ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 8
INTELLECTUAL PROPERTY RIGHTS
8-1A. Trademark infringement
The court agreed with Nike that its trademarks are widely recognized and deserve protection but
pointed out that to prevail, Nike needed to show a likelihood of confusion on the part of the
public. The court concluded that Stanard’s parody did not infringe Nike’s trademarks as a
matter of law. The court considered several factors in its analysis. The degree of similarity
between the trademark and the parody in appearance and suggestion was the first factor.
Similarity includes how words are pronounced, “the verbal translation of any graphic designs,
and whether they suggest similar ideas or meanings.” The court noted that the marks are
similar, but “[t]he parties do dispute, however, whether NIKE and MIKE would be pronounced
the same.” Stanard’s business was entirely mail order and to buy a “Mike” product, a customer
had to make a check out to “Just Did It Enterprises.” There was no evidence that Nike sold
shirts through the mail, and any check would need to be payable to “Nike.” Thus, “we cannot
conclude that as a matter of law the parody and trademark are so similar as to confuse the
consumer.” The second factor the court considered was the degree of similarity between the
products. “As a matter of law, Nike’s trademark and Stanard’s parody dealt with similar
8-2A. Trade secrets
The U.S. Court of Appeals for the Seventh Circuit affirmed the order of the district court. The
appellate court acknowledged that this was not a “traditional trade secret case.” Under the
B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 8
applicable state statute, however, relief was available for the “actual or threatened”
misappropriation of a trade secret. The court determined that Redmond inevitably would
8-3A. Copyright infringement
The U.S. Court of Appeals for the Sixth Circuit held in part that MDS’s practice of preparing
coursepacks without obtaining the copyright owners’ permission was not a fair use and ordered
MDS to stop. “To negate fair use, one need only show that if the challenged use should
8-4A. Trademark infringement
The court held, among other things, that the service mark, “The Velvet Elvis,” did not infringe on
the trademarks of Elvis Presley Enterprises, Inc. (EPE), and EPE appealed. The U.S. Court of
Appeals for the Fifth Circuit reversed this judgment and remanded the case for an order to
Velvet to stop infringing on EPE’s marks. The court concluded that a likelihood of confusion
existed between EPE’s marks and “The Velvet Elvis” mark. EPE’s marks are very strong. The
8-5A. Trademark infringement
The court found a “possibility of confusion” between THE MIRACLE BRA trademark and the
MIRACLESUIT mark, as applied to swimwear. The court stated that “where a party moved into
the territory of an established concern, the ‘likelihood of confusion standard’ should be lowered
to a ‘possibility of confusion.’ ” Treating VS as a “newcomer” and A&H as an “established
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 8 B-3
8-6A. Trade secrets
A trade secret is information that makes a company unique and has value to its competitor. The
federal district court in which this suit was brought asked the Wyoming Supreme Court (the
defendants were based in Wyoming) for the elements of that state’s common law cause of
action for trade secret appropriation. The state supreme court explained that on the one hand,
“[t]rade secrets are protected to encourage the development of new inventions, processes, and
business techniques, to protect against breaches of faith and the use of improper methods to
obtain information, and to maintain standards of loyalty and trust in the business community.”
On the other hand, “there is a strong policy favoring free competition, thus entitling an employee
8–7A. Licensing
A license is created when one party gives his or her property to another, without a transfer of
ownership, and allows the other party to copy and distribute it. A copyright owner waives his
right to sue for copyright infringement while the license is in effect. In this case, the parties’
conduct established that Wilchcombe gave LJESB and the other defendants a license to use his
8–8A. Trade secrets
Some business information that cannot be protected by trademark, patent, or copyright law is
protected against appropriation by competitors as trade secrets. Trade secrets consist of
anything that makes a company unique and that would have value to a competitor—customer
B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 8
8-9A. A QUESTION OF ETHICS
1. As the appellate court recognized, Bonyard’s chief difficulty in avoiding disclosure
of IBM’s trade secrets might be in determining what it is that he is not to disclose. The subject
2. Fundamental policies underlying trade secret protection include the incentive that
protection provides for innovation—that is, protecting trade secrets encourages efforts and
investment in research and development by providing some control over the commercial results.
Protection of trade secrets also helps to maintain ethical standards (trust, loyalty, confidence) by
3. Most trade secret owners control the dissemination of their trade secrets and
lessen the risk of disclosure by setting up protection programs, which may include informing
4. In a society based on free competition, an employee has a right to make use of the
general knowledge or skill that he or she acquires through experience in pursuing the
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 8 B-5