Intellectual Property, Ethical Dilemmas, and Alternative Dispute Resolution

Intellectual property issues, alternative dispute resolution, and ethical dilemmas often affect corporations in how the corporation conducts business. Such is the case of Acme, Inc., a pharmaceutical company that received a patent for an immortality drug but had no plans to market the drug per the company’s president and Beta, Inc. another drug company that copied the immortality drug with plans to market to the public at cost. The issues in this case involved intellectual property, specifically patent law, ethical decisions on the part of both companies, and alternative dispute resolution as to how both companies can resolve the problem.

In the case of Acme, Inc. and Beta, Inc. the main issue at hand is intellectual property rights and patent laws. Intellectual property gives companies rights to protect certain types of intangible personal property, such as a patent (Mayer, Warner, Siedel, Lieberman, and Martina, n.d., p. 1142). Acme was granted a patent from the United States Patent Office giving the company exclusive rights to make, use, and sell the immortality drug for a period of twenty years from the date of application (United States Patent and Trademark Office, 2015, para. 4). The type of patent issued to a company is vital in determining the legality of the intellectual property rights. Regarding Acme, the type of patent issued can be considered a utility patent which is granted to anyone who invents or discovers any composition of matter, such as the immortality drug (United States Patent and Trademark Office, 2015, para. 6). However, the patentee is solely responsible for enforcing the patent and in the case of Acme, the president chose not to pursue the patent (United States Patent and Trademark Office, 2015, para.5). In doing so, that decision opened the door for Beta, Inc. to take advantage of the law regarding intellectual property.

Due to the fact Acme sat on the patent for the immorality drug and did not market it to the public, Beta was able to copy the drug and release it on the market. In this case, Beta did not apply for a patent. However, under the aspect of intellectual property, Beta could trademark the drug. Although Beta did not obtain a patent, a trademark would give the company a way to distinguish their drug from the drugs of other pharmaceutical company’s (United States Patent and Trademark Office, 2015, para.7). However, Beta could find itself in the same position as Acme as a trademark does not prevent other companies from making or selling the same drugs under a clearly, different mark (United States Patent and Trademark Office, 2015, para.8).

In determining the legal aspects surrounding intellectual property rights such as patents or trademarks with the competition between Acme and Beta, caselaw plays a vital role. Acme applied for a patent for a specific drug but did not market the drug to the public. The question becomes in the case of Acme, what legal rights does Acme has regarding intellectual property and patent law? The same holds true of Beta. The company copied Acme’s drug, decided to market it to the public, but only for cost not profit. The question in the case of Beta, can Beta trademark the immortality drug under intellectual property and does patent law apply to Beta?

The first aspect of caselaw both Acme and Beta must take into consideration regarding the patent or trademark of the immortality drug is the Leahy-Smith America Invents Act of 2011. Language in the Leahy-Smith America Invents Act of 2011 is very specific and can be applied to both Acme and Beta regarding patent law. The Leahy-Smith America Invents Act of 2011 blocks a patent if an invention is in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention (Bloomberg, 2018, para. 9). Acme had the patent, but did not pursue the market or sell of the invention, so does this make the patent null and void? Under Section ‘§ 291. Derived Patents of the Leahy-Smith America Invents Act of 2011, “The owner of a patent may have relief by civil action against the owner of another patent that claims the same invention and has an earlier effective filing date, if the invention claimed in such other patent was derived from the inventor of the invention claimed in the patent owned by the person seeking relief under this section (pp. 6-7). In other words, Acme could have legal remedy against Beta for copying its patented immorality drug.

Another issue of intellectual property caselaw affecting Acme and Beta is trademark law. Although Beta can potentially trademark the immortality drug even with Acme having a patent, this could create legal issues. Under Title 1 § 13 (15 U.S.C. § 1063) section a of the U S Trademark Law, “Any person who believes that he would be damaged by the registration of a mark upon the principal register, including the registration of any mark which would be likely to cause dilution by blurring or dilution by tarnishment under section 1125(c) of this title, may, upon payment of the prescribed fee, file an opposition in the Patent and Trademark Office, stating the grounds therefor, within thirty days after the publication under subsection (a) of section 1062 of this title of the mark sought to be registered” (p. 16). This section of trademark law can create a major issue for Beta in that if Beta decides to trademark the immorality drug which Acme has patent right to, Acme could file a claim with the Patent Office against Beta. In addition to legal ramifications of both companies, Acme and Beta both face ethical dilemmas.

In the case of Acme, the ethical dilemma facing the business regarding the patent of the immortality drug and the president’s decision not to market the drug to the public is by keeping the drug from the public, is Acme in depriving an anti-aging cure that would benefit millions of people from dying practicing good social responsibility? The answer is no. When the president made the decision to withhold a drug that would keep millions of people from suffering from death, Acme lack of social responsibility became an ethical issue. Although the public in unaware of the immortality drug, Acme has a social responsibility to market the drug to help people. Acme needs to look at the ethical ramifications of not producing, marketing, and selling the drug. Where is its duty to its stakeholders? Acme must decide where its duty lies and by utilizing an ethical framework of utilitarianism. The utilitarianism framework is based on results. When practicing this ethical framework, Acme does what is right for the greater good of society (Mayer, et.al, n.d., p.). Instead of sitting on the patent, Acme must move forward with the manufacturing of the immorality drug to provide society with the ability to sustain infinite life.

In the case of Beta, the ethical dilemma facing the company regarding the copying of Acme’s immortality drug and deciding to sell at cost to the public, is Beta creating an issue of supply and demand when it markets a drug that will provide society with immortality and only charge at cost? The answer is yes. When Beta basically stole Acme’s idea of the immortality drug, decided to have people pay only costs, the company not only took away profits from shareholders, but started a domino effect of supply and demand. When people learn about the new drug on the market to give them longer life, the demand for the drug will increase and supply will dwindle. In order to keep up with the supply and demand chain, Beta will have to increase the cost of manufacturing, which in turn will increase the price of the drug to the public. Beta must consider the ethical issues it will create by selling the immorality drug at cost. By utilizing the ethical framework of deontology, Beta can produce an ethical solution. Deontology is an ethical framework that helps businesses put duty first, act rationally, and give moral weight to the equality to all people (Mayer, et al, n.d., p. 43). In other words, Beta should reconsider its decision to sale the drug at cost. It has a duty to act rationally by providing equality to all people. If Beta sells the drug at cost, over time as supply diminishes, demand increases. To avoid a supply and demand crisis, Beta must choose to make a profit and at the same time keep the drug affordable.

Although both Acme and Beta are facing ethical dilemmas, both companies are also facing legal issues with each other. One method Acme and Beta can solve the issue surrounding the immorality drug manufacturing by Beta and the patent Acme holds is through alternative dispute resolution. Alternative dispute resolution offers parties alternative means to litigation which can be costly and take several years to settle in court. For parties that have a dispute there are three types of ADR that can help resolve issues. ADR offers parties negotiation, arbitration, or mediation. Each form of ADR can produce positive results. However, each is different. Negotiation is usually the first step in the dispute process. This process is informal and is usually handled directly by the parties without intervention (Mayer, et al, n.d., p. 108). In the case of Acme and Beta, the possibility of negotiation working is improbable due to the severity of the issue. The next steps in the ADR process are arbitration and mediation. Parties can choose between arbitration and mediation to get the desired outcome to resolve the issue. Alternative dispute resolution offers parties a private decision maker where the decision is quick and binding by law and holds up in court (Mayer, et al, n.d., p.109). Unlike arbitration, mediation offers no binding decision where the parties can accept the mediators recommendations or not (Mayer, et al, n.d., p.109). It would be in the best interest of Acme and Beta to choose arbitration as any decision would be binding. For example, Acme could argue that because if the patent, it has sole rights to the immorality drug, while Beta could argue that Acme chose not to use the patent and therefore it has trademark right to the drug. In this situation, arbitration is the best option.

Under the Federal Arbitration Act parties in arbitration are protected with certain rights. In the case of Acme v. Beta, this act gives both parties solutions. For example, if Acme proved Beta committed fraud, an appeal may be filed if Beta was the party that was granted an award.

In conclusion, Acme invented an immorality drug to which the company was granted a patent. However, the president of Acme chose not to market the drug to the public. This caused Beta, a competitor to copy the drug and market it to the public at cost. Both issues created ethical dilemmas for Acme and Beta. Acme was faced with an ethical dilemma of withholding a life-saving rug from the public and Beta was faced with creating a supply and demand scenario. However, ethical dilemmas were not the only issues facing both companies. Acme and Beta are also facing legal issues in that Acme was granted a patent and Beta copied the drug and marketed the drug because Acme failed to do so. The solution to both ethical and legal issues for Acme is to go forward with the patent, manufacture the drug, and market to the public. Regarding legality Acme’s only solution to go to arbitration with Beta. Regarding Beta, the ethical decision will be based on the outcome of arbitration. If Beta is the victor of arbitration, ethically the company must rethink selling the immorality drug at cost.

References

Bloomberg Law. (2018, December 3). Drug-makers head to high court for clarity on patent-Sale timing. Retrieved from https://news.bloomberglaw.com/ip-law/drugmakers-head-to-high-court-for-clarity-on-patent-sale-timing

Mayer, D., Warner, D., Siedel, G. Lieberman, J., & Martina, A. (n.d.) Business Law and the Legal Environment. Washington, D. C.: Saylor Foundation. Retrieved from: https://www.saylor.org/site/textbooks/BusinessLawandLegalEnvironment.pdf

The Federal Arbitration Act (USA). (n.d.). Retrieved from https://sccinstitute.com/media/37104/the-federal-arbitration-act-usa.pdf

U S Trademark Law-Federal Statues. (2013, November 25). Retrieved from https://www.uspto.gov/sites/default/files/trademarks/law/Trademark_Statutes.pdf

United States Patent and Trademark Office. (2015, October). General information concerning patents. Retrieved from https://www.uspto.gov/patents-getting-started/general-information-concerning-patents#heading-12

USPTO. (2011, September 16). LEAHY–SMITH AMERICA INVENTS ACT. Retrieved from https://www.uspto.gov/sites/default/files/aia_implementation/20110916-pub-l112-29.pdf

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Intellectual Property, Ethical Dilemmas, and Alternative Dispute Resolution. (2019, Feb 20). Retrieved September 28, 2021 , from
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