Learning Objectives:

1. Distinguish a healthy and bad

competition.
2. Examine different kinds of competitors
and the competencies needed to play
fairly the game in competition.
 Intellectual property constitutes
those original creative works that
have economic value and are
protected by law.
1. They reward the creators of original
works by preventing others from
copying, performing or distributing
those works without permission; and

2. They also provide incentives for people

to produce scientific and creative works
that benefit the society at large.
 Ernie Baron’s inventions are patented.
 A book is copyrighted.
 Nike’s big check with the words “Just Do
It” is a trademark.
 Protects inventions that demonstrate
technological progress.
 Protects a variety of literary and artistic
works, including paintings, sculpture,
prose, poetry, plays, musical compositions,
dances, photographs, motion pictures,
radio and television programs, sound
recordings, and computer software
programs.
 Protects words and symbols that serve to
identify different brands of goods and
services in the marketplace.
 Nike’s big check with the words “Just Do
It” is a trademark.
 Protects confidential information that
belongs to a business and gives that
business a competitive advantage.
 Example: the ever-confidential formula
for mixing the soft drink flavor of Coca-
Cola is a top trade secret protected by
intellectual property laws.
 Protects the right to use one’s own name
or likeness for commercial purposes.
 Example: famous athletes like Michael
Jordan and Tiger Woods profit a million
U.S. dollars or more each day by using
their names to endorse Nike a product.
 Most intellectual property rights expire after
specified period.
 This permits the rest of society to benefit from
the work after the creator has had an
opportunity to earn a quite, fair, just and
reasonable reward.
 Example: after the inventor of a patented
telecommunications device has profited from a
specified period, anyone may manufacture that
same device without paying the inventor
royalties, thereby encouraging competition that
allows others to benefit from the invention as
well.
 The one exception to limited periods of
intellectual property rights is in the field
of trademark law. Trademark rights
never expire, so long as merchant
continues to use the trademark to
identify a given product.
 In the United States and other countries,
intellectual property has gained increased
protection with advances in digital technology
and global trade. However, some countries
tolerate the widespread sale of counterfeit
versions of intellectual property products, such
as software, movies on videotape, brand name
athletic goods, and even patented medicines.
The expected outcome consists of violations
and violations of intellectual property rights
that cost the owners of the rights billions of
dollars each year.
 This costs stem from lost royalties and
sales in markets dominated by counterfeit
products. In an attempt to reverse the
situation, most nations of the world signed
the Agreement of Trade Related Aspects of
Intellectual Property Rights (TRIPS) in 1994.
 Administered by the World Trade
Organization (WTO), TRIPS strengthened
legal protection for intellectual property
around the world.
 The United States has also attempted to
negotiate direct agreements with
countries such as China, the sleeping
economic dragon of Asia, where
counterfeiting has been particularly
extensive.
 means any FRAUDULENT, deceptive, or dishonest
trade practice that is prohibited by STATUTE,
regulation, or the COMMON LAW.
 It consists of a body of related doctrines that
gives rise to several different causes of actions,
including:
 (1) actions for INFRINGEMENT of PATENTS,
TRADEMARKS, or copyrights;
 (2) actions for wrongful APPROPRIATION of trade
names, TRADE DRESS, and trade secrets; and
 (3) actions for publication of defamatory, false,
or misleading representations.
 First, it seeks to protect the economic, intellectual, and
creative investments made by businesses in distinguishing
themselves and their products.
 Second, the law seeks to preserve the good will that
businesses have established with customers over time.
 Third, the law seeks to deter businesses from appropriating
the good will of their competitors.
 Fourth, the law seeks to promote clarity and stability by
encouraging customers to rely on a merchant's TRADE
NAME and reputation when evaluating the quality and prices
of rival products.
 Fifth, the law of unfair competition seeks to increase
competition by providing businesses with incentives to offer
better goods and services than others in the same field.
 Before a business can establish commercial relations with
customers and other businesses, it must create an identity
for itself, as well as for its goods and services. Economic
competition is based on the premise that consumers can
intelligently distinguish between products offered in the
marketplace. Competition is made difficult when rival
products become easily mistaken for each other, since one
business may profit from the sale of a product to
consumers who believe they are buying a rival's product.
Part of a business's identity is the good will it has
established with customers, while part of a product's
identity is the reputation it has earned for quality and
value. As a result, businesses spend tremendous amounts
of resources identifying their goods, distinguishing their
products, and cultivating good will.
 The four principal devices businesses use to
distinguish themselves are trademarks,
service marks, trade names, and trade dress.

 Trademarks
 consist of words, logos, symbols, slogans,
and other devices that are affixed to goods
for the purpose of signifying their origin and
authenticity to the public.
 Trade names
 are used to identify CORPORATIONS,
partnerships, sole proprietorships, and other
business entities.
 A trade name may be the actual name of a
business that is registered with the government,
or it may be an assumed name under which a
business operates and holds itself out to the
public.
 For example, a husband and wife might register
their business as "Sam and Betty's Bar and Grill,"
while doing business as "The Corner Tavern."
Both names are considered trade names under
the law of unfair competition.
 Trade dress
 refers to a product's physical appearance,
including its size, shape, texture, and design.
Trade dress can also include the manner in
which a product is packaged, wrapped,
presented, or promoted. In certain
circumstances particular color combinations
may serve as trade dress. For example, the
trade dress of Chevron Chemical Company
includes the red and yellow color scheme
found on many of its agricultural products.
Chevron Chemical Co., v. Voluntary
Purchasing Groups, Inc., 659 F.2d 695 (5th
Cir. 1981).
 Note: When a business uses a trademark,
service mark, trade name, or trade dress that
is deceptively similar to competitor's, a cause
of action for infringement of those
intellectual property interests may exist. The
law of unfair competition forbids companies
from confusing customers by using
identifying trade devices that make their
businesses, products, or services difficult to
distinguish from others in the market.
 The intangible assets of a business include not
only its trade name and other identifying trade
devices but also its inventions, creative works,
and artistic efforts. Broadly defined as trade
secrets, this body of commercial information may
consist of any formula, pattern, process,
program, tool, technique, mechanism, or
compound that provides a business with the
opportunity to gain an advantage over a
competitor. Although a trade secret is not
patented or copyrighted, the law of unfair
competition awards individuals a property right
in any valuable trade information they discover
and attempt to keep secret through reasonable
steps
 The owner of a trade secret is entitled to its
exclusive use and enjoyment. A trade secret is
valuable not only because it enables a company
to gain advantage over a competitor, but also
because it may be sold or licensed like any other
property right. On the other hand, commercial
information that is revealed to the public, or at
least to a competitor, retains limited commercial
value. Consequently, courts vigilantly protect
trade secrets from disclosure, appropriation, and
theft. Businesses may be held liable for any
economic injuries that result from their theft of a
competitor's trade secret, as may other
opportunistic members of the general public.
Employees may be held liable for disclosing their
employer's trade secrets, even if the disclosure
occurs after the employment relationship has
ended.
 Valuable business information that is disclosed to the
public may still be protected from infringement by
COPYRIGHT and PATENT law.
 Copyright law gives individuals and businesses the
exclusive rights to any original works they author,
including movies, books, musical scores, sound
recordings, dramatic creations, and pantomimes.
 Patents give individuals and businesses the exclusive
rights to make, use, and sell specific types of
inventions, such as mechanical devices,
manufacturing processes, chemical formulas, and
electrical equipment. Federal law grants these
exclusive rights in exchange for full public disclosure
of an original work or invention. The inventor or
author receives complete legal protection for his or
her intellectual efforts, while the public obtains
valuable information that can be used to make life
easier, healthier, or more pleasant.
 Yes.
 Example:
 With today’s instantaneous communication
and speedy travel, it is possible to arrange for
the transfer of stolen art and then move
quickly over great distances. In such a world,
illicit trade in stolen art is hidden within a
much larger legitimate art market that moves
faster and is more international than ever
before.
 Yes
 Example:
 Internet hijacking (piracy)
 Intangible work such as text, music, and
pictures can be copied more easily and are
cheaper when it is posted on the internet.
 Bootlegging, plagiarism (or making a copy of
the text of a book), or performing a play
without permission would be infringements.
 An infringement of a copyright is the
reproduction, distribution, performance, or
display of any copyrighted work without
permission of the copyright owner or without
compulsory license.
 Infringement does not necessarily require
absolute similarity to the copyrighted work.
 A patent works like a protective shield that
drives our investors and scientists to go
ahead, with confidence and boldness, in
their quest for scientific discoveries and
technological advancement, which today are
considered necessities for national survival
and global competitiveness.
 Patent is a legal document granted by the
government giving the inventor an exclusive
right to make, use, and sell an invention for a
specific number of years. In the U.S., patents last
for 20 years.
 The goal of the patent system is to encourage
inventions to advance the state of technology by
awarding them specific rights to benefit from
their inventions
 Patent protection has great economic importance
to a number of industries that rely on
technological innovation to remain competitive,
such as the chemical, pharmaceutical, and
computer industries.
 A patent works like a protective shield
that sends go-signal to drive our
inventors and scientists to go ahead,
with confidence and boldness, in their
quest for scientific discoveries and
technological advancement.
 Without patent, no new invention is
possible.
 Yes.
 No one can obtain a patent on a law of
nature or a scientific principle even if
he/she is the fist to discover it.
For example, Isaac Newton could not have
obtained a patent on the laws of gravity.
 Trade secrets are information and not skills.
The skill and training that an employee
acquired and developed from his/her work
experience in the company are not trade
secrets. In other words, his/her technical
skills which he/she personally developed
through time cannot be considered
property of the company.