LEGL 2700 Exam 3

Trademark

A trademark protects brand names, logos, or symbols that identify and distinguish a business’s goods or services.

Patent

A patent gives the inventor of a new, useful invention the exclusive legal right to make, use, or sell it for a set time.

Trade Secret

A trade secret is confidential business information that gives a company a competitive edge and isn’t publicly known.

Copyright

Copyright protects original creative works like books, music, software, or videos from being copied without permission.

• protects creative expression

• affords the author/artists/creator a monopoly

Trademark Example

Nike’s “swoosh” logo is a trademark. If another company uses a similar logo on shoes to confuse customers, Nike can sue for trademark infringement.

Patent Example

If a company invents a new kind of smartphone battery and gets a patent, they can sue anyone who makes or sells that battery without a license.

Trade Secret Example

Coca-Cola’s secret soda formula is a trade secret. If an employee leaks the recipe to a rival, Coca-Cola can sue for misappropriation of trade secrets.

Copyright example

If someone uploads a full Marvel movie online without Disney’s approval, Disney can file a copyright infringement lawsuit.

4 Key elements of intellectual property

• Justification

• Importance

• Competition

• Capturing

Justification (Key element of IP)

Property law protects the value of innovation and encourages people and companies to invest in new ideas. It gives legal recognition to intangible assets, helping businesses enforce rights and defend against misuse.

Importance (Key element of IP)

IP rights allow creators and companies to control and benefit from their inventions, branding, and trade secrets. Without protection, others could freely use the same ideas, reducing the incentive to innovate.

Competition (Key element of IP)

Companies know property rights lead to market power and innovation protection at a competitive advantage. Thought to incrementally increase the knowledge of investment and knowledge in business.

Capturing (Key element of IP)

Firms that don't have an IP strategy lose these concepts. Have one in place and do this regularly. Apply for a patent before putting it out into the public. 

Congressional Balancing Power over Intellectual Property

Under the U.S. Constitution, Congress has the power to create patent and copyright laws. Its role is to balance the rights of creators (by giving them temporary, exclusive control) with the public interest (by eventually releasing works into the public domain). This balance is meant to incentivize innovation while promoting long-term access and societal benefit.

Is a Copyright temporary?

✅ Yes, it’s temporary.

• Lasts for the life of the author plus 70 years (for individual authors).

• After expiration, the work enters the public domain.

Is a Patent temporary?

✅ Yes, it’s temporary.

• Utility patents: 20 years from the filing date.

• Design patents: 15 years from the grant date.

• After that, anyone can use or produce the invention.

Is a Trademark temporary?

🚫 No, it’s not automatically temporary — but it can expire.

• Trademarks can last forever if they are actively used in commerce and properly renewed (usually every 10 years).

• If unused or abandoned, they can be cancelled.

Is a Trade Secret temporary?

🚫 No expiration by law.

• A trade secret lasts as long as it remains secret and provides value.

• If it becomes public (legally or illegally), protection is lost.

Knowledge as an Asset

In the modern economy, knowledge is a key business asset — especially in the form of intellectual property, training, and proprietary systems. Many companies invest heavily in developing their employees' skills and protecting valuable know-how.

Non-Compete Justification

To safeguard that investment, employers often use non-compete agreements, preventing trained employees from taking insider knowledge to competitors.
This is especially relevant since over 75% of Fortune 500 company value comes from intellectual property and intangible assets.

Incentive Theory of Intellectual Property

The core idea behind intellectual property law is to incentivize innovation by granting temporary exclusive rights to creators or funders. This legal protection encourages businesses to invest in research and development, knowing they’ll benefit from the outcome.

Incentive Theory of Intellectual Property Example

Example: If a pharmaceutical company funds a researcher like Hackleman to develop a drug and he discovers a cure, the company typically holds the IP rights — because they took on the financial risk to promote innovation that benefits society.

Trade Secret Misappropriation

A trade secret is a valuable knowledge or information that a business keeps confidential through reasonable efforts. To be protected under law, the owner must show:

1. The information has economic value from not being publicly known, and

2. They took reasonable steps to keep it secret.
   To violate trade secret rights, the defendant must have wrongfully acquired, disclosed, or used the secret — such as through theft, breach of duty, or deception.

Uniform Trade Secrets Act (UTSA)

The Uniform Trade Secrets Act is a model law adopted by 48 states to create consistent rules for protecting trade secrets. It defines a trade secret as information that has independent economic value because it’s not generally known, and is subject to reasonable efforts to maintain its secrecy.
The UTSA also provides the legal basis for suing someone who misappropriates a trade secret.

• New York

• North Carolina

Trade Secret Split

Knowledge or info

—> Kept Secret (reasonable measures taken)

OR

—> Economic Value

Establishing the Existence of a Trade Secret

Conduct a trade secret audit to identify confidential knowledge-based resources. NO need to register a secret, just keep it protected.

How to preserve the secrecy of a Trade Secret (5 Ways):

• Lock written Materials

• Secure computer stored knowledge with firewalls and encryption 

• Impose confidentiality restrictions 

• Regulate Visitors 

• Ask employees, customers, and business partners to sign non-disclosure and non-competes.

Trade Secret in Action Example

In the 1990s, before email or digital marketing, Hackleman runs her business using traditional advertising — newspapers, billboards, and phone directories. She keeps her client lead list highly confidential, taking reasonable steps to protect that information.
When a competitor moves into town and tries to obtain her lead list, Hackleman can claim trade secret protection.
Even though her methods aren't unique or revolutionary, the list qualifies as a trade secret because:

• It has economic value from not being publicly known, and

• She made reasonable efforts to maintain its secrecy.

A trade secret does not have to be novel or creative — it just has to meet the legal criteria.

Al Minor & Associates, Inc. v. Martin (Trade Secret – Memorization Case)

In Al Minor & Associates, Inc. v. Martin, Martin was an employee who memorized AMA’s confidential client list and used it to start a competing business while still employed. He argued that since he didn’t take any physical documents, the information was just personal knowledge. The court disagreed, ruling in favor of AMA and holding that memorized information can still qualify as a trade secret if it has economic value and the company took reasonable steps to protect it. The case confirms that trade secret law applies even when the information is not written down.

Demonstrating misappropriation 

• Misappropriation occurs when one improperly acquires or discloses secret information 

• Independent creation and reverse engineering are exempted

Employee Mobility & Trade Secrets ( 4 Points )

• Confidentiality contracts forbid employees from disclosing the knowledge obtained in workplace

• Employers can enforce agreements not to compete only when there is a valid business purpose for the contract. 

• Individuals get prison and fines

• Other businesses get fined

Employee Mobility & Trade Secrets Example (Coke Secretary)

In a real-world example, a Coca-Cola secretary attempted to sell confidential R&D information to Pepsi for $1.75 million. Rather than accept the offer, Pepsi reported the attempt to the FBI, recognizing that knowingly accepting stolen trade secrets would make them legally liable. This case highlights how trade secret misappropriation requires wrongful conduct, and even receiving stolen information can trigger legal consequences. It also shows how ethical handling of trade secrets can protect a company from litigation.

SILENT – How to Protect Trade Secrets (Possibly correct?)

• S – Secure all confidential information (physically and digitally)

• I – Identify what qualifies as a trade secret

• L – Limit access to only those who need to know

• E – Educate employees on confidentiality policies

• N – Non-disclosure agreements (NDAs) should be used consistently

• T – Track use and access to trade secrets for accountability

Patent Law (Technical , not sexy)

• New Invention → Legal monopoly

• Inventive act and grants you rights and ownership to that item.

• Patent- exclusive right created by statute and grants you it for a LIMITED TIME by Congress and federal admin

3 Types of patents 

• Utility

• Design

• Plant

Utility Patent Definition

New, non obvious, useful processes machines, Compositions of matter or improvements thereof

Design Patent Definition

Apply to its shape or display, not its utilization. New, original ornamental design for an article of manufacture 

Plat Patent Definition

Only apply to a variety of plants that can be reproduced asexually. New variety of plants that can be reproduced asexually. 

Process of Obtaining a Patent

• File application 

• Filing Fee

• Explain invention 

  • Show Difference from prior art 

• Describe patentable aspects

  • Evaluation by patent examiner

Boom, patent exclusive right to the invention

Patent Attorneys and the Patent Bar

A patent grants the exclusive legal right to an invention, preventing others from making, using, or selling it without permission. To practice before the U.S. Patent and Trademark Office (USPTO), patent attorneys and agents must pass the Patent Bar Exam, which has a pass rate below 50%. These professionals must have both legal training and a scientific or technical background, qualifying them to assist inventors in securing patent protection and navigating complex patent filings.

America Invents Act (AIA)

A 2011 law changed U.S. patent rules from first to invent to first to file with the USPTO, giving rights to whoever files first.

3 Characteristics of Patents

Novelty

Nonobviousness

Utility

Novelty (Patent Characteristics)

Something new and different form the prior art (Must not be identical to another invention , has to prove something new and unique)

Nonobviousness (Patent Characteristics)

Ability of an invention to produce surprising or unexpected results (Not obvious if it is different enough)

Utility (Patent Characteristics)

Must do something useful. (does not have to do something you wanted to do, just has to do something and prove it contributes) 

Association for Molecular Pathology (AMP) v. Myriad Genetics

Myriad Genetics discovered the BRCA1 and BRCA2 genes, linked to breast and ovarian cancer, and tried to patent the isolated DNA. The Association for Molecular Pathology (AMP) argued that genes are natural phenomena and cannot be patented.
The Supreme Court ruled that although Myriad contributed important research, it did not invent or alter the genetic structure, so the genes were not patentable. The case established that patents protect inventions, not discoveries, and as a result, it invalidated all DNA patents.

Alice Corp. v. CLS Bank International

Alice Corp held patents for a software system that served as a third-party intermediary to verify that both sides in a financial transaction had sufficient funds. CLS Bank challenged the patents, arguing they were based on an abstract idea.
The Supreme Court ruled against Alice, holding that abstract ideas, even when performed on a computer, are not patentable. The Court said a valid patent must show an inventive concept, not just a generic computer implementation.
Since Alice’s system was simply a computerized version of a longstanding financial practice, the patents were declared invalid.

Patent Enforcement

(You should file, and then put it out for public display) 

Certain subject matter is NOT patentable.

• Patent owners can sue against infringement for injunction and damages 

• Inventions can cover methods and articles that can overlap 

• Overlapping rights provide an opportunity for firms to purchase patent rights and sue companies - patent trolls.

Patent Enforcement Example

You cannot patent a natural phenomenon. You find a flower in a field, no. Find a flower and make something useful from it, yes. Cannot patent mathematical equations or mere abstract ideas. Cannot do that to delay discovery.

Trademark Purpose and Protection

• Marks on what is produced to represent the origin of the good or service

• Recognizability OR distinctiveness 

• Protection against confusion. 

• WE shop by brand and mark and associate a brand with the identity of something

• Want to protect the power of the mark 

Marks protected by the Lanham Act of 1946

Mac daddy of protection and protect 5 categories of marks:

1. Trademark

2. Service Mark

3. Certification Mark

4. Collective Mark

5. Trade Dress

Service Mark

Associated with a service , appears like SM. USed for advertising on webpages, etc. 

Certification Mark

Used by someone other than the Owner of the mark to certify a characteristic of a good or service, usually owned by a trade. Meet this standard, and slap it on. USDA Organic needs to meet standards.

Collective Mark

Used to show membership in a group or organization. Only members of the group can use the mark. Example: a union or trade group seal.

Trade Dress (Type of mark)

The visual appearance of a product or its packaging that signifies the source of the product. This includes design, shape, color, layout, or decor. Trade dress is protected when it is distinctive and non-functional, and it helps consumers identify the brand. Example: the shape of a Coca-Cola bottle or the layout of an Apple store.

Color as Trade Dress – Functional vs. Non-Functional

Tiffany & Co. owns Robin’s Egg Blue as protected trade dress because it is non-functional and used purely for brand identity. Other jewelers cannot use that color for boxes or packaging.

In contrast, John Deere cannot trademark "John Deere Green" because it is a functional color commonly used in the farming industry.

👉 Key difference: A color can be protected only if it is non-functional and used to signal brand identity — not if it’s essential to the product’s use or industry.

Sound Trademarks (Sound Marks)

A sound trademark is a distinctive audio element used to identify the source of a good or service, like the NBC chimes or 20th Century Fox intro. To be registered with the USPTO, the sound must be used in interstate commerce and be clearly associated with the brand.

Can the PTO Deny Trademark Registration?

Yes — the USPTO can deny registration if the mark is:

• Too similar to an existing mark

• A prohibited or reserved name/design

• A name or likeness without permission

• Descriptive without acquired distinctiveness

• Generic (e.g., “cell phone,” “tissue”)

• Previously: Disparaging, immoral, or scandalous — but no longer after Matal v. Tam and Iancu v. Brunetti

Supplemental Register vs. Principal Register

If a mark uses a personal name or likeness with permission or is merely descriptive, it can be placed in the Supplemental Register. After 5 years, if it gains secondary meaning (the public associates it with a brand), it can move to the Principal Register, gaining full protection under the Lanham Act.

Example of Acquired Distinctiveness

The name “Ford” originally referred to Henry Ford, but now it's widely recognized as the Ford Motor Company. This shows secondary meaning, where a descriptive or personal name becomes strongly tied to a product or brand.

Matal v. Tam (2017)

An Asian-American rock band called "The Slants" applied for a trademark, but the USPTO denied it, calling the name disparaging under the Lanham Act. The Supreme Court ruled that the disparagement clause was unconstitutional because it violated the First Amendment. The government can’t reject a trademark just because it finds the message offensive. Theme: Free speech — the USPTO cannot engage in viewpoint discrimination.

Iancu v. Brunetti (2019)

Erik Brunetti tried to register the trademark “FUCT” for his clothing brand. The USPTO denied it, calling the mark immoral and scandalous.
The Supreme Court struck down that part of the Lanham Act, saying it also violated the First Amendment.
Theme: Reinforced free speech rights — the government cannot deny trademarks just because they are offensive, immoral, or vulgar.

Trademark Registration

To register a trademark, the mark must be used in interstate commerce. The PTO publishes it in the Official Gazette, giving the public a chance to object. If no objection is made and the mark is acceptable, it is placed on the Principal Register, granting full protection under the Lanham Act.
If the mark is descriptive or includes a personal name, it may go on the Supplemental Register for 5 years. If it then gains secondary meaning, it can move to the Principal Register and gain full trademark rights.

Trademark Enforcement

Trademark law protects owners from unauthorized use of their mark. Infringement is a civil violation and can lead to remedies like damages, injunctions, and destruction of infringing products.
Generic marks are not protected, and manufacturing or selling counterfeit goods is a criminal violation.
However, fair use of a trademark is allowed for education, news, or comparative advertising.

Jack Daniel’s Properties v. VIP Products (2023)

VIP Products created a dog toy called “Bad Spaniels”, mimicking the Jack Daniel’s whiskey bottle in shape, font, and design — but with humorous, pet-themed wording. Jack Daniel’s sued for trademark infringement and dilution, arguing that the toy created brand confusion and harmed its reputation.
VIP claimed First Amendment protection through parody, but the Supreme Court ruled in favor of Jack Daniel’s, stating that humor does not shield a product from trademark law when the product itself is used as a source identifier (not just commentary).
Theme: Trademark protection applies even to parody if the parody is used to sell a product and causes confusion.

Genericide – When a Trademark Becomes Generic

A trademark can be lost if it becomes synonymous with a general product or service in the eyes of the public. This is called genericide.
Example: In some regions, people say “Coke” to refer to any soda. If a brand name becomes the generic term for a product, the company can lose trademark protection.

Trademark Duration and Renewal

Trademark registrations last for 10 years, but they can be renewed indefinitely as long as the mark is used in commerce and the owner meets renewal and maintenance requirements.

Kraft Foods Group Brands LLC v. Cracker Barrel

Kraft and Cracker Barrel Old Country Store both used the name “Cracker Barrel,” but in different markets — Kraft for cheese, and Cracker Barrel for restaurants. When Cracker Barrel tried to sell branded products in grocery stores, Kraft sued, arguing it would confuse consumers.
The court granted an injunction, siding with Kraft due to the likelihood of consumer confusion in the same retail space.
Theme: Trademark protection can apply even when brands coexist, if expansion into overlapping markets creates confusion.

Federal Trademark Dilution Act (1995)

This law prohibits the use of a mark that is the same or similar to a famous trademark if it dilutes the mark’s significance, reputation, or goodwill — even without consumer confusion or competition.

2 Types of Trademark Dilution

Blurring & Tarnishment

Blurring (Type of Trademark Dilution)

Blurring happens when the use of a similar mark weakens the distinctiveness of a famous trademark, even if there’s no confusion or competition.
👉 Example: Using a name similar to “Google” for an unrelated product.

Tarnishment (Type of Trademark Dilution)

Tarnishment occurs when a mark is used in a way that harms the reputation of a famous brand by associating it with something offensive or inappropriate.
👉 Example: An adult entertainment company using a logo similar to Ben & Jerry’s.

Copyright Visual

Monopoly —>

Copying & Marketing

OR

Limited period of time

OR

Original Expression

What Does Copyright Protect?

Copyright grants legal ownership over original creative expressions and prohibits others from reproducing them without permission.

3 Requirements for Copyright Protection

To be protected by copyright, a work must:

• Be original

• Be fixed in a tangible medium (like paper, film, or digital file)

• Show creative expression

Where Is Copyright Registered?

Copyrights are registered with the U.S. Copyright Office, which is part of the Library of Congress (not the Chamber of Commerce).

Copyright Duration – Individual

For individual creators, copyright protection lasts for the life of the author plus 70 years.

Copyright Duration – Company

For corporate or anonymous works, copyright lasts for 95 years from publication or 120 years from creation, whichever comes first.

Public Domain Day

Occurs on January 1 each year. As of 2025, works published in or before 1929 are in the public domain, meaning copyright protection has expired.

Copyright Infringement

Occurs when someone violates the exclusive rights of a copyright owner. To prove infringement, the owner must show that the defendant copied protected work without permission.

To prove copyright infringement, the owner must show that the defendant violated one or more of the copyright holder’s exclusive rights, including:

• Reproduction

• Creation of derivative works

• Distribution

• Performance

• Display

it does not have to be all five.

Copyright Fair Use

Fair use allows limited use of copyrighted material without permission for purposes like:

• Criticism

• Comment

• News reporting

• Teaching

• Scholarship

• Research

Courts evaluate fair use case-by-case, using several factors like purpose, amount used, and market impact.

Google v. Oracle (2021)

Oracle sued Google for using Java APIs in its Android operating system. The Supreme Court ruled in favor of Google, holding that Google’s limited use of the code was protected under the fair use doctrine.
Theme: Reusing software code can be fair use if it's transformative and doesn’t harm the original market.

DMCA – Safe Harbor Provision

Under the Digital Millennium Copyright Act (DMCA), internet service providers (ISPs) are protected from liability as long as they quickly remove copyrighted material when notified. This is known as the “safe harbor” rule, shielding them from being sued for users' uploads.

Conlcusion ? Why Intellectual Property Matters

• serves the common good by encouraging innovation

• Needs enforcement and recognition to motivate private effort

• Crucial for countries in the global trading system to protect innovation and ensure fair competition

Closely Held

Closely - owned by a few people and stock is held by 5 or less people. Mostly family owned and operated 

Publicly Held

Publicly - held by hundreds of thousands and stock is sold to and owned by public instead of private investors. 

3 Basic Forms of Business Organizations

• Sole proprietorships 

• Partnerships 

• Corporations

3 Hybrid Forms of Business Organizations

• Limited partnership 

• S corporations 

• Limited liability companies 

• Limited liability partnership

5 Factors to Consider when selecting a Business organization form

• Cost of creation - Legal steps necessary to make your corporation exist. How long, fast, and complicated will this be & How much is it going to cost? What are the steps? 

• Continuity of the organization - Stability or durability of the organization. Disillusion & Termination - NOT SAME. Disillusioned with any changes in ownership that change its legal structure, the legal form will change and transfer into a new form. EX: add a partnership. Not the same as terminating someone's business activities. 

• Managerial control of decisions—Who manages the business, making calls and decisions? Consider potential conflicts. Do you have a strong owner or two? Do family members do business together? For example, four brothers operating will hinder and stymie the process as they bring back up the past and compare. 

• Owner liability - to what degree is an owner going to be liable for their personal belongings within a business organization? This is very important and needs heavy consideration. This one gets people, to understand this lingo and terms. 

• Taxation - Simple single tax entity or double tax entity.

Liability Shield (a.k.a. Legal Veil)

Some business entities (like LLCs and corporations) provide a legal shield between the business and the owner's personal assets. This creates limited personal liability, meaning owners aren't personally responsible for business debts—in theory.

Piercing the Corporate Veil

Even with a legal shield, courts can “pierce the veil” if the business is run improperly. If an entity owes more than it can pay (e.g., a judgment of $8 million and only $2 million in assets), courts may go after personal or related assets if there’s evidence of fraud, commingling funds, undercapitalization, or misuse of the entity.

Myth of the LLC Shield

Saying "I’m an LLC, they can’t get my stuff" is a false sense of protection. Courts can break through an LLC's liability shield if the owner misuses the business or treated it as an extension of personal finances.

Sole proprietorship

• Least expensive and easiest business organization to create. 

• No legal distinction between owner and the entity

• Proprietorships continuity is tied directly to the will of the owner 

• Sole proprietorship is in total control of the business’s goals and operations

• Owner has unlimited liability for the obligations of the business organization

• Not taxed as an organization 

• No managerial control conflicts.

Cant transfer ownership of the company.

Amount of Sole Proprietorships

More than 75% of US businesses are sole proprietorships. EX: Arts and crafts and selling on etsy. Cant have mult owners, just one. And the owner is in complete control of everything. 

General Partnership (GP) – Definition

A general partnership is an agreement between two or more people to share a common interest in a business, including profits and losses. It is the second easiest form of business to create — usually formed by registering a simple form with the state.

General Partnership – Key Rules & Examples

GPs aren’t always required to file formal documents but should be clear and honest with the public — don’t use misleading terms like “Inc.” or “Corp.”
Example: Ben & Jerry’s started as a GP but dissolved it when they wanted to franchise.
Example: Hackleman and Smith, a biscuit business, must disclose who they are.

General Partnership – Management & Disputes

Unless stated otherwise, all partners have equal control. A written agreement is crucial to manage decision-making and to resolve disputes. Every GP should include a buyout clause and conflict resolution terms.

General Partnership – Liability

Partners have unlimited, joint, and several liability. Any partner can be held fully responsible for the partnership’s obligations.
Example: In a $100K judgment, one partner may be required to pay the full amount, even if there are three.

General Partnership – Taxation

Partnerships are not taxed as separate entities. Instead, profits and losses pass through to the individual partners, who report them on personal tax returns.