Business Ethics Chapter 6 Organizations Must Educate Employees About The Importance

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Chapter 6

Intellectual Property

At a Glance

Instructor’s Manual Table of Contents

• Overview

• Objectives

• Teaching Tips

Lecture Notes

Overview

Chapter 6, “Intellectual Property,” defines intellectual property and explains the varying degrees

of ownership protection offered by copyright, patent, and trade secret laws. Copyright, patent,

and trademark infringement are examined, using many examples. Key U.S. and international

rules aimed at protecting intellectual property are discussed, including the Prioritizing Resources

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Objectives

As students read this chapter, they should consider the following questions:

• What does the term intellectual property encompass, and what measures can

Teaching Tips

Organizations Behaving Badly

1. Discuss the various lawsuits involving Apple and Samsung, including how Google

factors into the ongoing disputes.

I. What is Intellectual Property?

1. Intellectual property is a term used to describe works of the mind—such as art, books,

2. Explain that copyright law protects authored works, such as art, books, film, and music;

patent law protects inventions; and trade secret law helps safeguard information that is

critical to an organization’s success.

Teaching

Tip

Give examples of materials that may be copyrighted, and materials that may be

patented.

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A. Copyrights

1. Begin this section by explaining that copyright and patent protection was established

through the U.S. Constitution, Article I, section 8, clause 8, which specifies that Congress

Copyright Term

1. Copyright law guarantees developers the rights to their works for a certain amount of

Eligible Works

1. The types of work that can be copyrighted include architecture, art, audiovisual works,

choreography, drama, graphics, literature, motion pictures, music, pantomimes, pictures,

Fair Use Doctrine

1. The fair use doctrine allows portions of copyrighted materials to be used without

permission under certain circumstances. Discuss the four factors that must be considered

Tip

For more information on copyrights, including the history of copyright law in the

Teaching

Tip

Discuss the pros and cons of extending the term of a copyright.

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Software Copyright Protection

1. Explain that the use of copyrights to protect computer software raises many complicated

issues of interpretation. Note that to prove infringement, the copyright holder must show

The Prioritizing Resources and Organization for Intellectual Property Act of 2008

1. The Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act

General Agreement on Tariffs and Trade

1. Explain that the General Agreement on Tariffs and Trade (GATT) is a trade agreement

The WTO and the WTO TRIPS Agreement (1994)

1. Briefly discuss the WTO, a global organization that deals with the rules of international

trade based on WTO agreements that are negotiated and signed by representatives of the

Teaching

Tip

Emphasize that an idea cannot be copyrighted, but its expression can. Discuss

why this is central to the notion of copyrighting.

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The World Intellectual Property Organization Copyright Treaty (1996)

1. The World Intellectual Property Organization (WIPO), headquartered in Geneva,

Switzerland, is an agency of the United Nations (established in 1967) that is dedicated to

The Digital Millennium Copyright Act (1998)

1. The Digital Millennium Copyright Act (DMCA) was signed into law in 1998 and

implements two 1996 WIPO treaties: the WIPO Copyright Treaty and the WIPO

Performances and Phonograms Treaty. Note that the act is divided into five sections,

Titles I–V, as detailed on pages 229-230.

Quick Quiz 1

1. _____ is a term used to describe works of the mind—such as art, books, films, formulas,

inventions, music, and processes—that are distinct and owned or created by a single

person or group.

3. A(n) _____ is the exclusive right to distribute, display, perform, or reproduce an original

work in copies or to prepare derivative works based on the work.

Teaching

Tip

Take time to discuss criticisms of the DMCA, including the opinion held by

some that the law gives holders of intellectual property so much power that it

restricts the flow of information.

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4. _____ is a violation of the rights secured by the owner of a copyright.

6. The _____ allows portions of copyrighted materials to be used without permission under

certain circumstances.

7. (True or False) Because of the General Agreement on Tariffs and Trade (GATT),

copyright protection is consistent around the world.

B. Patents

1. A patent is a grant of a property right issued by the United States Patent and Trademark

Office (USPTO) to an inventor. A patent permits its owner to exclude the public from

2. Discuss the difference between a utility patent and a design patent. Use Figure 6-1 to

aid a discussion about the number of utility and design patents applied for and granted in

2000–2015.

Leahy-Smith America Invents Act (2011)

1. Explain that the Leahy-Smith America Invents Act represented a major change in U.S.

For more background on the patent process, students can visit the “Patent

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2. Further, explain that the America Invents Act also expanded the definition of prior art

used to determine the novelty of an invention and whether it can be patented. Emphasize

that the America Invents Act makes it more difficult to obtain a U.S. patent.

Software Patents

Cross-Licensing Agreements

1. Explain that many large software companies have cross-licensing agreements in which

each party agrees not to sue the other over patent infringements.

C. Trade Secrets

1. Remind students that a trade secret is defined as business information that represents

something of economic value, has required effort or cost to develop, has some degree of

Trade Secret Laws

1. Trade secret protection laws vary greatly from country to country. For example, the

Philippines provides no legal protection for trade secrets.

Discuss the implications of small companies paying more to license their

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Uniform Trade Secrets Act (UTSA)

1. The Uniform Trade Secrets Act (UTSA) was drafted in the 1970s to bring uniformity to

The Economic Espionage Act (EEA) (1996)

1. The Economic Espionage Act (EEA) of 1996 imposes penalties of up to $10 million and

15 years in prison for the theft of trade secrets. Before the EEA, there was no specific

Defend Trade Secrets Act of 2016

1. Introduce the Defend Trade Secrets Act of 2016, and explain that it amended the EEA

Employees and Trade Secrets

1. An important point to make is that employees are the greatest threat to the loss of

company trade secrets—they might accidentally disclose trade secrets or steal them for

Critical Thinking Exercise: Auto Repair Electronic Database

1. Because part of the group’s plan is to scan data in from existing sources, they would

likely face numerous copyright, patent, and possibly trade secret issues, all of which

would be complicated by the number of different companies (e.g., car makers, auto parts

Ask students to read the following USA Today article for more information about

the increasing use of noncompete agreements, “These Days, Even Janitors Are

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Quick Quiz 2

1. A(n) _____is a grant of a property right issued by the USPTO to an inventor

2. The _____ changed the U.S. patent system changed from a “first–to–invent” to a “first–

inventor-to–file” system.

3. (True or False) One of the disadvantages of using trade secret law to protect intellectual

property is that there are time limitations on the protection of trade secrets.

4. A(n) _____ prohibits an employee from working for any competitors for a period of time,

often one to two years.

II. Current Intellectual Property Issues

1. Use this section to discuss issues that apply to intellectual property and information

A. Plagiarism

1. Plagiarism is the act of stealing someone’s ideas or words and passing them off as one’s

2. Point out that plagiarism detection services and software (see Table 6-2) allow teachers,

3. Discuss actions that schools can take to combat student plagiarism.

B. Reverse Engineering

1. Introduce the term reverse engineering, which is the process of taking something apart

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2. Note that one frequent use of reverse engineering for software is to modify an application

3. Explain that using reverse engineering, a developer can use the code of the current

database programming language to recover the design of the information system

application. Next, code-generation tools can be used to take the design and produce code

(forward engineer) in the new database programming language.

C. Open Source Code

1. Open source code is any program whose source code is made available for use or

modification, as users or other developers see fit. Explain that the basic premise behind

D. Competitive Intelligence

1. An effective competitive intelligence operation requires the continual gathering, analysis,

and evaluation of data with controlled dissemination of useful information to decision

Teaching

Take time to discuss whether allowing reverse engineering to enable

For a different perspective on industrial espionage, students can read the

following Financial Times article, “The Secret of Industrial Espionage Is That It

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4. Emphasize that competitive intelligence analysts must avoid unethical or illegal actions,

E. Trademark Infringement

1. A trademark is a logo, package design, phrase, sound, or word that enables a consumer

2. Note that it is not uncommon for an organization that owns a trademark to sue another

3. Discuss the steps involved in successfully employing the nominative fair use defense.

F. Cybersquatting

1. Explain that when websites were first established, there was no procedure for validating

the legitimacy of requests for website names, which were given out on a first-come, first-

served basis. Cybersquatters registered domain names for famous trademarks or

Critical Thinking Exercise: Noncompete Clause

1. Students’ answers to this will vary. During the discussion, ask students to consider this

issue from both sides—as an employer and as an employee. What are the likely priorities

of each group? In this situation, should the human resources employee be worried about

Quick Quiz 3

1. _____ is the act of stealing someone’s ideas or words and passing them off as one’s own.

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2. The _____ is intended to protect GNU software from being made proprietary, and it lists

terms and conditions for copying, modifying, and distributing free software.

3. _____ is the use of illegal means to obtain business information not available to the

general public.

4. The _____ is a nonprofit corporation responsible for managing the Internet’s domain

name system.

Discussion Questions

1. Improvised speech is not eligible for copyright. What about a piece of music in which

large sections are improvised?

Additional Projects

1. Research and write a paper about the efforts of at least one pharmaceutical company to

protect one of its patents by transferring it to a Native American tribe—which plans to

2. Research the current status of a highly publicized trade secret lawsuit in which Waymo (a

unit of Google’s parent, Amazon) is seeking $2.6 billion in damages for a single trade

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3. Write an essay about the history and benefits of the Open Source movement.

Additional Resources

1. United States Patent and Trademark Office (https://www.uspto.gov)

2. Plagiarism.org, an online resource for combating plagiarism (www.plagiarism.org)

4. “Countering the Growing Intellectual Property Theft Threat,” FBI.gov

Key Terms

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS): An

agreement of the World Trade Organization that requires member governments to ensure that

intellectual property rights can be enforced under their laws and that penalties for infringement

are tough enough to deter further violations.

design patent: A type of patent that permits its owner to exclude others from making, using, or

selling the design in question.

Defend Trade Secrets Act: An act passed in 2016 that amended the Economic Espionage Act to

create a federal civil remedy for trade secret misappropriation.

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and character of the use (such as commercial use or nonprofit, educational purposes); (2) the

nature of the copyrighted work; (3) the portion of the copyrighted work used in relation to the

work as a whole; and (4) the effect of the use on the value of the copyrighted work.

Leahy-Smith America Invents Act: An act that changed the U.S. patent system so that the first

person to file with the U.S. Patent and Trademark Office will receive the patent, not necessarily

the person who actually invented the item first.

patent: A grant of a property right issued by the U.S. Patent and Trademark Office to an

inventor; permits its owner to exclude the public from making, using, or selling a protected

invention, and allows for legal action against violators.

Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act of 2008:

An act that created the position of Intellectual Property Enforcement Coordinator within the

Executive Office of the President. It also increased trademark and copyright enforcement and

substantially increased penalties for infringement.

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Uniform Trade Secrets Act (UTSA): An act drafted in the 1970s to bring uniformity to all the

United States in the area of trade secret law.