POWERPOINT 23 Employment laws generally cover EMPLOYEES, not those doing work as “independent contractors” - Employees who are full-time, year round employees - “Control test” is used by the court to determine if a work is an employee or an independent contractor QUESTION: Phoenix Corporation hired Erika to make whistles. Under the terms of the agreement, Erika was to be paid a fixed sum without benefits, she was to craft the whistles in her shop, she could use any suppliers she chose, and she had 3 months during which to complete the project. If a dispute arises and a court must determine Erika’s employment status, which of the following is the most likely outcome? A. Erika is an employee of Phoenix B. Erika is an independent contractor - Lump sum payment, no benefit, does all the work at her own place, can pick her own supplies, 1-3 month contract - Even if she had to use the employer’s suppliers, she would still be an independent contract because of all the other factors - Court focuses on what a MAJORITY of the evidence implies QUESTION: Under the basic “at will” doctrine, “at will” employees can be terminated at any time without cause TRUE Employment at will – either party may terminate the employment relationship at ANY time and for ANY reason - Unless doing so would violate an employee’s statutory or contractual rights (3 exceptions) EXCEPTIONS: Contract theory - Implied employment contracts can exist between an employer and an employee - If an employee is fired outside the terms of the implied contract, he or she may succeed in an action for breach of contract even though no written employment contract exists - The employee’s reasonable expectations are the key to whether an employment manual creates an implied contractual obligation - “You will only be fired if you do X, Y, or Z” you rely upon this expectation - An employer’s oral promises to employees regarding discharge policy may also be considered part of an implied contract - If an employer fires a worker in a manner contrary to what was promised - EXAMPLE 24.1 – BDI’s employment manual and personnel bulletin both state that workers will be dismissed only for good cause; if an employee reasonably expects BDI to follow this policy, a court may find that there is an implied contract based on what is stated in the manual and bulletin Tort theory (most common) - Abusive discharge may result in a suit for intentional infliction of emotional distress, defamation, or fraud - Some courts have permitted workers to sue their employers under the tort theory of fraud - EXAMPLE 24.2 – Goldfinch, Inc. induces Jarvis to leave a lucrative job and move to another state by offering “a long-term job with a thriving business”; Goldfinch is having significant financial problems and is planning a merger that will result in the elimination of the position offered to Jarvis; if Jarvis takes the job in reliance on Goldfinch’s representations and is fired shortly afterwards, he may be able to bring action against the employer for fraud Public policy - Statutes, common law, well-known mandates - Generally, the public policy involved must be expressed clearly in the jurisdiction’s statutory law - Also applies to an employee who is discharged for whistleblowing – telling government authorities, upper-level managers, or the media that his or her employer is engaged in some unsafe or illegal activity QUESTION: Matt was summoned for jury duty and was required to leave his job for two months. Upon his return, his employer said his position had been filled. Does Matt have a valid claim for wrongful discharge against his employer? A. Yes B. No - Matt was fulfilling a public obligation Wrongful discharge – an employer’s termination of an employee’s employment in violation of the law or an employment contract - Even if an employer’s actions do not violate any provisions in an employment contract or a statute, the employer may still be subject to liability under a common law doctrine CASE EXAMPLE 24.4 – Moroni vs. Medco Health Solutions, Inc. Robert Moroni negotiated a deal to provide consulting services for Medco, a third party administrator of prescription-drug plans; Medco’s agent, Griffin, sent Moroni an email setting forth the details of the parties’ agreement; Moroni emailed a counteroffer suggesting that he would work on Medco’s projects two days a week for thirteen months in exchange for $17,000 a month plus travel expenses; Medco accepted via e-mail; Moroni began performing a contract, but Medco refused to pay him; Moroni sued for breach of contract - Medco argued that no enforceable contract existed and that the e-mail showed only agreement to agree - Court ruled that the e-mail amounted to an agreement to the essential terms of an employee contract - Moroni won The Fair Labor Standards Act (FLSA) covers all employers engaged in interstate commerce by extending wage-hour requirements - Child labor - Children under 14 years can only perform certain types of work, such as deliver newspapers, work for their parents, and be employed in entertainment/some agriculture - Working times and hour restrictions apply - Children year 14-15 are allowed to work, but not in hazardous occupations - Working times and hour restrictions apply - Children 16-18 are allowed to work, but not in hazardous occupations - NO restrictions on working times or hours - No restrictions apply to individuals over age 18 - Minimum wage - Nobody in a full-time job can make less than $7.25 an hour (federal) - State minimum wages can be higher than federal - If employee receives tips, the employer is only required to pay $2.13 an hour in wages as long as wage + tips = at least $7.25 - If not at least $7.25, employer must pay the difference - Seasonal jobs do not apply to federal/state minimum wage - Maximum hours - “Normal” hours = 40 hours a week - Overtime is any additional hours beyond 40 a week = 1.5x regular hourly wage - Test for overtime 1. Employee worked overtime but was not paid for the overtime hours 2. Employer knew or should have known employee worked overtime hours - In-class example – case about a worker who is employed by a company that has a policy not to pay overtime - Worker’s immediate supervisor said the company won’t pay overtime even if you work extra hours; employee told the supervisor that with all of the tasks he needs to clock in overtime; company refuses to pay overtime; worker quit his job and filed a suit for the overtime pay; test was met and the worker won the suit - Types of workers EXEMPT from overtime 1.5x pay – executive employees, administrative employees, professional employees - Have a lot of bargaining power when first accepting this job (can negotiate a salary) - Companies give these people a lump sum of money to do whatever, for however long, to get the job done The WARN Act requires large employers to provide 60 days notice before implementing a mass layoff or closing a plant that employs more than 50 full time workers - A mass layoff is at least 1/3 of full-time employees at a particular job site The FMLA allows employees to take time off from work for family or medical reasons - Employers with 50+ employees must provide up to 12 weeks of unpaid family or medical leave in any 12-month period for any employee who has worked for over one year - Anything beyond 12 weeks, no protection - If an employee works for a large company, the employee is covered as long as he or she has worked for over a year - 26 weeks of military caregiver leave within a 12-month period if family member is serious injured or has become ill as a result of active military duty - Employer is not required to pay wages during leave but must continue health care coverage and when the employee comes back, reinstate him or her to the original position or a comparable one (equivalent pay and benefits) - An employer can avoid reinstating a key employee – one who falls within the top 10 percent of the firm’s workplace - Possible remedies an employer may be required to provide: damages to compensate for lost benefits or compensation, job reinstatement, promotion, court costs/attorney fees, 2x damage award if the employer engaged in bad faith - Employers must provide NOTICE when an absence will count as authorized FMLA leave CASE EXAMPLE 24.2 – Ballard vs. Chicago Park District Ballard worked for Chicago Park District; she lived with her mother who suffered from end-stage congestive heart failure; Ballard served as her mother’s primary caregiver with support from hospice, hospice helped her mother plan and secure funds for an end-of-life goal to Las Vegas; to accompany her mother on this trip, Ballard asked the Park District for unpaid time off under the FMLA; the employer refused, but Ballard went on the trip instead; the Park District terminated Ballard for “unauthorized absences”; Ballard filed a suit against the employer - Court issued a decision in Ballard’s favor but Park District appealed arguing that Ballard had been absent from work on a “recreational trip” - The FMLA protects an employee who takes leave from work to care for a seriously ill family member during a trip - There is only limitation imposed on the care, it is not a restricted to a particular place The OSHA imposes on employers a general duty to keep workplaces safe - An employer can NOT fire or discriminate against an employee who does not work because he or she believes the workplace is unsafe - Employers with 11+ employees must post certain notices in the workplace, perform prescribed record keeping, and submit specific reports - Employers covered by OSHA report any work related death or 3+ hospitalizations within 8 hours of the incident Workers’ compensation laws establish an administrative procedure for compensation workers injured on the job - Instead of suing, an injured worker can file a claim to receive workers’ compensation - Worker has to choose but once the paperwork is filed with the state for a claim, there is no option to sue - Where does the money come from? – employer may purchase insurance or pay claims (self-insurance) - Requirements: (1) existence of an employment relationship and (2) an accidental injury that occurred on the job or in the course of employment, regardless of fault - There also should be prompt notice by the employee to the employer (30 days) and the state (60 days – 2 years) - Commuting to work is not on the job/in the course of employment - Unless your job includes you having to drive around during the day POWERPOINT 24 Income security – insurance programs designed to protect employees and their families by covering the financial impact of retirement, disability, death, hospitalization, and unemployment No employer is required to provide retirement plans for employees Social Security Act provides for old-age (retirement) benefits, survivors benefits, and disability insurance - Replaces income - You start paying into the system but you don’t actually get any of the benefits until you retire - RETIREMENT AGE: 66 - Can’t take out money without a significant penalty until you reach age 66 - While you are working, you pay into the system and so does your employer - Employee’s paychecks are TAXED at 6.2%; maximum taxable earnings cap = $128,700 (wage base) - Every dollar you earn up to $128,700 is tax refundable social security - If you earn $129,000, only $128,700 is tax refundable and the rest isn’t - Employers match the tax paid by the employee - Self-employed persons must also pay the tax – 12.4% on all earnings up to wage base - Eligibility – you must earn credits; the number of credits required for eligibility varies with age/type of benefit but MOST people need 40 credits to qualify - you can earn a MAX of 4 credits per year Medicare – federal health insurance program - You are eligible if you or your spouse is eligible to receive Social Security benefits AND you are 65 years or older/under 65 with certain disabilities - Both employee and employer contributes 1.45% of paycheck - Self-employed pays 2.9% - There is no “cap” ceiling for wages taxed so everything you earned is taxed - High income earners must pay an additional tax on all earnings over $200,000 but employer does not have to - Hospital insurance – automatic for most people if individual or spouse workers - Medical insurance – must pay additional premium (doctors, outpatient care) Medicaid – a STATE program - Generally for low income individuals ERISA = management standards for private retirement plans - Enforces its provisions governing employers that have private pension funds for their employees - Vesting – the creation of an absolute or unconditional right or power - Employee contributions vest immediately - Employer contributions vest after 5 years - Once both sides put contributions in the money is preserved; will stay in the retirement fund until you reach retirement age Unemployment insurance – provides unemployment compensation to eligible individuals - Employers pay into a fund and the proceeds are paid out to qualified unemployed workers - To be eligible, a worker must be willing and able to do work - Workers who have been fired for misconduct or have voluntarily left their jobs are not eligible for benefits - EXAMPLE 24.5 – Martha works for a snowboard store; Martha receives a text from her son saying that he has been taken to the hospital; Martha rushes to the hospital and does not return to work for several days; snowboard store hires someone else for Martha’s position; Martha files for unemployment benefits Martha’s claim will be denied because she left her job voluntarily and made no effort to maintain contact with her employer COBRA – enables workers to continue, for a limited time, their health-care coverage after they are no longer working for a company (up to 18 months) - The workers pay the premiums for the continued coverage - Employee is eligible as long as he or she is not fired for gross misconduct HIPAA – establishes administrative requirements that employer health care plans must meet and mandatory policies and procedures to protect private/security of employee’s private health information More than half of employers engage in some form of surveillance of their employees - However, employees have some privacy protection - Private employers are free to use filtering software to block access from certain websites - The First Amendment’s protection of free speech prevents only government employers from restraining speech by blocking web sites - If employees have been informed that their communications are being monitored, they cannot reasonably expect those interactions to be private - If employees are not notified, the employer may be held liable for invading their privacy - Employers can require employees to sign consent forms that permit them to monitor both personal and business related electronic communications - Employers are prohibited from requiring/requesting job applicants to take lie-detector tests or asking about results of a polygraph - Public employers cannot ask for drug tests because of the Fourth Amendment but private employers can QUESTION: A company may monitor the electronic business communications of an employee made via the employer’s e-mail system without violating the employee’s privacy rights EVEN IF the employer DOES NOT INFORM the employee of the monitoring. A. True B. False - Anything provided by the company can be monitored by the company without warning POWERPOINT 25 Intellectual property = products of the mind - An intellectual creation - Intangible - Example – the music you hear when you play a CD - DIFFERENT from “property” – tangible (can feel, see, touch) - Example – the actual DC disc on which the music composition is embodied QUESTION: Stephanie is an architect. She designed a building and embodied the plans into blueprints. The physical blueprints are the intellectual property, and the expression embodied in those blueprints is property FALSE We protect all forms of intellectual property because the Constitution says we can Copyrights and patents can only be protected through federal law Trademarks are trade secrets are protected by state law (can choose between state and federal court) Trademark – a distinctive word, symbol, sound, or design that identifies the manufacturer as the source of particular goods and distinguishes its products from those made or sold by others - When you see, hear, touch, taste something it you identify it from one source/company/place - *Source Indicator – when customers see a particular logo, they know that everything with that logo comes only from one source PREVENTS CONSUMER CONFUSION - Example – If an imposter company were to use the Nike swoosh, then consumers would be unable to determine if it is actually from Nike - ALL marks that identify and distinguish products of one company from products of another is protected under federal and state trademark laws - Marks can be DISTINCTIVE designs, numbers (Chanel No. 5), slogans (“I’m Lovin’ It”), shapes (shape of Coke bottle), sounds, colors Distinctive = fanciful, arbitrary, suggestive - AND descriptive, but must acquire secondary meaning Descriptive mark – provides information about the product/good, uses a geographic term, is a personal name – receive NO trademark protection - Need to teach the public to recognize the mark as distinctive acquire a secondary meaning - Examples – “Honey-Baked” (ham), “World Book” (encyclopedias) QUESTION: Frosty Treats sells frozen desserts out of ice cream trucks that are decorated with a picture of a clown. Twisted Metal, a video game series created by Twisted Metal Corp., included an ice cream truck driven by a clown character that was very similar to the Frosty Treats clown. In the last video game in the Twisted Metal series, the ice cream truck is labeled, “Frosty Treats.” If Frosty Treats sues Twisted Metal for trademark infringement, which of the following statements is correct? A. Frosty Treats will lose if the court determines the term “Frosty Treats” is a descriptive term that has not acquired secondary meaning (as such, it is not distinctive) B. Frosty Treats will win if the court determines the mark is generic. - Only own valid trademark if it is distinctive enough to be protected as a mark in the first place CASE EXAMPLE 6.3 – Unity Health vs. UnityPoint Unity Health Plans Insurance Corporation has been a health maintenance organization insurer in Wisconsin since 1955; in 2013, another health-care provider, Iowa Health System, began rebranding itself as UnityPoint Health; when this company expanded to Wisconsin, where Unity Health had an established presence, United Health filed a trademark infringement suit in federal court - Court found that Unity Health was a descriptive mark, thus not inherently distinctive - Court also held that the United Health mark had acquired a secondary meaning, largely because it had been used for so long and so exclusively by one health insurer in Wisconsin - It made no difference to the court that only one part of the mark (Unity) was common to both trademark - To allow allow Iowa Health Systems to use the mark UnityPoint would likely create confusion for consumers Generic marks – terms that refer to an entire class of products receive no protection, even if they acquire secondary meanings – receive NO trademark protection - The use of an ordinary term that IS the thing that you’re selling - Examples – bicycle, computer, soap - If you are selling soap, you can’t get a trademark for the word “soap” - EXCEPTION (example) – you cannot get a trademark on the word “spoon” to sell spoons, but you can use this ordinary word if you’re using it in another way “Spoon” as the name of a restaurant/bar lounge - Combining/blending multiple generic terms MAY create a non-generic mark capable of receiving trademark protection - Examples – Rent-A-Wreck (car rental), Shoetique (boutique for shoes) - Some marks can lose their protection if they become generic (losing their significance as a source indicator) - Examples – Band-Aid, Jacuzzi, Frisbee, iPod - Examples (actually lost their protection) – Elevator, Yo-Yo, Trampoline, Aspirin Suggestive marks – suggest a characteristic of the good - Some imagination or thought may be needed to identify the nature of the goods - Inherently distinctive and afforded a high degree of trademark protection - Examples – Dairy Queen (dairy products), Greyhound (bus service), Coppertone (suntan lotion) Arbitrary/fanciful marks – highly distinctive and are offered a very high degree of trademark protection - Common words applied in a way that bears no logical relationship to the underlying good - Can be made-up words - Examples – Google (search engine), Hard Rock (café), Kodak (camera supplies) CASE EXAMPLE 6.2 – ESPN vs. Quiksilver ESPN sued Quiksilver alleging trademark infringement; ESPN claimed that Quiksilver had used on its clothing the stylized “X” mark that ESPN uses in connection with the “X Games”; Quiksilver filed counterclaims for trademark infringement and dilution, arguing that it had ad long history of using the stylized “X” on its products; ESPN created the X Games in the mid-1990s, and Quiksilver has used the X mark since 1994; ESPN asked the court to dismiss Quiksilver’s counterclaims, but the court refused, holding that the X on Quiksilver’s clothing was clearly an arbitrary mark - The court found that the two X’s were “similar enough that a consumer might well confuse them” - Quiksilver could continue its claim for trademark infringement CASE EXAMPLE 6.4 – Elliot & Gillespie vs. Google Elliot and Gillespie sought to register numerous domain names, including “googledisney.com” and “googlenewstvs.com”; they were unable to register the names because all of them used the word “google” which is already trademarked; Elliot and Gillespie brought an action in federal court to have the Google trademark canceled because it had become a generic term - Argued that because most people now use “google” as a verb when referring to searching the Internet with any search engine, the term should no longer be protected - Court held that even if people do use the word “google” as a verb, it is still a protected trademark if consumers associate the noun with one company - The primary significance of the word to a majority of the public who utilize the internet search engines is a designation of the Google search engine Service mark – company that delivers a service Trade name – distinguishes/identifies a company’s NAME - Name needs to be unusual or fancifully used Trade dress – the distinctive features of a product’s packaging or the distinctive features of the product itself (image/overall appearance) of a product that are protected under trademark law - Entire product you sell is protecting the overall image of the protect - Packaging is also a type of trade dress - Any time an entire product is being protected is an example of trade dress - EXAMPLES: the distinctive décor, menu, and style of service of a particular restaurant may be regarded as the restaurant’s trade dress; the layout/appearance of a mail-order catalogue; the use of a lighthouse as part of a golf hole; the fish shape of a cracker; the Gshaped design of a Gucci watch - EXAMPLE 6.7 – Nike owns Converse; Nike filed a suit against thirty-one companies, including Ralph Lauren, for manufacturing knock-off versions of Converse’s All-Star shoes; Nike claims the consumers are likely to be confused because the knock-offs use the same white rubber soles, rubber cap on the toes, etc.; Ralph Lauren agreed to settle its dispute with Nike by destroying all remaining fake All-Stars and paying Nike an undisclosed sum Certification mark – “certifies” product/service characteristic - You have a product and a third party group certified your product to meet their standards Collective mark – indicates MEMBERSHIP in a group, association, or collective - Permits you to displace their logo to show they are a part of your group - Example – collective marks appear at the end of a movie’s credits to indicate the various associations and organizations that participated in making the movie CASE EXAMPLE 6.1 – Coca-Cola Co. vs. Koke Co. of America Coca-Cola brought an action into federal district to prevent other beverage companies from using the names Koke and Dope for their products; the defendants contended that the Coca-Cola trademark was a fraudulent misrepresentation and that Coca-Cola was therefore not entitled to any help from the court; the defendants alleged that the Coca-Cola company represented, through its name, that the beverage contained cocaine (from coca leaves) - Yes for Koke, but no for Dope - “Koke” infringed on Coca-Cola’s trademark, “Dope” did not - Supreme Court prevented the competing beverage companies from calling their products Koke but not from calling their products Dope The Lanham Act prohibits unauthorized use of an identical or similar mark likely to confuse a consumer on (1) directly COMPETING goods/services or (2) non-competing but RELATED goods/services trademark infringement - Mark must be DISTINCTIVE *When you register for trademark protection, protection is only available for use of your mark on particular products or services that you use your mark on - Example – selling snow boots with your mark on the snow boots - Counter example – a different company uses the snow boot’s store’s mark on stationary paper if snow boots store only sells snow boots, the goods are not related and don’t compete so both companies can use the mark on their products Trademark infringement – a form of trademark misuse; open to every kind of trademark - Intention does not need to be proved - Test to determine infringement – “likelihood of confusion as to the source of product” - Will the consumer be confused about who made the product? - The likelihood of confusion is evaluated from the perspective of the AVERAGE PURCHASER of that particular product - Does not include side-by-side comparisons or perfect recall by the average purchaser - If an average purchaser is easily able to distinguish between the two logos, there is no likelihood of confusion and no trademark infringement Trademark dilution – the unauthorized use of a distinctive and famous mark in a way that impairs the mark’s distinctiveness (blurring) or harms its reputation (tarnishment) - Only available to trademarks that are famous - If you do not own a famous mark, you can only sue for trademark infringement - ADDITIONAL condition for trademark dilution – can apply on non-competing and/or non-related goods/services - Can claim dilution when the mark is likely to confuse consumers and also when the mark is not likely to confuse consumers Dilution vs. infringement: Infringement = confusion of consumers with competing goods or related goods Dilution = blurring or tarnishment of related and non-related goods; mark is used in an unauthorized way that reduces that value of the mark CASE EXAMPLE 6.1/CLASS EXAMPLE – Starbucks Coffee vs. Sambucks Coffee - Similar marks, same business - Starbucks could lose its ability to act as a source indicator of goods to consumers, losing all trademark protection - Court determined Sambucks was way too similar to Starbucks, a directly competing good - Court believed that Sambucks was likely to confuse consumers - Starbucks is a famous name – trademark dilution (blurring) CLASS EXAMPLE – Burger King Small family-owned “Burger King” (only sold burgers) only in Illinois and trademark was registered in the 1950s; Franchised Burger King began to grow; Small Burger King complained; government said neither group did anything wrong; Small Burger King only sells in Illinois and just sells burgers so they can have exclusive trademark registration within 20 miles radius; for the entire rest of the country, franchised Burger King had the trademark - Any indication that the franchised Burger King knew about the small one’s trademark and was trying to interfere with their business, this would not have happened Trademarks may only be registered when the mark is “used” PUBLICLY - Born of use, not registration - Significant benefits come from a trademark being registered but you don’t have to do it - Only way to file a federal lawsuit – you have a registered trademark - TM/SM symbols only indicate that the mark owner claims rights to the mark but it does not tell you for sure whether or not the mark is registered - Option to use the symbol but helpful if you want to sue (statutory notice) *An applicant MAY file an “intent-to-use” – protecting yourself early before you start using the trademark in commerce - Gives you 6 months between when you file the registration and when you actually begin using the trademark in commerce - Mark is not secured until mark is publicly used - Once actual public use occurs, registrant must file a “statement of use in commerce” TRADEMARKS CAN LAST FOREVER AS LONG AS IT’S A SOURCE INDICATOR OF GOODS TO CONSUMERS What is one legal tool that would permit you to legally use the intellectual property rights owned by another? LICENSE - Just ask for permission from the trademark holder POWERPOINT 26 Many trademark owners use their trademark as part of a domain name (part of an internet address - Top level domain (TLD) – type of entity that operates the site - The part of the name to the right of the period - As of 2012, you may pick this generic name if you want for a hefty price (gTLD’s) - Examples –gov, edu, org, net, com (commercial) - Second level domain (SLD) – name selected by individual/business - The part of the name to the left of the period - Example – psu.edu Cybersquatting – the act of registering a domain name that is the same as, or confusingly similar to, the trademark of another and then either offers to sell the domain name back to the trademark owner or uses the domain name in bad faith - If both (1) and (2) are present, the ACPA makes the instance of cybersquatting considered illegal CASE EXAMPLE 7.2 – Apple, Inc. vs. Cyber Squatters Apple, Inc. has repeatedly sued cyber squatters that registered domain names similar to the names of its products, such as ipods.com; in 2012, Apple won a judgement in litigation against a company who that squatting on the domain name iPhone5.com Typosquatting – registering a name that is a misspelling of a popular brand name - Example – appple.com Meta tags – key words that give Internet browsers specific information about a webpage - Can be used to increase the likelihood that a site will be included in search engine results, even if the site has nothing to do with the words - Using another’s trademark in a meta tag without the owner’s permission normally constitutes trademark infringement - Use of another’s trademark in a meta tag can be permissible IF the use is deemed nominative - Reasonably necessary (no good substitute exists) and does not suggest that the owner authorized or sponsored use CASE EXAMPLE 7.5 – Tabari’s vs. Toyota The Tabari’s are auto brokers – the personal shoppers of the automotive world; they contact authorized dealers, solicit bids, and arrange for customers to buy from the dealer offering the best combination of location, availability, and price; the Tabari’s offered this service at the website buyorleaselexus.com; Toyota, the exclusive distributor of Lexus vehicles and the owner of the Lexus mark, objected to the Tabari’s use of the Lexus trademark; the Tabari’s removed Toyota’s photographs and logo from the site and added a disclaimer but refused to give up the domain names; Toyota sued for infringement - The court forced the Tabari’s to stop using any “domain name, service mark, trademark, trade name, meta tag, or other commercial indication of origin that includes the Lexus mark” ***CASE EXAMPLE 7.1 – Hasbro, Inc. vs. Internet Entertainment Group, Ltd. Hasbro, the maker of Candy Land, owns the Candy Land trademark; the defendants, Brian Cartmell and the Internet Entertainment Group, used candyland.com as a domain name for a sexually explicit Internet site; any person who performed an online search for “candyland” was directed to this adult website; Hasbro filed a trademark dilution claim in federal court, seeking a permanent injunction to prevent the defendants from using the Candy Land trademark - Did the defendants’ use of the word “candyland” in connection with a sexually explicit Web Site violate Hasbro’s trademark rights? YES - The misuse of the trademark was causing irreparably injury to Hasbro POWERPOINT 27 Patent – a grant from the government that gives an inventor the exclusive right to make, use, and sell an invention - Right to prevent others from doing anything with the patented product - The applicant must demonstrate that the invention, discovery, process, or design is novel, useful, and not obvious in light of current technology - 20 YEARS – INVENETIONS AND PLANS - 15 YEARS – DESIGNS - After the term expiration, the patent passes into the public domain so it can be made, sell, or used without paying the patent holder PATENT PROTECTION BEGINS ON THE DATE OF FILING THE PATENT APPLICATION - If you are ultimately granted the patent, it will be deemed valued as of the date you filed your patent application CASE EXAMPLE 6.9 – Monsanto, Inc. Monsanto has sold its patented genetically modified seeds to farmer to help them achieve higher crop yields using fewer pesticides; Monsanto has required farmers who bought the seeds to sign agreements promising to plant the seeds for only one crop and to pay a technology fee for each acre planted; to ensure compliance, 75 Monsanto employees are assigned to investigate and prosecute farmer who use these seeds illegally - Nearly 150 farmers in the US have been charged *A SINGLE ITEM CAN BE GRANTED MUTIPLE PATENTS - Even though we have utility patents and design patents, by definition utility patents are useful but design patents don’t apply to any useful technology because design patents are only available for new and non-obvious designs placed on a function object - Example – MP3 Player has utility patent for a novel and non-obvious memory device and a design patent for its appearance - You can NEVER get both a design patent and a utility patents on the exact same feature of a new product or invention Any person who invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent - Process – a way to do something; primarily includes industrial or technical processes - Manufacture – “stuff”; refers to all articles that are made - Composition of matter – chemical compositions - Almost anything is patentable that is human-made - You cannot patent laws of nature (gravity), natural phenomena (when water gets cold it turns to ice), abstract ideas (algorithms, love), or mere ideas/suggestions (you must create something that actually works) Utility patent – granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, composition of matter, or useful improvement thereof - Must be useful, novel (new), non-obvious in light of prior discoveries - Novelty – must not have been known/used by other in the U.S. or been described in a printed publication anywhere in the world - “One-Year Statutory Bar” – the inventor only has ONE YEAR to apply for a patent from the date the invention first was described in any publication available to the public, used publicly, or placed on sale - Non-obviousness – sufficiently different from what has been previously used or described such that it would have been nonobvious to a person of ordinary skill in the area of expertise related to the invention - Changes in color/size are too obvious - Example – wooden screw to metal screw is too obvious - Example – McGinley vs. Franklin Sports, Inc. – training baseball with colorcoded markings where fingers should be placed is a “non-obvious” invention and patentable - *Invention must serve a USEFUL purpose - Includes “operability” - Example – if a machine has been designed to perform a task, the machine must actually be able to perform that task to be deemed “useful” QUESTION: An inventor created a “perpetual motion machine” which inventor argued could defy law of thermodynamics and produce energy output greater than energy input. When tested, the machine could not could not live up to this claim. Would the patent examiners (USPTO) likely grant the patent? A. Yes, the patent examiners would likely grant the patent B. No, the patent examiners would likely deny the patent What if your claim doesn’t match the test results but the test results prove something else useful? – patent would not be granted, have to go through the whole process again to file for a new, different patent Design patent – granted to anyone who invents a new, original, configuration, shape, or ornamental design for an article of manufacture - Ornamentation that can’t be useful but is new and non-obvious - Placed upon/incorporated into an actual patent device - Example – iPhone’s curved corners and home button are covered by design patents Plant patents – granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of a plant - Asexually = genetically combining in a lab - Example – Monsanto, Inc.’s genetically modified seeds are patented because they have higher yield and require less pesticides Patent infringement – if another makes, uses, or sells whole OR part of another’s patented design or product, or the entirety of another’s patented process WITHOUT the patent owner’s permission - No patent infringement occurs when a patented product is made and sold in another country CASE EXAMPLE 6.10 – AT&T vs. Microsoft AT&T holds a patent on a device used to digitally encode, compress, and process recorded speech; AT&T brought an infringement case against Microsoft, which admitted that its Windows operating system incorporated software that infringed on AT&T’s patent - The case reached the Supreme Court on the question of whether Microsoft’s liability extended to computers made in another country - The court determined it was not; Microsoft was liable only for infringement in the U.S. and not for the Windows-based computers produced in foreign locations - Microsoft had not “supplied” the software for the computer but had only electronically transmitted a master copy, which the foreign manufacturers then copied and loaded onto the computers Microsoft LIABLE for patent infringement IN THE US when code was incorporated into computers MADE or SOLD in the U.S. Microsoft NOT LIABLE for patent infringement when code was incorporated into computers MADE or SOLD in FOREIGN COUNTRIES CLASS/TEXTBOOK EXAMPLE – Apple vs. Samsung Apple claimed that Samsung used icons that Apple had trademark protection for and that Samsung’s icons looked too similar to Apple’s, claiming trademark infringement; Apple claimed that they had design patents on the icons and home screen interface, claiming patent infringement - Apple won CASE EXAMPLE 6.11 – Cordance vs. Amazon Cordance Corporation developed some of the technology and software that automates Internet communications; Cordance sued Amazon for patent infringement, claiming that Amazon’s one-click purchasing interface infringed on one of Cordance’s patents; after a jury found Amazon guilty of infringement, Cordance requested the court to issue a permanent injunction against Amazon’s infringement or, alternatively, to order Amazon to pay Cordance an ongoing royalty - The court refused to issue a permanent injunction, because Cordance had not proved that it would otherwise suffer irreparable harm - Cordance and Amazon were not direct competitors in the relevant market - The court also refused to impose an ongoing royalty on Amazon An inventor from Country A who wants patent protection for a product made or sold in a foreign country (Country B) must apply for and receive patent protection in Country B POWERPOINT 28 Copyright – a property right of ownership that gives creators and owners of creative works the right to control and profit from the use of those works - Protects original expression that are fixed in a tangible medium from which it can be perceived, reproduced, or communicated - Needs to be put in a format that others can see - Not copyrighted if the expression is still in your head - “Fixed” = embodiment of the expression in ANY tangible object satisfies this requirement - Phono record – material object in which sounds are fixed - EXCEPTION: music that accompanies a motion picture - Examples – CDs, MP3s - Copy – any material object (other than phono record) in which a work is fixed - CAN’T HEAR A COPY - Examples – paper, tattooed skin, something written on a stone, written lyrics, books, magazines - The tangible medium itself is a separate ownership interest - Example – JK Rowling had copyright protection for the expression of the Harry Pottery story - People who buy the book don’t own the expression of the story they just own the physical book - Anything that is not an original expression will not qualify for copyright protection - OR if it’s not “fixed” in tangible form - Individual words, facts widely, known, page numbers, mathematical calculations, short phrases, familiar symbols or designs, standard calendars, height and weight charts, works authorized by the U.S. government - Compilations of facts may be copyrightable if they are arranged in such a way that the resulting work as a whole constitutes an original work of authorship - IDEAS NOT PROTECTED– others can freely use the underlying ideas or principles embodied in a work - What is copyrightable is the particular way an idea is expressed - Cannot be a useful object - Novelty is NOT required - Example – someone in writes a book and never shows it to anyone; someone in California writes an identical book – both the author in NY and the author in California can each claim copyright protection for their books COPYRIGHT PROTECTION BEGINS AT THE MOMENT OF FIXATION IN A TANGIBLE MEDIUM - You don’t need a whole book on paper before you get copyright protection, just enough to differentiate your expression from the expression of others - When copyright duration period ends, the work passes into the public domain and anybody can freely use it without needing permission from the copyright owner Duration of protection for copyrights - Natural persons = life –plus 70 years - Work made for hire = SHORTER OF: 95 years from the date of publication OR 120 years form date of creation - Copyright for a work made for hire expires in the year that comes first - EMPLOYER, not CREATOR, owns original copyright CASE EXAMPLE 6.12 The popular character, Sherlock Holmes, originated in stories written by Arthur Doyle and published from 1887 through 1927; over the years, elements of the characters and stories created by Doyle have appeared in books, movies, and televisions series; before 2013, those who wished to use the copyrighted Sherlock material had to pay a licensing fee to Doyle’s estate; then, the editors of a book of Holmes-related stories filed a lawsuit in federal court claiming that the basic Sherlock Holmes story elements introduced before 1923 should no longer be protected; the court agreed and ruled that these elements have entered the public domain - The copyright expired and can be used without permission Some things don’t show enough originality to be protected - In-Class Example – Star Wars movie is protected but the TITLE isn’t IN CLASS EXAMPLE - Idea (not protected) – terrorists take over the White House - Expression (protected) – White House Down (movie trailer) - Expression (protected) – Olympus Has Fallen (movie trailer) White House Down expression versus Olympus Has Fallen expression - Different settings, characters, character development - Basic idea is that terrorists take over the white house but there was no copyright protection for that idea - Expression of the idea is protected through the copyright QUESTION: Matt is an improvisational comedian. His work is completely spontaneous, and he never writes down his jokes. Each performance is fresh and new. On Saturday night, Matt performed live at Eisenhower Auditorium. The performance was not recorded. Can Matt receive a copyright in the jokes he uses in the performance? A. Yes B. No - Never fixed in a tangible medium - FOLLOW-UP: What if someone without Matt’s permission recorded the jokes while in the audience and his jokes were original? DOES NOT count as fixation so he still cannot have a copyright - The person who recorded the video also cannot get a copyright because that person did not create the original material Music Works – Musical work vs. Sound recording - People who wrote the lyrics/music own the musical work (stuff you can read, not hear) - People license their work to a record company who then pulls to together producers to perform the word/record it sound recording - Song writers get paid because you’re using the musical work and the record company gets paid because you’re purchasing the sound recording to listen A photograph is copyrightable if it is original in (1) rendition – angle of shot, light and share, exposure, effects, developing techniques, (2) timing – selecting when to take the photograph, and (3) creation of subject – choosing what to include in the picture Architectural works – copyright protection not available if the building in which the word is embodied is located in or ordinarily visible in a public place Registration of copyright is not required, but offers benefits notice can prevent an infringer from raising defense of “innocent infringement” - Owner must register the copyright with the copyright office before filing the suit - If copyright owner registers before infringement or within 3 months after the first publication of the work, he or she can be awarded damages Copyright Act Section 106 refers to the specific rights a copyright owner owns (1) to reproduce the copyrighted work in copies or phono records (2) to prepare derivative works based upon the copyrighted work - Taking a first generation work and recasting, transforming, or adapting it in an original way to create a second generation work - Must get permission (a license) from the first generation author (3) to distribute copies or phono records of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending - A person distributing even one copy without copyright owner’s permission, distribution right is violated (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly - An owner of a copy MAY display the copy to the public so long as (a) the copy is lawful, (b) the display is a direct display or a display of the projection of a single image at a time, and (c) the display must be made to the viewers present at the location of the copy; live and in-person, not online - Does not include phono records/sound recordings (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission Sound recordings are offered less protection than other works - Nobody can reproduce a work without the author’s permission but there is an exception with audio home recordings (Audio Home Recording Act) - If you legitimately bought a copy of someone else’s work, you’re allowed to make one copy for your own personal use – ONLY applies to sound recordings - You can’t put it on a website, play it in a venue, do anything with the song unless you have permission from the author with the exception of this act (the one copy for yourself) CASE EXAMPLE 6.13 Caroll operated an online term paper business, R2C2, that offered up to 300,000 research papers for sale on nine different websites; individuals whose work was posted on these web sites without their permission filed a lawsuit against Caroll for copyright infringement; Caroll repeatedly failed to comply with court orders regarding discovery - Court found that the copyright infringement was likely to continue unless an injunction was issued Fair Use Exception – the fair use of a copyrighted work, including such use by reproduction in copies or phono records, for purposes such as criticism, comment, news reporting, teachings, scholarship, or research, is not an infringement of copyright -In-Class Example – Google Books and. Hathitrust - Google books makes website that people can search for books and hits that come up will show you sections of books that have the search terms in them - Hathitrust gives you general information about books - Authors sued both companies - Claimed that both companies were infringers - Court focused on digitizing the books to save the books for posterity and in addition it’ll make the books easier to find - Court determined they were transformative - Fair use defense saved them CASE EXAMPLE 6.14 – BMG Music Publishing vs. Leadsinger, Inc. BMG Music Publishing, an owner of copyrighted music, granted a license to Leadsinger, Inc., a manufacturer of karaoke devices; the license gave Leadsinger permission to reproduce the sound recordings, but not to reprint the song lyrics; the lyrics appeared at the bottom of a screen when the karaoke device was used; BMG demanded that Leadsinger pay a “lyric reprint” fee and a “synchronization” fee for this use of the song lyrics; Leadsinger refused, claiming that its use of the lyrics was educational and thus did not constitute copyright infringement under the fair use exception - Court disagreed - Leadsinger’s display of the lyrics was not a fair use because it would negatively affect the value of the copyrighted work First Sale Doctrine – requires that the copy lawfully be made and that the initial public distribution is authorized - Copyright owner can determine how, when, and where to distribute FIRST sales of a work, but once a copy has been sold/distributed, the copyright owner no longer controls the physical object - HOWEVER, the copyright owner RETAINS rights to the copyright interest in the original creative expression embodied on the physical object so no additional copies of the work can be made - Example – JK Rowling gave a publisher the right to make reproductions of her work/distribute it; Eric bought 1,000 copies and now owns those books; Eric resells them for way more than he purchased them for NOT illegal, Copyright Act doesn’t restrict your ability to make a profit Copyright Infringement – occurs when a third party violates one or more of the copyright owner’s exclusive rights (section 106) - Occurs when the defendant copies WHOLE or PART of the copyrighted work without the copyrighter’s permission Two-prong test for copying – a plaintiff has to show that a defendant: 1. Created a substantially similar work (look alike, sound alike) 2. Had access to the plaintiff’s work (defendant had an opportunity to see a picture, read a book, listen to a sound recording) - Doesn’t matter whether the defendant said that they didn’t understand or didn’t intentionally copy CASE EXAMPLE 7.6 In one case, a rap song that was included in the sound track of a movie had used a few seconds from the guitar solo of another’s copyrighted sound recording without permission - A federal court held that digitally sampling a copyrighted sound recording of any length constitutes copyright infringement Innocent vs. Willful Infringers - Willful infringer – is or should be on notice that the material had copyright protection from another person - Willful damages = $750 – $150,000, Innocent = $750 – $30,000 CASE EXAMPLE 7.8 – Napster and Grokster The issue of file-sharing infringement has been the subject of an ongoing debate since highly publicized cases cases against two companies, Napster and Grokster, that created software used for copyright infringement; Napster operated a web site with free software that enabled users to copy and transfer MP3 files; firms in the recording industry sued Napster; the court held that Napster was liable for contributory and vicarious (indirect) copyright infringement; Grokster created and distributed new types of file-sharing software which allows P2P network users to share stored music files - The court held that because the companies distributed file-sharing software with the object of promoting its use to infringe the copyright, they were liable for the resulting acts of infringement by software’s users POWERPOINT 29 Trade Secret – a formula, device, process, idea, or other information used in a business that gives the owner a comparative advantage - Very broad - Information of commercial value - Anything that makes an individual company unique and that would have value to a competitor - A company’s customer lists, plans, research and development, pricing information, marketing techniques, production methods - Unlike copyright and trademark protection, protection of trade secrets extends both to ideas and to their expression - Can potentially last forever - Once it’s no longer a secret, you don’t have protection for it - Trade secrets and trademarks are the only types of intellectual property protection that can last forever - Requirements: - The kind of information protected must give the owner a competitive edge over the competition - Of value to the owner - Cannot be generally known (doesn’t have to be a complete secret either) - Owner must be a reasonable effort to keep the information SECRET - Owner must make affirmative steps to keep information secret - Novelty is NOT required - If information would be DIFFICULT to replicate/duplicate, trade secret protection is possible - Trade secret protection does not include reverse engineering - Example – company purchases lotion from competitor to find out its ingredients to duplicate it Trade Secret Infringement – owner of trade secret must prove that infringer: 1. Knew or had reason to know that the information was a trade secret 2. The alleged infringer acquired the trade secret by “improper means” OR used/disclosed the trade secret without consent of the owner CASE EXAMPLE 6.17 – Kravtiz vs. PhoneDog Kravitz worked for a company called PhoneDog for four years as a product reviewer and video blogger; PhoneDog provided him with a twitter account; the account popularity grew and he had approximately 17,000 followers by the time he quit; PhoneDog requested that he stop using the Twitter account; Kravitz changed the twitter handle but continued to use the account; PhoneDog subsequently sued Kravitz for misappropriation of trade secrets; Kravitz moved for a dismissal - Court found that the complaint adequately stated a cause of action for misappropriation of trade secrets and allowed the suit to continue
