection on the ________________ If listed on the Supplemental Register for five years and acquires a secondary meaning, a name or descriptive term can acquire full trademark status

Registration Statement

includes a detailed disclosure of financial information about the issuer and the controlling individuals involved in the offering of securities for sale to the public.

Substantial Evidence

is that which a reasonable mind might accept as adequate to support the conclusion.

Piracy

large scale infringement Just because you bought a book or a cd doesn't mean you have rights to it. In these criminal cases, illegally reproduced copies may be seized, fines may be imposed, and defendants may actually be sent to jail.

Three Sections of Securities; Section 11

liability on every person involved in registration that occurs (misrepresentation is possible)

Three Sections of Securities; Section 12

liability on person selling something that is not registered, regardless of intent

Counterfeit Trademarked Products

manufacturing and trafficking these products are a criminal violation A fake Rolex or a fake Prada bag in New York What makes _____________ criminal is the deliberate intent to pass off, or palm off, fake products as real by attaching an unauthorized trademark

Generic Marks

not protected When a trademark loses its distinctiveness, it also loses its status as a protected trademark. A trademark becomes _________ when, through the owner's actions or another's inappropriate use, the mark becomes synonymous in the consumer's mind with the name of the goods or services. Ex: Aspirin, Cellophane, Cola, Escalator, Lite beer, Refrigerator, Thermos, Zipper Can't be protected Coke got close to the generic line. That's why they specify that the serve Pepsi at Pizza Hut.

Taxation of Sole Proprietorship

not taxed as an organization All the proprietorship's income subject to taxation is attributed to the proprietor. However, the individual proprietor must pay the applicable personal tax rate on the income earned by the proprietorship whether the proprietor actually receives any of the income from the organization or not.

Insider

person who owns more than 10% of any security and is a director or officer of the issuer of the security If you are an ________ you HAVE to file in online...it use to be a 10 day period of filing but the Sarbanes Oxly act changed it to 2 days

Limited Liability Corporations (LLC)

reated as nontaxable entities Owners have more flexibility compared with S corporation Business structure that combines the pass-through taxation of a partnership/sole-proprietorship with the limited liability of a corporation. Not a corporation. In the true sense of a hybrid, an _____ and an LLP have characteristics of both a partnership and a corporation. Characteristic shared with corporation: limited liability Characteristic shared with partnership: pass-through taxation

Function of trademarks

recognizability or distinctiveness

Secondary Meaning

refers to a meaning that is different from its meaning as a person's name or as a descriptive term. Examples: Disney refers to a specific entertainment company rather than its founder. Ford refers to an automobile rather than a person. Levis means jeans rather than a family.

Consent Orders

requires that the organization or individual accused admit to the jurisdiction of the agency and waive all rights to seek a judicial review. There is no admission that the business has been guilty of a violation of the law, but there is an agreement not to engage in the business activities that were the subject of the complaint. A ____________ saves considerable expense and has the same legal force and effect as a final cease and desist order issued after a full hearing.

If successful in case for copyright:

the copyright owner may be able to obtain an injunction to stop the defendant's infringement. An owner may request actual damages for any losses. Must be registered before infringement for statutory damages This is a certain amount set by the judge for each work infringed, regardless of any lost revenue. Although registration is optional until a lawsuit is considered, a copyright owner can obtain statutory damages only if the work is registered before a defendant's infringement.

Federal Register

the official journal of the federal government that contains government agency rules, proposed rules, and public notices.

Patents that are invalid

the patented material was already a part of the public domain.

Aggrieved Party

the plaintiff is aggrieved Generally the plaintiff must have been harmed by an administrative action or decision to have standing. One has standing to sue if they can show: -Economic injury -Non-economic injury (ex: First Amendment Rights have been jeopardized)

Misappropriate

to violate another's trade secret rights, one must ________ the information The book notes that this is an important distinction from intellectual property rights that make one liable simply for unauthorized use.

Double Taxation

when a corporation makes a profit so that it is taxed at the corporate level and then dividends are paid and shareholders are taxed too Corporations and shareholders are taxed on it.

Misappropriation occurs:

when one improperly acquires or discloses secret information when one discloses information that one had a duty to keep secret, even if the original acquisition was proper. If someone knowingly acquires information that is protected, they are guilty of misappropriation. Examples: burglary, espionage, and computer hacking