BLAW 2080 Test #2 - IP and Contracts (Ch. 8, 10, 11, 12)

Intellectual property

Property resulting from intellectual, creative processes, such as inventions, writings, and brands.

Trademark

A distinctive word, symbol, sound, or design that identifies the manufacturer as the source of particular goods and distinguishes its products from those made or sold by others.

Trade name

A name that a business uses to identify itself and its brand.

Trademark dilution

Occurs when someone owns a famous distinctive mark, the defendant uses a similar mark that leads to an association between the two, and the association impairs the distinctiveness of the famous mark.

Lanham Act of 1946

Federal statute enacted to protect manufacturers from losing business to rivals that use similar trademarks.

Trademark registration

Registered with the government; allowed if the mark is currently in commerce or will be within 6 months (extendable to 30 months); registrant may use the (R) symbol.

Trademark infringement remedy

The most common remedy is an injunction to prevent further infringement.

Rights of a trademark owner

(1) Use the mark in commerce, (2) prevent competitors from using a confusingly similar mark, and (3) prevent dilution of a famous mark.

Distinctiveness of a mark

Only sufficiently distinctive marks are protected; fanciful, arbitrary, or suggestive marks are strongest, and generic terms get no protection.

License

An agreement by the owner of intellectual property to permit another to use a trademark, copyright, patent, or trade secret for certain limited purposes.

Licensor

The party that owns the IP rights and issues the license.

Licensee

The party that obtains the license to use the IP.

Patent

A government grant giving an inventor the exclusive right to make, use, and sell an invention for a set time.

Patent term

20 years for utility patents; 14 years for design patents.

America Invents Act

The first person to file a patent application receives protection (first to file); there is a 9 month limit for challenging a patent.

What is patentable

An invention that is novel, useful, and not obvious; not patentable: laws of nature, natural phenomena, and abstract ideas.

Patent infringement

Making, using, or selling another's patented product without permission, even if not all parts are copied; no infringement under U.S. law if made and sold in another country; remedies are injunctions and damages.

Rights of a patent owner

To prevent others from making, using, or selling the invention.

Copyright

The exclusive right of an author or creator to use and sell an original work of expression.

Copyright duration

Works created after January 1, 1978 last for the life of the author plus 70 years; publisher-owned works last 95 years from publication or 120 years from creation, whichever is first.

Copyright owner protections

Protected against reproduction, derivative works, distribution, and public display of the work.

Copyright infringement

Occurs when the form or expression of an idea is copied; reproduction need not be exact, and copying a substantial part is enough; remedies are damages and/or criminal penalties.

Fair use exception

Material may be reproduced for criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.

Trade secret

A formula, device, idea, process, or other information used in a business that gives the owner a competitive advantage in the marketplace.

Trade secret protection

Extends to both the idea and the expression (unlike copyrights and trademarks).

Right of publicity

Protects an individual's identity.

Contract

A promise to perform that is based on the voluntary agreement of the parties and is enforceable.

Elements of a contract

(1) Agreement made of an offer and acceptance, (2) made voluntarily, (3) supported by consideration, (4) between parties with capacity, and (5) made for a lawful purpose.

Three requirements under common law

An agreement (offer and acceptance), an exchange of consideration, and a lack of defenses.

Purposes of a contract

Increase predictability, strengthen relationships, and allocate risk.

Which law governs a contract

Common law governs real estate, insurance, services, and employment; the UCC Article 2 governs sales of goods.

Unilateral contract

One promise, given in exchange for performance; the contract is not formed until performance is completed.

Bilateral contract

Two promises, a promise exchanged for a promise; the contract is formed as soon as the promises are exchanged.

Mutual assent

Agreeing to the same bargain at the same time; a meeting of the minds.

Offer

A statement by an offeror that creates the power of acceptance in the offeree.

Offeror

The party who makes the offer; the "master of his or her offer."

Offeree

The party to whom the offer is made; has the option to accept before the offer terminates.

Three requirements of a valid offer

Intent to contract, definiteness and certainty, and communication to the offeree.

Definiteness at common law

A valid offer must identify the subject matter, quantity, price, payment terms, and delivery terms; the UCC allows open price, payment, and delivery terms.

What is not an offer

Preliminary negotiations or inquiries, flea market haggling, sale of a small business, and advertisements (invitations to negotiate) unless the ad limits who can accept.

Termination of an offer

An offer ends by revocation, rejection or counteroffer, lapse of time, death or incompetency of either party, or destruction of the subject matter.

Revocation

The offeror can revoke any time before acceptance, even if the offer said it would stay open; effective when received by the offeree.

Rejection

Effective when received by the offeror; ends the offer.

Counteroffer

A rejection of the original offer that proposes new terms.

Who may accept an offer

Only the original offeree.

Method of acceptance

Any reasonable manner unless the offeror specifies the method; generally effective upon dispatch (mailbox rule) unless the offeror requires receipt.

Mirror image rule

An acceptance must match the offer terms exactly; an acceptance that changes or adds terms is a counteroffer.

Mailbox rule

An acceptance is effective when dispatched (mailed, emailed, faxed), unlike a revocation or rejection; exception if the offeror requires receipt.

Consideration

Something the promisor receives from the promisee: a legal detriment that is bargained for.

Legal detriment

An act, forbearance, promise to act, or promise to forbear that is bargained for.

Forbearance

Not doing something one has a legal right to do.

Preexisting duty rule

A promise to perform an existing duty is not sufficient consideration.

Five common defenses to a contract

Mistake, fraud or misrepresentation, duress, undue influence, and lack of capacity or illegality; these generally make a contract voidable.

Voidable contract

A contract that one party has the power to cancel (rescind); the party must not ratify it.

Void contract

A contract that never existed, such as one for an illegal purpose.

Fraudulent misrepresentation

A misrepresentation of material fact, an intent to deceive, justifiable reliance by the innocent party, and resulting harm.

Undue influence

Wrongful pressure by persuasion from a special relationship (such as guardian or attorney) that overcomes a person's free will; the contract is voidable.

Duress

Forcing a party into a contract under fear or threat; the threat must be wrongful or illegal; a threat of a civil suit is not duress.

Groups lacking capacity

Minors, people with mental disabilities, and intoxicated people; their contracts are voidable at their option.

Contractual capacity

The legal ability to enter into a contract; at 18 a person can enter any contract an adult can.

Disaffirmance

A minor's right to avoid a contract; only the minor can disaffirm, during minority or a reasonable time after, and must disaffirm the entire contract.

Ratification

Affirming a contract made as a minor or while impaired after gaining capacity or reaching majority; may be express or implied by conduct.

Mental incompetence contracts

Void if a court adjudged the person incompetent and appointed a guardian; voidable if the person did not understand the contract; valid during lucid intervals.

Illegality

Contracts for an illegal purpose, contrary to statute, or against public policy are void; includes crimes, unlicensed acts, and agreements in restraint of competition.

Covenant not to compete

Enforced if it serves a legitimate business purpose, is reasonable in time, geographic area, and scope, and does not impose an undue hardship.

Statute of limitations

Time limit to bring a legal action, generally 4 to 6 years; in Ohio it is 8 years for written contracts.

Statute of frauds

Certain contracts must be in writing: those involving an interest in land, acting as surety (paying another's debt), and sales of goods over $500.

Impossibility of performance

A contract is excused if performance becomes objectively impossible; destruction of subject matter before acceptance or death or incompetence of a party can end it.

Breach of contract

Failure to perform something one is contractually obligated to do; the breaching party fails to perform and the innocent (non-breaching) party is injured.

Remedy at law vs. equitable remedy

Money damages are the normal remedy at law; equitable remedies include specific performance, rescission, restitution, and non-compete injunctions.

Three categories of contract damages

Compensatory, consequential, and punitive (not generally awarded in breach of contract claims).

Compensatory damages

Compensate the non-breaching party for loss of the bargain; standard measure is the cost of substitute performance versus the contract price.

Mitigation of damages

The innocent party must act to reduce the damages; example: a landlord must make reasonable efforts to re-lease after a tenant moves out and stops paying rent.

Consequential damages

Reasonably foreseeable losses that result from the breach, in addition to the standard measure.

Liquidated damages

Damages agreed on in the contract; enforceable if reasonable in relation to the actual harm and not a penalty.

Specific performance

An equitable remedy ordering performance; used for real estate and unique goods.

Rescission

An equitable remedy used for fraud; cancels the contract.

Restitution

An equitable remedy used for quasi contract.

UCC (Uniform Commercial Code)

Sales Article 2 governs contracts for the sale of goods.

Goods

Tangible and movable; the UCC does not deal with real property.

Predominant-factor test

Determines which law prevails when a contract involves both goods and services.

Merchant

Some UCC rules vary depending on whether one party is a merchant.

Sale

The passing of title from the seller to the buyer for a price.

Open price term under the UCC

If the price is not agreed, a court can determine a reasonable price at the time of delivery.

Quantity under the UCC

Courts will generally not supply a quantity if none was agreed upon.

Default place of delivery

Unless otherwise agreed, the buyer takes delivery at the seller's place of business.

Firm offer

A merchant's written, signed offer is irrevocable for a reasonable period (no more than 3 months); no consideration is necessary.

Acceptance under the UCC

Either by prompt shipment of conforming or nonconforming goods; shipping nonconforming goods is both an acceptance and a breach unless sent as an accommodation with prompt notice.

Additional terms under the UCC

The UCC does not follow the mirror image rule; if one or neither party is a merchant the original terms control; if both are merchants the new terms are included unless the offer limits terms, they are a material change, or the offeror objects within a reasonable time.

UCC modifications

Modifications do not need consideration but must be made in good faith.

UCC statute of frauds

Sales of goods over $500 must be in writing signed by the party against whom enforcement is sought; between merchants, a writing may follow within a reasonable time.

UCC statute of frauds exceptions

Specially manufactured goods, admission by the breaching party, and partial performance.

Tender of delivery

Occurs when the seller delivers conforming goods to the buyer; requires reasonable notice, a reasonable hour and manner, and all goods in one installment unless agreed.

Perfect tender rule

If goods fail to conform, the buyer may accept the goods, reject the entire shipment, or accept part and reject part.

Cure

The seller can replace defective goods within the time of contract performance.

How a buyer shows acceptance

By words or conduct, by not rejecting within a reasonable time, or by acting like the owner.

Anticipatory repudiation

A breach; the non-breaching party may suspend performance, pursue a remedy, or wait a reasonable time for the repudiating party to perform.

Seller's remedies for buyer breach

Cancel the contract, withhold delivery, resell the goods and hold the buyer liable for the difference, or recover damages (market price at tender plus incidentals).

Buyer's remedies for seller breach

Cancel, obtain goods on insolvency, specific performance for unique goods, cover, reject nonconforming goods, or accept them and recover damages.

Cover

The buyer buys substitute goods and recovers the difference in price plus incidental and consequential damages.