The case regarding the companies Acme and Beta Inc. relate to patents. Patents are defined by the court as, “novel, useful, non-obvious and intangible ideas”, (Colonia, et al., 2005). These are inventions that must follow a set of guidelines and criteria subject to patent protections. Patents must be new inventions that provide the method or design of a new product. The patent must also be useful. This includes the process required to achieve the new product. While the product is simply an idea for an invention, this idea can be protected by law. It allows for inventors to have the “exclusive right to make, use, and sell the invention for a period of twenty years”, (Mayers, et al., 2012, p. 1142).
As intangible objects, patents represent intellectual property. These are ideas or inventions that can be bought and sold for personal and public gain. In this way, patents are also personal property, (Mayer et al., 2012). The patent can be owned by an individual or a corporation. It not only provides the patent owner exclusive rights to the invention but also works to prevent others from having it. This includes marketing or misuse of the invention, (Colonia, et al., 2005). With these rights, the owner has the ability to modify the invention, restrict the invention, or sell the invention to allow someone else to distribute and manufacture. When the patent is used in part or licensed to others, it allows organizations other than the owner to profit from the invention through royalties, (Mayer, et al., 2012). However, it is up to the owner to decide what to do with the patent. Examples can be seen such as licensing the patent to several entities allowing for exploitation and high exposure. With these rights the law recognizes the importance of sciences, the arts, technology, and the overall progression of humanity. Protected by the Fifth Amendments Taking Clause of the Constitution, patents give owners special benefits and rights for their ideas, (Mossoff, 2015).
Although Acme Inc. is the owner of a patent for immortality, Beta Inc. took the liberty to copy, manufacture and release the drug to the public market. This was done without the permission of Acme Inc., practicing patent infringement. Not only did Beta Inc. violate the law, they violated the rights of patent ownership. The owner was not allowed to profit from the patented invention due to Beta Inc.’s lawlessness. As a result, “the patent holder may seek damages and an injunction against the infringer in federal court, requesting damages for royalties and lost profits as well”, (Mayers, 2012, p. 1147). While court is a common way to litigate judgment, there are additional alternative options. Alternative dispute resolution allows individuals and organizations to argue a case without a long and costly trail. These include mediation, arbitration, and conciliation, (Mayers, 2012). All three options allow both parties to come to an agreement to resolve conflicts under more comfortable terms and conditions.
Arbitration is a formal and binding commitment recognized by the court. The case is not heard or decided by a judge or jury. It is heard before experienced parties who can resolve patent issues without the stress of a formal court. Arbitrators work as a judge, hearing arguments and deciding a just course of action. They are often retired judges, lawyers, and other experienced individuals with special knowledge of patents and circumstances regarding the case. In many ways, arbitration represents the best alternative due the fast turnaround results and the professional expertise of the arbitrator. Additionally, arbitration does not allow for an appeal process so all decision are final. Decisions are often confidential and preferred because of its ability to preserve business relationships, (Knight, 2012). Arbitration is often favored in patent proceedings and included in most licensing contracts. Also recognized as a route to resolution is mediation. It is unfavored in patent cases because the decision is not binding and there is no party to enforce the decision. Other alternative routes can be found in the Leahy-Smith American Invents Act of 2011. The Act includes four additional options that can prevent court intervention. It includes the supplemental examination for patent review, post-grant review, inter partes review, and derivation proceedings, (Knight, 2012). Enacted by the Obama administration it provides more options for resolving issues with patent.
ACME holds patent ownership of a new drug for immortality. This reserves the right for ACME to hold, sell, or distribute the patent product as they see fit. It is done to protect ACME and also to prevent theft and misuse of the product from unlicensed organizations, (Colonia, et al., 2005). In addition, as owners ACME has an obligation to serve the public. This includes marketing products that are beneficial to public health and promotes the progression of art, science, and human life, (Massoff, 2013). Because ACME decided to hold the patent with no movements towards marketing and distribution, it presents an ethical dilemma for the organization. It raises concern “to the possibility of stifling innovation, copyrights and patents also allow the holder to ransom the health and welfare of the public”, (Colonia, et al., 2005). This suggests that the organization was putting public health in jeopardy. The actions conducted by ACME question the integrity and authenticity to the organizational intent of the product. ACME has the ability to prevent millions of deaths worldwide. Instead, the organization failed their moral obligations to society by improving health and extending human life.
BETA Inc. stands in an ethical dilemma. The organization ignored patent laws by marketing a patent product they did not own. The organization also did not have a license from ACME granting BETA permission to distribute the product. Although BETA did not profit from the distribution, BETA did not apply “fair use” laws, (Colonia et al., 2005). The fair use law allows organizations to copy patent products for educational purposes only. Furthermore, BETA did not apply “transformative” use of the product, (Colonia et al., 2005). They did not transform the product into a new item for a different use. For instance, BETA did not modify the product to extend life for a specified period or alter the product to cure deathly illnesses. The organization went against patent protections to distribute the product without permission. Doing so BETA restricted the creativity of the product. AMCE was not given the opportunity to improve the product in any way or provide input in matters of marketing and distribution. Although BETA Inc. worked with good intentions to serve the public and help others, they did not follow federal guidelines granting AMCE the exclusive rights.
Utilitarianism is a theory of ethical thought that is encouraged throughout government and general public. It is the idea that, “an action, or set of actions, is generally deemed good or right if it maximizes happiness or pleasure throughout society”, (Mayer, et al., 2012, p.41). It can be applied throughout all aspects of life including law, economy, and government. Utilitarianism is seen as a moral compass for important decisions to be used among individuals and communities. When a product is useful and productive in positive ways it provides the greatest amount of benefit for the people. By manufacturing and distributing an unlicensed product that prolongs life, BETA acted with good intentions for the good of society. Patents protect ideas that help to flourish human life, (Massoff, 2013). As a result, it comes with moral obligations to society that grants rights to the owner. For the service the invention provides to society, patent owners are granted rights, protection, and financial compensation for their work. AMCE did not follow its moral obligations to progress life, encouraging BETA to act in its wake. BETA did not generate profits from their distribution demonstrating their act of utilitarianism. Instead, BETA broke the law and violated patent rights by distributing an unlicensed product to improve the health and general welfare of society.
An important theory to the case of patent rights and intellectual property is social justice and social contract theory. The patent owned by AMCE is monumental and has the potential to change the landscape of how people live. With the promises of immortality it bears to question the marketing potential of the product and the problems that can ensue as a result. This includes possible limitations to the product. The social justice theory raises the question of who should have access to the product and the potential good and bad that can come from the misuse of the product. Do all people have access to the product including criminals or is the product restricted to those facing illness, old age or death? Placing limitations on the distribution of the product enforces an intermediary to enforce the stipulations of distribution. Through the social contract theory, it allows the government to act as a mediator between the patent owner and the public. This puts the decision out of the hands of both parties and into the hands of the government. The theory implies the use of an overseer or organization that acts as a watch dog over the people. It goes on to suggest that people must lose something in return and the process of give and take. This is seen in the social contract theory “where people give up certain rights to government in exchange for security and common benefits”, (Mayer, et al., 2012, p. 44).
1. Colonia, A., Yonga, N., Hass, B., Juan, J., Luy, J., Yeager, W. (2005). The Ethics of Intellectual Property. Engineering Ethics. University of California Santa Cruz. Spring. Retrieved from: https://classes.soe.ucsc.edu/cmpe080e/Spring05/projects/ip/
2. Knight Jr., B. (2012). The America invents act alternative dispute resolution. United States Patent and Trademark Office USPTO. March 8. Washington, D.C. Retrieved from: https://www.uspto.gov/sites/default/files/aia_implementation/20120308-alternative-dispute-resolution-ip.pdf
3. Massoff, A. (2013). Patents are Property Rights. Foundation for Economic Education FEE. 14 April, 2013. Retrieved from: https://fee.org/resources/patents-are-property-rights/
4. Mayer, D., Warner, D., Siedel, G. Lieberman, J., & Martina, A. (2012). Business Law and the Legal Environment. Washington, D. C. Saylor Foundation. Retrieved from: https://www.saylor.org/site/textbooks/Business%20Law%20and%20the%20Legal%20Environment.pdf
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