The Legal Environment of Business: a Managerial Approach - Theory to Practice, Melvin/1E

The Legal Environment of Business: A Managerial Approach- Theory to practice, Melvin/1e

Manager’s Challenge Sample Answer

Chapter 1

Memorandum

To: Jackson, Senior Manager

Fr: Student, Junior Manager

Re: Trademark issue

The e-mail sent by Necklace Emporium (“NE”) raises several issues that require use of a legal-decision-making model.

Identify. The legal issue here is NE’s allegations that we are infringing on NE’s trademark and whether or not Galaxy’s has proper legal rights to use the trademark
Assess.The language of the e-mail and NE’s threat to turn the matter over to their attorney would indicate that this legal challenge is imminent. The impact / liability for trademark infringement can severe and ongoing, so the threat-level should be thought of as high. Based on this assessment, we should consult our counsel immediately.
Analyze. The worst case scenario in this case is a loss after a trial based on a dispute over who owns the trademark rights. The civil penalties, statutory damages, and attorneys’ fees could easily exceed $100,000.
Alternatives

Alternative / Cost / Risk / Impact / Benefit to Galaxy
Litigation /

High monetary and human resource costs.
Risks include uncertainty in the outcome, long term distractions.

/ Wining the lawsuit will settle the matter subject to appeal.
ADR /

Medium costs and medium to high human resources commitment.
Risks include potential failure to obtain satisfactory outcome.

/ Dispute is settled (unless ADR is non-binding).
Non-Litigation/ADR:
Negotiate a license agreement and contract with Necklace Emporium that makes intellectual property rights clear and provides royalty rights etc. /

Low costs and human resources commitment.
Major risk is that NE may not be amenable to negotiations.

/ Potential to turn a legal threat into a business planning opportunity and limiting Galaxy’s exposure to liability.

Compare with business mission, objectives, and ethical considerations.

Based on Galaxy’s adherence to principles of corporate social responsibility and a general cost benefit considerations, litigation should be a last resort. The notion of coming to a contractual agreement about the use of the trademark and the benefits of the mark have the potential to result in a profitable outcome for Galaxy and NE. Litigation, by its nature, cannot be profitable and should only be used as a means to, in this case, determine the legal rights of the parties if we cannot come to an agreement with NE on ownership and use of the trademark in question.

Recommendations for implementation, monitoring, and future practices.

Based on the information available, I recommend the following:

1. Contact counsel to obtain legal advice regarding ownership and rights of the trademark. Given the legal challenge at hand, it will be prudent to have our attorney in the decision-making loop from the very beginning.

2. Pursue negotiations with NE to determine common ground and attempt to negotiate an agreement for ownership and use rights of the trademark in question.

3. If an agreement cannot be reached because of a disagreement over ownership of the trademark, offer to participate in binding ADR on the issue of ownership.

4. If an agreement still cannot be reached, or if NE does not negotiate in good faith, and if our counsel’s expert opinion is that we are within our legal rights, then litigation should be used to preserve our rights and attempt to limit our liability.

5. The manager charged with carrying out this strategy should provide weekly (more frequently when necessary) updates via e-mail to the senior manager to ensure consistent adherence to our strategy.

6. Management may also wish to consider reviewing Galaxy’s trademark compliance procedures.