1. Its Legal, Ethical & Global Environment 6 th Ed. Its Legal, Ethical & Global Environment 6 th Ed. B U S I N E S S MARIANNE M. JENNINGS Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. Chapter 16 Business Property

2. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 2 Tangible Business Property  Tangible Personal Property Examples: Fleet vehicles, machinery, office equipment  Transfer of Personal Property Documents of title Bills of sale  Lease of Personal Property Right of use and possession License v. Bailment Exculpatory Clause  Tangible Personal Property Examples: Fleet vehicles, machinery, office equipment  Transfer of Personal Property Documents of title Bills of sale  Lease of Personal Property Right of use and possession License v. Bailment Exculpatory Clause

3. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 3  Bailments of Personal Property Right of possession Bailor—property owner Bailee—property possessor Requirements Property possession transferred Intent to create a bailment Liability Bailee liable for damages until return Bailor must be certain property is in good condition  Bailments of Personal Property Right of possession Bailor—property owner Bailee—property possessor Requirements Property possession transferred Intent to create a bailment Liability Bailee liable for damages until return Bailor must be certain property is in good condition Tangible Business Property

4. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 4  Creditors’ Rights and Personal Property Take security interest (lien) in personal property Also called a chattel mortgage or collateral Governed by Article 9 of the Uniform Commercial Code (UCC)  Creditors’ Rights and Personal Property Take security interest (lien) in personal property Also called a chattel mortgage or collateral Governed by Article 9 of the Uniform Commercial Code (UCC) Tangible Business Property

5. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 5  Creditors’ Rights Creation of security interest Security agreement Possession or some other perfection of the interest required Enforcing a security interest Debtor must be in default Creditor may repossess without court action so long as there is no breach of the peace  Creditors’ Rights Creation of security interest Security agreement Possession or some other perfection of the interest required Enforcing a security interest Debtor must be in default Creditor may repossess without court action so long as there is no breach of the peace Tangible Business Property

6. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 6  Examples Patents Copyrights Trademarks Trade Names Trade Dress  Examples Patents Copyrights Trademarks Trade Names Trade Dress Intangible or Intellectual Personal Property

7. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 7  Federal Protection for Business Intellectual Property Patents 20 years from filing/14 years for design patent Exclusive rights to use and profits Must be non-obvious, novel, and useful Using the idea without consent constitutes infringement  Federal Protection for Business Intellectual Property Patents 20 years from filing/14 years for design patent Exclusive rights to use and profits Must be non-obvious, novel, and useful Using the idea without consent constitutes infringement Intangible or Intellectual Personal Property

8. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 8  Federal Protection for Business Intellectual Property Copyrights Protect authors of books, magazine articles, plays, movies, songs, dances, photographs Runs for lifetime of author plus fifty years 100 years from creation or 75 years from publication, which ever is shorter, if company holds rights  Federal Protection for Business Intellectual Property Copyrights Protect authors of books, magazine articles, plays, movies, songs, dances, photographs Runs for lifetime of author plus fifty years 100 years from creation or 75 years from publication, which ever is shorter, if company holds rights Intangible or Intellectual Personal Property

9. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 9 Intangible or Intellectual Personal Property  Federal Protection for Business Intellectual Property Copyrights Works automatically copyrighted but no suits can be filed until the copyright office is given a copy Damages include profits, costs, attorney’s fees Fair use is permitted—short quotes; research copies, criticism, commentary and parody  Federal Protection for Business Intellectual Property Copyrights Works automatically copyrighted but no suits can be filed until the copyright office is given a copy Damages include profits, costs, attorney’s fees Fair use is permitted—short quotes; research copies, criticism, commentary and parody

10. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 10  Case 16.1 Campbell v. Acuff-Rose Music, Inc. (1994) What is the significance of 2 Live Crew’s commercial gain from the parody? Do you agree with the Court’s decision? Was it a fair use?  Case 16.1 Campbell v. Acuff-Rose Music, Inc. (1994) What is the significance of 2 Live Crew’s commercial gain from the parody? Do you agree with the Court’s decision? Was it a fair use? Intangible or Intellectual Personal Property

11. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 11  Federal Protection for Business Intellectual Property Trademarks Words, pictures, designs, or symbols used to identify a product Lanham Act of 1946 and subsequent amendments provide protection Must be unique and non-generic Holder must maintain unique nature Recent changes allow registration prior to use of the trademark  Federal Protection for Business Intellectual Property Trademarks Words, pictures, designs, or symbols used to identify a product Lanham Act of 1946 and subsequent amendments provide protection Must be unique and non-generic Holder must maintain unique nature Recent changes allow registration prior to use of the trademark Intangible or Intellectual Personal Property

12. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 12  Federal Trademark Dilution Act (an amendment to the Lanham Act) Passed in 1996 Protects against dilution of trademarks and includes both profit and non-profit uses  Federal Trademark Dilution Act (an amendment to the Lanham Act) Passed in 1996 Protects against dilution of trademarks and includes both profit and non-profit uses Intangible or Intellectual Personal Property

13. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 13  Federal Protection for Business Intellectual Property Trade Dress Colors, shapes, and designs associated with a product Allowing their use is likely to create confusion. Consumer surveys are used to establish whether consumers will be misled. Penalties for Infringement Civil suits Criminal penalties  Federal Protection for Business Intellectual Property Trade Dress Colors, shapes, and designs associated with a product Allowing their use is likely to create confusion. Consumer surveys are used to establish whether consumers will be misled. Penalties for Infringement Civil suits Criminal penalties Intangible or Intellectual Personal Property

14. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 14  Case 16.2Harley-Davidson v. Grottanelli (2001) Who used the term “hog” first? What does generic standing (public domain) mean? Was H.D. successful in associating hog with its motorcycles?  Case 16.2Harley-Davidson v. Grottanelli (2001) Who used the term “hog” first? What does generic standing (public domain) mean? Was H.D. successful in associating hog with its motorcycles? Intangible or Intellectual Personal Property

15. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 15  Case 16.3Two Pesos, Inc. v. Taco Cabana, Inc. (1992) Does the Lanham Act require a showing of secondary meaning to acquire protection for trade dress? Evaluate the ethics of Two Pesos?  Case 16.3Two Pesos, Inc. v. Taco Cabana, Inc. (1992) Does the Lanham Act require a showing of secondary meaning to acquire protection for trade dress? Evaluate the ethics of Two Pesos? Intangible or Intellectual Personal Property

16. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 16 Business Property Protection in International Business  Patents Some countries require opposition proceedings for defense of the patent Some countries impose working requirements  Patents Some countries require opposition proceedings for defense of the patent Some countries impose working requirements

17. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 17  Trademark Protection Name, symbol, mark, letter, word or figure Must be registered in United States and other countries for full protection Protects the goodwill of the firm Common law countries establish trademark through establishing use and recognition Now in United States you can register a trademark before you begin using it  Trademark Protection Name, symbol, mark, letter, word or figure Must be registered in United States and other countries for full protection Protects the goodwill of the firm Common law countries establish trademark through establishing use and recognition Now in United States you can register a trademark before you begin using it Business Property Protection in International Business

18. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 18  Trademark Protection In 1996, EU opened a centralized office for Trademark registration for member states Provides a one-step registration for all EU countries 1891 Madrid Agreement provides for international registry of trademarks Effective in all member countries for five years 1929 Pan American Convention provides protection for registered trademarks in all member countries  Trademark Protection In 1996, EU opened a centralized office for Trademark registration for member states Provides a one-step registration for all EU countries 1891 Madrid Agreement provides for international registry of trademarks Effective in all member countries for five years 1929 Pan American Convention provides protection for registered trademarks in all member countries Business Property Protection in International Business

19. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 19  Trademark Protection Knock-off goods Goods carrying trademarks that are not produced by the trademark holder Gray market goods Actual trademark goods that are sold without authorization of trademark holder  Trademark Protection Knock-off goods Goods carrying trademarks that are not produced by the trademark holder Gray market goods Actual trademark goods that are sold without authorization of trademark holder Business Property Protection in International Business

20. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 20  Copyrights Berne convention membership Registration in one is registration in all Will be part of WIPO Simultaneous publication in member country is protected International standards vary China’s software piracy China is on trade watch list because so much software is copied  Copyrights Berne convention membership Registration in one is registration in all Will be part of WIPO Simultaneous publication in member country is protected International standards vary China’s software piracy China is on trade watch list because so much software is copied Business Property Protection in International Business

21. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 21 Enforcing Business Property Rights  Product Disparagement Defamation for products/businesses Elements Statement about a business’ reputation, honesty, or integrity that is untrue Publication Statement is directed at business with intent to injure Damages  Product Disparagement Defamation for products/businesses Elements Statement about a business’ reputation, honesty, or integrity that is untrue Publication Statement is directed at business with intent to injure Damages

22. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 22  Case 16.4 Bose Corporation v. Consumers Union of the United States, Inc. (1984) Why is Malice an important part of the case? What classes of speech are excepted from First Amendment protection?  Case 16.4 Bose Corporation v. Consumers Union of the United States, Inc. (1984) Why is Malice an important part of the case? What classes of speech are excepted from First Amendment protection? Enforcing Business Property Rights

23. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 23  Palming Off Company sells product by leading buyers to believe the product is something else Examples: Fake Rolex watches; Cabbage Patch dolls Plaintiff must establish that confusion is likely  Palming Off Company sells product by leading buyers to believe the product is something else Examples: Fake Rolex watches; Cabbage Patch dolls Plaintiff must establish that confusion is likely Enforcing Business Property Rights

24. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 24  Misappropriation Protects business trade secrets such as the customer list Some theft, espionage or bribery must be used to obtain secret information  Misappropriation Protects business trade secrets such as the customer list Some theft, espionage or bribery must be used to obtain secret information Enforcing Business Property Rights

25. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 25 What Can A Business Own? Real Property  The Nature of Real Property Land/surface Air rights/mineral rights Airplane easements Right to separate title and sell to others Air rights can be sold and taxed  The Nature of Real Property Land/surface Air rights/mineral rights Airplane easements Right to separate title and sell to others Air rights can be sold and taxed

26. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 26  The Nature of Real Property Mineral rights Can be sold/transferred separately Oil, gas, coal, geothermal Fixtures Personal property becomes annexed to real property and is sold with the real property Questions for determining whether an item is real or personal property: Trade Fixtures  The Nature of Real Property Mineral rights Can be sold/transferred separately Oil, gas, coal, geothermal Fixtures Personal property becomes annexed to real property and is sold with the real property Questions for determining whether an item is real or personal property: Trade Fixtures What Can A Business Own? Real Property

27. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 27  Interests in Real Property Fee simple Highest form of ownership Life estate Right to use and possession until death Title goes back to grantor or remainderman  Interests in Real Property Fee simple Highest form of ownership Life estate Right to use and possession until death Title goes back to grantor or remainderman What Can A Business Own? Real Property

28. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 28  Interests in Real Property Easement Right to use another’s property for access Negative easement controls how another uses his land so as not to interfere with your use Easements in gross—utility easements Leases Periodic-month-to-month Fixed lease Issues of habitability controlled by statute  Interests in Real Property Easement Right to use another’s property for access Negative easement controls how another uses his land so as not to interfere with your use Easements in gross—utility easements Leases Periodic-month-to-month Fixed lease Issues of habitability controlled by statute What Can A Business Own? Real Property

29. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 29  Transferring Real Property Transfer by deed Warranty deed—highest protection Special warranty or bargain and sale deed Quitclaim deed—no warranties; transfers title if you have title Recording Not required for transfer, but protects against future losses of title and rights  Transferring Real Property Transfer by deed Warranty deed—highest protection Special warranty or bargain and sale deed Quitclaim deed—no warranties; transfers title if you have title Recording Not required for transfer, but protects against future losses of title and rights What Can A Business Own? Real Property

30. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 30  Transferring Real Property Adverse possession Transfer of title through exclusive use and possession for statutorily-mandated period Mortgage-borrow money and pledge land as security Must be in writing Allows lender to take back (foreclose on) property if borrower defaults  Transferring Real Property Adverse possession Transfer of title through exclusive use and possession for statutorily-mandated period Mortgage-borrow money and pledge land as security Must be in writing Allows lender to take back (foreclose on) property if borrower defaults What Can A Business Own? Real Property

31. Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 31  Financing Real Property Purchases Deed of trust—third party holds title until debt is satisfied—like a mortgage  Foreclosure—the process in which the lender sells property to satisfy its debt Both forms of financing documents should be recorded—mortgages and deeds of trust  Financing Real Property Purchases Deed of trust—third party holds title until debt is satisfied—like a mortgage  Foreclosure—the process in which the lender sells property to satisfy its debt Both forms of financing documents should be recorded—mortgages and deeds of trust What Can A Business Own? Real Property