Bonus Chapter A – Working within the Legal Environment
A-16
PPT A-18
Patent Leaders in 2013
Source:IFIPatentIntelligence,www.ificlaims.com,accessedNovember2014.
PATENT LEADERS in 2013
A-18
Company # of Patents Home Country
IBM 6,809 USA
Samsung 4,676 Korea
Canon 3,825 Japan
Sony 3,098 Japan
Microsoft 2,660 USA
LO A-3
lecture enhancer A–3
NORTEL’S PATENT AUCTION
As Nortel Communications filed for bankruptcy, it hired a
company to help sell its powerful patent portfolio. (See the
complete lecture enhancer on page A.61 of this manual.)
lecture enhancer A–4
THE DIFFERENCES BETWEEN
PATENTS, COPYRIGHTS, AND
TRADEMARKS
Though Stairway to Heaven is 44 years old, there are still ar-
guments over copyrights. (See the complete lecture enhancer
on page A.62 of this manual.)
Bonus Chapter A – Working within the Legal Environment
A-17
mal course of a job, the copyright belongs to the
employer.
D. A TRADEMARK is a legally protected name, sym-
bol, or design (or combination of these) that identi-
fies the goods or services of one seller and distin-
guishes them from those of competitors.
1. Generally, trademarks belong to the owner for-
ever.
2. Examples include the Aflac duck, Disney’s
Mickey Mouse, the Nike swoosh, and McDon-
ald’s Golden Arches.
3. Like a patent, a trademark is protected from in-
fringement.
learning objective 4
Describe warranties and negotiable instruments as covered in the Uniform
Commercial Code.
IV. SALES LAW: THE UNIFORM COMMERCIAL
CODE
A. The UNIFORM COMMERCIAL CODE (UCC) is a
comprehensive commercial law, adopted by every
state in the United States, that covers sales laws
and other commercial laws.
1. The 11 ARTICLES of the UCC cover sales;
commercial paper; bank deposits and collections;
letters of credit; bulk transfers; warehouse re-
ceipts, bills of lading, and other documents of ti-
tle; investment securities; and secured transac-
Bonus Chapter A – Working within the Legal Environment
A-18
lecture enhancer A-5
PIRACY MAY KO UFC
As online streaming has advanced, UFC has to work to com-
bat copyright infringement of its pay-per-view fights. (See the
complete lecture enhancer on page A.62 of this manual.)
test
prep
PPT A-19
Test Prep
TEST PREP
A-19
• What is tort law?
• What is product liability? What is strict product
liability?
• How many years is a patent protected from
infringement?
• What is a copyright?
PPT A-20
What Is the Uniform Commercial
Code?
WHAT is the
UNIFORM COMMERCIAL CODE?
A-20
LO A-4
• Uniform Commercial
Code (UCC) — A
comprehensive commercial
law that covers sales laws
and other commercial laws.
• The UCC has 11 articles that
contain laws covering a wide
range of business issues.
Bonus Chapter A – Working within the Legal Environment
A-19
tions.
2. The text discusses two of these articles: ARTI-
CLE 2 (WARRANTIES) and ARTICLE 3 (NE-
GOTIABLE INSTRUMENTS).
B. WARRANTIES
1. A WARRANTY guarantees that the product sold
will be acceptable for the purpose for which the
buyer intends to use it.
2. EXPRESS WARRANTIES are specific repre-
sentations by the seller that buyers rely on re-
garding the goods they purchase.
3. IMPLIED WARRANTIES are guarantees legally
imposed on the seller.
4. A FULL WARRANTY requires a seller to re-
place or repair a product at no charge if the
product is defective.
5. LIMITED WARRANTIES typically limit the de-
fects or mechanical problems that are covered.
6. The rights of buyers are spelled out in Article 2
of the UCC.
C. NEGOTIABLE INSTRUMENTS
1. NEGOTIABLE INSTRUMENTS are forms of
commercial paper (such as checks) that are
transferable among businesses and individuals
and represent a promise to pay a specified
amount.
2. Article 3 of the UCC requires that NEGOTIABLE
INSTRUMENTS:
Bonus Chapter A – Working within the Legal Environment
A-20
PPT A-21
Understanding Warranties
UNDERSTANDING WARRANTIES
A-21
LO A-4
• A warranty guarantees that the product sold will
be acceptable for the purpose for which the buyer
intends to use it.
• Express Warranties — Specific representations
made by the seller that buyers rely on regarding the
goods they purchase.
• Implied Warranties — Legally imposed on the
seller, who implies that a product will conform to the
standards of trade.
PPT A-22
Negotiable Instruments
NEGOTIABLE INSTRUMENTS
A-22
LO A-4
• Negotiable Instruments — Forms of commercial
paper that are transferable among businesses and
individuals.
• Four conditions for using negotiable instruments:
1. They must be written and signed by the maker or drawer.
2. Be made payable on demand or at a certain time.
3. Be made payable to the bearer.
4. Contain an unconditional promise to pay a specified
amount.
lecture enhancer A-6
NEGOTIABLE INSTRUMENT FOR-
GERY AND THE UNIFORM COM-
MERCIAL CODE
Frank Abagnale Jr. seems an unlikely person to work with the
FBI’s Financial Crimes Unit, but he does. Thirty years ago he
created and passed millions of dollars of bad checks. (See the
complete lecture enhancer on page A.63 of this manual.)
Bonus Chapter A – Working within the Legal Environment
A-21
a. Be WRITTEN and SIGNED by the maker
b. Be made PAYABLE ON DEMAND or at a
certain time
c. Be made PAYABLE TO THE BEARER or to
specific order
d. Contain an UNCONDITIONAL PROMISE to
pay a specified amount of money
3. Checks or other forms of negotiable instruments
are transferred when the payee signs the back
of the check, known as an ENDORSEMENT.
learning objective 5
List and describe the conditions necessary to make a legally enforceable
contract, and describe the possible consequences if such a contract is violat-
ed.
V. CONTRACT LAW
A. TERMINOLOGY
1. A CONTRACT is a legally enforceable agree-
ment between two or more parties.
2. CONTRACT LAW is the set of laws that specify
what constitutes a legally enforceable agree-
ment.
B. A contract is LEGALLY BINDING if the following
conditions are met:
1. An OFFER is made
2. There is a VOLUNTARY ACCEPTANCE of the
offer
3. Both parties give CONSIDERATION
a. CONSIDERATION is something of value; it
is one of the requirements of a legal con-
tract.
Bonus Chapter A – Working within the Legal Environment
A-22
PPT A-23
Contract Law
CONTRACT LAW
A-23
LO A-5
• Contract — A legally
enforceable agreement
between two or more parties.
• Contract Law — Specifies
what constitutes a legally
enforceable agreement.
• Breach of Contract — When
one party fails to follow the
terms of a contract.
PPT A-24
Contract Requirements
CONTRACT REQUIREMENTS
A-24
LO A-5
• A contract is legal and binding when:
1. An offer is made
2. There’s a voluntary acceptance of the offer
3. Both parties give consideration
4. Both parties are competent
5. The contract covers a legal act
6. The contract is in the proper form
Bonus Chapter A – Working within the Legal Environment
A-23
4. Both parties are COMPETENT.
5. The contract act must be LEGAL.
6. The contract is in a PROPER FORM—some
contracts must be written.
C. BREACH OF CONTRACT
1. BREACH OF CONTRACT occurs when one
party fails to follow the terms of the contract.
2. CONSEQUENCES of a breached contract are:
a. SPECIFIC PERFORMANCE: The person
violating contract may be required to live up
to the agreement if no monetary award is
adequate.
b. PAYMENT OF DAMAGES, the monetary
settlement awarded to a person who is in-
jured by a breach of contract
c. DISCHARGE OF OBLIGATION, agreeing to
drop the matter
D. A CONTRACT SHOULD:
1. Be in writing
2. Specify mutual consideration
3. Be clearly offered and accepted
learning objective 6
Summarize several laws that regulate competition and protect consumers in
the United States.
VI. PROMOTING FAIR AND COMPETITIVE BUSI-
NESS PRACTICES
A. The legislature passes laws to enforce a competitive
Bonus Chapter A – Working within the Legal Environment
A-24
PPT A-25
Breached Contracts
BREACHED CONTRACTS
A-25
LO A-5
• If a contract is breached the following may be
ordered:
– Specific performance
– Payment of damages
– Discharge of obligation
test
prep
PPT A-26
Test Prep
TEST PREP
A-26
• What Is the purpose of the Uniform Commercial
Code (UCC)?
• Compare express and implied warranties.
• What are the four elements of a negotiable
instrument specified in the UCC?
• What are the six conditions for a legally binding
contract? What could happen if it’s breached?
Bonus Chapter A – Working within the Legal Environment
A-25
atmosphere among businesses.
1. The Justice Department’s antitrust division
serves as watchdog.
2. The scope of government is broad and exten-
sive.
3. The department’s antitrust division has prose-
cuted giant companies such as Microsoft, Apple,
Visa, and Google.
4. Businesses were once (but no longer) able to
drive smaller competitors out of business with lit-
tle resistance.
B. THE HISTORY OF ANTITRUST LEGISLATION
1. In the late 19th century, big industrial firms dom-
inated the U.S. economy.
a. Congress passed the SHERMAN ANTI-
TRUST ACT in 1890.
b. The act was designed to prevent large or-
ganizations from stifling the smaller competi-
tors.
2. The SHERMAN ACT forbids:
a. Contracts, combinations, or conspiracies in
restraint of trade
b. Actual monopolies or attempts to monopo-
lize any part of trade or commerce
3. Later laws clarified the legal concepts of the
Sherman Act.
Bonus Chapter A – Working within the Legal Environment
A-26
Bonus Chapter A – Working within the Legal Environment
A-27
a. The CLAYTON ACT OF 1914 prohibits ex-
clusive dealing, tying contracts, interlocking
directorates, and buying large amounts of
stock in competing corporations.
i. EXCLUSIVE DEALING is selling goods
with the condition that the buyer will not
buy goods from a competitor.
ii. A TYING CONTRACT requires a buyer
to purchase unwanted items in order to
purchase desired items.
iii. An INTERLOCKING DIRECTORATE
occurs when a board of directors in-
cludes members of the board of compet-
ing corporations.
b. The FEDERAL TRADE COMMISSION ACT
OF 1914 prohibits unfair methods of compe-
tition in commerce and created the Federal
Trade Commission.
i. This legislation set up the five–member
FEDERAL TRADE COMMISSION (FTC)
to enforce compliance with this act.
ii. The FTC regulates activities ranging
from misleading advertising to price dis-
closure for funeral homes.
iii. The WHEELER-LEA AMENDMENT in
1938 gave the FTC additional jurisdiction
over false or misleading advertising.
c. The ROBINSON-PATMAN ACT OF 1936
Bonus Chapter A – Working within the Legal Environment
A-28
PPT A-27
The Clayton Act of 1914
The CLAYTON ACT of 1914
A-27
LO A-6
• The Clayton Act prohibits:
– Exclusive dealing
– Tying contracts
– Interlocking directorates
PPT A-28
Antitrust Legislation
ANTITRUST LEGISLATION
A-28
LO A-6
• The Federal Trade Commission Act of 1914
created the FTC and prohibits unfair methods of
competition in commerce.
• The Wheeler Lea Amendment of 1938 gave the
FTC additional control over false and misleading ads.
• The Robinson-Patman Act of 1936 prohibits price
discrimination and applies to buyers and sellers.
Bonus Chapter A – Working within the Legal Environment
A-29
prohibits price discrimination.
i. It applies to both sellers and buyers who
“knowingly” induce unlawful discrimina-
tion in price.
ii. The law outlaws price differences that
“substantially” weaken competition un-
less these differences can be justified by
lower selling costs.
iii. This act applies to business-to-business
transactions and does not apply to con-
sumers in business transactions.
4. MICROSOFT’S COMPETITIVE PRACTICES
have been criticized as being unfair competition.
a. Microsoft was accused of hindering competi-
tion in its dealings with computer manufactur-
ers.
b. The case broadened the definition of anti-
competitive behavior.
c. The NASDAQ OMX and Intercontinental Ex-
change Inc withdrew their bid for NYSE Eu-
ronext when an antitrust suit was threatened
in 2011.
VII. LAWS TO PROTECT CONSUMERS
A. CONSUMERISM is a social movement that seeks to
increase and strengthen the rights and powers of
buyers in relation to sellers.
1. Consumerism has taken on new vigor in the
Bonus Chapter A – Working within the Legal Environment
A-30
PPT A-29
History of High-Profile Antitrust
Cases
TEXT FIGURE A.3
History of High-Profile Antitrust Cases
HISTORY of HIGH PROFILE
ANTITRUST CASES
A-29
LO A-6