Manufacturing Co. v. Artic International, Inc.

The present case undoubtedly serves as an exemplary trial of the entire US intellectual property disputes resolution system. In this case study, the paper aims to examine the conventional model of the dispute resolution, alternative ways of dispute resolution, and risk management issues pertinent to the case at hand.

Facts of the Case which Led to a Lawsuit

Common law recognizes several legal acts which may hypothetically result in a lawsuit. The situation at hand deals with a civil misdeed, in particular with a violation of the copyright. The claimant in its statement of the claim identified that the Respondent has violated the United States Copyright Act, Title 17, 102. To be more exact, Midway Manufacturing Co. stated that a videogame machine manufactured by the respondent is almost identical to the one produced by the claimant itself.  After the tools manufactured by the respondent appeared on the free market, the managers of the plaintiff immediately became aware of this fact.  The competitor may allegedly fraudulently entice the existing customers and attract new customers, which may potentially join the referral base of the plaintiff. The authorized representative of the plaintiff lodged the United States District Court for the Northern District of Illinois with the present Statement of Claim.

Overall, the first part of this paper is concerned about the theoretical basis for the lawsuit (the violation of the inherent copyright on the object covered by the U.S. Copyright Law).

Possible Methods of Risk Management

It is obvious that the managers of the defendant have perpetuated several grave legal omissions, which eventually result in the company being sued and the company assets being partially arrested in order to ensure the civil action and to make the prospective relief feasible. Generally, the executive department of the respondent should have done several economic and legal actions in order to avert the legal action brought by the claimant.

First and foremost, it is evident that the company primarily deals with the objects which are protectable under the Copyright Law currently in force in the United States of America. Therefore, it is obvious that highly professional legal staff should have been recruited in order to provide counseling for the executive departments of the firm. Furthermore, the legal staff (the department of the sole counsel, depending on the scale of the firm in question) is to be particularly skilled in the field of intellectual property, as the company primarily operates in this area.  The copyright law of the United States is one of the changeable in the Common Law system; therefore, the legal advisors have to monitor the amendments meticulously and regularly. Secondly, the executive managers should have invariably contacted the authorized representatives of the plaintiff in order to transact the future application of the subject matter of the dispute. In my viewpoint, it was evident and clear for a reasonable prudent person that technology used by the defendant contains several elements entirely identical to those invented and manufactured by the defendant. The managers could have easily contacted the representatives of the claimant and requested a license to produce these goods or they could have entered into a franchise agreement with the claiming company. Although it can be highly disputed economically, I am firmly convinced that the claimant would have concluded that agreement with the respondent due to the heightened financial attractiveness of the contract.  Simultaneously, the defendant could have gained additional source of income by means of receiving regular franchise payments or it could have easily improved the financial environment through a single royalty consideration.

Methods of the Alternative Dispute Resolution

Nowadays, the business community is more prone to resolve the emerging conflicts by means other than litigation. It happened due to the numerous reasons. Among them, the primary factors are time-saving and monetary friendly. Therefore, the two litigants could have simply opted for the arbitration, mediation or negotiation in order to avoid considerably expensive and temporally long court proceedings.                                                         

First and foremost, the two litigants could have signed the arbitration agreements. Subsequently, their dispute would have been heard by an ad hoc tribunal or a permanent arbitral institution.

Among others, the following advantages of arbitration must be accentuated:

1. Due to the complexity of the subject matter of the proceeding, the arbitrators with the relevant degrees or/and with the sufficient professional background can be appointed by the parties. I am not in any way doubting the professionalism of judges in the United States of America, but it seems to be very reasonable to assign those arbitrators, who practice intellectual property law on a regular basis, i.g. the practicing attorneys. With the highest degree of probability, I assume that they can unravel the intricacies of the subject matter with ease.
2. The arbitral proceedings are often considerably faster than litigation in national courts.
3. Arbitration is immensely cheaper than conventional trials. Although fees must be paid to the appointed arbitrators and to the attorneys, the total sum can hardly exceed the total value of the court litigation.
4. The ruling of the arbitral institution is never publicized due to the confidential nature of the arbitral proceedings.
5. The grounds to appeal an arbitral award are limited. Therefore, if a favorable decision is adjudicated by the arbitral body, the opponent can hardly appeal it.

Considering the fact that the litigation has lasted for two years, if the parties chose the arbitral approach, they could have easily economized both their money and time. Apart from arbitration, the parties could have easily involved an independent mediator, who in his turn could have easily succored the parties in reaching the mutually acceptable settlement. Overall, the quickness of the mediation is the second advantage of this type of the alternative dispute resolution, not to mention the monetary side of this possibility.

Source of the Law and their Management

In order to attain the judicious decision, the court has to define the scope of the legal base which will be cited in the future decision. In the case at hand, the court has extensively cited the provisions of the United States 1976 Copyright Act, putting particular emphasis on its provisions. Besides, the court has broadly referred to the international convention for the protection of performers, producers of the phonographs and broadcasting (hereinafter referred to as the Rome Convention 1961), Berne Convention for the Protection of Literary and Artistic Works 1971. Besides, the court cited the US case law extensively.

In my opinion, the counsels of the claimant should have incorporated more broadly the national case law and case law of other common law. Besides, the relevant rulings of both national and oversees arbitral institutions might have been of use for the plaintiffs. The reasoning of the court is majorly based on the U.S. case law and the aforementioned international instruments, which, under any circumstances may not serve as ultimately persuasive tools for the tribunal, as the U.S. judges are more willingly convinced by the national precedents, especially those adjudicated on the federal level.

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