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Chapter 08 - Intellectual Property and Unfair Competition
8-18
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
use even material that he had developed and that was not his former employer’s trade
secret.
Points for Discussion: Ask a student to summarize the basic facts. By virtue of its
decision here, is the court effectively granting Coleman permission to use his former
the law even without this agreement? (No. Even without a noncompetition agreement,
Coleman would have had a common law duty not to use his former employer’s trade
secrets.)
F. Injurious Falsehood
1. A successful claim of injurious falsehood involves proof of the following: a) the
tangible and provable form of economic loss), and d) some kind of fault or culpability on
the part of the defendant (see below).
2. The most common types of harm to the economic interests of another are comprehended
someone other than P. Or, suppose that D falsely tells T that P does not deal in certain
goods, thus deflecting a possible sale.
3. Note that the special damages discussed in the text are part of the cause of action for
4. It seems generally agreed among the states that some form of fault on the part of the
(knowledge of falsity or recklessness in that regard) is probably your best alternative for
proof of specific intent to cause economic harm.
5. Note the possible--and partial--overlap with defamation discussed in the text.
G. Interference with Contractual Relations
1. Probably the best way to break down the material in this section is to discuss: a) the
determinations of impropriety or privilege.
2. With respect to these threshold requirements:
a. Note that some hindrance to an existing contractual relation is needed. Most often, this
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party's performance as well.
make refusals to deal automatically unlawful. Such cases, however, fall close to the
line. Their outcomes depend upon the particular facts and circumstances at issue. See
Lewis-Gale, a text case discussed below.
"yellow dog" contract (which is forbidden by federal labor law). Finally, although
liability may result from interference with a terminable-at-will contract, liability is less
3. The text's discussion of "privilege" situations probably provides enough examples for
classroom use. The Carey Station Village case (a former text case now serving as Problem
#9) deals with this subject.
allegedly interfered with was terminable at will.
Points for Discussion: Have a student summarize the basic facts. Note the terminable-at-
such a statement give rise to a good defamation claim? (Probably not. Given the opinion-
oriented, hyperbolic nature of the statement, it probably wouldn’t be seen as a false
contract between Alldredge and SWEP was terminable at will? (It was significant.
Although it did not expressly say so, the court suggested that less latitude might have been
H. Interference with Prospective Advantage
1. Emphasize how this tort differs from interference with contractual relations. Here, we are
concerned with hoped-for or likely business relations, not existing contractual relations.
Chapter 08 - Intellectual Property and Unfair Competition
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contract.
2. Also emphasize that most of the "privilege" factors discussed previously apply in this
the defendant disrupts an existing contract.
I. Lanham Act § 43(a)
1. Section 43(a) appears at 15 U.S.C. § 1125(a).
2. Go through the text's five applications of § 43(a)'s broad language. Example of a false
advertising claim that involves an omission and an ad that is not clearly false on its face: a
injunction against DIRECTV ads implying, falsely, that high-definition picture quality
could not be had on "basic cable." It vacated a preliminary injunction against Internet ads
"reasonable person?" It is easy to see the sense in applying the reasonable person standard
to an allegedly negligent defendant. Such standards also serve to keep "ultrasensitive"
less than puffery. The difference is subtle unless it is viewed on an enormous screen. Ask
without puffery?
3. Note that when false advertising is present, it will be enjoined. A corrective advertising
order is also among the court's arsenal of remedies for false advertising. If the party
increased costs in countering the defendant's false ads.
IV. RECOMMENDED REFERENCES
A. J.T. MCCARTHY, MCCARTHY'S DESK ENCYCLOPEDIA OF INTELLECTUAL PROPERTY.
B. A. MILLER & M. DAVIS, INTELLECTUAL PROPERTY: PATENTS, TRADEMARKS, AND
C. M. EPSTEIN, EPSTEIN ON INTELLECTUAL PROPERTY.
F. S. KANE, TRADEMARK LAW.
G. K. MCGRATH & S. ELIAS, TRADEMARK: LEGAL CARE FOR YOUR BUSINESS & PRODUCT
NAME.
Chapter 08 - Intellectual Property and Unfair Competition
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
H. K. STUCKEY, INTERNET AND ONLINE LAW.
I. K. NORWICK AND J. CHASEN, THE RIGHTS OF AUTHORS, ARTISTS, AND OTHER CREATIVE
PEOPLE.
J. D. DOBBS, THE LAW OF TORTS.
K. Arlen W. Langvardt, Section 43(a), Commercial Falsehood, and the First Amendment: A
Proposed Framework, 78 MINNESOTA LAW REVIEW 309 (1993).
Benefit, 5 MINNESOTA INTELLECTUAL PROPERTY REVIEW 193 (2004).
Amendment Interests from the Constraints of the Traditional View, 2 HARVARD JOURNAL OF
SPORTS & ENTERTAINMENT LAW 99 (2011).
V. ANSWERS TO PROBLEMS AND PROBLEM CASES
was obvious. KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398 (2007).
2. Koons succeeded on the fair use defense. The Second Circuit held that Koons’ critical and
artistic purpose rendered his painting “transformative.” The court found additional
justification in Koons’ assertion that the use of an existing image advanced his satirical
obtain monetary damages for, uses that allegedly amounted to infringement or dilution of the
either, because the defendants were entitled to the protection of the fair use defense.
MasterCard International, Inc. v. Nader 2000 Primary Committee, Inc., 2004 U.S. Dist.
LEXIS 3644 (S.D.N.Y. 2004).
4. The Court held that color is registrable if the applicant proves secondary meaning in regard to
it. In other words, the applicant must prove that it has used the mark (in this instance, the
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
mark with the applicant. The Court’s decision contains useful discussion of different types of
trademarks and their registrability. This case was a text case prior to this edition. Instructors
who may wish to use it for teaching purposes beyond the narrower color registrability issue
may want to provide students a copy of the edited version that appeared in the 11th edition of
the text. Qualitex Co. v. Jacobson Products Co., 514 U.S. 159 (1995).
5. Yes. The “Surfvivor” mark was “suggestive,” and therefore worthy of some intermediate level
Circuit concluded that in light of the evidence, it would not disturb the lower court’s
Survivor Prods, 406 F.3d 625 (9th Cir. 2005).
6. Yes. The Second Circuit Court of Appeals affirmed the district court's issuance of a
preliminary injunction in favor of North Atlantic Instruments (NAI). The Second Circuit
after he no longer worked there, he would have been liable to NAI in this case even if the
written employment contract had not contained such a provision. The reason? An ex-
Haber, 188 F.3d 38 (2d Cir. 1999).
7. Although business methods can sometimes be patented, this particular one was not eligible for
meaningful attention to Bilski in the Alice decision, a text case.
8. Vuitton lost its trademark infringement claim and its trademark dilution claim. The
in their parody versions would lessen the distinctiveness of the Vuitton trademark or tarnish
F.3d 252 (4th Cir. 2007).
9. No. Reversing the trial court’s decision, the Georgia Court of Appeals held that the
homeowners association was not liable to the developer for interference with the contracts
between the developer and the lot purchasers because the association was not a stranger to the
relationships between the developer and the purchasers and was privileged to act in protection
the developer? The court answered that question with a clear “no.” Carey Station Village
Homeowners Association, Inc. v. Carey Station Village, Inc., 602 S.E.2d 233 (Ga. App.
2004).
10. Google successfully invoked the fair use defense. In applying the fair use factors, the court
Chapter 08 - Intellectual Property and Unfair Competition
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
placed heavy emphasis on the transformative purpose associated with Google’s use of the
thumbnail images in the context of reporting Internet search results. The court also seemed to
be influenced by public interest considerations and the implications for the public if search
engines were to be held liable in cases of this nature. Perfect 10, Inc. v. Amazon.com, Inc.,
508 F.3d 1146 (9th Cir. 2007). Note: Both Google and Amazon were defendants in the case.
Discussion of the Perfect 10 case appears earlier in this chapter of the manual.
11. Puffery. “America’s Favorite Pasta” does not stand for a discrete or measurable fact.
“Favorite” essentially means “well-liked,” a subjective descriptor. “America” does not mean
Co., 371 F.3d 387 (8th Cir. 2004).
12. The defendants were liable for inducing patent infringement. The Supreme Court held that
inducement liability requires a showing that the defendants knew the induced acts would
constitute patent infringement. The Court went on to hold, however, that the doctrine of
willful blindness can be used as a way of satisfying the knowledge element. The Court
13. Colting argued that the fair use defense should protect him against liability. A federal district
court, however, issued a preliminary injunction in favor of Salinger and thereby barred
distribution of Colting’s novel in the United States. Although it later vacated the preliminary
injunction, the Second Circuit issued an opinion indicating, after relatively brief analysis, that
View, 2 HARV. J. SPORTS & ENT. L. 99 (2011).
