MARIANNE M. JENNINGS
7th Ed.
Its Legal, Ethical, and
Global Environment
Chapter 16
Business Property
Copyright ©2006 by West Legal Studies in Business
A Division of Thomson Learning
Tangible Business Property
• Tangible Personal Property.
– Examples: Fleet vehicles, machinery, office
equipment.
• Transfer of Personal Property:
– Documents of title.
– Bills of sale.
• Lease of Personal Property:
– Right of use and possession.
– License v. Bailment.
– Exculpatory Clause.
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Tangible Business Property
• Bailments of Personal Property.
– Right of possession.
• Bailor—property owner.
• Bailee—property possessor.
– Requirements:
• Property possession transferred.
• Intent to create a bailment.
– Liability:
• Bailee liable for damages until return.
• Bailor must be certain property is in good
condition.
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Tangible Business Property
• Creditors’ Rights and Personal
Property:
– Take security interest (lien) in personal
property.
• Also called a chattel mortgage or collateral.
• Governed by Article 9 of the Uniform
Commercial Code (UCC).
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Tangible Business Property
• Creditors’ Rights.
– Creation of security interest.
• Security agreement.
• Possession or some other perfection of the
interest required.
– Enforcing a security interest.
• Debtor must be in default.
• Creditor may repossess without court
action so long as there is no breach of the
peace.
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Intangible Personal Property
• Examples:
– Patents.
– Copyrights.
– Trademarks.
– Trade Names.
– Trade Dress.
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Patents
• 20 years from filing/14 years for design
patent.
• Exclusive rights to use and profits.
• Must be non-obvious, novel, and useful.
• Using the idea without consent constitutes
infringement.
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Copyrights
• Protect authors of books, magazine
articles, plays, movies, songs, dances,
photographs.
• Runs for lifetime of author plus fifty years.
• 100 years from creation or 75 years from
publication, which ever is shorter, if
company holds rights.
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Copyrights
• Works automatically copyrighted but
no suits can be filed until the
copyright office is given a copy.
• Damages include profits, costs,
attorney’s fees.
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Copyrights
• Federal Statutes:
– Sonny Bono Copyright Extension Act.
– Digital Millennium Copyright Act.
– Computer Software Copyright Act of
1980.
• Fair use is permitted—short quotes;
research copies, criticism,
commentary and parody.
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Is Parody Fair Use?
• Case 16.1 Campbell v. Acuff-Rose
Music, Inc. (1994).
– What is the significance of 2 Live
Crew’s commercial gain from the
parody?
– Do you agree with the Court’s decision?
– Was it a fair use?
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Trademarks
• Words, pictures, designs, or symbols
used to identify a product.
• Lanham Act of 1946 and subsequent
amendments provide protection.
• Must be unique and non-generic.
• Holder must maintain unique nature.
• Recent changes allow registration
prior to use of the trademark.
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Generic Name?
• Case 16.2 Harley-Davidson v.
Grottanelli (2001).
– Who used the term “hog” first?
– What does generic standing (public
domain) mean?
– Was H.D. successful in associating hog
with its motorcycles?
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Trademark Dilution
• Federal Trademark Dilution Act (an
amendment to the Lanham Act).
– Passed in 1996.
– Protects against dilution of trademarks
and includes both profit and non-profit
uses.
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Trademark Dilution
• Case 16.3 Mosely, dba Victor’s
Little Secret, v. V Secret Catalog, Inc.
(2003).
– Were the two names confusing?
– What connection do the two companies
have?
– What does VS have to prove to prevail?
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Trade Dress
• Colors, shapes, and designs associated with
a product.
– Allowing their use is likely to create
confusion.
– Consumer surveys are used to establish
whether consumers will be misled.
• Penalties for Infringement.
• Civil suits.
• Criminal penalties.
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Infringement and the Web
• Cyber squatting.
– Victoriassecrets.net vs.
victoriassecret.com.
• ICANN.
– Arbritration of domain name disputes.
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International I.P. Issues
• Patent Protection.
– Some countries require opposition
proceedings for defense of the patent.
– Some countries impose working
requirements.
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International Trademark
• Trademark Protection.
– Name, symbol, mark, letter, word or figure.
– Must be registered in United States and
other countries for full protection.
– Protects the goodwill of the firm.
– Common law countries establish trademark
through establishing use and recognition.
– Now in United States you can register a
trademark before you begin using it.
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International Trademark
• Trademark Protection.
– In 1996, EU opened a centralized office for
Trademark registration for member states.
• Provides a one-step registration for all EU
countries.
– 1891 Madrid Agreement provides for
international registry of trademarks.
• Effective in all member countries for five years.
– 1929 Pan American Convention provides
protection for registered trademarks in all
member countries.
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International Trademark
• Trademark Protection.
– Knock-off goods: goods carrying
trademarks that are not produced by the
trademark holder.
– Gray market goods: actual trademark
goods that are sold without authorization
of trademark holder.
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International Trademark
• Copyrights
– Berne convention membership: Registration in
one is registration in all.
– Will be part of WIPO.
– Simultaneous publication in member country
is protected.
– International standards vary.
• China’s software piracy.
• China is on trade watch list because so much
software is copied.
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Enforcing Business
Rights
• Product Disparagement: defamation for
products/businesses.
– Elements:
• Statement about a business’ reputation, honesty, or
integrity that is untrue.
• Publication.
• Statement is directed at business with intent to
injure.
• Damages.
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Enforcing Business
Rights
• Case 16.4 Bose Corporation v.
Consumers Union of the United
States, Inc. (1984).
– Why is Malice an important part of the
case?
– What classes of speech are excepted
from First Amendment protection?
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Enforcing Business
Rights
• Palming Off.
– Company sells product by leading
buyers to believe the product is
something else.
• Examples: Fake Rolex watches; Cabbage
Patch dolls.
– Plaintiff must establish that confusion is
likely.
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Enforcing Business
Rights
• Misappropriation:
– Protects business trade secrets such as
the customer list.
– Some theft, espionage or bribery must be
used to obtain secret information.
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Real Property
• The Nature of Real Property.
– Land/surface.
– Air rights/mineral rights.
– Airplane easements.
– Right to separate title and sell to others.
– Air rights can be sold and taxed.
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Real Property
• The Nature of Real Property.
– Mineral rights:
• Can be sold/transferred separately.
• Oil, gas, coal, geothermal.
– Fixtures:
• Personal property becomes annexed to
real property and is sold with the real
property.
• Trade Fixtures.
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Real Property
• Interests in Real Property.
– Fee simple.
• Highest form of ownership.
– Life estate.
• Right to use and possession until death.
• Title goes back to grantor or remainderman.
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Real Property Interests
• Easement:
– Right to use another’s property for access.
– Negative easement controls how another
uses his land so as not to interfere with your
use.
– Easements in gross—utility easements.
• Leases:
– Periodic-month-to-month.
– Fixed lease.
– Issues of habitability controlled by statute.
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Transferring Real Property
• Transfer by deed.
– Warranty deed—highest protection.
– Special warranty or bargain and sale
deed.
– Quitclaim deed—no warranties;
transfers title if you have title.
• Recording: not required for transfer,
but protects against future losses of
title and rights.
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Transferring Real Property
• Adverse possession.
– Transfer of title through exclusive use
and possession for statutorilymandated period.
• Mortgage-borrow money and
pledge land as security.
– Must be in writing.
– Allows lender to take back (foreclose
on) property if borrower defaults.
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Financing Real Property
• Financing Real Property Purchases.
– Deed of trust—third party holds title
until debt is satisfied—like a mortgage.
• Foreclosure—the process in which the
lender sells property to satisfy its debt.
– Both forms of financing documents
should be recorded—mortgages and
deeds of trust.
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