Research Business Law Regarding Intellectual Property Protec
Research business law in regard to protection of intellectual property using your
Research business law in regard to protection of intellectual property using your textbook, the Argosy University online library resources, and the Internet. Based on the facts of the case and research, write an analytical paper. In the paper, respond to the following questions: Was it ethical for Normandale to sell the alleged knock-off products at a lower price? Explain. What federal or state laws protect owners of intellectual property? How do they apply here? Explain. What damages, if any, has Mathis suffered because of Normandale’s conduct? Explain. What are the differing views on the social responsibility of corporations like Normandale? What ethical code could Normandale implement to prevent similar incidents in the future? Do the owners of Normandale have personal liability to Mathis for damages? Explain. Do the owners of Normandale have personal criminal liability for their conduct and that of the business? Explain. Write a five-page paper in Word format. Apply APA standards for writing style.
Paper For Above instruction
Introduction
The case of Mathis Inc. versus Normandale presents a complex intersection of intellectual property rights, business ethics, and legal liabilities. Mathis Inc., a producer of high-end women's winter fashion, alleges that Normandale engaged in illegal conduct by transmitting samples and photographs of Mathis’s designs to Countess Lori-Ann (CLA), a competitor, and instructing them to produce identical copies. These copies were then sold at lower prices, generating significant profits for Normandale and CLA. This scenario raises critical questions about ethical business practices, legal protections for intellectual property, damages suffered by the rights owner, corporate social responsibility, and potential liabilities of business owners. This paper explores these issues through a thorough analysis based on applicable laws and ethical standards.
Ethical Analysis of Normandale's Conduct
From an ethical standpoint, Normandale's decision to sell counterfeit versions of Mathis’s designs at lower prices is highly questionable. Ethical business practices encompass honesty, integrity, and respect for intellectual property rights (Crane & Matten, 2016). By copying Mathis’s designs and using their recognizable labels without permission, Normandale infringes upon intellectual property rights, betraying the principles of fair competition and respect for original creators. Selling counterfeit products undermines the value of innovation and craftsmanship, which are central to high-end fashion brands like Mathis. Moreover, Normandale’s actions potentially deceive consumers into believing they are purchasing authentic Mathis products, which is deceptive and unethical.
Legal Protections for Intellectual Property
Numerous federal and state laws safeguard the intellectual property rights of creators and businesses. The primary federal statutes include the Copyright Act, the Patent Act, and the Lanham Act (federal trademark law). The Copyright Act protects original works of authorship, including fashion designs, while the Lanham Act protects trademarks and trade dress, which identify the source of goods and distinguish them in the marketplace (United States Patent and Trademark Office [USPTO], 2020). In this case, Mathis’s trademarks and labels are protected under the Lanham Act, which prohibits the unauthorized use of a mark that is likely to cause confusion among consumers.
Specifically, the Lanham Act could be invoked due to the use of Mathis’s labels and recognizable design features by CLA in their counterfeit products. Trademark infringement and counterfeiting are criminal offenses under federal law, and courts can impose damages and injunctions to prevent further infringement (Resnik, 2014). States may also have their laws protecting trade secrets and unfair competition, complementing federal statutes.
Damages Suffered by Mathis
Mathis Inc. has suffered several damages from Normandale’s conduct. Financially, the loss of sales revenue and potential brand dilution are significant. The sale of counterfeit products damages the brand’s reputation, eroding consumer trust and affecting future sales. Additionally, Mathis is deprived of rightful profits; the counterfeit sales led to a gross profit increase for Normandale and CLA, approximately $3 million, representing financial harm to the original creators (Kesan & Shah, 2001). The brand’s exclusivity and perceived quality are compromised when counterfeit goods flood the market, which can have long-term negative impacts on Brand equity (McCarthy & Kaplan, 2018). Mathis has also expended resources in sending cease-and-desist notices and pursuing legal action, incurring legal costs and diverting management attention.
Social Responsibility and Ethical Business Practices
Corporate social responsibility (CSR) emphasizes ethical conduct, fair competition, and respect for intellectual property rights. Companies like Normandale have a social obligation to uphold ethical standards and avoid engaging in or promoting counterfeit activities (Carroll, 2015). The proliferation of counterfeit products undermines legitimate businesses, fosters illegal markets, and harms consumers who may unknowingly purchase inferior or unsafe counterfeit goods.
To promote ethical behavior, Normandale could adopt an internal ethical code emphasizing respect for intellectual property rights, compliance with legal standards, and the importance of fair competition. Implementing strict internal policies to verify the authenticity and legality of the products they sell would serve as preventive measures. Education programs demonstrating the economic and societal harms caused by counterfeiting can also reinforce ethical standards among employees and business partners.
Liability of Business Owners: Personal and Criminal
The issue of personal liability hinges on whether the owners of Normandale are individually responsible for the business’s conduct. Generally, in a corporation, owners or shareholders are protected from personal liability (Gerber, 2018). However, if owners personally engaged in illegal activities such as counterfeiting or directed such conduct, they could be held personally liable. In this case, if evidence shows that the owners orchestrated or knowingly participated in the infringement, courts may hold them liable for damages and penalties.
Concerning criminal liability, counterfeiting and trademark infringement are criminal offenses under federal law, carrying potential fines and imprisonment. If the owners of Normandale knowingly engaged in illegal counterfeiting activities, they could face criminal sanctions (Resnik, 2014). Courts consider the intent, scale of infringement, and whether laws were intentionally violated when assigning criminal liability. Therefore, owners involved in deliberate infringement may be subject to criminal prosecution, beyond civil damages.
Conclusion
The conduct of Normandale in selling counterfeit, knock-off products infringes upon the legal rights of Mathis Inc. and demonstrates unethical business practices. Legally, federal statutes such as the Lanham Act provide robust protections against such infringement, and Mathis has suffered significant damages, including financial loss and brand dilution. Ethically, companies have a responsibility to respect intellectual property and engage in fair competition; violating these principles risks long-term damage to corporate reputation and societal trust. Business owners may face personal and criminal liabilities if they actively participate in illegal activities or facilitate infringements knowingly. Implementing ethical codes and compliance policies can help prevent future violations, promote responsible business conduct, and foster respect for intellectual property laws.
References
Carroll, A. B. (2015). Business and Society: Ethics, Sustainability, and Stakeholder Management. Cengage Learning.
Crane, A., & Matten, D. (2016). Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. Oxford University Press.
Gerber, D. J. (2018). Understanding Business Law. Cengage.
Kesan, J. P., & Shah, R. C. (2001). Counterfeit goods and infringement laws. Harvard Journal of Law & Technology, 14(2), 437-470.
McCarthy, M. P., & Kaplan, R. (2018). Brand valuation and counterfeit impact. Journal of Brand Management, 25(4), 341–356.
Resnik, D. B. (2014). The Ethics of Infringement: Intellectual Property and Business Law. Stanford Law Review, 66(1), 101-147.
United States Patent and Trademark Office. (2020). Trademark Law Resources. https://www.uspto.gov/trademarks
Note: Additional legal cases and scholarly articles can further strengthen this discussion, emphasizing the importance of intellectual property rights in fostering innovation and fair competition in high-end fashion industries.