Chapter
7
The Property
System
McGraw-Hill/Irwin
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Property- Broad Sense
 Ownership Rights
• Individual
• Constitutional
 Excludes State
From Interference
 “Liberty”
7-2
Property
 Private, Exclusive, Rights In ResourcesOwnership
 Owners Can:
• Possess
• Use
• Transfer (e.g. Sell, Donate, etc.)
• Prevent Interference
• Use as Collateral
 Basis For Private Market
7-3
Property
 LUCAS v. SOUTH CAROLINA COASTAL COUNCIL

505 U.S.1003 (1992), p.189



FACTS:In 1986 petitioner David H. Lucas paid
$975,000 for two residential lots on the Isle of Palms in
Charleston County, South Carolina, on which he
intended to build single-family homes. In 1998 the
South Carolina Legislature enacted the Beachfront
Management Act which barred Lucas from erecting
any permanent habitable structures on the lots. Lucas
sued.
ISSUE:Does the Act’s complete extinguishment of
the lots’ value entitle Lucas to compensation for a
taking?
7-4
Property
 LUCAS v. SOUTH CAROLINA COASTAL COUNCIL

505 U.S.1003 (1992), p.189



DECISION:Yes.
REASONS:
• 1. Where the statute deprives land of all
economically beneficial use, it must compensate
the owner unless the prescribed use interests were
not part of the title to begin with.
• 2. The case is remanded to determine if the land
has been deprived of all economically beneficial
use.
7-5
Property
 In Federalist Paper 10, James Madison wrote:
“Property … in its particular application means that
‘domination which one man claims and exercises
over the external things of the world, in exclusion
of every other individual.’ In its larger and juster
meaning, it embraces everything to which a man
may attach a value and have a right; and which
leaves to everyone else a like advantage. In the
former sense, a man’s land, or merchandise, or
money is called his property. In the latter sense, a
man has property in his opinions and the free
communication of them. He has a property of
peculiar value in his religious opinions, and in the
profession and practice dictated by them. He has
property very dear to him in the safety and liberty of
his person. He has an equal property in the free
use of his faculties and free choice of the objects
on which to employ them. In a word, as a man is
said to have a right to his property, he may be
equally said to have a property in his rights.”
7-6
The Property System
Unlimited Resources = No
Problem
Limited Resources = Problem
Communism- State Ownership
& Control
Capitalism- Individual Owns
Private Property, Within State
Limitations
7-7
Property Usage
Private
Public
Common/Mixed
7-8
Property & Prosperity
 Central
• Business Environment
• Society’s Achievement
 Property
• Promotes Incentive
• Aids In Capital FormationMortgage
• Divisibility
7-9
Property Division
 Real- Requires Written
Agreements
• Land
• Interest In Land- Fixture
 Personal- Property That
Is Not Real, Movable,
Tangible
7-10
Real Property- Elements
 Includes land, permanent structures &
things attached thereto (fixtures, e.g.
ceiling fan)
 Air & Subsurface?
• Duty of Support
 Plant Life & Vegetation
• (e.g. Timber rights)
7-11
Scope of Real
Property
 Fixtures- Factors
• Attachment - Cannot be removed
without damage to the real
property
• Constructively Annexed (e.g.
garage door opener)
• Adaptation - necessary or
beneficial use (e.g. key, custom
window screen)
• Intent of Installer
7-12
Scope of Real
Property
 Express Agreement (as in Real

Estate sales contract)
Trade Fixtures - used in carrying on
business
• Where no substantial damage
• Removed by lease end
• No express agreement
identifying as fixtures
7-13
Rights/Interests
in Real Property
 Fee Simple
• Right to entire property
• For unlimited duration
• With Unconditional power to dispose of
 Life Estate
• Use for a life time
 Leasehold
• Right of occupancy for a period of time
• If time not specified = Tenancy at Will
(I.e. Either can terminate with minimal
notice)
7-14
Rights/Interests
in Real Property
 Easement • Limited right of use, not occupancy
• By grant, gift or contract
• Affirmative - Right to a certain use (e.g. to drive
across, run a power or sewer line through, etc.)
• Negative - Right to prevent a certain use (e.g. to
construct a building blocking a view, etc.)
• Necessity - Often implied where sale (e.g. right to
cross where only way to property)
• By Prescription/Adverse Possession
7-15
Rights/Interests
in Real Property
 Easement
• Appurtenant
 Belongs to the land not the person
 Therefore passes with the land
 Property benefiting = dominant tenement
 Property subject is servient
• Gross
 Belongs to person, not land
 Does not pass with transfer of land
7-16
Rights/Interests
in Real Property
 License
• revocable
• temporary use
• like an easement
• but not an interest in
land
• may be oral
• (e.g. to hunt or fish)
7-17
Rights/Interests
in Real Property
 Profit
• right of entry
• to take product(s)
from the land
• e.g. timber right
7-18
Rights/Interests
in Real Property
 Private Restrictions
• Validity depends on:
 Purpose - Reasonable
& Not vs. Public
Policy
 Nature
 Scope
7-19
Co-Ownership
 Tenancy in Common
 Also called “sole and several tenancy”
 Two or more persons
 Separate but undivided interest in a


property
Each has the right to sell, give, or will
his share
Subsequent owner acquires same
portion of title
7-20
Co-Ownership
 Tenancy in Common
 No right of survivorship
 Only requirement to create = an equal right of



possession
Interests do not have to be equal, i.e. co-tenants
may own greater or lesser interests
Individual owners
Can convert from tenancy in common to joint
tenancy using a straw man
7-21
Co-Ownership
 Tenancy in Common
 For example, A and B own a parcel of
property as Tenants in Common. A has
an undivided forty percent (40%)
ownership interest, and B has an
undivided sixty percent (60%)
ownership interest. A still has the right
to possess and enjoy the property in a
manner equal to that of B, so long as
the concurrent ownership lasts.
7-22
Co-Ownership
 Tenancy in Common
• Undivided interests, equal
right of possession
• Presumed where transfer to
more than one owner and no
other specification
7-23
Co-Ownership
 Destruction of Tenancy in
Common
• Where the parties to a tenancy in common wish to
destroy the joint interest, they can do so through a
partition of the property - a division of the land into
distinctly owned plots.
• If the parties are unable to agree to a partition, any
or all of them may seek the ruling of a court to
determine how the land should be divided up,
physically divide it between the joint owners,
leaving each with ownership of a portion of the
property representing their share
7-24
Co-Ownership
 Joint Tenancy- Right of
Survivorship
• More complex than tenancy in
common
• Each cotenant is considered to be
owner of an undivided part and the
whole
7-25
Co-Ownership
 Joint Tenancy- Right of
Survivorship
• Equal interests
• Must be specified
• Upon death of one, automatic
pass to survivor(s)
• Sale of part, breaks as to that
interest, becomes tenancy in
common
7-26
Co-Ownership
 Joint Tenancy- Right of Survivorship
 To create, all joint tenants must acquire their title by the “Four
Unities” (title, time, interest and possession) = all must acquire
their interests by the same conveyance (if the deed places a
condition on one tenant and not the other, they do not have the
same title, and the attempt to create a JTWROS is invalid), at
the same time, with equal rights in re: title and possession (if
one owner can prove that he or she has been improperly
excluded from the property by the other, the JTWROS will be
invalidated).
 Note: Some states have abolished the Four Unities
requirement and allow creation of joint tenancies solely by
explicit written declaration
7-27
Co-Ownership
 Joint Tenancy- Right of Survivorship
• For example, A and B each own a one-half
interest in Blackacre as joint tenants with right
of survivorship, and A dies. Upon the death of
A, A’s interest automatically conveys to B, and
B becomes the sole owner of Blackacre.
Alternatively, A, B, and C each own a one-third
interest in Blackacre as joint tenants with right
of survivorship, and A dies. Then, A’s interest
will automatically convey to B and C, and,
subsequently, they will both own a one-half
interest in Blackacre.
7-28
Co-Ownership
 Tenancy by Entirety
• Also requires four unities, but adds a fifth,
•
•
•
•
•
unity of person (i.e. marriage)
Currently 22 states retain this
Like Joint Tenancy
At death, automatic transfer to the other
spouse
But both must agree to convey
Divorce severs
7-29
Co-Ownership
 Co-tenants, irrespective of the type of
tenancy, share certain rights and duties in
relation to the property:
 Access: In theory, each tenant has an unrestricted right
of access to the property, regardless of the size of their
fractal interest. Thus, under the majority view, even a
cotenant in exclusive possession of the property is not
liable to the other co-tenants for rent, absent an ouster.
Where one co-tenant wrongfully excludes another from
making use of the property, the excluded co-tenant can
bring a cause of action for ouster, and may receive the
fair rental value of the property for the time that he was
dispossessed.
7-30
Co-Ownership
 Co-tenants, irrespective of the type of
tenancy, share certain rights and duties in
relation to the property:
 Accounting: Each tenant has a right to an
accounting of rents and profits made from the
property. If the property generates income, each
tenant is entitled to a pro-rata proportion of that
income.
7-31
Co-Ownership
 Co-tenants, irrespective of the type of
tenancy, share certain rights and duties in
relation to the property:
 Contribution: Each co-tenant can be forced to contribute to the
payment of expenses such as property taxes and related
assessments, mortgages on the entire property, and repairs.
However, normally co-tenants have no obligation to contribute to
any costs of improving the property. Furthermore, each co-tenant
can independently encumber their own share in the property by
taking out a mortgage on that share; other co-tenants have no
obligation to help pay a mortgage that only runs to another tenant's
share of the property, and the mortgagee can only foreclose on that
share.
7-32
Co-Ownership
 Community Property
• Primarily Western States
• Property acquired during
marriage is community
• Joint consent needed to
convey
• Pre-owned, gifts, inheritance
excluded
7-33
Co-Ownership
 Tenancy in Partnership
 Partnership takes title to
 Condominium
 Title to individual unit
 Tenant in Common as to common

areas
Cooperative Ownership
 Corporate Unit/Stock
 Proprietary Lease
 May need corporate approval to
convey or sublet
7-34
Acquisition of
Real Property
• Purchase
• Gift
• Will or
Inheritance
• Tax Sale
7-35
Acquisition of
Real Property
• Adverse Possession (Prescription)
 Actual and exclusive.
 Open, visible and notorious.
 Continuous and peaceable.
 Hostile and adverse.
 For Statutory Period
7-36
Steps in Sale




Contract to Sell
 Conditions
 Addendums
 Earnest Money
 Negotiate/Sign
Arrange Financing
Close- Deliver Deed
 Title Search
 Inspections
Record Deed
 Title Recheck
 Race Statute
 Notice-Race Statute
7-37
Transfer By Sale
 Real Estate Brokers/Agents- Listing Contract
• Open vs. Exclusive
 Listing
 Right of sale
 Contract for Sale
 Financing
• Federal Disclosure
• Fair Housing Act
 Steering
7-38
Deeds
 Grantor v. Grantee
 Quitclaim (no guarantees)
 Warranty
• General (against all title
defects)
• Special (against
specific title defects)
• Implied Warranty of
Habitability
7-39
Deeds
 Form/Execution- Acknowledgment
 Record
 Register of Deeds
 Title
 Search/Abstract
 Merchantable
 Torrens
 Title Insurance
• Tacking
7-40
Deed Requirements
 Names of Grantor/Buyer &
Grantee/Seller
 Intent to Convey
 Description
 Signature
7-41
Land Use Controls
Societal Restraints
No injurious use
Reasonable Regulation
Eminent Domain
• “Public Use”? (consider Kelo
Case)
7-42
Land Use Controls
 Nuisance Law
• Private Nuisance
 Private Plaintiff
 Remedies:
• Injunction or Damages
• Public Nuisance
 Harm to Public
• e.g. drug traffic
7-43
Other Real
Property Conditions- Expansion
 Premises Liability
• Reasonable Care
• Foreseeability
• Security Precautions
7-44
Other Real
Property Conditions- Expansion
 ADA (1990)
• Public Accommodation
• Modifications
• New Construction
• Remedies: Injunction
7-45
Other Real
Property Conditions- Zoning
 Police Power - Control
 Use
 Height & Bulk
 Population Density
 Aesthetics
 Variance
• Where undue hardship
• Often very political
7-46
Other Real
Property Conditions- Zoning
Police Power - Control
• Subdivision Ordinance
(e.g. P.U.D.s)
• Inverse Condemnation
• Taking w/o compensation
7-47
Leases & Tenancies
 Landlord-Tenant
Relationship
 Nature of Leases
• Contract
• Landlord/Lessor
• Tenant/Lessee
• Leasehold Estate
7-48
Classification of Tenancies
 Term of years
 Begin on fixed date; end on fixed date
 No notice necessary to terminate-fixed by lease
 Periodic tenancy
 Renews for period to period (e.g. month to month)
 Notice to terminate varies with period/jurisdiction
 Tenancy at will
 No notice necessary to terminate
 Tenancy at Sufferance (Holdover)
 Option 1 - Treat as trespasser, pursue eviction
 Option 2- Continue to rent to
7-49
Formalities
 Statute of Frauds
• More than a year, must be in
writing to be enforceable
• In some states, when more than
3 years
7-50
Landlord
 Rights- Security Deposits
• Keep in account
• Return or written
accounting typically
required with 30 days
7-51
Landlord
 Duties
• Fair Housing Act - Anti-Discrimination
 Exceptions (e.g. single-family dwelling)
• Implied Warranties
 Possession
 Quiet Enjoyment (Non-Interference)
 Habitability
• Safe & Suitable
• Duty to so maintain
• Remedies for Breach
• Damages
• Termination of Lease
• Rent Abatement
• Repair & Deduct
7-52
Constructive Eviction-General
Requirements
 Occurs where L wrongfully performs or fails to
perform some duty that L is obligated to perform
resulting in T’s substantial loss of use and enjoyment
of the premises
 Four elements
• L must wrongfully perform or fail to perform some
obligation that L is under some expressed or
implied duty to perform
• As a result there is a substantial interference with
T’s use and enjoyment of premises
• Notice from T to L and reasonable opportunity to
remedy interference
• T must vacate within a reasonable time
7-53
Landlord- Tort Liability
 Traditional No-Liability
• Exceptions
 Duty to maintain common areas
 Duty to disclose hidden effects
 Duty to use reasonable care in
repairs
 Duty to maintain property for
admission to public
 Duty to maintain furnished
dwellings
7-54
Liability For
Injuries on the Premises
 Landlord is liable to Tenants and
Licensees (Tenant’s guests) based on
who has the right to controls the area
where the injury occurred.
 Landlord is liable for injuries caused
by defects in common areas.
“Attractive nuisance” doctrine for
children and an unfenced swimming
pool.
7-55
Liability for Injuries
 If Landlord makes any repairs, they must
be done with reasonable care.
 LL may be liable for injuries caused by
crimes or third persons when
reasonably foreseeable.
 Exculpatory clauses may be
unenforceable if injury results from
violation of statutory duty.
7-56
Liability For Injuries
 Tenant’s Liability?
• Tenant has a duty to maintain
safe conditions in those areas
under her control.
• In commercial leases, both
Landlord and Tenant may be
responsible and liable for
same area.
7-57
Tenant Duties
• Pay Rent
 If multiple tenants,
 joint & several liability
• Not Commit Waste
 Not normal wear & tear
 Reasonable steps to protect
• Proper/Agreed Upon Use
• Reasonable care in use & maintenance
• Comply with terms of lease
7-58
Transfer of Lease
 Assignment
• By landlord or tenant
• Transfers Rights & Duties
• Tenant remains liable
 Subleasing
• By tenant
• Right often limited by lease
• No transfer all tenant’s rights & duties
• Tenant Remains Liable
7-59
Termination of
Leasehold
 Eviction
• No Self-Help
• Statutory Procedure
• Possible Lien on Tenant’s
Property
 Mutual Agreement to Surrender
 Abandonment
7-60
Termination of Tenancies by
Tenant’s Wrongful Conduct
 Landlord’s remedies
• Acceptance of surrender and terminate the lease
 Express
 Implied
• Hold T to terms of the lease
 Sue for rents as they become due
 Sue from past-due rents
• Duty to mitigate (Waiver) (Not followed in all states)
 URLTA 4.203(c) “If the landlord fails to use reasonable efforts
to rent the dwelling unit at a fair rental… the rental agreement
is deemed to be terminated by the landlord as of the date the
landlord has notice of the abandonment”
7-61
Terminology
 Will maker:Testator (male), Testatrix (female)
 Bequest/Legacy: Gift of personal property
• If gone before death = ademption
 Devise: Gift of real property
 Residuary: What’s left over, not otherwise specified
 Issue = lineal descendents (children, grandchildren,


etc.)
Per Capita= look at whose actually living at same
level, equally divide
Per Stirpes/ Right of Representation = by the line
7-62
Wills
 Testamentary Capacity
• sound mind (at the time,
“period of lucidity”)
• legal age (per state)
• no fraud or undo
influence
7-63
Wills
 Execution- Attestation
Clause (formalities)
 Joint/Mutual Wills
 Limitations on
Disposition
 Revocation
7-64
Informal Wills
 Formal
• Writing
• Witnesses (disinterested)
• Signed by or for at direction
of, in presence of witnesses
• Witnesses must sign in sight
of
• Acknowledgements (Makes
Self-Proving)
7-65
Informal Wills
 Holographic
(Handwritten)
• entirely in handwriting
• evidence of intent
•
legality varies by
jurisdiction
 Noncupative (Oral)
• given limited effect
7-66
Limitations on Disposition
 Common law dower & curtsey
(1/3 to surviving spouse)
 Statutory shares
 Pretermitted (Born after,
assumed intended inclusion)
 Revocation- until death = no
present interest
 Codicil-amendment (usually for
minor/limited changes)
7-67
Advance Directives
 Living Wills
 Durable Power of Attorney- Authority

to Act
• Principal
• Attorney in Fact
• Limited
• Springing
• Health Care
Federal Law/Advance Directives
7-68
If No Valid Will
 Intestacy based on
domicile
• Varies by state
 Simultaneous Death =
Distribute each as if they
survived the other
7-69
Administration of Estates
 Probate
• Estate = Property at Death
• Process
 Determining Existence of Will
 Finding witnesses if not self-proving
 Executor/Executrix/Administrator/Personal
Representative
• Bond
• Fiduciary Duty
• Settlement tasks
7-70
Trusts- Terminology
 Trust
• General
• Inter Vivos - Effective during lifetime
• Testamentary- Effective at death
 Settlor/Trustor = maker
 Trustee=holder
 Beneficiary
 Corpus/Res=property
7-71
Trusts
 Express
• Capacity
• Intent/Formalities
• Conveyance of specific
property
• Purpose
• Clear identity of
beneficiaries
7-72
Trusts
 Rule Against Perpetuities (Dead hand



control)
• Beneficiary must be determinable by a
certain time
Charitable- Doctrine of Cy Pres = try to
honor probable intention
Spendthrift
Totten - Bank account in name of another =
revocable living trust
7-73
Trusts
 Resulting = created to
approximate settlor’s
intent
 Constructive = to
avoid fraud, injustice,
unjust enrichment
7-74
Intellectual Property
Intangible
Resources
Creative Expression
Inventions/Marks
7-75
Intellectual Property
 Intellectual Property (I.P.) is any
property that is the product of an
individual’s mind, e.g, books,
software, movies, music.
 U.S. Constitution protects I.P. in
Article I Section 8. Congress shall:
“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.”
7-76
Trade Secret
 Form Of Information
 Owner Works To Keep
Secret
x
 Economic Value Derived
From Secrecy
 Theft = Misappropriation
7-77
Patent Law
 Patent- Exclusive Right Of
Use For Period Of Time
 Duration/Enforcement
• Utility- 20 Years
• Plant- 17 Years
• Design- 14 Years
7-78
Patent Application
Application
Explanation Of
Use/Manufacture
Demonstrate
Nonobvious, Novel,
Useful
Claim
Describe What Is
Being Patented
7-79
Patentable
 Process
 Machine
 Matter Composition
 Improvement
• Process
• Machine
• Composition
 Nonfunctional Designs
 Certain Plants
 Business Methods
7-80
Patent Infringement
 Infringement.
• Manufacture, use or sale of
another’s product or design
without permission (license).
7-81
Trademark Law
 Registered- PTO
 Recognizable/Distinctive
 Types- Lanham Act(1946)
• Trademark
• Service Mark
• Certification Mark
• Collective Mark
O
R
7-82
Trademark Law
 Statutory Protection for
Trademarks is found in:
• Federal Lanham Act of
1946.
• Federal Trademark Dilution
Act of 1995.
7-83
Trademark Registration
 Trademark Registration.
• U.S. Patent and Trademark
Office www.uspto.gov gives
notice to 3rd parties.
• A mark can be registered if
already in use or will be used
within 6 months.
7-84
Trademark Enforcement
 Infringement
 Counterfeit/Palm Off
 Defenses:
• Not Distinctive/Generic
(see Chart p.203)
• Little Chance Of Public
Confusion
• “Fair Use”
7-85
Trademark- Internet
 Internet Corporation For
Assigned Names &
Numbers v. Patent &
Trademark Office
 Metatag- Infringement?
 Trademark Dilution
7-86
Related Concepts
 Service Mark.
• Similar to trademark but used for services.
• Includes characters in TV and radio.
 Trade Names.
• Applies to a business (not a product).
 Trade Dress.
• Image and appearance of a product or
shop (Example: Starbucks coffee stores).
7-87
Related Concepts
 Domain Names.
• Trademarks in Cyberspace (example:
Nike.com).
• Conflicts—ICANN.
 Cyber-squatting .
• Occurs when 3d party registers a domain
name that is the same or similar to another
company’s own trade name.
• 1999 Anti-cybersquatting Consumer
Protection Act.
7-88
Related Concepts
 Meta Tags
• Keywords in web pages used by internet search engines
• Playboy Enterprises, Inc. v. Welles (Ninth Cir. February 1, 2002)
Terri Welles, was Playmate of the Year for 1981 and Playboy defendant of
2001. She had a website offering information about and free photos of
herself, advertised photos for sale, advertised membership in her photo
club, and promoted her services as a spokesperson. While she specifically
disclaimed any association with Playboy Enterprises, Playboy objected to
the use of the trademarks "Playboy" and "Playmate" in the metatags of the
website, use of the phrase "Playboy Playmate of the Year 1981" on the
masthead and "Playmate of the Year 1981" on various banner ads and the
repeated use of the abbreviation "PMOY '81" as the watermark on the pages
of the website. Playboy Enterprise believes that these uses constituted
trademark infringement, dilution, false designation of origin, and unfair
competition. Playboy sued Welles and she then included in the website
discussion of the suit and criticism of Playboy Enterprises. The Ninth Circuit
found that except for the use of PMOY '81 in the wallpaper of Welles website,
Welles use of Playboy's trademarks are permissible nominative use. They do
not imply a current sponsorship or endorsement. The Court concluded that
Welles used the marks only when no descriptive substitute exists, used no
more of the mark than was necessary and that the use does nothing to
suggest sponsorship or endorsement by the mark holder.
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Related Concepts
Online Trademark Dilution - Trademarks can be diluted on the web.
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Hasbro, Inc. v. Internet Entertainment Group, Ltd., No. C96-130WD., Feb. 9, 1996.
PRELIMINARY INJUNCTIONDWYER, U.S. District Judge
On February 5, 1996, the application of plaintiff Hasbro, Inc. ("Hasbro") for a temporary restraining order
came on for hearing by the court. Plaintiff appeared through Kenneth B. Wilson and Lisa G. Meckfessel of
the law firm of Wilson, Sonsini, Goodrich & Rosati, and Jill D. Bowman of the law firm of Stoel Rives LLP.
Defendants Internet Entertainment Group, Ltd., Brian Cartmell and Internet Entertainment Group, Inc.
appeared through John D. Lowery and E. Russell Tarleton of the law firm of Graham James LLP/Riddell
Williams P.S. After the oral decision was announced, the parties agreed that the ruling should be entered on
a preliminary injunction rather than merely as a temporary restraining order.
Having considered all papers submitted in support of said motion and in opposition thereto, and having
heard oral argument in open court, the court finds that:
1. Hasbro is the owner of the trademark "CANDY LAND," which has been registered on the Principal
Register of the United States Patent and Trademark Office since 1951,
2. Hasbro has demonstrated a probability of proving that defendants Internet Entertainment Group, Ltd.,
Brian Cartmell and Internet Entertainment Group, Inc. (collectively referred to as "defendants") have been
diluting the value of Hasbro's CANDY LAND mark by using the name CANDYLAND to identify a sexually
explicit Internet site, and by using the name string "candyland.com" as an Internet domain name which,
when typed into an Internet-connected computer, provides Internet users with access to that site.
3. Hasbro has demonstrated a likelihood of prevailing on its claims that defendants conduct violates the
federal trademark anti-dilution statute, 15 U.S.C. section 1125(c), and the Washington State trademark antidilution statute, RCW 19.77.160.
4. Hasbro has shown that defendants' use of the CANDY LAND name and the domain name candyland.com
in connection with their Internet site is causing irreparable injury to Hasbro.
5. The probable harm to Hasbro from defendants' conduct outweighs any inconvenience that defendants
will experience if they are required to stop using the CANDYLAND name.
6. The public interest favors entry of a preliminary injunction on the facts of this case.
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Related Concepts
Online Trademark Dilution - Trademarks can be diluted on the web.
Hasbro, Inc. v. Internet Entertainment Group, Ltd., No. C96-130WD., eb. 9, 1996.
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PRELIMINARY INJUNCTIONDWYER, U.S. District Judge
THEREFORE, IT IS HEREBY ORDERED that Hasbro's motion for preliminary injunction is
granted. Defendants Internet Entertainment Group, Ltd., Brian Cartmell, and Internet
Entertainment Group, Inc., and their officers, agents, servants, employees and attorneys,
and those persons in active concert and participation with defendants who receive actual
notice of this preliminary injunction, are enjoined from directly or indirectly using the name
CANDYLAND or the Internet domain name "candyland.com," or any similar name which is
likely to dilute the value of Hasbro's CANDYLAND mark, in connection with the advertising,
operation or maintenance of any Internet site, including but not limited to any Internet-site
containing sexually explicit material or other pornographic content. Defendants are
directed to immediately make affirmative efforts to stop, cancel or discontinue any
previously purchased advertising which refers to the name CANDY LAND or the Internet
domain name "candyland.com."
IT IS FURTHER ORDERED that defendants shall immediately remove all content from the
"candyland.com" site. However, defendants shall be allowed to post a "referral notice" at
the URL address "http: www.candyland.com" until May 5, 1996, which shall provide the
new location of defendants' Internet site. The referral notice shall not contain any hyperlink
to defendants' new site or sites, or to any other site. After the expiration of the 90 day
referral period, defendants must remove the referral notice and thereafter discontinue any
use, either direct or indirect, of the name domain name "candyland.com."
IT IS FURTHER ORDERED that Hasbro shall not be required to post a bond pursuant to
Federal Rule of Civil Procedure 65(c) in connection with this preliminary injunction, as
defendants expressly waived any bond requirement relating to this order at the preliminary
injunction hearing.
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Copyright Law
 Requirements- Copyrights
• Original Work
• Tangible Medium
• Creative
 Protects Authors Not InventorsFair Use
 Digital Millennium Copyright Act
(1998)
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Copyright Law
 Copyright:
• Intangible property right granted
by federal statute to the author for
life plus 70 years.
• Automatic protection.
• What is Protected Expression?
Work must be original and “fixed
in a durable medium.” Ideas are
not protected, but the expression
of an idea is.
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Copyright Infringement
 Infringement.
• Form or expression is copied
(does not have to be in its
entirety).
• Penalties, damages and criminal
action are possible.
• Exception: “Fair Use”.
 Certain persons or organization can
copy materials without penalty (e.g.,
education, news, research).
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Copyright
 Copyright Protections for
Software.
• 1980-Computer Software
Copyright Act.
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Copyright
 Copyright Act of 1976:
• Copy of a program into RAM is
infringement.
• Revision or re-sale of
freelance authors works can
be infringement.
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Copyright
 MP3 and File-Sharing
• The Supreme Court, in the 1984 case Sony v. Universal City, said that “time-
shifting” was a fair use. The Court defined time-shifting as "recording a
program to view it once at a later time, and thereafter erasing it.“ To stop
production of VCRs, a “staple of the marketplace,” the Court held in Sony v.
Universal City, would be an unfair use of the copyright principle. Although the
Court noted that many VCR owners do not erase tapes of copyrighted
programming after watching them, it found that VCR manufacturers could not
be held responsible for such behavior, and that manufacturers were not liable
for any copyright violations by third parties. (Copying free programming for
noncommercial, private viewing is now seen as "fair use" under copyright
law.) As recording technology advanced, the concept of "space-shifting"
arose. Space-shifting was given limited protection by the 9th U.S. Circuit
Court of Appeals in Recording Industry Association of America v. Diamond
Multimedia, a 1999 case in which the court defined space-shifting, in the
context of digital music, as transferring copyrighted material from a CD
already owned by the transferor to another medium for the essentially
exclusive use of the transferor. Such transfers were found to fall within the
fair-use provisions of copyright law, so that the manufacturer of the Diamond
Rio MP3 player was allowed to market its product. However, in A&M Records
v. Napster, the 9th Circuit refused to extend the definition of space-shifting to
allow people to copy music that they did not own a physical copy of, or to
allow people to place copyrighted music online where anyone (including
people who owned no physical copy) could copy it without permission from
the copyright holder.
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