A state legislature enacts a statute that prohibits the ...



Business Law 201 Spring 2009

Professor Isler

Extra Credit Assignment

Directions: Read the question carefully and answer only what is asked. No points will be awarded for extraneous discussion. Please also note the following:

1. This assignment may not exceed three pages;

2. The assignment must be typed;

3. The assignment is due no later than March 26, 2009;

4. The assignment may not be e-mailed to me or the TA;

5. The assignment is worth 2.5 points; and

6. Place only your ID numbers

Question 1

American Ingenuity, Inc. (AI), invents, develops, and distributes a new snowboard. AI does not apply for a patent for its product. Best Copy Corporation buys an AI snowboard, analyzes it, and produces and sells a "clone" of the product under the Best name. AI files a suit against Best, alleging violations of intellectual property law. On what basis would Best prevail?

Question 1 Answer

Best would prevail because it has not violated any law with respect to AI. Copying another's product is not illegal unless a trademark, a patent, a copyright, or a trade secret is infringed. Here, AI does not patent its product, so there is no violation of the patent laws, and trademark and copyright protection is not otherwise available. To make a lawful copy, a party may use "reverse engineering," as Best does in this question. Thus, there is no violation of the law protecting trade secrets, because there is no misappropriation or other improper action on the part of Best, which uses independent means to discover the secret of AI's product.

Question 2

Max plots a new Batman adventure and carefully and skillfully imitates the art of DC Comics to create an authentic-looking Batman comic. Max is not affiliated with the owners of the copyright to Batman. Can Max publish the comic without infringing on the owners' copyright?

Question 2 Answer

Probably not. The idea of a superhero crimefighter attired in tights and cape is not copyrightable, but the particular way in which an idea is expressed (in this case, in the character of Batman) is copyrightable and may not be freely used by others. When the form or expression of an idea is copied, an infringement of copyright occurs. The reproduction does not have to be exactly the same as the original nor reproduce the original in its entirety to constitute infringement.

Question 3

Fred, a successful stockbroker, gives a lecture about investing. Some of the persons who attend the lecture form Gain & Profit, an investment club, and ask Fred to advise them. Gain & Profit allows Fred to set up an account for the club with a brokerage firm and gives Fred control of the account, but does not authorize Fred to withdraw funds for his own benefit. Fred uses the money in the Gain & Profit account to repay personal loans. Charged with embezzlement, Fred defends his actions on the ground that he intended to repay the club. Is Fred guilty of embezzlement? Why or why not?

Question 3 Answer

The answer is yes, Fred is guilty of embezzlement. When a person entrusted with another's money or property and fraudulently appropriates it, the person has committed embezzlement. Force or fear is not required, and the money or property does not need to be physically taken from another's possession. The intent to repay the money or return the property is not a valid defense. Here, Fred had control of the money in the Gain & Profit account and withdrew it without permission-fraudulently appropriated it-for his own benefit. Fred's intent to repay the amount does not constitute a sufficient defense to the crime of embezzlement.

Question 4

Ed, a businessperson, is a friend of Fran, the owner of a candy store. Every day, Ed spends five minutes in Fran's candy store, looking at the candy and usually buying one or two candy bars. One afternoon, Ed goes into the store, looks at the candy, and picks up a $1 candy bar. Ed waves the candy at Fran without saying a word and walks out. Is there a contract? If so, how would it be classified in terms of formation, performance, and enforceability?

Question 4 Answer

The facts presented here indicate the presence of all the elements necessary for a valid contract. There are a serious offer and acceptance, consideration is exchanged (a candy bar for $1), both parties have capacity, the selling of the candy is legal, and there is no particular form required for this type of contract. Thus, a contract exists and for the reasons given here is classified as valid, enforceable, and informal. In addition, this is a classic case of an implied-in-fact contract. There is no explicit agreement between the parties. Rather, an agreement is implied by Ed's action of waving the candy bar and by his past conduct. By his conduct Ed is telling Fran that he will pay for the candy later. The contract is also bilateral (as opposed to unilateral), because Fran impliedly promises to sell the candy to Ed in exchange for Ed's implied promise to pay. The contract is partially executory, as Ed has engaged to pay for the candy in the future. Because the contract is for a legal purpose, both parties have capacity, and reality of consent is not an issue, the contract is neither voidable nor void

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