Deck 10: The Legal Environment

Question 1

To Sue or Not to Sue
Jonathan Hoffman got an unpleasant surprise in the spring of 2003. An employee had seen books and flash cards in a local Target that looked suspiciously like those made by his company, School Zone Publishing. Unfortunately, his employee was correct. The composition, fonts, language, and concepts screamed copycat. He turned a book over and it all made sense-the competing publisher was Dogs in Hats.
Peter Alfini started Dogs in Hats just two months before, after resigning as School Zone's vice president of national sales and marketing. As if to pour salt in Hoffman's wounds, Alfini had taken two former School Zone designers with him to Dogs in Hats. Now the competing workbooks and flash cards were beside Hoffman's on the shelves of School Zone's largest customer. Target accounted for about 10 percent of School Zone's sales.
Alfini claims that all of Dogs in Hats products came from his own ideas and resources. He had worked in educational publishing for more than a decade before joining School Zone. But Hoffman could not believe that Alfini had used what he learned at School Zone from product design and marketing to equipment and contacts to launch Dogs in Hats. Hoffman was infuriated.
Hoffman called an emergency meeting of his executive team-which includes his mother, Joan, the company's president and co-founder, and his sister, Jennifer Dexter, the vice president of design and development- and his attorney. They analyzed Alfini's products spread across the table. In one example, a School Zone alphabet flash card featured a drawing of a blond girl in pigtails with green bows and a yellow shirt collar and with a blue capital G on the card's flip side. A Dogs in Hats alphabet flash card was nearly identical, except for the girl's hair color, which was brown. They all reached the same conclusion: School Zone's intellectual property had been stolen. The executive team had little choice but to take Dogs in Hats to court.
Summer sales data confirmed Hoffman's worst fears. School Zone revenue fell by 23 percent over one six-week period, when Dogs in Hats products were side by side at Target. Hoffman became a man obsessed with preparing the legal case against Alfini. When he suspected one of his salespeople of passing company information to Alfini, he didn't know who he could trust. In contrast to his normal management style, he limited access to the copy room and banned employees from the office on weekends and after hours. But he was doing what he had to do.
In August 2003, School Zone filed a complaint in federal district court in western Michigan listing 84 allegations against Dogs in Hats. Hoffman was seeking payment for damages and attorneys' fees. Furthermore, he was demanding that Alfini destroy all materials that infringed on School Zone's copyrighted and trademarked material. In Dogs in Hats' response to the complaint, Alfini denied most of the allegations, conceding only that he had hired former employees of School Zone and had re-entered School Zone's property after resigning.
The extensive discovery process lasted for more than two years. School Zone had spent close to $200,000 on legal filings and attorneys' fees. Joan Hoffman and Dexter were begging Hoffman to drop the case. But Jonathan was haunted by the thought of what his father would have done. Hoffman's father Jim started School Zone in 1979 and had passed away a few months before the Alfini affair began. "Jim Hoffman would have fire in his eyes," his son believed. The company's attorneys had warned that if School Zone did not defend its marks now, it would be increasingly more difficult to do so in the future. So Hoffman wouldn't drop the case.
In March 2005, a judge magistrate sent the parties into mediation. Neither side should have been surprised; western Michigan courts regularly seek alternative means of resolving disputes over litigation. But Hoffman now faced a dilemma: whether to compromise via mediation and put an end to the case or to hold out for a shot at total victory in court.
Hoffman's gut told him to litigate aggressively. But do you think that was a smart move

Answer 1

Case summary:
Company JH, manufacturer of books and flash cards, found that similar products are available in the market by another manufacturer called Company PA. JH decided to file a suit against the manufacturer of similar products Company PA. Company PA shared 23% of revenue and market share of Company JH in 6 weeks time.
To prove that the books and flash cards of Company PA are similar, Company JH spent around $200,000. The executives of the Company PA requested Company JH to drop the case. However, he continued the case to protect his intellectual property right against the books and flash cards. As a final step, to resolve the issue, the court ordered for mediation.
Statement:
"JH decided to treat the litigation aggressively"
Justification:
Generally, any legal litigation should be supported by documents and proofs to withstand the justice in the case. In the above case, Company JH fails to collect proofs and evidences that prove that designs and patterns of the Company PA are similar to that of Company JH.
Instead, Company JH would have observed internal and external environment of the company to identify the leak area of design and patterns of books and flash cards. Then, he could have filed a suit against Company PA to prove those designs are similar to their products. This would have saved the cost of investigation, $200,000, to Company JH.

Question 2

Compliance with government regulations is sometimes burdensome for small business owners; what can they (and you) do to change the laws and regulations that influence small business in order to lessen the burden

Question 3

Are the antitrust laws established in the late 1800s and early 1900s still pertinent in the twenty-first century Why or why not

Question 4

The stories of companies like KFC, Coca-Cola, and McDonald's guarding their recipes for batter, syrup, and hamburger sauce are legendary. Triple-locked safes, binding contractual agreements, spies, and counterspies are all involved. A company's trade secrets are worth significant (sometimes staggering) amounts of money. Like any good secret, they are known to only a handful of people.
Many assets, such as chemical formulas or specific designs, are protected by patents. In exchange for the legal protection afforded by a patent, the patent holder must surrender the leverage of secrecy. That's because part of the patent application process involves a full explanation of the process or product. The PTO publishes all patent applications within 18 months of their filing. Protecting a trade secret is complicated by the fact that, unlike patents, copyrights, and trademarks, trade secrets do not fall under federal jurisdiction. They are regulated by individual state laws. Trade secrets must be proved to be secret to qualify for protection. At the very minimum, the owner must prove that procedures were in place to protect the information prior to any legal challenge.
Imagine that you have developed a unique formula for a soft drink that, upon entering a person's mouth, analyzes the drinker's DNA to determine his favorite flavor, and then the drink instantly realigns its chemical composition to become that flavor. Write a two-page paper describing how you can best protect this trade secret. Will you patent it Why or why not

Question 5

To Sue or Not to Sue
Jonathan Hoffman got an unpleasant surprise in the spring of 2003. An employee had seen books and flash cards in a local Target that looked suspiciously like those made by his company, School Zone Publishing. Unfortunately, his employee was correct. The composition, fonts, language, and concepts screamed copycat. He turned a book over and it all made sense-the competing publisher was Dogs in Hats.
Peter Alfini started Dogs in Hats just two months before, after resigning as School Zone's vice president of national sales and marketing. As if to pour salt in Hoffman's wounds, Alfini had taken two former School Zone designers with him to Dogs in Hats. Now the competing workbooks and flash cards were beside Hoffman's on the shelves of School Zone's largest customer. Target accounted for about 10 percent of School Zone's sales.
Alfini claims that all of Dogs in Hats products came from his own ideas and resources. He had worked in educational publishing for more than a decade before joining School Zone. But Hoffman could not believe that Alfini had used what he learned at School Zone from product design and marketing to equipment and contacts to launch Dogs in Hats. Hoffman was infuriated.
Hoffman called an emergency meeting of his executive team-which includes his mother, Joan, the company's president and co-founder, and his sister, Jennifer Dexter, the vice president of design and development- and his attorney. They analyzed Alfini's products spread across the table. In one example, a School Zone alphabet flash card featured a drawing of a blond girl in pigtails with green bows and a yellow shirt collar and with a blue capital G on the card's flip side. A Dogs in Hats alphabet flash card was nearly identical, except for the girl's hair color, which was brown. They all reached the same conclusion: School Zone's intellectual property had been stolen. The executive team had little choice but to take Dogs in Hats to court.
Summer sales data confirmed Hoffman's worst fears. School Zone revenue fell by 23 percent over one six-week period, when Dogs in Hats products were side by side at Target. Hoffman became a man obsessed with preparing the legal case against Alfini. When he suspected one of his salespeople of passing company information to Alfini, he didn't know who he could trust. In contrast to his normal management style, he limited access to the copy room and banned employees from the office on weekends and after hours. But he was doing what he had to do.
In August 2003, School Zone filed a complaint in federal district court in western Michigan listing 84 allegations against Dogs in Hats. Hoffman was seeking payment for damages and attorneys' fees. Furthermore, he was demanding that Alfini destroy all materials that infringed on School Zone's copyrighted and trademarked material. In Dogs in Hats' response to the complaint, Alfini denied most of the allegations, conceding only that he had hired former employees of School Zone and had re-entered School Zone's property after resigning.
The extensive discovery process lasted for more than two years. School Zone had spent close to $200,000 on legal filings and attorneys' fees. Joan Hoffman and Dexter were begging Hoffman to drop the case. But Jonathan was haunted by the thought of what his father would have done. Hoffman's father Jim started School Zone in 1979 and had passed away a few months before the Alfini affair began. "Jim Hoffman would have fire in his eyes," his son believed. The company's attorneys had warned that if School Zone did not defend its marks now, it would be increasingly more difficult to do so in the future. So Hoffman wouldn't drop the case.
In March 2005, a judge magistrate sent the parties into mediation. Neither side should have been surprised; western Michigan courts regularly seek alternative means of resolving disputes over litigation. But Hoffman now faced a dilemma: whether to compromise via mediation and put an end to the case or to hold out for a shot at total victory in court.
Should he settle Or should he press his case before a judge

Question 6

Think of transactions you have entered into in the past: With whom were you agreeing, what was the agreement about, and what were the terms When have you had a written contract with someone When have you had an oral contract Use several examples to analyze the process of buying a car, accepting a job, and ordering a pizza. What elements of contract law applied in each case

Question 7

How does the Federal Trade Commission protect consumers

Question 8

To Sue or Not to Sue
Jonathan Hoffman got an unpleasant surprise in the spring of 2003. An employee had seen books and flash cards in a local Target that looked suspiciously like those made by his company, School Zone Publishing. Unfortunately, his employee was correct. The composition, fonts, language, and concepts screamed copycat. He turned a book over and it all made sense-the competing publisher was Dogs in Hats.
Peter Alfini started Dogs in Hats just two months before, after resigning as School Zone's vice president of national sales and marketing. As if to pour salt in Hoffman's wounds, Alfini had taken two former School Zone designers with him to Dogs in Hats. Now the competing workbooks and flash cards were beside Hoffman's on the shelves of School Zone's largest customer. Target accounted for about 10 percent of School Zone's sales.
Alfini claims that all of Dogs in Hats products came from his own ideas and resources. He had worked in educational publishing for more than a decade before joining School Zone. But Hoffman could not believe that Alfini had used what he learned at School Zone from product design and marketing to equipment and contacts to launch Dogs in Hats. Hoffman was infuriated.
Hoffman called an emergency meeting of his executive team-which includes his mother, Joan, the company's president and co-founder, and his sister, Jennifer Dexter, the vice president of design and development- and his attorney. They analyzed Alfini's products spread across the table. In one example, a School Zone alphabet flash card featured a drawing of a blond girl in pigtails with green bows and a yellow shirt collar and with a blue capital G on the card's flip side. A Dogs in Hats alphabet flash card was nearly identical, except for the girl's hair color, which was brown. They all reached the same conclusion: School Zone's intellectual property had been stolen. The executive team had little choice but to take Dogs in Hats to court.
Summer sales data confirmed Hoffman's worst fears. School Zone revenue fell by 23 percent over one six-week period, when Dogs in Hats products were side by side at Target. Hoffman became a man obsessed with preparing the legal case against Alfini. When he suspected one of his salespeople of passing company information to Alfini, he didn't know who he could trust. In contrast to his normal management style, he limited access to the copy room and banned employees from the office on weekends and after hours. But he was doing what he had to do.
In August 2003, School Zone filed a complaint in federal district court in western Michigan listing 84 allegations against Dogs in Hats. Hoffman was seeking payment for damages and attorneys' fees. Furthermore, he was demanding that Alfini destroy all materials that infringed on School Zone's copyrighted and trademarked material. In Dogs in Hats' response to the complaint, Alfini denied most of the allegations, conceding only that he had hired former employees of School Zone and had re-entered School Zone's property after resigning.
The extensive discovery process lasted for more than two years. School Zone had spent close to $200,000 on legal filings and attorneys' fees. Joan Hoffman and Dexter were begging Hoffman to drop the case. But Jonathan was haunted by the thought of what his father would have done. Hoffman's father Jim started School Zone in 1979 and had passed away a few months before the Alfini affair began. "Jim Hoffman would have fire in his eyes," his son believed. The company's attorneys had warned that if School Zone did not defend its marks now, it would be increasingly more difficult to do so in the future. So Hoffman wouldn't drop the case.
In March 2005, a judge magistrate sent the parties into mediation. Neither side should have been surprised; western Michigan courts regularly seek alternative means of resolving disputes over litigation. But Hoffman now faced a dilemma: whether to compromise via mediation and put an end to the case or to hold out for a shot at total victory in court.
Put yourself in Hoffman's place. What would you do

Question 9

What rights does owning a patent protect How do you get this protection

Question 10

What tests must an invention pass to receive a patent

Question 11

What is the difference between a copyright and a trademark Between a trademark and a brand

Question 12

Name and explain the four elements that a contract must have to be valid.

Question 13

List and briefly explain the laws that protect people in the workplace.

Question 14

How are liquidation and reorganization used as different approaches to bankruptcy What chapters of bankruptcy law accomplish these objectives

Question 15

What licenses are required by the owner of a small business

Question 16

What risk does an inventor assume when filing for a patent for an invention