The Legal Environment Of Business: A Critical Thinking Approach
14-1
Chapter 14
Intellectual Property
Introduction
Chapter Fourteen addresses these questions:
• What is intellectual property?
• How are trademarks protected?
• How are trade secrets protected?
• What do patents protect?
• What do copyrights protect?
• What are the global dimensions of intellectual property law?
Achieving Teaching Excellence
Encouraging Students to Resist Social Pressures to Not Ask Questions
The past few chapters of this Instructor’s Manual have encouraged instructors to ask higher-
order thinking questions, encourage class discussion, and get students to interact with one
another. This chapter reminds instructors to encourage students to understand that they will need
to endure a great deal of resistance from other people who do not want them to ask productive
questions on a regular basis. Many people in a position of authority prefer others to just listen
and obey.
In the spirit of this Jon Stewart quote, learners can choose to create an environment in which
reasonable people can productively and respectfully disagree—an environment that welcomes
The Legal Environment Of Business: A Critical Thinking Approach
14-2
discussion and question-asking. Yet, however careful a person is when asking productive
questions, the person asking the questions needs to realize in advance that the idea of searching
for clarity and evidence is often not socially smooth.
Chapter Overview, Topic Outline, and Discussion Questions
Chapter Overview
Intellectual property consists of the fruits of one’s mind. The laws of intellectual property
protect property that is primarily the result of mental creativity rather than physical effort. This
category includes trademarks, trade secrets, patents, and copyrights.
The material in this chapter will be interesting to the students because it is becoming more
important to businesses with each passing year. The case in this chapter are timely and involve
Topic Outline
I. Introduction to Intellectual Property
II. Trademarks
A. Toys “R” Us, Inc., v. Canarsie Kiddie Shop, Inc.
B. Trade Dress
The Legal Environment Of Business: A Critical Thinking Approach
14-3
C. Federal Trademark Dilution Act of 1995
1. Victor Moseley and Kathy Moseley et al., dba Victor’s Little Secret v. V Secret
Catalogue, Inc. et al.
III. Patents
A. Bilski v. Kappos
IV. Trade Secrets
A. Economic Espionage Act
V. Copyrights
A. Fair Use Doctrine
B. Copyrights in the Digital Age
5. File-Sharing Networks and Technologies
a. RealNetworks, Inc. v. DVD Control Copy Association, Inc., et al.
VI. Global Dimensions of Intellectual Property Law
VII. Summary
Discussion Questions for Chapter Fourteen
1. Explain relationships between real and intellectual property.
Real property is land and anything permanently attached to it. Intellectual property includes
2. Explain relationships between trademarks and trade secrets.
Trademarks and trade secrets are two kinds of intellectual property. A trademark is a
3. Explain relationships between patents and copyrights.
Patents and Copyrights are both used to protect intellectual property. A patent protects a
The Legal Environment Of Business: A Critical Thinking Approach
14-4
4 Explain what the Fair Use Doctrine is and why it causes controversy.
The Fair Use Doctrine is a legal doctrine that provides that a portion of a copyrighted work
may be reproduced for purposes of “criticism, comment, news reporting, teaching,
5. Explain how digital copyright laws have developed over time.
Legislators faced a number of problems with the development of computers, software and
the Internet. First, legislators had to determine how someone could “copy” from a computer
6. Explain how intellectual property rights are protected globally.
Treaties and conventions, such as the Trade Related Aspects of International Property Rights
Answers to Critical Thinking about the Law Questions, Case Summaries,
Answers to Review Questions, Review Problems, and Case Problems
Suggested Answers to Critical Thinking about the Law Questions
1. It is more difficult to define what intellectual property is because a lot of it is not tangible.
2. The idea of expecting people to share their mental output comes from valuing collective
14-5
3. A person would be more willing to support the intellectual property rights of an individual if
they knew he or she had worked hard to create the idea or work. It would be difficult for
them to give rights to someone who just came up with an idea in a matter of moments.
Case Summary—Toys ‘R’ Us, Inc. v. Canarsie Kiddie Shop, Inc.
This case is a trademark infringement case. In this case, plaintiff Toys “R” Us, Inc., sold
children’s clothes in stores across the country from the beginning of 1960. The firm obtained a
Suggested Answers to Critical Thinking about the Law Questions
2. The reference of past cases is a crucial piece of information that is missing in this case. It is
because without these understanding the background of these cases it would be difficult to
Case Summary—Victor Moseley and Kathy Moseley et al., dba Victor’s Little Secret v. V
Secret Catalogue, Inc. et al.
This case is in the book to show analysis relevant in trademark dilution cases. In this case, a
novelty store, “Victor’s Little Secret” did not infringe upon the Victoria’s Secret trademark. The
Case Summary—Bilski v. Kappos
This case deals with patents. The petitioner had sent in an application to file a patent for
their invention. However, the application was rejected on the basis that it was an abstract idea
that had been expressed mathematically. Additionally, they stated that it did not pass the
The Legal Environment Of Business: A Critical Thinking Approach
14-6
Case Summary—American Broadcasting Company, Inc. et al. v. Aereo, Inc.
Aereo developed a subscription service whereby subscribers for a fee could view broadcast
television shows over the Internet or on their mobile devices. Aereo did not own the copyright in
those works nor did it hold a license from the copyright owners to perform those works publicly.
The broadcast networks and cable companies who were required by law to pay a fee to
rebroadcast network content believed Aero was violating copyright law by broadcasting
Case Summary—RealNetworks, Inc. v. DVD Control Copy Association, Inc., et al.
This case is in the book to demonstrate how copyright law constantly evolves as new
technologies emerge. RealNetworks created a product called RealDVD to copy DVDs as
“backups.” These copied DVDs, however, were created without permission from the DVD
Answers to Review Questions
14-1. Trademark infringement laws protect all trademarks that have been registered with the
U.S. Patent Office. However, the potential for consumers to be confused with the two
The Legal Environment Of Business: A Critical Thinking Approach
14-7
14-2. The different types of marks that are protected under the Lanham Act are as follows:
• Product trademarks—marks affixed to a good, its packaging or its labeling.
14-3. Someone would choose patent protection over trade-secret protection if he or she wanted
to have exclusive rights to produce, sell and use a product, process, invention, machine or
asexually reproduced plant for the next twenty years. The criteria for a patent are that the
14-4. The four factors that are relevant to whether the Fair Use Doctrine can be used as a
defense are as follows:
• The purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes
14-5. Both tying arrangements and cross-licensing are common illegal uses of patents. A tying
arrangement occurs when the patent holder issues a license to use the patented object only
14-6. A trade dress refers to the overall appearance and image of a product but it is entitled to
the same protection as a trademark. A trademark, on the other hand, is a distinctive mark,
Answers to Review Problems
14-7. If Simon has also been selling donuts in Ohio, he may be infringing on Matt’s rights by
The Legal Environment Of Business: A Critical Thinking Approach
14-8
14-8. Yes, having Markham Manufacturing buy a key ingredient after they have already
14-9. The plaintiffs won’t be able to win the case. This is because even though the screenplay is
14-10. The injunction will be granted. This case is similar to the Toys “R” Us case. The “Mc”
14-11. The Christophers will say they discovered the secret by lawful means. They would be
14-12. The professor will say the “fair use” defense applies because he was using the material
Answers to Case Problems
14-13. The court ruled in favor of Seinfeld. It found that the two cookbooks were decidedly
14-14. Following the trial that award $2 million to Capital Records, the appellant court found
The Legal Environment Of Business: A Critical Thinking Approach
14-9
14-15. The United States District Court found in favor of the studios, holding that Hotfile was
14-16. The court denied the plaintiffs’ request for a preliminary injunction. In support of its
decision, the court noted that equitable factors weighed in favor of denying the relief
sought by the plaintiffs. Although plaintiffs showed that they were likely to succeed on
14-17 The plaintiff’s case was dismissed by the court based on reasonable grounds. The court
14-18. The court reduced the damage award to $750, the minimum amount of damages
Thinking Critically about Relevant Legal Issues
The Legal Environment Of Business: A Critical Thinking Approach
2. The author believes in fair compensation. The author cares about credit for those who put in
3. A student could ask, “Are intellectual property rights very important in today’s world?” The
4. One would argue that the company in India is producing the drug to help save many lives.
At times, pharmaceutical companies are selfish and tend to hold on to drugs until they know