© 2013 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Real, Personal and...

© 2013 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 8

Real, Personal and Intellectual Property

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Copyright © 2016 McGraw-Hill Education. All rights reserved.


Chapter 8 Case Hypothetical and Ethical Dilemma

Timothy Ackers is a “stay-at-home dad” living in Falling Waters subdivision in Olympia, Washington. Timothy’s wife Julia earns a six-figure income at the largest accounting firm in Olympia, and both husband and wife feel fortunate that

one of them is able to stay at home with their two young children, four-year-old Hope and two-year-old Matthew.

Timothy is part of the community watch organization in his subdivision, and as a stay-at-home parent, he has ample opportunity to observe the daily neighborhood “goings-on.” For the past six months, Timothy has noticed heightened activity at the house down the street owed by the Penningtons (Clara and Jonathan;) approximately eight to twelve cars come and go from the Pennington driveway every day, and four months ago, handicapped access ramps were

installed at the front and back entrances to the home. On several occasions, Timothy has seen elderly people sitting in wheelchairs in the Penningtons’ front yard.

Curious, Timothy knocks on the front door of the Pennington home one Monday morning. Clara Pennington answers. Ackers states “Good morning, Clara. I know the old saying that ‘curiosity killed the cat,’ but I can’t help myself. What’s

going on at your house? Why are all the elderly people here? I though both of your parents were deceased, and I thought Jonathan’s parents had ‘passed on’ as well. Are these people related to you?”

Clara responds: “Timothy, Jonathan and I decided six months ago to open up an elderly care facility. We didn’t have the money to purchase a separate building, so we decided to care for the elderly in our home. This gives me a

wonderful opportunity to stay at home, and I wouldn’t be able to do that just on Jonathan’s income. Plus, think of the advantages for our clients. Isn’t this so much better than a regular rest home? These folks have cried tears of joy, and

they thank me every day for providing them the quality of care they had hoped for in their ‘golden years.’”

Falling Waters subdivision is zoned exclusively residential. Should Timothy report the Penningtons’ zoning violation? What ethical issues are involved in Timothy’s decision?

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Chapter 8 Case Hypothetical and Ethical Dilemma

John “Jack” Franklin and Ruby Huss are next-door neighbors. Jack’s narrow road from the state-maintained highway to his house is approximately two-tenths of one (1) mile long, and

runs along the edge of his property. On the left side of Jack’s road is a drainage ditch running the length of his road, while on the right side is the property line dividing the two neighbors’

landholdings. One day, Ruby was out gardening (she loved to cultivate roses) and Jack approached her with the following question “Ruby, I am going to have my road graveled, and I would like lay enough gravel to expand my road about four feet in width. I can’t expand it on the left side because of the drainage ditch, so I was wondering if you would mind if I widened the road on the right side. It sure would mean a lot to me, since my road is so narrow right

now that I have a hard time driving my truck up to the house.” This meant that the gravel would extend approximately four feet onto Ruby’s property.

Ruby believed in the power and value of friendly neighborly relations. She responded, “Yes Jack, you may certainly do that. That gravel won’t do me or my property any harm. Tell Ann

and the kids (Jack’s wife and children) I said hello when you get back to the house.”Based on the facts presented, is Ruby’s four-foot-wide strip of land subject to Jack’s adverse possession of it? If the gravel remains on this strip of land for the statutorily-prescribed period

of time for adverse possession (twenty years in many states), will Jack become its owner?

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Chapter 8 Case Hypothetical

Jason Binghamton is a huge fan of the Montana State Teacher’s College (M.S.T.C.) men’s basketball team, nicknamed the “Flying Elk.” The M.S.T.C. team has enjoyed the best season in its 52-year history, and they are a

favorite to win the Lewis and Clark League (L.C.L.) men’s basketball title. In fact, the team has advanced to the L.C.L. men’s basketball tournament championship, a contest against the Billings Technical College “Fighting Prairie Dogs.”

Jason drives to the championship game at Lewis and Clark Stadium in Helena, Montana. He approaches the stadium parking lot, and pays the attendant $25 for parking; in return, the attendant hands Jason a parking stub. On the back of the stub is the following language: “Lewis and Clark Stadium and the city of Helena shall not be held liable in any

way for loss of or damage to visitor’s property, including loss of or damage to automobiles parked in the stadium parking lot. In accepting this parking privilege, the patron agrees that he will hold harmless Lewis and Clark Stadium, and the city of Helena, for such damage.” Jason does not read the language on the parking stub; instead, he places

the ticket on his dashboard, parks his car in area B1 of the lot, locks the car doors and puts his keys in his pocket, and heads to the stadium.

By all accounts, the game is the proudest moment in the history of the Flying Elk. They defeat the Fighting Prairie Dogs 82 to 58, and Binghamton leaves the stadium ecstatic, knowing he attends a college of “winners.”

Upon returning to his car, Jason’ happiness deflates to consternation and anger. His windshield has been shattered by a stuffed and mounted prairie dog that now lays upside-down in his driver’s seat, along with countless shards of broken glass. It is obvious to Jason that the “deed was done” by some disgruntled Fighting Prairie Dog fan, but that

individual is probably well on his way back to Billings by now, and he will never be able to locate the criminal.

Jason files suit against Lewis and Clark Stadium and the city of Helena, Montana, seeking to hold the defendants “jointly and severally” liable for the damage to his automobile. Will he win the lawsuit?

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The American Pistol Association (APA), a gun-rights activist organization, is headquartered in Laramie, Wyoming. The APA held a ceremonial luncheon at its headquarters, and invited a host of Second Amendment advocates, including

the former governor of Wyoming, Sara M. Caine. Dubbed “The Renegade” by her avid supporters, most believed that Sara would make a presidential run in the next election. Known more for her public proclamations than her actual governing acumen, Sara is most-remembered for leading a gun-rights demonstration in Wyoming’s state capital, Cheyenne, at which time she held her Chesterfield rifle above her head and announced that before government

officials took her gun away, they would first have to deal with her “sharp, red fingernails!”

As a key part of the ceremony, the APA honored Sara M. Caine’s efforts to uphold the Second Amendment. The APA’s president, Charles T. Hess, presented Sara with a “Bronco 55” pistol, proudly manufactured in the United States

of America. Sara enthusiastically accepted the Bronco 55. After the ceremony, Charles approached Sara and informed her that although his organization had planned to get the gun engraved with her initials on each side of its ivory handle before the presentation, the person they had chosen to do the work, Edward “Wild Eddie” Cody, had

been away on vacation. He further told Sara that if she would hand the gun to him, he would get Wild Eddie to engrave the gun when he returned from vacation, and return it to her as soon as possible. Sara happily agreed, and

transferred the gun to Charles.

Charles put the gun in his office desk at APA headquarters. That night, an unknown perpetrator burglarized APA headquarters, taking only the Bronco 55. Charles suspected the thief was Jean Gigot, a vocal, well-known opponent

of gun rights who had moved from Dijon, France to Laramie several months ago. During his presentation of the Bronco 55 to Sara, Charles had observed Jean lurking in the back of the dining room, furtively and feverishly pacing

back and forth.

From a legal standpoint, must The American Pistol Association or Charles T. Hess answer to Sara M. Caine for the theft of the gun?

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Bernie Sides is a restaurant entrepreneur and an avid Civil War buff. Over the years, Bernie has collected a “treasure trove” of Civil War memorabilia, and he decides to combine his passions for restaurant ownership and Civil War history by opening a new restaurant called the “Hardtack Café” (“hardtack” is a hard,

unsalted biscuit used as a staple for Civil War army rations.) Sides has devised a logo for the restaurant, and the logo (a yellow circle with red lettering for the

name of the restaurant) bears a striking resemblance to a certain “rock and roll” themed restaurant of a similar name and logo.

Upon discovering the existence of the new restaurant, attorneys for the rock and roll restaurant immediately sue, requesting 1) a temporary injunction (a

court order mandating that the Hardtack Café cease and desist from using its name and logo, pending the outcome of the litigation; 2) a permanent injunction (a court judgment that the Hardtack Café forever cease and desist from using

its name and logo;) and 3) money damages representing all profit the Hardtack Café has earned during its existence.

Who wins, and why?6



Davidson’s Microbrew, Inc. is a small beer manufacturer located in Denver, Colorado. The owner of Davidson’s Microbrew, Benjamin Davidson, takes great pride in offering the public a variety of beers, including a particular one that is currently the subject of litigation. “Barley-Davidson” is a dark brew closely resembling motor oil in its appearance. For the past three (3) years, Barley-Davidson has

been sold in orange cans. There is a “bar-and-shield” logo on the can’s front closely resembling the iconic Harley-Davidson logo; in the “bar” portion of the logo, the “Barley-Davidson” name appears,

and the words “Asphalt-Dark Beer” appear in the “shield” portion of the logo. On the back of the can, in small but legible print, the following disclaimer appears: “Not affiliated with Harley-Davidson Motor

Company.” Barley-Davidson has become Davidson’s Microbrew’s most popular product, selling approximately 250,000 units per year.

In its lawsuit against Davidson’s Microbrew, Harley-Davidson has requested an injunction (temporary, pending litigation, and permanent, post-litigation) and money damages based on all profits generated by the defendant in its sale of Barley-Davidson. Davidson’s Microbrew’s defense is based on four (4) contentions: first, its product (beer) is distinguishable from Harley-Davidson’s product (motorcycles); second, its product disclaimer (indicating its non-affiliation with Harley-Davidson Motor Company) is displayed on every can of Barley-Davidson it sells; third, the “Barley” portion of its dark beer’s name

has nothing to do with Harley-Davidson; and four, the “Davidson” portion of the beer’s name is proudly associated with the name of the microbrew’s company, and the last name of the microbrew’s

founder himself.

What is the likely result of the litigation?

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Real Property

Definition: Land and everything permanently attached to it

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Extent of Land Ownership

•Surface Rights

•Airspace

•Water Rights

•Mineral Rights (Subsurface Rights)

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Interests In Real Property•Fee Simple Absolute: Right to possess for life and devise (will) to heirs upon death; the most complete interest in real property

•Conditional Estate: Interest comparable to fee simple absolute, except that interest will terminate on occurrence/non-occurrence of a specified condition

•Life Estate: Granted for lifetime of an individual; right to possess property terminates upon life estate holder’s death, and property will pass to another party designated by original grantor

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Interests In Real Property (Continued)

•Future Interest: Person’s right to property ownership and possession in the future

•Leasehold Estate: Right to possess (but not own) property for a stipulated period of time

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Nonpossessory Estates•Easement: Irrevocable right to use some part of another’s land for a specific purpose, without taking anything from the land

-Example: Utility easement

•Profit: Right to enter another’s land and take part of the land, or take away a product of it

-Example: Right to harvest timber

•License: Temporary, revocable right to use another’s property

-Example: Theatre ticket12


Voluntary Transfer of Real Property

Requires:

•Execution—preparation and signing of deed;

•Delivery—of deed to grantee, with intent of transferring ownership to grantee;

•Acceptance—grantee’s expression of intent to possess and own property

•Recording—filing deed with appropriate county office to protect interests of grantee

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Types of Involuntary Transfers:

•Adverse Possession: When person openly treats real property as his/her own, without protest/permission from real owner, for statutorily-established period of time, ownership is automatically vested in that person

•Condemnation: Government acquires ownership of private property for “public use” for “just compensation” over the protest of the property owner

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Personal Property

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Personal Property

Definition: All property that is not land or not permanently affixed to land

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Types of Personal Property

• Tangible: Property identified by the senses (Examples include furniture and automobiles)

• Intangible: Property not identified by the senses (Examples include bank accounts and stocks)

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Voluntary Transfer of Property

• Purchase: Buyer gives consideration to seller in exchange for title to property

• Gift: Donee gives no consideration to donor in exchange for title to property

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Elements Required for Valid Gift

• Delivery

• Donative Intent

• Acceptance

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Involuntary Transfer of Personal Property

• Abandoned Property: Property the owner has discarded

• Lost Property: Property the owner has unknowingly or accidentally left somewhere

• Mislaid Property: Property the owner has intentionally placed somewhere but forgotten its location

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Intellectual Property

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Intellectual Property

Definition: Property that comes from creativity

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Types of Intellectual Property•Trademarks

•Trade Dress

•Copyrights

•Patents

•Trade Secrets23


Trademark•Definition: A distinctive mark, word, design, picture, or arrangement used by seller in conjunction with a product and tending to cause consumer to identify product with producer

•Mark must be registered with U.S. Patent and Trademark Office; mark must be renewed between fifth and sixth years, and after initial renewal, every 10 years

•Remedies for mark infringement:

-Money Damages

-Injunction24


Trade Dress

•Refers to the overall appearance and image of a product

•Entitled to same protection as trademark

•Main focus of trade dress infringement case is whether there is likely to be consumer confusion in the comparison of two products

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Copyright•Protects the expression of a creative idea

•Examples of copyrighted material include books, periodicals, musical compositions, plays, motion pictures, sound recordings, lectures, works of art, and computer programs

•Criteria for a work to be copyrightable:

-Fixed (Set out in a tangible medium of expression)-Original-Creative

•Remedies for copyright infringement:

•Money Damages

•Injunction 26


The “Fair Use” Doctrine

Provides that a portion of copyrighted work may be reproduced for purposes of

“criticism, comment, news reporting, teaching, scholarships, and research”

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“Fair Use” Factors•Purpose and character of use, including whether use is of a commercial nature or for nonprofit educational purposes

•Nature of the copyrighted work

•Amount and substantiality of portion used in relation to copyrighted work as a whole

•Effect of use on potential market for or value of copyrighted work

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Patent•Protects a “product, process, invention, machine, or plant” that is “novel, useful, and non-obvious”

•Length of protection: 20 years

•Remedies for patent infringement:

-Money Damages-Injunction

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Trade Secret•Alternative to patent protection

•Definition: A process, product, method of operation, or compilation of information that gives a businessperson an advantage over his or her competitors

•Remedies for trade secret infringement:

-Money Damages

-Injunction

•Allows holder to sue for violation, if owner can prove:

-Trade secret existed

-Defendant acquired trade secret through unlawful means

-Defendant used trade secret without plaintiff’s permission 30

© 2013 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Real, Personal and...

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