ANSWERS TO PROBLEMS
1. Keller, a professor of legal studies at Rhodes University, is a diligent instructor. Late one night,
while reading a newly published, copyrighted treatise of 1,800 pages written by Gilbert, he came
across a three-page section discussing the subject matter he intended to cover in class the next
day. Keller considered the treatment to be illuminating and therefore photocopied the three pages
and distributed the copies to his class. One of Keller’s students is a second cousin of Gilbert, the
author of the treatise, and she showed Gilbert the copies. May Gilbert recover from Keller for
copyright infringement? Explain.
Answer: Copyrights: Rights. Probably not. It is most probable that Keller will be protected by the
Copyright Act’s codification of the common law fair use doctrine. Section 107 of the Act
2. A conceived a secret process for the continuous freeze-drying of foodstuffs and related products
and constructed a small pilot plant that practiced the process. A, however, lacked the financing
necessary to develop the commercial potential of the process and, in hopes of obtaining a
contract for its development and the payment of royalties, disclosed it in confidence to B, a coffee
manufacturer, who signed an agreement not to disclose it to anyone else. At the same time, A
signed an agreement not to disclose the process to any other person as long as A and B were
considering a contract for its development. Upon A’s disclosure of the process, B became
extremely interested and offered to pay A the sum of $1,750,000 if, upon further development, the
process proved to be commercially feasible. While negotiations between A and B were in
progress, C, a competitor of B, learned of the process and requested a disclosure from A, who
informed C that the process could not be disclosed to anyone unless negotiations with B were
broken off. C offered to pay A $2,500,000 for the process, provided it met certain defined
objective performance criteria. A contract was prepared and executed between A and C on this
basis, without any prior disclosure of the process to C. Upon the making of this contract, A
rejected B’s offer. The process was thereupon disclosed to C, and demonstration runs of the pilot
plant in the presence of C’s representatives were conducted under varying conditions. After three
weeks of conducting experimental demonstrations, compiling data, and analyzing results, C
informed A that the process did not meet the performance criteria in the contract and that for this
reason C was rejecting the process. Two years later, C placed on the market freeze-dried coffee
that resembled in color, appearance, and texture the product of A’s pilot plant. What are the
rights of the parties??
Answer: Appropriation. A may recover against C the profits realized by C for misappropriation of
A’s secret process, and is also entitled to an injunction against further use of the process by C.
3. B, a chemist, was employed by A, a manufacturer, to work on a secret process for A’s product
under an exclusive three-year contract. A employed C, a salesperson, on a week-to-week basis. B
and C resigned their employment with A and accepted employment in their respective capacities
with D, a rival manufacturer. C began soliciting patronage from A’s former customers, whose
names he had memorized. What are the rights of the parties in (a) a suit by A to enjoin B from
working for D, and (b) a suit by A to enjoin C from soliciting A’s customers?
Answer: Trade Secrets. (a) A is entitled to enjoin B from working for D. Although a court of equity
will not compel an individual to perform personal services for another pursuant to a contract,
the court will in a proper case enjoin the defaulting employee from performing service for
4. Conrad and Darby were competitors in the business of dehairing raw cashmere, the fleece of
certain Asiatic goats. Dehairing is the process of separating the commercially valuable soft down
from the matted mass of raw fleece, which contains long coarse guard hairs and other impurities.
Machinery for this process is not readily available on the open market. Each company in the
business designed and built its own machinery and kept the nature of its process secret. Conrad
contracted with Lawton, owner of a small machine shop, to build and install new improved
dehairing machinery of increased efficiency for which Conrad furnished designs, drawings, and
instructions. Lawton, who knew that the machinery design was confidential, agreed that he would
manufacture the machinery exclusively for Conrad and that he would not reproduce the
machinery or any of its essential parts for anyone else. Darby purchased from Lawton a copy of
the dehairing machinery that Conrad had specially designed. What are Conrad’s rights, if any,
against (a) Darby and (b) Lawton? Explain.
Answer: Trade Secrets. Conrad is entitled to an injunction and/or damages against Lawton and,
possibly, Darby. There is no indication that the machine has been patented. Nevertheless, the
5. Jones, having filed locally an affidavit required under the assumed name statute, has been
operating and advertising his exclusive toy store for twenty years in Centerville, Illinois. His
advertising has consisted of large signs on her premises reading “The Toy Mart.” Lewis, after
operating a store in Chicago under the name of “The Chicago Toy Mart,” relocated in
Centerville, Illinois, and erected a large sign reading “TOY MART” with the word “Centerville”
written underneath in substantially smaller letters. Thereafter, Jones’s sales declined, and many
of Jones’s customers patronized Lewis’s store, thinking it to be a branch of Jones’s business. What
are the rights of the parties?
Answer: Trade Names. Jones should be entitled to obtain an injunction against Lewis’s use of a
name or sign which would mislead customers of Jones into thinking that Lewis’s store was a
branch of Jones business. Unfair competition is a question of fact and no inflexible rule can be
6. Ryan Corporation manufactures and sells a variety of household cleaning products in interstate
commerce. On national television, Ryan falsely advertises that its laundry liquid is
biodegradable. Has Ryan violated the Lanham Act?
7. Gibbons, Inc., and Marvin Corporation are manufacturers who sell a variety of household
cleaning products in interstate commerce. On national television Gibbons states that its laundry
liquid is biodegradable and that Marvin’s is not. In fact, both products are biodegradable. Has
Gibbons violated the Lanham Act?
8. George McCoy of Florida has been manufacturing and distributing a cheesecake for more than
five years, labeling his product with a picture of a cheesecake, which serves as a background for
a Florida bathing beauty and under which is written the slogan “McCoy All Spice Florida
Cheese Cake.” George McCoy has not registered his trademark. Subsequently, Leo McCoy of
California begins manufacturing a similar product on the West Coast using a label similar in
appearance to that of George McCoy, containing a picture of a Hollywood star and the words
“McCoy’s All Spice Cheese Cake.” Leo McCoy begins marketing his products in the eastern
United States, using labels with the word “Florida” added, as in George McCoy’s label. Leo
McCoy has registered his product under the Federal Trademark Act. To what relief, if any, is
George McCoy entitled?
Answer: Types of Trade Symbols. George McCoy is entitled to injunctive relief against Leo
McCoy’s use of George McCoy’s label in markets where George McCoy’s Cheese Cake was sold.
9. Sony Corporation manufactured and sold home video recorders, specifically Betamax videotape
recorders (VTRs). Universal City Studios, Inc. (Universal) owned the copyrights on some
programs aired on commercially sponsored television. Individual Betamax owners frequently
used the device to record some of Universal’s copyrighted television programs for their own
noncommercial use. Universal brought suit, claiming that the sale of the Betamax VTRs to the
general public violated its rights under the Copyright Act. It sought no relief against any
Betamax consumer. Instead, Universal sued Sony for contributory infringement of its copyrights,
seeking money damages, an equitable accounting of profits, and an injunction against the
manufacture and sale of Betamax VTRs. Explain whether Universal will prevail in its action.
Answer: Copyrights. Judgment for Sony. The sale of copying equipment does not constitute
contributory infringement if the product is widely used for legitimate, unobjectionable purposes.
The product need merely be capable of substantial noninfringing uses. Moreover, an unlicensed
10. The Coca-Cola Company manufactures a carbonated beverage, Coke, made from coca leaves
and cola nuts. The Koke Company of America introduced into the beverage market a similar
product named Koke. The Coca-Cola Company brought a trademark infringement action against
Koke. Coca-Cola claimed unfair competition within the beverage business due to Koke’s
imitation of the Coca-Cola product and Koke’s attempt to reap the benefit of consumer
identification with the Coke name. Should Coca-Cola succeed? Explain.
Answer: Trademark Infringement. Yes, judgment for Coca-Cola. The name Coke has become
associated with a specific product in the minds of consumers. The community assumes that any
11. Vuitton, a French corporation, manufactures high-quality handbags, luggage, and accessories.
Crown Handbags, a New York corporation, manufactures and distributes ladies’ handbags.
Vuitton handbags are sold exclusively in expensive department stores, and distribution is strictly
controlled to maintain a certain retail selling price. The Vuitton bags bear a registered trademark
and a distinctive design. Crown’s handbags appear identical to the Vuitton bags but are of
inferior quality. May Vuitton recover from Crown for manufacturing counterfeit handbags and
selling them at a discount? Explain.
Answer: Trademark Infringement. Yes, Vuitton will prevail. Trademark law protects the goodwill
of a trademark owner’s business and protects the public from buying goods of inferior quality and
unknown origin. The Trademark Act provides that:
1) Any person who shall without consent of the registrant–
12. T.G.I. Friday’s, a New York corporation and registered service mark, entered into an exclusive
licensing agreement with Tiffany & Co. that allowed Tiffany to open a Friday’s restaurant in
Jackson, Mississippi. International Restaurant Group, operated by the owners of Tiffany, applied
for a license to open a Friday’s in Baton Rouge, Louisiana, but was refused. In Baton Rouge,
International then opened a restaurant, called E.L. Saturday’s, or Ever Lovin’ Saturday’s, which
had the same type of menu and decor as Friday’s. Friday’s sues International for trademark
infringement. Explain who will prevail.
Answer: Trademark Infringement. Judgment for International. The test for trademark
infringement is whether confusion about the source of the product is caused. There is no such
13. As part of its business, Kinko’s Graphics Corporation (Kinko’s) copied excerpts from books,
compiled them in “packets,” and sold the packets to college students. Kinko’s did this without
permission from the owners of the copyrights to the books and without paying copyright fees or
royalties. Kinko’s has more than 200 stores nationwide and reported $15 million in assets and $3
million in profits for 1989. Basic Books, Harper & Row, John Wiley & Sons, and others
(plaintiffs) sued Kinko’s for violation of the Copyright Act. The plaintiffs owned copyrights to the
works copied and sold by Kinko’s and derived substantial income from royalties. They argued
that Kinko’s had infringed on their copyrights by copying excerpts from their books and selling
the copies to college students for profit. Kinko’s admitted that it had copied excerpts without
permission and had sold them in packets to students, but it contended that its actions constituted
a fair use of the works in question under the Copyright Act. What result? Explain.
Answer: Copyrights. Judgment for all plaintiffs: Basic Books, Harper & Row, John Wiley & Sons,
McGraw-Hill, Penguin Books, Prentice Hall, Richard D. Irwin, and William Morrow. Coined as
an “equitable rule of reason,” the fair use doctrine has existed for as long as the copyright law. It
14. In 1967, a Chicago brewer, Meister Brau, Inc., began making and selling a reduced-calorie,
reduced-carbohydrate beer under the name “LITE.” Late in 1968, that company filed
applications to register “LITE” as a trademark in the United States Patent Office, which
ultimately approved three registrations of labels containing the name “LITE” for “beer with no
available carbohydrates.” In 1972, Meister Brau sold its interest in the “LITE” trademarks and
the accompanying goodwill to Miller Brewing Company. Miller decided to expand its marketing
of beer under the brand “LITE.” It developed a modified recipe, which resulted in a beer lower
in calories than Miller’s regular beer but not without available carbohydrates. The label was
revised, and one of the registrations was amended to show “LITE” printed rather than in script.
In addition, Miller undertook an extensive advertising campaign. From 1973 through 1976,
Miller expanded its annual sales of “LITE” from 50,000 barrels to 4,000,000 barrels and
increased its annual advertising expenditures from $500,000 to more than $12,000,000.
Beginning in early 1975, a number of other brewers, including G. Heileman Brewing Company,
introduced reduced calorie beers labeled or described as “light.” In response, Miller began
filing trademark infringement actions against competitors to enjoin the use of the word “light.”
Should Miller be granted the injunction? Explain.
Answer: Trademarks. Preliminary injunction reversed. Miller claims that the original registration
is evidence of their exclusive right to use the registered mark. The three registrations on which
15. B. C. Ziegler and Company (Ziegler) was a securities company located in West Bend. It had
established an internal procedure by which its customer lists were treated confidentially. This
procedure included burning or shredding any paper to be disposed of that contained a customer
name or information. Nonetheless, Ziegler delivered a number of boxes of unshredded scrap
paper to Lynn’s Waste Paper Company for disposal. One of Lynn’s employees, Ehren, who had
been in the securities business and had worked for two of Ziegler’s competitors, noticed the
information contained in the delivery from Ziegler and purchased six boxes of the Ziegler
wastepaper for $16.75 from Lynn’s. Shortly thereafter, Ehren and his daughter sorted through the
information and ultimately obtained 11,600 envelopes of information on Ziegler’s customers,
including names, account summaries, and other information. Ehren sold this information to
Thorson, a broker in competition with Ziegler. Thorson then sent a mailing to the Ziegler
customers to solicit security sales for his firm and obtained an abnormally high response rate as
a result. Ziegler, with the help of the West Bend Police Department, traced the dissemination of
this information to Ehren and sought from the court a permanent injunction against Ehren using
or disclosing the information regarding Ziegler’s clients. What is the result?
Answer: Trade Secrets. . Ziegler would prevail. The court stated that in determining whether a trade
secret exists under the common law, factors to be considered include (1) the extent to which the
16. Since the 1950s Qualitex Company has used a special shade of green-gold color on the pads
that it makes and sells to dry cleaning firms for use on dry cleaning presses. In 1989 Jacobson
Products (a Qualitex rival) began to sell its own press pads to dry cleaning firms, and it colored
those pads a similar green-gold. In 1991 Qualitex registered the special green-gold color on
press pads with the Patent and Trademark Office as a trademark. Qualitex sued Jacobson for
trademark infringement. Jacobson argues that the Lanham Act does not permit registering “color
alone” as a trademark. Explain whether a trademark violation has been committed.
Answer: Trademarks. Lanham Act gives a seller or producer the exclusive right to “register” a
trademark, and to prevent his or her competitors from using that trademark. Both the language of
the Act (trademarks “includ[e] any word, name, symbol, or device, or any combination thereof)
17. Napster, Inc. (“Napster”) facilitates the transmission of MP3 files (a digital format for the
storage of audio recordings) between and among its users. Through a process commonly called
“peer-to-peer” file sharing, Napster allows its users to: (1) make MP3 music files stored on
individual computer hard drives available for copying by other Napster users; (2) search for
MP3 music files stored on other users’ computers; and (3) transfer exact copies of the contents of
other users’ MP3 files from one computer to another via the Internet. These functions are made
possible by Napster’s MusicShare software, available free of charge from Napster’s Internet site,
and Napster’s network servers and server-side software. The plaintiffs include A&M Records,
Geffen Records, Sony Music Entertainment, MCA Records, Atlantic Recording Corporation,
Motown Record Company, and Capitol Records. The plaintiffs are engaged in the commercial
recording, distribution, and sale of copyrighted musical compositions and sound recordings. The
plaintiffs allege that Napster is a contributory and vicarious copyright infringer. Explain whether
Napster should be enjoined “from engaging in, or facilitating others in copying, downloading,
uploading, transmitting, or distributing plaintiffs’ copyrighted musical compositions and sound
recordings, protected by either federal or state law, without express permission of the rights
owner.”
Answer: Cybercrime. Yes. The evidence establishes that a majority of Napster users use the service
to download and upload copyrighted music, constituting direct infringement of plaintiffs’ musical
ANSWERS TO “TAKING SIDES” PROBLEMS
Southwire Company and Essex Group, Inc. are direct competitors in the cable and wire industry.
Southwire’s logistics system is a warehouse organizational system with components extending from
architectural layout features to customized equipment and modified computer software. Southwire’s
logistics system was primarily designed over a three-year period, with a development cost exceeding
$2 million, by a project team headed by Richard McMichael. In addition to self-testing and a
trial-and-error learning process, development of Southwire’s logistics system also included
modifications based on observation of logistics systems in other industries and the adaptation of
commercially-available components. The selection and arrangement of components and equipment
in the new logistics system is unique to the Southwire logistics system. The new logistics system has
resulted in substantial efficiencies to Southwire, with annual savings of $12 million. Because
Southwire and its competitors produce basically identical goods for sale, the marketing advantage
gained by the important efficiencies that have resulted from the new logistics system has proved
especially valuable for Southwire. Essex hired McMichael, and Southwire brought suit against its
former employee, McMichael, and his new employer, Essex, to enjoin McMichael from disclosing to
Essex any Southwire trade secrets, particularly, trade secrets involving Southwire’s logistics system.
(a) What are the arguments in favor of the court not issuing the injunction?
(b) What are the arguments in favor of the court issuing the injunction?
(c) Explain whether the court should issue the injunction.
18. ANSWER:
(a) Essex could argue that Southwire’s logistics system is not a trade secret because (i) it is
composed primarily of computer hardware components and warehouse equipment that are
commercially available, (ii) it may be independently discovered or ascertained by others, and
