An introduction to the fundamentals of dynamic business law and business ethics chap007

Upon discovering the existence of the new restaurant, attorneys for the rock and roll restaurant immediately sue, requesting 1 a temporary injunction a court order mandating that the H

Chapter 7

Real, Personal, and Intellectual

Property

Chapter 7 Case Hypothetical

Davidson’s Microbrew, Inc is a small beer manufacturer located in Denver, Colorado The owner of

Davidson’s Microbrew, Benjamin Davidson, takes great pride in offering the public a variety of beers, including a particular one that is currently the subject of litigation “Barley-Davidson” is a dark brew

closely resembling motor oil in its appearance For the past three (3) years, Barley-Davidson has

been sold in orange cans There is a “bar-and-shield” logo on the can’s front closely resembling the

iconic Harley-Davidson logo; in the “bar” portion of the logo, the “Barley-Davidson” name appears,

and the words “Asphalt-Dark Beer” appear in the “shield” portion of the logo On the back of the can,

in small but legible print, the following disclaimer appears: “Not affiliated with Harley-Davidson Motor Company.” Barley-Davidson has become Davidson’s Microbrew’s most popular product, selling

approximately 250,000 units per year.

In its lawsuit against Davidson’s Microbrew, Harley-Davidson has requested an injunction (temporary, pending litigation, and permanent, post-litigation) and money damages based on all profits generated

by the defendant in its sale of Barley-Davidson Davidson’s Microbrew’s defense is based on four (4) contentions: first, its product (beer) is distinguishable from Harley-Davidson’s product (motorcycles); second, its product disclaimer (indicating its non-affiliation with Harley-Davidson Motor Company) is

displayed on every can of Barley-Davidson it sells; third, the “Barley” portion of its dark beer’s name

has nothing to do with Harley-Davidson; and four, the “Davidson” portion of the beer’s name is

proudly associated with the name of the microbrew’s company, and the last name of the microbrew’s

Chapter 7 Case Hypothetical

Bernie Sides is a restaurant entrepreneur and an avid Civil War buff Over the

years, Bernie has collected a “treasure trove” of Civil War memorabilia, and he decides to combine his passions for restaurant ownership and Civil War history

by opening a new restaurant called the “Hardtack Café” (“hardtack” is a hard,

unsalted biscuit used as a staple for Civil War army rations.) Sides has devised

a logo for the restaurant, and the logo (a yellow circle with red lettering for the

name of the restaurant) bears a striking resemblance to a certain “rock and roll” themed restaurant of a similar name and logo.

Upon discovering the existence of the new restaurant, attorneys for the rock

and roll restaurant immediately sue, requesting 1) a temporary injunction (a

court order mandating that the Hardtack Café cease and desist from using its

name and logo, pending the outcome of the litigation; 2) a permanent injunction (a court judgment that the Hardtack Café forever cease and desist from using

its name and logo;) and 3) money damages representing all profit the Hardtack Café has earned during its existence.

Chapter 7 Case Hypothetical

The American Pistol Association (APA), a gun-rights activist organization, is headquartered in Laramie, Wyoming The APA held a ceremonial luncheon at its headquarters, and invited a host of Second Amendment advocates, including

the former governor of Wyoming, Sara M Caine Dubbed “The Renegade” by her avid supporters, most believed that Sara would make a presidential run in the next election Known more for her public proclamations than her actual

governing acumen, Sara is most-remembered for leading a gun-rights demonstration in Wyoming’s state capital,

Cheyenne, at which time she held her Chesterfield rifle above her head and announced that before government

officials took her gun away, they would first have to deal with her “sharp, red fingernails!”

As a key part of the ceremony, the APA honored Sara M Caine’s efforts to uphold the Second Amendment The

APA’s president, Charles T Hess, presented Sara with a “Bronco 55” pistol, proudly manufactured in the United States

of America Sara enthusiastically accepted the Bronco 55 After the ceremony, Charles approached Sara and

informed her that although his organization had planned to get the gun engraved with her initials on each side of its

ivory handle before the presentation, the person they had chosen to do the work, Edward “Wild Eddie” Cody, had

been away on vacation He further told Sara that if she would hand the gun to him, he would get Wild Eddie to

engrave the gun when he returned from vacation, and return it to her as soon as possible Sara happily agreed, and

transferred the gun to Charles

Charles put the gun in his office desk at APA headquarters That night, an unknown perpetrator burglarized APA

headquarters, taking only the Bronco 55 Charles suspected the thief was Jean Gigot, a vocal, well-known opponent

of gun rights who had moved from Dijon, France to Laramie several months ago During his presentation of the

Bronco 55 to Sara, Charles had observed Jean lurking in the back of the dining room, furtively and feverishly pacing

back and forth

Chapter 7 Case Hypothetical

Jason Binghamton is a huge fan of the Montana State Teacher’s College (M.S.T.C.) men’s basketball team,

nicknamed the “Flying Elk.” The M.S.T.C team has enjoyed the best season in its 52-year history, and they are a

favorite to win the Lewis and Clark League (L.C.L.) men’s basketball title In fact, the team has advanced to the L.C.L men’s basketball tournament championship, a contest against the Billings Technical College “Fighting Prairie Dogs.”

Jason drives to the championship game at Lewis and Clark Stadium in Helena, Montana He approaches the stadium parking lot, and pays the attendant $25 for parking; in return, the attendant hands Jason a parking stub On the back

of the stub is the following language: “Lewis and Clark Stadium and the city of Helena shall not be held liable in any

way for loss of or damage to visitor’s property, including loss of or damage to automobiles parked in the stadium

parking lot In accepting this parking privilege, the patron agrees that he will hold harmless Lewis and Clark Stadium,

and the city of Helena, for such damage.” Jason does not read the language on the parking stub; instead, he places

the ticket on his dashboard, parks his car in area B1 of the lot, locks the car doors and puts his keys in his pocket, and heads to the stadium

By all accounts, the game is the proudest moment in the history of the Flying Elk They defeat the Fighting Prairie

Dogs 82 to 58, and Binghamton leaves the stadium ecstatic, knowing he attends a college of “winners.”

Upon returning to his car, Jason’ happiness deflates to consternation and anger His windshield has been shattered

by a stuffed and mounted prairie dog that now lays upside-down in his driver’s seat, along with countless shards of

broken glass It is obvious to Jason that the “deed was done” by some disgruntled Fighting Prairie Dog fan, but that

individual is probably well on his way back to Billings by now, and he will never be able to locate the criminal

Jason files suit against Lewis and Clark Stadium and the city of Helena, Montana, seeking to hold the defendants

“jointly and severally” liable for the damage to his automobile Will he win the lawsuit?

Chapter 7 Case Hypothetical and Ethical Dilemma

John “Jack” Franklin and Ruby Huss are next-door neighbors Jack’s narrow road from the

state-maintained highway to his house is approximately two-tenths of one (1) mile long, and

runs along the edge of his property On the left side of Jack’s road is a drainage ditch running the length of his road, while on the right side is the property line dividing the two neighbors’

landholdings One day, Ruby was out gardening (she loved to cultivate roses) and Jack

approached her with the following question “Ruby, I am going to have my road graveled, and I would like lay enough gravel to expand my road about four feet in width I can’t expand it on

the left side because of the drainage ditch, so I was wondering if you would mind if I widened

the road on the right side It sure would mean a lot to me, since my road is so narrow right

now that I have a hard time driving my truck up to the house.” This meant that the gravel would extend approximately four feet onto Ruby’s property.

Ruby believed in the power and value of friendly neighborly relations She responded, “Yes

Jack, you may certainly do that That gravel won’t do me or my property any harm Tell Ann

and the kids (Jack’s wife and children) I said hello when you get back to the house.”

Based on the facts presented, is Ruby’s four-foot-wide strip of land subject to Jack’s adverse

possession of it? If the gravel remains on this strip of land for the statutorily-prescribed period

of time for adverse possession (twenty years in many states), will Jack become its owner?

Chapter 7 Case Hypothetical and Ethical Dilemma

Timothy Ackers is a “stay-at-home dad” living in Falling Waters subdivision in Olympia, Washington Timothy’s wife

Julia earns a six-figure income at the largest accounting firm in Olympia, and both husband and wife feel fortunate that one of them is able to stay at home with their two young children, four-year-old Hope and two-year-old Matthew

Timothy is part of the community watch organization in his subdivision, and as a stay-at-home parent, he has ample

opportunity to observe the daily neighborhood “goings-on.” For the past six months, Timothy has noticed heightened

activity at the house down the street owed by the Penningtons (Clara and Jonathan;) approximately eight to twelve

cars come and go from the Pennington driveway every day, and four months ago, handicapped access ramps were

installed at the front and back entrances to the home On several occasions, Timothy has seen elderly people sitting

in wheelchairs in the Penningtons’ front yard

Curious, Timothy knocks on the front door of the Pennington home one Monday morning Clara Pennington answers Ackers states “Good morning, Clara I know the old saying that ‘curiosity killed the cat,’ but I can’t help myself What’s going on at your house? Why are all the elderly people here? I though both of your parents were deceased, and I

thought Jonathan’s parents had ‘passed on’ as well Are these people related to you?”

Clara responds: “Timothy, Jonathan and I decided six months ago to open up an elderly care facility We didn’t have

the money to purchase a separate building, so we decided to care for the elderly in our home This gives me a

wonderful opportunity to stay at home, and I wouldn’t be able to do that just on Jonathan’s income Plus, think of the

advantages for our clients Isn’t this so much better than a regular rest home? These folks have cried tears of joy, and they thank me every day for providing them the quality of care they had hoped for in their ‘golden years.’”

Falling Waters subdivision is zoned exclusively residential Should Timothy report the Penningtons’ zoning violation?

What ethical issues are involved in Timothy’s decision?

Real Property

Definition: Land and everything

permanently attached to it

Extent of Land Ownership

Interests In Real Property

• Fee Simple Absolute: Right to possess for life and

devise (will) to heirs upon death; the most complete

interest in real property

• Conditional Estate: Interest comparable to fee

simple absolute, except that interest will terminate on

occurrence/non-occurrence of a specified condition

• Life Estate: Granted for lifetime of an individual; right

to possess property terminates upon life estate

holder’s death, and property will pass to another

party designated by original grantor

Interests In Real Property

(Continued)

• Future Interest: Person’s right to property

ownership and possession in the future

• Leasehold Estate: Right to possess (but

not own) property for a stipulated period

of time

Nonpossessory Estates

• Easement: Irrevocable right to use some part of another’s land for a specific purpose, without taking anything from the land

-Example: Utility easement

• Profit: Right to enter another’s land and take part of the land,

or take away a product of it

-Example: Right to harvest timber

• License: Temporary, revocable right to use another’s property

-Example: Theatre ticket

Voluntary Transfer of Real Property

Requires:

• Execution—preparation and signing of deed;

• Delivery—of deed to grantee, with intent of

transferring ownership to grantee;

• Acceptance—grantee’s expression of intent to

possess and own property

• Recording—filing deed with appropriate county office

to protect interests of grantee

Types of Involuntary Transfers:

• Adverse Possession: When person openly treats

real property as his/her own, without

protest/permission from real owner, for

statutorily-established period of time, ownership is

automatically vested in that person

• Condemnation: Government acquires ownership

of private property for “public use” for “just

compensation” over the protest of the property

owner

Intellectual Property

Intellectual Property

Definition: Property that comes from

creativity

Types of Intellectual Property

• Definition: A distinctive mark, word, design, picture, or arrangement

used by seller in conjunction with a product and tending to cause

consumer to identify product with producer

• Mark must be registered with U.S Patent and Trademark Office; mark must be renewed between fifth and sixth years, and after initial

renewal, every 10 years

• Remedies for mark infringement:

-Money Damages

-Injunction

• Trademarks used in interstate commerce protected under Lanham Act

Trade Dress

• Refers to the overall appearance and image of

a product

• Entitled to same protection as trademark

• Main focus of trade dress infringement case is

whether there is likely to be consumer

confusion in the comparison of two products

• Protects the expression of a creative idea

• Examples of copyrighted material include books, periodicals,

musical compositions, plays, motion pictures, sound recordings,

lectures, works of art, and computer programs

• Criteria for a work to be copyrightable:

-Fixed (Set out in a tangible medium of expression)

-Original

-Creative

• Remedies for copyright infringement:

• Money Damages

The “Fair Use” Doctrine

Provides that a portion of copyrighted work may

be reproduced for purposes of “criticism,

comment, news reporting, teaching, scholarships, and research”

“Fair Use” Factors

• Purpose and character of use, including whether

use is of a commercial nature or for nonprofit

educational purposes

• Nature of the copyrighted work

• Amount and substantiality of portion used in

relation to copyrighted work as a whole

• Effect of use on potential market for or value of

copyrighted work

• Protects a “product, process, invention, machine, or plant”

that is “novel, useful, and non-obvious”

• Length of protection: 20 years

• Remedies for patent infringement:

-Money Damages

-Injunction

• Lanham Act—allows patent holder to license use of idea for

royalties, provided that holder does not enter into “tying

arrangement” or engage in “cross-licensing”