Exam 4 Commercial Law

Administrative Agency

Implementation and enforcement of statutes enacted by congress.

Agencies are

within the executive branch. Often called fourth branch of government.

Bc of society changes and demands

regulations, governmental actions, and additional agencies were created by congress by enabling legislation.

Federal and state agencies must

operate within constitutional guarantees of due process, equal protection, and freedom of speech.

U.S Constitution establishes

a three-branch (tripartite) system of government for checks and balances and as a separation of powers.

Agency powers blur lines of separation.

2 Federal Administrative Agencies:

Executive agencies

W/in Executive Office Administrative heads are appointed and removable at presidents will.

2 Federal Administrative Agencies:

Independent Agencies

are still executive in function, but headed by board or commission whose members are appointed by the president are confirmed “with the advice and consent of the Senate”

Discretionary powers

Agencies may posses are rulemaking power, investigative power, and adjudicatory power.

Agency’s formal powers also offer significant informal power

in form of agency advice, suggestions, or guidelines, which lack legal force of formal agency regulations or rules, but are very persuasive in shaping behavior of regulated industries

Agency Investigative Power

• Agencies need accurate information on business activities to detect and prosecute violations of law and to identify areas in which rules should be added or modified.

• Agency investigations must be authorized by law and conducted for a legitimate purpose

• Two most important investigative tools are subpoenas and search and seizures

Subpoena ad testificandum

compels unwilling witnesses to appear and testify at hearing.

Subpoena duces tecum

compels production of most types of documentary evidence. (Accounting records, office memoranda)

Administrative subpoena

does not require probable cause, but are intrusive and constitutional protections apply.

Agencies can investigate

merely on the suspicion that the law is being violated or even just bc it wants assurance that it is now.

Subpoena information sought must be

relevant to that purpose and not privileged, information demands must be sufficiently specific and not unreasonably burdensome, and investigation must not compromise important government operations conducted by another unit of government.

Fourth Amendment

Person to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.

No warranty required

• Aerial photography of factory

• Administrative inspections

  • substantial gov. interest

  • necessary to further scheme

  • owner gets a notice of inspection

Agency’s rulemaking power derives from enabling legislation and must comply with Administrative Procedure Act.

Procedural rules - state how agency will operate

Legislative rules - have full force and effect of law

Interpretive rules - advise regulated entities about how an agency interprets statutes in enforces

“Notice and Comment”

is the most common method used by administrative agencies that are not required by enabling legislation to follow more stringent procedures of APA

Formal rulemaking

Begins with a Notice of Proposed Rulemaking. Formal notice must state time and place at which a public hearing will be held.

Hearings resemble trials

Agency must produce evidence and justify proposed regulation, interested parties may present evidence in opposition.

Hybrid Rulemaking

Combines elements of formal rulemaking in that the process involves some sort of hearing, but also resembles informal rulemaking as the right of interested parties to cross-examine agency witness is limited.

Adjudicatory power

• agencies have power to conduct judicial proceedings to determine whether a statue or regulation has been violated.

• Process begins with a complaint filed by the agency and party charged in complaint (respondent) files an answer.

• In a hearing before the agency testimony and evidence are allowed, but no jury is present.

• Administrative cases are heard by agency employee known as administrative law judge.

• Burden of proof in administrative proceedings is the civil preponderance of evidence standard.

ALJ

• renders a decision with findings of fact and conclusions of law and inappropriate penalty if necessary.

• decision may be appealed for a de novo review by governing body of agency

President may shape agency action through

• appoint and remove agency administrators

• veto legislation related to administrative agencies

• influence over executive budget

Congress may shape agency action through its

• Advice and consent role in agency appointments

• Power to amend agencies enabling legislation

• Power to pass legislation that mandates changes in agency practices or procedures

Courts

Arguably exercise, greatest control over agency behavior since APA allows judicial review of most agency action.

Legal basis for challenging agency action

• Ultra vires doctrine

• Agency, dub, substantial deviated from procedural requirements of APA or enabling legislation

• Agency action was unconstitutional

• Agency action unsubstantiated by facts at time of action

Agencies are created by Congress through enabling legislation

True

The federal procedural act constraints agencies

False

An agency subpoena may request information that is privileged as long as it is necessary to the investigation

False

Informal rulemaking is also known as notice and comment rulemaking

True

If an agency decision is challenged courts generally deferred to the agency decision

True

Which of the following is not a legal basis for challenging agency action?

Agency failed to obtain advice and consent.

An individual or organization seeking review of an agency action must show

The challenging agency action is reviewable, challenging party has standing to sue, all required administrative remedies have been exhausted, the dispute is ripe for judicial review

Federal trade commission act of 1914

Enabled creation of the federal trade commission as an independent agency

FTC

Represents unfair, methods of competition and unfair or deceptive, acts or practices. Section 5 authorizes commission to prevent this.

FTC act section 5 policy statement on deception requires commission to prove the activity is deceptive or unfair in because it

1. Involves a material misrepresentation, omission or practice

2. Likely to mislead a consumer

3. Who acts reasonably under the circumstances

Bait advertising

Refused to show the advertise product

Bargain offers

Buy one get one free

Lanham Act

Permits individual in corporate consumers to enforce protections.

• Commercial speech

• By a defendant who is in competition with the plaintiff

• For the purpose of influencing consumers to buy the defendants goods or services

• The representation Weather, part of a classic advertising campaign or less formal promotion must be sufficiently disseminated to the prevalent purchasing public

Promotional tactics cannot be a lottery

• price

• Chance

• Consideration

Patent law

• Any new and useful process, machine, manufacturer, or composition of matter or any new and useful improvement

• 20 years

Copyright law

• original works of authorship fixed in any tangible medium of expression now known or later developed from which they can be perceived reproduced or otherwise communicated

• Life of the author +70 years

Trademark law

• Word, name, symbol device, or any combination two identity and distinguish the service of one from another and to identify the source of the service

• As long as in use or renewed

Something is not patentable if it

Lacks novelty, is obvious or has no utility.

Patented exhaustion doctrine

Once the patent owner or licensee sells an item embodying the patented invention, the sale of the item exhaust the patent owners right regarding that item

Ownership and transfer of patents

• patentee may transfer ownership of the patent by making a written assignment to another party

• Or patentee may retain ownership and licensed others to make use or sell the patented invention

Under the America invents act

• If an employee was hired to do inventive or creative work, the invention belongs to the employer

• If the employee was hired for purposes, other than invention or creation, the employee owns any patent acquired

• Regardless ShopRite doctrine gives employer a non-exclusive royal T free license to use employees invention if it was created on company time and through the use of company facilities

Infringement

Occurs when defendant makes uses or cells patented invention without patentees authorization

Defenses of infringement

• Invalidity

• Patent misuse

Copyrights

Intangible right granted by statute to the author or creator of certain, tangible, literary or artistic productions

• Only expression of an idea is copyrightable

Creation and notice

Protection automatic; registration not required the recommended

Work for hire exists when

• An employee in the course of their regular employment duties create a copyrightable work

• An individual or a corporation and an independent contractor non-employee enter into a written higher agreement under which the non-employee creates a copyrightable work for the individual or corporation

Ownership rights

• A copyright owner has exclusive rights to reproduce the copyrighted work, prepare derivative works based on it and distribute copies of the work by sale or otherwise

• Copyright ownership may be transferred to another party

• First sale doctrine: extinguishes owners rights once that copy has been lawfully sold anywhere in the world

Fair use

Defense or exception exist when a copyrighted work or trademark is used without the property holders permission but use was for purposes, such as criticism comment news, reporting and teaching scholarships or research

A court weighs several factors in a fair use determination

• Purpose and character of use

• Nature of copyrighted Work

• Amount and substantiality of portion used in relation to copyrighted work as a whole

• Effect of use on potential markets for the copyrighted work or on its value

Violation of intellectual property rights

When someone uses makes or cells another trademark patented or copyrighted intellectual property without owners permission license or franchise

Penalties

Actual or statutory damages in civil proceedings or criminal penalties for willful violations

Distinctive mark Moto device or emblem

That a manufacturer or service provider, stamps, prints or fixes to products it produces or services it performs to distinguish products or services from those of competitors

Distinctiveness is key for trademarks

• Arbitrary or fanciful marks

• Suggestive marks

• Descriptive marks

• Generic terms

Infringement

Occurs when a sub substitution similar mark is used and is likely to cause confusion

Dilution

Is diminishment of capacity of plaintiffs mark to identify and distinguished, plaintiffs goods or services

• Blurring

• Tarnishment

Trade secret

Any secret formula pattern process program, device method, technique, or database used in the owner’s business that offers competitive advantage

Misappropriation

Of a trade secret occurs when a person discloses or uses after acquiring the secret

• By improper means

• Through another party who is known or should have been known to have obtained the secret by improper means

• By breaching a duty of confidentiality