Transcript Property
Legal Environment of Business University of Management and Technology 1901 North Fort Myer Drive Arlington, VA 22209 Voice: (703) 516-0035 Fax: (703) 516-0985 Website: www.umtweb.edu © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-1 MGT102 Chapter 9: Property and Intellectual Property Meiners, R. E., Ringleb, A. H. & Edwards, F. L. Legal Environment of Business (8th ed.) © 2003 South-Western. ISBN 0324121512 © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-2 MGT102 Chapter 9 Property and Intellectual Property © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-3 MGT102 Real Property Land under - oil, minerals attached - buildings, trees Property - “legally protected expectation of being able to use a thing for one’s advantage.’’ © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-4 MGT102 Ownership of Land Deeds most common way to transfer ownership ID original owner, describe land, ID new owner, & state that the ownership is being transferred, possibly subject to certain conditions Titles comes from receipt of valid deed; is means by which owner has legal possession of the property “formal right of ownership” Titles are recorded by state officials (usually county) © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-5 MGT102 Forms of Ownership Fee Simple - indefinite time and right to dispose of it up in the air “to the skies” down to the core “to the center of the earth” these rights can be sold separately subsurface mineral rights often legally separated Can be inherited, transferred, sold in part or in whole © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-6 MGT102 Forms of Ownership Life Estates have use of land for life of life tenant- but can’t ruin it! Servitudes property requirements imposed by an owner positive and negative requirements easements and covenants most important servitudes Easements right to enter land of another and make use of it or take something example: sidewalks, utilities Adverse possession is a form of easement © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-7 MGT102 Adverse Possession Must be: Actual- does in fact possess property Open- visible so owner is on notice Hostile- without consent of owner Exclusive- not shared with others who have no right Continuous- goes on without major interruption © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-8 MGT102 Hickerson v. Bender The Fagans owned lots A & B; sold lot B with an easement on the eastern 15 feet of lot A in 1955. In ‘90, Hickerson was the fourth owner of lot B. Nothing ever built on lot B. The Fagans sold lot A to Bender in 1958 who built a home which blocked the easement on lot A. Hickerson sued Bender for blocking his easement. Trial court held the easement had been extinguished by abandonment and adverse possession before Hickerson bought the property. Hickerson appealed. Court of appeals stated that for abandonment of an easement to occur there must be more than mere nonuse. There must appear to be an intentional relinquishment of the rights granted. This intention can be shown in acts or conduct. HELD: Trial Court decision affirmed. The court stated that the previous owner’s acquiescence to the Benders’ improvements was evidence of intent to abandon. © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9-9 MGT102 International Perspective: Insecure Property Rights In U.S., property ownership is generally secure. Not so in other parts of the world. In many poor countries, farmers do not own land they farm; city dwellers do not own land under the houses they have built. Philippines: only 1/3 of agricultural land and 43% of dwellings have clear title Peru: 81% of farmed land & 1/2 of urban dwellings have no title Haiti: 97% farm land not owned Egypt: 92% of urban dwellings and 83% of farms are “unowned” With no secure property rights, investment is difficult and very risky. Economic progress is enjoyed by the minority who live in the formal economy. © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 10 MGT102 Covenants like a contract w/estate goes with the estate from owner to owner Landlords and tenants rented property is called a leasehold landlord has interest of some length tenant possesses estate for a fixed period or at will as determined by landlord © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 11 MGT102 Lease ID parties describe premises being leased state how long in effect state how much rent is to be paid does not have to state a specific end can go month to month usually also: who pays utilities where/when rent is paid terms of damage deposit © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 12 MGT102 Rights of a Tenant Right of possession during lease Can exclude other parties Landlord must make essential repairs or may have constructive eviction © 2004 UMT Version 07-22-04 Can’t: abuse property remove valuable property be nuisance to neighbors engage in illegal activities on property Visit UMT online at www.umtweb.edu 9 - 13 MGT102 Barton v. Mitchell Co. Barton leases space for 5 years from Mitchell Co. and operates a patio furniture store 2 years into lease, Mitchell rents next door to “Body Electric”, a loud exercise studio Interferes w/ Barton’s business; she complains; landlord does nothing © 2004 UMT Version 07-22-04 After 8 months, Barton vacates premises. Mitchell sues for breaking lease, gets $18,930. Barton appealed. Constructive eviction from noise - Barton wins Visit UMT online at www.umtweb.edu 9 - 14 MGT102 Public Control of Real Property Eminent Domain Government can force sale of property or granting of easement without consent of owner 5th Amendment requires “just compensation” Police powers Control land use with regulations Is there compensation? Yes, but when property loses value, compensation may not appear to be “just” © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 15 MGT102 Village of Euclid v. Ambler Realty (1926) Ambler owned 68 acres in Euclid, Ohio. In ‘22 the village adopted a comprehensive zoning plan which reduced the estimated value of the land from $10,000 per acre for the use intended to only about $2500 per acre. Amber sued Euclid in federal court claiming that the ordinance deprived it of, “liberty and property without due process of law.” © 2004 UMT Version 07-22-04 District court declared plan unconstitutional. Euclid appealed. Sup. Ct. stated that if municipal ordinances are not satisfying to a majority of the citizens, then their recourse is to the ballot, not the courts. HELD: The ordinance was valid under police power of the state to protect public health, safety & welfare. Visit UMT online at www.umtweb.edu 9 - 16 MGT102 Intellectual Property Intangible property Major forms include: trademarks trade names copyrights patents trade secrets © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 17 MGT102 Trademark A commercial symbol design, logo, distinctive mark, name or word “brand name” protected by common law & the Lanham Act classified (see also Exhibit 9.1) arbitrary and fanciful (most favored) suggestive (not as favored--but Chicken of the Sea is okay) descriptive (less favored--but Holiday Inn and Bufferin have protection) generic—not protected © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 18 MGT102 Harley-Davidson, Inc. v. Grottanelli Grottanelli owns The Hog Farm, a motorcycle repair shop in NY. He used “hog” in connection with events he sponsored and products he sold. He also used variants of the Harley’s bar-andshield logo. Harley sued to enjoin Grottanelli from using the word “hog” and from using the bar-and-shield logo. The district court held for Harley; Grottanelli appealed. © 2004 UMT Version 07-22-04 Grottanelli was using the word “hog” when Harley was trying to disassociate itself from the word. Other facts also supported the claim that the word was a generic term long before Harley registered the word in 1987. HELD: Harley could not prohibit Grottanelli from using the word “hog,” but did prohibit him from using variations of the bar-andshield logo. Visit UMT online at www.umtweb.edu 9 - 19 MGT102 Other Marks Service Marks Apply to services, not goods Law is the same as for trademarks Ex: International Silk Assn. uses the motto: “Only silk is silk.” Ex: Burger King’s “Home of the Whopper” © 2004 UMT Version 07-22-04 Trade Dress Concerns the “look and feel” of products and service establishments. Size, shape color, texture, graphics, etc. Must be “inherently distinctive” Two Pesos v. Taco Cabana: One Mexican restaurant could not copy its competitor’s decor Visit UMT online at www.umtweb.edu 9 - 20 MGT102 Copyright © Registration simple—not a guarantee of validity Works must be original Life of author plus 70 years Gives owner exclusive right to: reproduce publish or distribute display in public perform in pubic prepare derivative works based on original © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 21 MGT102 Infringement and Fair Use in Copyright Fair use - “for purposes such as criticism, comment, news reporting, teaching,…scholarship, or research” Four Factors of “fair use” purpose and character of copying nature of work extent of copying effect of copying on market Example--ok to copy TV show for personal use © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 22 MGT102 New York Times Co.v. Tasini (2001) © Tasini and other freelance authors wrote articles for NY Times Company. Authors registered copyrights in articles. Each Times magazine and newspaper then registered collective work copyrights. Times allowed LEXIS/NEXIS to publish the works online. Authors sue Times for copyright infringement as they did not give permission for online publication. Times said it had the right to reproduce the works. District Ct. held for Times; Appeals Court held for the authors; Times appealed to the U.S. Supreme Court. HELD: Affirmed. Both Times and LEXIS/NEXIS infringed. Section 201 (c) of the Copyright Act states that a “separate contribution to a collective work is distinct from . . . the collective work, and vests initially in the author of the contribution.” Publishers may make agreements for electronic reproduction. LEXIS infringed in publishing without permission; Times infringed by authorizing and aiding LEXIS in placing articles in their databases. © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 23 MGT102 Patents Exclusive right to make, use, or sell a product for 20 years Anyone who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent” Strong protection during life of patent © 2004 UMT Version 07-22-04 But expensive, technical and time-consuming process Since patent divulges all info to competitors, some prefer trade secrets If Coca Cola had gotten a patent instead of trade secret it could be used by others after 1907 Visit UMT online at www.umtweb.edu 9 - 24 MGT102 Richardson-Vicks v. Upjohn RVI owned a patent, issued in 1985, for an OTC medicine for the relief of cough, cold, and flu symptoms. Upjohn contested its validity because it was very similar to prior inventions and was for something obvious, but in 1992 the patent office upheld the patent. RVI sued Upjohn for infringement for selling products that had the same formula as the patent. The jury held for RVI and awarded it a royalty of 7%. The judge overturned the jury verdict, and RVI appealed . HELD: The appeals court affirmed the trial judge’s ruling. The product formulation (2 ingredients of ibuprofen & pseudoephedrine) would have been obvious to one of ordinary skill in the art; patent invalid. © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 25 MGT102 Trade Secrets Coca-Cola has held secret the formula for Coke for over 100 years; so protection can be strong. Most trade secret lawsuits are common law actions of stealing & using secrets Prosecutors can also press criminal charges Protection in other countries is difficult Information is a trade secret if: it is not known by the competition business would lose advantage if competition were to obtain it owner has taken reasonable steps to protect the secret from disclosure © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 26 MGT102 Buffets, Inc. v. Klinke Old Country Buffets (OCB) developed “small-batch cooking” to ensure freshness. The Klinkes fraudulently obtained a copy of OCB’s recipes and its EE manual. The Klinkes opened Granny’s at which they used the OCB EE manual and recipes. OCB sued for trade secret theft. The district court granted summary judgment for Klinkes. HELD: The appeals court stated that the alleged secrets were so obvious that very little effort would be required to “discover” them. “Klinkes may be liable for stealing something, but not . . . misappropriation of trade secrets. . . .” © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 27 MGT102 Want to Hear My Songs? Pay Up by Ted Nugent Issue: Is Copying Music Acceptable? People copy music files by burning CDs or downloading from the web without paying The music industry is attempting to upgrade the quality of music and also protect intellectual property rights The 9th Circuit Court of Appeals ruled that Napster had to stop providing unauthorized music But downloading music files is very difficult to stop © 2004 UMT Version 07-22-04 Visit UMT online at www.umtweb.edu 9 - 28 MGT102