Fundamentals of Business Law

Business

Quiz 5 :

Intellectual Property and Internet Law

Quiz 5 :

Intellectual Property and Internet Law

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Copyright Infringement. In which of the following situations would a court likely hold Maruta liable for copyright infringement? Why? (See Copyrights.) 1. At the library, Maruta photocopies ten pages from a scholarly journal relating to a topic on which she is writing a term paper. 2. Maruta makes leather handbags and sells them in her small shop. She advertises her handbags as "Vutton handbags," hoping that customers will mistakenly assume that they were made by Vuitton, the well-known maker of high-quality luggage and handbags. 3. Maruta teaches Latin American history at a small university. She has a digital video recorder and frequently records television programs relating to Latin America and puts them on DVDs. She then takes the DVDs to her classroom so that her students can watch them.
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Copyright:
Copyright is one of an Intellectual Property Right. Copyright of any intangible property grants a right to the originator, author to use and distribute his creations or artistic productions. Anyone who infringes the right is liable for penalty. Copyright is usually provided for a limited period time. 
Trademark:
Trademark refers to any symbol, word, sound, mark, or logo, which is used by a company or organization to differentiate its products from other products in the market. The rights of trademark are secured under Intellectual Property Rights. These rights are as valuable as physical assets of a company.
The basic objective to secure trademarks is to avoid confusion in the mind of the consumer, which can be created if similar mark, sign, sound, etc. will be used by another business.
1.
Person M copied text from her book for her term exams.
When work of a person is used by another as a fair use, he will not be liable to pay any kind of penalty, under section 107 of the copyright act. Copying any text or journal from a book for education purpose comes under section 107 of Copyright Act, thus is not termed as copying.
Thus, it can be concluded that M will not be liable for copyright infringement.
2.
Person M use to sell handbags made by her but advertised them in her shop by name of another brand, which is famous for its bags. She wanted to deceive customers by making them mistakenly assume that the bags made by her are actually of the other famous brand.
This act comes under infringement of trademarks, as it is used by M without permission, thus making her liable for infringement.
3.
Person M uses DVDs of the TV programs related to her subject, to clear the concepts of her students in university.
When work of a person is used by another as a fair use, he will not be liable to pay any kind of penalty, under section 107 of the copyright act. However, fair use is determined on case to case basis. The degree and purpose of coping and its substantial effect on the market helps in determining fair use.
Here, if such coping does affect the market in negative way and the purpose is of commercial benefit, M is liable for infringement whereas, if such act is only done for the purpose of education M is not liable.

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Eagle Corporation began marketing software in 2000 under the mark "Eagle." In 2009, Eagle.com, Inc., a different company selling different products, begins to use "eagle" as part of its URL and registers it as a domain name. Can Eagle Corporation stop this use of "eagle"? If so, what must the company show?
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No , as the facts found in case:
- Company E C will not stop the use of mark "Eagle".
- To stop such usage by the company E COM the company E C must file the application to get trademark registered.
- The mark is registered for the companies those are in trade and intends to put mark in 6 months.
- In the case facts, the company E C has not qualified these conditions and so one cannot stop such use.
If the company E C fulfils the above conditions, then the company E C must show that the company E COM used the mark created a likelihood of confusion about the origin of the defendant's goods and services.

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Why does the law protect trademarks and patents?
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Trademark:
A Trademark represents a symbol, name, graphics, logo, a unique word or combination of all affixed to the goods. It is used to recognize and differentiate the goods in the market. It provides the owner the legal rights to avoid the unauthorized use of the goods.
Patent:
A patent represents grant from the government that provides the holder or inventor an exclusive rights to make use or sells the invention for a particular period of time. In other words, an assignment of property rights of discovery or invention for a particular time period and it also exclude others from inventing it.
Article 1, section 8 of the constitution of US provides for the protection of trademarks or patents.Using the trademark of others entirely or substantially without taking permission intentionally or unintentionally would lead to trademark infringement and would create confusion among customers. In order to protect the manufacturers from losing its business to rival companies and to prevent the unauthorized use of trademark and patent, the federal trademark law has been enacted.

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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What laws protect authors' rights in the works they create?
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Copyright Infringement. United Fabrics International, Inc., purchased a fabric design from an Italian design house, Contromoda, and registered a copyright to the design with the U.S. Copyright Office. When Macy's, Inc., began selling garments with a similar design, United filed a copyright infringement lawsuit against Macy's and others. In its defense, Macy's claimed that United did not own a valid copyright to the design. Ownership of a copyright is a requirement to establish an infringement claim. The district court held that the evidence was insufficient to establish United's ownership of the design and, for that reason, dismissed the action. United appealed, arguing that its copyright in the design should be presumptively valid because the copyright had been registered with the U.S. Copyright Office. How should the federal appellate court rule? Should the owner of a registered copyright have to prove that the copyright is valid to establish infringement? Or, should the party contesting the validity of a copyright have to show that it is invalid? Explain your answer. [ United Fabrics International, Inc. v. C J Wear, Inc., 630 F.3d 1255 (9th Cir. 2011)]
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Should the Law Continue to Allow Business Process Patents? At one time, it was difficult for developers and manufacturers of software to obtain patent protection because many software products simply automate procedures that can be performed manually. In other words, it was thought that computer programs did not meet the "novel" and "not obvious" requirements for patents. This changed in 1981 when the United States Supreme Court held that a patent could be obtained for a process that incorporates a computer program.Then, in a landmark 1998 case, State Street Bank Trust Co. v. Signature Financial Group, Inc., a federal appellate court ruled that business processes are patentable. Skyrocketing Demand After the State Street case, numerous firms applied for and received patents on business processes or methods. Walker Digital obtained a business process patent for its "Dutch auction" system, which allows Priceline.com users to name their own price for airline tickets and hotels. Amazon.com patented its "one-click" online payment system. The U.S. Patent and Trademark Office (USPTO) has issued thousands of business process patents, and many more applications are clogging its system. These applications frequently involve ideas about a business process, blurring the distinction between ideas (which are not patentable) and processes (which are). In addition, because business process patents often involve fields that provide services, such as accounting and finance, determining when a process originated or who first developed it can be difficult. Consequently, business process patents are more likely to lead to litigation than patents on tangible inventions, such as machines. The In re Bilski Decision Significantly Limits Business Process Patents In 2008, the same court that decided the State Street case made it more difficult to obtain patents for business processes when it reversed its earlier decision and invalidated "pure" business process patents. In the In re Bilski case, two men had applied for a patent for a process that uses transactions to hedge the risk in commodity trading. The USPTO denied their application because it was not limited to a particular machine and did not describe any method for working out which transactions to perform. The men appealed. After soliciting input from numerous interest groups, the appellate court established a new test for business process patents. A business process patent is valid only if the process (1) is carried out by a particular machine or apparatus or (2) transforms a particular article into a different state or object. Because the men's process did not meet the machine-or-transformation test, the court affirmed the USPTO's decision. One of the dissenting judges in the Bilski case, Judge Haldane Robert Mayer, would have done away with business process patents altogether. He lamented that "the patent system is intended to protect and promote advances in science and technology, not ideas about how to structure commercial transactions." In Mayer's view, these patents "do not promote 'useful arts' because they are not directed to any technological or scientific innovation." Although they may use technology, such as computers, the creative part of business methods is in the thought process rather than the technology. FOR CRITICAL ANALYSIS Some patent experts think that the Bilski decision, and sentiments such as those expressed by Judge Mayer, may signal an end to all business process patents in the near future. Should business process patents be severely limited or eliminated? Why or why not?
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. Why is the protection of trademarks important?
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The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions: What are trade secrets, and what laws offer protection for this form of intellectual property?
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Copyright Infringement. Redwin Wilchcombe is a musician and music producer. In 2002, Wilchcombe met Jonathan Smith, known as Lil Jon, a member of Lil Jon The East Side Boyz (LJESB). Lil Jon and LJESB are under contract to give TeeVee Toons, Inc. (TVT), all rights to LJESB's recordings and Lil Jon's songs. At Lil Jon's request, based on his idea, and with his suggestions, Wilchcombe composed, performed, and recorded a song titled Tha Weedman for LJESB's album Kings of Crunk. They did not discuss payment and Wilchcombe was not paid, but he was given credit on the album as a producer. By 2005, the album had sold 2 million copies. Wilchcombe filed a suit against TVT and the others, alleging copyright infringement. The defendants asserted that they had a license to use the song. Wilchcombe argued that he had never granted a license to anyone. Do these facts indicate that the defendants had a license to use Wilchcombe's song? If so, what does that mean for Wilchcombe's cause? Explain. [ Wilchcombe v. TeeVee Toons, Inc., 555 F.3d 949 (11th Cir. 2009)]
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What steps have been taken to protect intellectual property rights in today's digital age?
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Global Products develops, patents, and markets software. World Copies, Inc., sells Global's software without the maker's permission. Is this patent infringement? If so, how might Global save the cost of suing World for infringement and at the same time profit from World's sales?
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Case Problem with Sample Answer Peggy Hamilton was a major shareholder in Carbon Processing and Reclamation, LLC (CPR). After a dispute, she sold her interest in the company and signed a confidentiality agreement not to divulge company business to anyone. A year later, when William Jones, the owner of CPR, left on a trip, he let an employee, Jesse Edwards, drive his company car. There were boxes containing some detailed company records in the car. Edwards and his wife, Channon, were in the middle of a divorce, and she suspected him of hiding financial information from her. When Channon saw the boxes in the car her husband was driving, she got a car key from Hamilton, who still had one from when she was an owner. Channon used the key to get into the boxes of company information. Jones then sued Hamilton for breach of the confidentiality agreement, contending that allowing Channon to have access to the files was assisting in the theft of trade secrets. The trial court dismissed the claim, but Jones appealed. Could Hamilton's actions be the basis for a claim of trade secret violation? What factors should be taken into consideration? [ Jones v. Hamilton, 53 So.3d 134 (Ala.Civ.App. 2010)] -For a sample answer to Problem 5-5, go to Appendix F at the end of this text.
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What is intellectual property?
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What laws protect authors' rights in the works they generate?
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The five Learning Objectives below are designed to help improve your understanding of the chapter. After reading this chapter, you should be able to answer the following questions: What is intellectual property?
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Patent Infringement. John and Andrew Doney invented a hard-bearing device for balancing rotors. Although they obtained a patent for their invention from the U.S. Patent and Trademark Office, it was never used as an automobile wheel balancer. Some time later, Exetron Corp. produced an automobile wheel balancer that used a hard-bearing device with a support plate similar to that of the Doneys' device. Given that the Doneys had not used their device for automobile wheel balancing, does Exetron's use of a similar device infringe on the Doneys' patent?
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Two computer science majors, Trent and Xavier, have an idea for a new video game, which they propose to call "Hallowed." They form a business and begin developing their idea. Several months later, Trent and Xavier run into a problem with their design and consult with a friend, Brad, who is an expert in creating computer source codes. After the software is completed but before Hallowed is marketed, a video game called Halo 2 is released for both the Xbox and Playstation 3 systems. Halo 2 uses source codes similar to those of Hallowed and imitates Hallowed's overall look and feel, although not all the features are alike. Using the information presented in the chapter, answer the following questions. 1. Would the name Hallowed receive protection as a trademark or as trade dress? 2. If Trent and Xavier had obtained a business process patent on Hallowed, would the release of Halo 2 infringe on their patent? Why or why not? 3. Based only on the facts presented above, could Trent and Xavier sue the makers of Halo 2 for copyright infringement? Why or why not? 4. Suppose that Trent and Xavier discover that Brad took the idea of Hallowed and sold it to the company that produced Halo 2. Which type of intellectual property issue does this raise?
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What steps have been taken to protect intellectual property rights in today's digital age?
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What are trade secrets, and what laws offer protection for this form of intellectual property?
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Copyright Infringement. Professor Littrell is teaching a summer seminar in business torts at State University. Several times during the course, he makes copies of relevant sections from business law texts and distributes them to his students. Littrell does not realize that the daughter of one of the textbook authors is a member of his seminar. She tells her father about Littrell's copying activities, which have taken place without her father's or his publisher's permission. Her father sues Littrell for copyright infringement. Littrell claims protection under the fair use doctrine. Who will prevail? Explain.
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