IP in Hospitality
Intellectual “Properties” in HRIM
Trademark & Franchising
Tech Transfer
IP Overview
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Patents
Trade Secrets
Copyrights
Unfair Competition
Trademarks & Trade Dress
Sui Generis Protections:
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Semiconductor chips, asexual plants, designs,
petty patents, Databases, boat hull design
Recurring HRIM IP ?s
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What is intellectual property and what
does it all mean to the entrepreneur?
Can I patent a recipe?
How do I go about establishing a
trademark?
Is a brand , like McDonalds protected
under any type of IP?
How do I establish a franchise and protect
it?
Distinguishing IP from Tangibles
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Tangible Property
Physical substance
 Only one copy exists, totally exhaustible
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Intangible Property
No physical substance
 Often only represented by something of
substance
 Apparent inexhaustibility
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IP Theory & Economics
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Incentive Theory
Investment likely when exclusivity assured
 Suboptimal investment w/o ownership &
control
 Lockean theory of initiative: innovation
forthcoming w/ rewards of private property
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Contract Theory
Maximize the public domain
 Ltd. monopoly exchanged for disclosure
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Patentable Subject Matter
New, Useful & Human-made
1. Process
2. Machine
3. Manufacture
4. Composition of Matter
Novelty
 Not
in The Public Domain
 Statutory Bars:“Known or Used...Patented or
Published”
 Diligence
Not
 The
abandon, suppressed or concealed
U.S. One Year Grace Period
No
Public Use or Sale
US: no use or sale
World: no patent or publication
Non-Obviousness
Patent should not grant if the advancement is small,
merely minor improvements over prior art
 Not obvious at the time of invention to one skilled in
the art
 Graham v. John Deere:
1. Determine scope and content of the prior art
2. Determine differences between prior art and the
claim(s) at issue; and
3. Determine the level of ordinary skill in the pertinent
art
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Confidentiality of
Application Materials
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Trade Secrets Maintained?
Most nations - confidential only for 18
mos after filing
U.S. law changed to Int’l Standard:
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Confidential only for 18 months if application
is also filed in country that publishes files
after 18 months
Otherwise, confidential until patent issues,
then publicly available unless national security
matter
Trade Secret Under Uniform Act
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information (formula, pattern,
compilation, program, device, method,
technique or process)
derives independent economic value
from secrecy or by proper means
discovery by potential competitors, and
subject of efforts, reasonable under
the circumstances, to maintain secrecy.
Eligible Information:
pattern, device, engineering data, formulas,
customer lists or preferences, raw materials,
manufacturing processes, design manuals,
operating & pricing policies, price codes, bid
information, method, technique, bookkeeping
methods, market studies/research, sales data,
marketing plans/strategies, new product
information, business plans, equipment &
machinery, program, software, flow charts,
drawings, blueprints, negative results, unique
compilation or combination of public domain
info, know-how
Duty of Secrecy
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Implied Confidentiality Duty
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Fiduciary duty of loyalty
Express Confidentiality Agreements NDA
Employment contract; covenant not to
compete
 independent contract, consulting contract,
certain distribution contracts, franchise
agreement, prior assignment of innovations,
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Employee Confidentiality
Agreements (NDA)
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Provision or addendum to employment
contract imposing confidentiality
Continuously updated list of specified
documents, projects, corporate functions,
etc.
Establish ownership of particular innovations
Define theft of IP, custody or removal of
documents, files, computer disks, E-Mail
What are Databases under
Law?
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Systematic data accumulation/ordering
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Collections of works, data or other materials
arranged in a systematic or methodical way for
retrieval or access by manual or electronic means
Used for learning, research, science,
governing & control, commerce
File composed of records, each with fields,
operations search, sort &/or recombine for
useful report
Elements of Copyrightability
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Must be original
Must be fixed in a tangible medium
of expression
Must be directly or indirectly
perceivable by humans
Types of
Copyrightable Works
Literary works
Pictorials, graphics,
and sculptures
Musical works
Motion pictures and
A/V works
Dramatic works
Sound recordings
Pantomimes and
choreography
Architectural works
Non-copyrightable Material
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Ideas are not copyrightable – only the
expression of ideas.
Includes ideas, procedures, processes,
systems, methods of operation, concepts,
principles, or discoveries.
The idea-expression dichotomy rule states
that creators can maintain control over
ideas only if they qualify as patentable or
remain as trade secrets.
Trademark Protection
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Word, Name Symbol, Device
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Identifies Source of Goods or Services
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Recently: color, sound, smell
Distinguishes from competitors
Protection Schemes:
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State C/L, misappropriation, unfair competition
Federal registration under the Lanham Act
Int’l: Paris Conv, Madrid Arrange, Pan-Am
Fundamental Purposes of
Trademarks
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Trademarks differ conceptually from patents,
trade secrets, or copyrights.
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Promote business ethics
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Prevent palming off
Symbol or device identifies source
Knowledge about prior use
Likelihood of confusion
Protect investments in goodwill
Promote Distributional Efficiency
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Consumer search costs savings outweigh costs of
regulation & forgone competitor opportunities
Identifiers are often suggestive
Distinctiveness
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Capacity to distinguish owners goods or
services
Protectability Scale
Ranges from Descriptive to Distinctive
Spectrum of Distinctiveness – a Scale of
Decreasing Protectability
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Arbitrary or Fanciful
Suggestive
Descriptive
Generic
Trade Dress
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Configuration of package, product &/or
premises
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Must be distinctive & not primarily functional
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3D design, ornamentation, color scheme, sound,
smell, ambience, look & feel
Not merely decoration; must serve to distinguish &
make a commercial impression
Separate protection & consumers impression
EX:
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Website, homepage distinctive graphics
Pole lamp
Taco Cabana patio Mexican restaurant
 http://www.tacocabana.com/
Trademark Subject Matter
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Words
Titles
Numerals
Abbreviations
Product package
design
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Slogans
Colors
Smells
Sounds
Manufacturer’s
premises
The Coca Cola trademark is an example of a
product in which the recipe, bottle design, and
brand name are all trademarks.
Two Pesos v. Taco Cabana
Facts: Family restaurant split, 2 Pesos
used Taco Cabana “motif”
Issue: Is trade dress protectable w/o
proof of secondary meaning?
Rationale: Difficulties of determining
inherent distinctiveness; restaurant
motif, look & feel protectable
Legal Tools for Technology Transfer
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Assignments
Licensing: scope, duration, fields of use,
compensation, geographic limits, etc. (e.g.,
software “sales,” terms & conditions of website
use)
Shop Rights
Work Made for Hire; Hired to Invent; M-S & S/E
Confidentiality Duties
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Non-Competition Agreements (non-competes)
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Non Disclosure Agreements (NDA)
Emerging Inevitable Disclosure Doctrine
Leasing, Franchising
Common License Terms
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Scope & Exclusivity
Duration & Termination
Geographic Limitations
Confidentiality & Non-Competition
Establishes & Perpetuates Trade Secrets
Limits on Improvements & Sub-Licensing
Warranties of IP Ownership
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Infringement indemnity
Principe v. McDonald’s (1980)
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Facts: McDonald’s denied Principe
another franchise; Principe sued
claiming tying: franchise to premises
lease
Issue: Is franchise illegal tying? NO
Rationale: Lease is not separate from
franchise due to importance of site
selection & other factors improving
quality & potential success for
franchisees.
Franchises
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Franchise Definition
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Business Organization, Network
Franchisor Exerts Control/Provides Assistance
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Franchise Trademarks & the Lanham Act
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Business Methods; ™
Control: Must Police ™ Use!
Required Fees & Payments
Franchise Agreements
Franchise Marketing Disclosures as Business
Opportunity Investment (security, FTC)
Maintaining Limited Liability F’or – F’ee
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McDonalds Scalding Coffee