Legal and Ethical Leadership

What is Intellectual Property? Intellectual property is the area of law that deals with protecting the rights of those who create original works. It covers everything from original plays and novels to inventions and company identification marks. The purpose of intellectual property laws is to encourage new technologies, artistic expressions and inventions while promoting economic growth. When individuals know that their creative work will be protected and that they can benefit from their labor, they are more likely to continue to produce things that create jobs, develop new technology, make processes more efficient, and create beauty in the world around us. (Intellectual Property Law: Patents, Trademarks and Copyright, 2013)
Was it ethical for Normandale to sell the alleged knock-off products at a lower price?
No, it was not ethical for Normandale to sell the knock-off Mathis products for a lower price, or at all. Normandale knowingly and willingly sent photographs to CLA and told them to reproduce the line, identical to Mathis’ designs. Normandale is making a profit off of designs that Mathis created while Mathis is not making a profit, and this is happening all without Mathis’ knowledge or permission.
What federal or state laws protect owners of intellectual property? How do they apply here?
Trademarks protect the names and identifying marks of products and companies. The purpose of trademarks is to make it easy for consumers to distinguish competitors from each other. Trademarks are automatically assumed once a business begins using a certain mark to identify its company, and may use the symbol TM without filing their symbol or name with the government. (Intellectual Property Law: Patents, Trademarks and Copyright, 2013)
In the given scenario, it states that in the photographs that were sent to CLA from Normandale, the Mathis labels are easily discernable (or recognizable) and the samples have the Mathis labels attached. If the Mathis labels are easily recognizable, it is safe to assume that Mathis has established a name for themselves, a customer base and their labels are easily identified as theirs.
There are different types of trademarks that are protected under the Lanham Act of 1947;
1. Product trademarks: Marks affixed to a good, its packaging, or its labeling.
2. Service marks: Marks used in conjunction with a service.
3. Collective marks: Marks identifying the producers as belonging to a larger group, such as a trade union.
4. Certification marks: Marks licensed by a group that has established certain criteria for use of the mark, such as “U.L. Tested” or “Good Housekeeping Seal of Approval.” (Kubasek 426) Mathis falls under number 1, product trademarks. It was stated that the Mathis label was “easily discernable”. Mathis should be protected under the Lanham Act of 1947 if they are registered under the U.S. Patent office because is product was sold through Normadale, which is a national company. If Mathis was only sold within one state, they would automatically be protected through that state.
What damages, if any, has Mathis suffered because of Normandale’s conduct? For one, Mathis has lost potential revenue through Normandale. Because Normandale has been selling Mathis’ designs through another designer, Mathis’ is losing potential revenue. These designs were created by Mathis, and Mathis did not give permission to Normandale or CLA to reproduce and sell the designs. Secondly, Mathis may lose customers. Mathis is known for their high-winter fashions and their particular style may be recognized by their loyal customers. When the designs were reproduced, the same fabrics and materials were most likely not used and the quality probably isn’t the same as an original Mathis. Customers may be turned off and may not buy another Mathis’ piece because of the lack of quality.
What are differing views on social responsibility of corporations like Normandale? According to the text, it can be argued that corporations like Normandale have a responsibility of just making problems “go away”, by hiding issues from the public (What they don’t know can’t hurt them). Others say that large corporations have responsibility to to their shareholders and their customers. Shareholders have invested money into a company that they trust and customers have spent money on products that these corporations produce because they believe in the quality of their products. When people have put faith and trust into a corporation, they do have a responsibility to protect their customers, shareholders and the environment.
What ethical code could Normandale implement to prevent similar incidents in the future? A code of ethics is a system by which a company “lives” by and should operate in conjunction with a company’s mission statement. To prevent a situation such as the Normandale issue, the company can implement a code where it will not sell knock-off brands or designs, nor will Normandale sell reproduced designs without the permission of the original design’s creator.
Do the owners of Normandale have personal liability to Mathis for damages? Yes, Normandale has personal liability to Mathis for damages. Their willingness to allow production of designs of another company without the permission of that company for the purpose of financial gain shows lack of ethics and professionalism. Normandale needs to be held responsible for their actions, or else these acts may continue not only with Mathis but with other designers as well.
Do the owners of Normandale have personal criminal liability for their conduct and that of the business?
Yes, Normandale, and CLA both have personal criminal liability to Mathis, it is called trademark infringement. Trademark law protects a trademark owner 's exclusive right to use a trademark when use of the mark by another would be likely to cause consumer confusion as to the source or origin of goods (Trademark Infringement, 2000). As mentioned above, regular consumers of Mathis could recognize that the knock-off versions are indeed not the usual quality that Mathis produces and that may cause confusion and loss of consumers.
In conclusion, successful businesses remain as such because of their ability to make the most profit while spending the least amount of money. Normandale managed to make a substantial profit off of Mathis’ designs while using another designer to reproduce said designs. While most businesses are successful financially, in order to remain that way, those businesses have to also represent themselves as morally ethical. The actions that Normandale took were not morally ethical and now they may have to compensate Mathis’ for their damages which could cause trouble for them financially and they could possibly lose customers and stockholders. Having a strong ethical base should be a priority in every company.
References
Trademark Infringement. (2000). Retrieved December 4, 2013, from Cornell University Law School: http://www.law.cornell.edu/wex/trademark_infringement
Intellectual Property Law: Patents, Trademarks and Copyright. (2013). Retrieved November 28, 2013, from All Law: http://www.alllaw.com/topics/intellectual_property
Kubasek. Legal Environment of Business, 5th Edition. Pearson Learning Solutions. VitalBook file.

References: Trademark Infringement. (2000). Retrieved December 4, 2013, from Cornell University Law School: http://www.law.cornell.edu/wex/trademark_infringement Intellectual Property Law: Patents, Trademarks and Copyright. (2013). Retrieved November 28, 2013, from All Law: http://www.alllaw.com/topics/intellectual_property Kubasek. Legal Environment of Business, 5th Edition. Pearson Learning Solutions. VitalBook file.