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Antitrust, Copyright and Business Tort Basics in Virginia

  1. Sherman Act
    1. Restraint of Trade
      1. Every contract, combination or conspiracy in restraint of trade or commerce among the States is illegal. 15 U.S.C. Section 1.
      2. A restraint of trade cause of action requires showing that:
        1. the activities are in or affect interstate or foreign commerce;
        2. the activities are performed by two or more persons;
        3. the activities are the result of concerted action;
        4. the concerted action is a restraint on commerce; and
        5. the restraint is unreasonable.

        See Levine v. McLeskey, 881 F. Supp. 1030, 1044 (E.D. Va. 1995); Estate Constr. Co. v. Miller & Smith Holding Co., 14 F. 3d 213, 220 (4th Cir. 1994).

      3. The following tests are used to determine if a restraint on trade is unreasonable:
        1. Per se unreasonable restraints. Examples include: price fixing, group boycotts (concerted refusals to deal), and market allocation agreements among competitors.
        2. Rule of reason (most cases)Evaluate the situation on a case-by-case basis and consider the impact of competition in the relevant market. See Berlyn, Inc. v. Gazette Newspapers, Inc., 157 F. Supp. 2d 609, 615-16 (D. Md. 2001).
    2. Monopoly
      1. Monopolizing or attempting to monopolize, or combining or conspiring to monopolize, any part of the trade or commerce among States is illegal. 15 U.S.C. Section 2. Monopoly power is the power to control prices or exclude competition. Price maker rather than price taker.
      2. The defendant must possess monopoly power in the relevant market and must willfully acquire and maintain that power. See Levine v. McLeskey, 881 F. Supp. 1030, 1046 (E.D. Va. 1995).
      3. Having a monopoly legitimately is not illegal. These monopolies are tolerated but not cherished by the antitrust laws.
      4. Concerted action is not required, but two or more parties combining to monopolize is still a violation. William C. Holmes, Intellectual Property and Antitrust Law Sections 6.01, 6.03 (West 2004).
      5. Attempt to monopolize requires:
        1. specific intent to achieve monopoly in the relevant market;
        2. anticompetitive or predatory actions; and
        3. dangerous probability of successfully achieving monopoly power.
      6. Conspiracy to monopolize requires:
        1. concerted action;
        2. specific intent to achieve unlawful monopoly;
        3. commission of overt act in furtherance of conspiracy; and
        4. antitrust injury. See Virginia Vermiculite v. W.R. Grace & Co., 144 F. Supp. 2d 558, 590 (W.D. Va. 2001).
        5. Predatory pricing. A competitor, particularly one with significant market power, cannot price its goods or services below cost in an effort to hurt competition.
  • Clayton Act
    1. A. Price Discrimination (Robinson-Patman Act)
      1. Unlawful to discriminate in price between different purchasers of commodities of like grade and quality where the effect of the discrimination may be substantially to lessen competition or to create a monopoly. 15 U.S.C. Section 13(a).
      2. Most services are not a “commodity” under federal law. See Berlyn, Inc. v. Gazette Newspapers, Inc., 157 F. Supp. 2d 609, 621 (D. Md. 2001).
    2. Mergers/Acquisitions
      1. Acquisitions that may substantially lessen competition or create a monopoly are prohibited. 15 U.S.C. Section 18.
  • Virginia Antitrust Act
    1. Contract, combination or conspiracy in restraint of trade or commerce of the Commonwealth is unlawful. Va. Code Section 59.1-95.
    2. Conspiracy, combination, attempt to monopolize, or monopolization of trade or commerce of the Commonwealth is unlawful. Va. Code Section 59.1-9.6.
    3. Unlawful to discriminate in price between different purchasers of commodities[1] or services[2] of like grade or quality, where the purchasers are in competition and where the discrimination may substantially lessen competition or may tend to create a monopoly. Va. Code Section 59.1-9.7(a).
  • Copyright Act
    1. Copyrightable Material
      1. Certain categories of materials are copyrightable. 17 U.S.C. Section 102(a).
        1. literary works[3]
        2. musical works
        3. dramatic works
        4. pantomimes and choreographic works
        5. pictorial, graphic and sculptural works[4]
        6. motion pictures and other audiovisual works
        7. sound recordings
        8. architectural works
      2. The work must be original. 17 U.S.C. Section 102(a).
      3. The work must be creative. “The requisite level of creativity is extremely low.” Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F. 3d 772, 787 (5th Cir. 1999).
      4. The work must be “fixed” in a tangible medium of expression. “A work is ‘fixed’ in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” 17 U.S.C. Section 101.
      5. News articles are copyrightable, but copyright protection does not extend to factual information in the articles. See Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 353-54 (1991).
      6. The Copyright Act “protects expression, not facts. A compilation of facts is not entitled to copyright protection unless the compilation itself possesses some degree of originality.” Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F. 3d 772, 786 (5th Cir. 1999); see also Konor Enterprises, Inc. v. Eagle Publications, Inc., 878 F.2d 138 (4th Cir. 1989).
      7. New media such as websites (home pages, etc.) have copyright protection.
    2. Copyright Ownership
      1. The copyright belongs to the author. 17 U.S.C. Section 201(a).
      2. With “works for hire,” the employer for whom the work was prepared is considered the author unless the parties have agreed otherwise in a written instrument signed by them. 17 U.S.C. Section 201(b).
      3. Work is “for hire” if it is:
        1. prepared by an employee within the scope of his or her employment; or
        2. specially ordered or commissioned for use as a contribution to a collective work or a compilation if the parties expressly agree in a written instrument signed by them that the work shall be considered a work for hire. 17 U.S.C. Section 101.
      4. Ownership may be affected by whether the work is performed by an employee or an independent contractor. Use common law agency principles to determine whether a person is an employee or an independent contractor. See Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989).
    3. Copyright owner has the exclusive right to:
      1. Reproduction (right to copy, duplicate, imitate, translate, etc.);
      2. Modification (make a new work based on an old work, e.g. Gone With the Wind sequel);
      3. Distribution;
      4. Performance (shown in public);
      5. Display (directly or indirectly to the public).
    4. Fair Use Doctrine
      1. No infringement of copyright if “fair use,” which includes criticism, comment, and news reporting. 17 U.S.C. Section 107.
      2. This is largely a case-by-case determination. Factors to consider to determine if a use is a “fair use”:
        1. purpose and character of the use (non-commercial use is more likely to be “fair”);
        2. nature of the copyrighted work (factual, creative, etc.);
        3. amount and substantiality of the portion used in relation to the copyrighted work as a whole (court also considers quality of portion selected); and
        4. effect of the use upon the potential market for or value of the copyrighted work.
        5. 17 U.S.C. Section 107(1)-(4); see Religious Technology Center v. Lerma, 908 F. Supp. 1362 (E.D. Va. 1995) (copying documents for news gathering and news reporting may not be a violation of a copyright if the four factors for “fair use” are satisfied).
      3. Unauthorized reproduction of a photo generally violates the Copyright Act, but a “fair use” may exist if the photo has already been disseminated, the photo is particularly newsworthy, and the user acquired the photo in good faith. See Nunez v. Caribbean Int’l. News Corp., 235 F. 3d 18 (1st Cir. 2000).
    5. Public Domain
      1. Materials in the public domain are not protected by copyright and, therefore, may be used without permission. 18 Am. Jur. 2d Copyright Section 215 (1985);
      2. Works in the public domain include:
        1. works not copyrightable, such as ideas, facts, titles, and names;
        2. works that have lost copyright protection (applies only to works published prior to 1978[5] and some works published between 1978 and 1989[6]
        3. works for which the statutory copyright period has expired (post January 1, 1978, life of author plus 50 years; or, with works for hire, the lesser of 75 years from publication of 100 years from creation);
        4. federal documents and publications[7];
        5. works that the copyright owner has granted to the public domain.
    6. Removing Some Basic Misconceptions
      1. The copyright symbol is not required. (optional after March 1, 1989)[8]. Do not think you can use a work just because there is no copyright notice.
      2. Citing the author (avoiding plagiarism) is not a defense to copyright infringement.
      3. Internet availability does not mean there is no copyright. Owners/authors do not give up copyrights by placing material on the internet.
      4. The fact that your “publication” is free is not determinative.
    7. International: Almost all major countries have signed the Berne Copyright Convention, making every creative work copyrighted at the time it is put into tangible form.
  • Lanham Act Trademark law makes it unlawful to use “any word, term, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact,” in connection with any goods or services if the use is likely to cause confusion or mistake by another person. 15 U.S.C. Section 1125(a)(1); see The Hub, Inc. v. Manhattan-Ward, Inc., 673 F. Supp. 770 (W.D. Va. 1987). (Examples using similar designs to trademark, trade dress, or business name).
  • Business Torts
    1. Tortious Interference
      1. Tortious interference with existing contractual or business relations involves the following elements:
          1. the existence of a valid contractual relationship or business expectancy;
          2. knowledge of the relationship or expectancy on the part of the interferer;
          3. intentional interference inducing or causing a breach or termination of the relationship or expectancy; and
          4. damage to the party whose relationship or expectancy has been disrupted.

        See Chaves v. Johnson, 230 Va. 112, 120 (1985); see also Meadow Limited Partnership v. Heritage Savings & Loan, 639 F. Supp. 643, 651 (E.D. Va. 1986).

      2. The law is not settled regarding whether a person can tortiously interfere with his or her own contract. See Chaves v. Johnson, 230 Va. 112, 120 (1985) (providing that a person cannot tortiously interfere with a contract to which he or she is a party). But see Worrie v. Boze, 198 Va. 533, 540 (1957) (allowing a tort action for conspiring to breach one’s own contract); Elliott v. Shore Stop, Inc., 238 Va. 237 (1989) (allowing an employee to maintain a tortious interference claim against the employer based on a contract to which the employee was a party); Catercorp, Inc. v. Catering Concepts, Inc., 246 Va. 22 (1993) (reaffirming a cause of action for conspiring to breach one’s own contract).
    2. Statutory Conspiracy
      1. Virginia Code Sections 18.2-499 and 18.2-500 make it unlawful to conspire to willfully and maliciously injure another person in his or her reputation, trade, business or profession, and create a civil cause of action to recover treble damages and attorney’s fees.
      2. The plaintiff must prove:
          1. a combination of two or more persons;
          2. for the purpose of willfully and maliciously injuring the plaintiff by any means; an
          3. resulting in damage to the plaintiff’s reputation, trade, business or profession

        See Va. Code Section 18.2-499; Allen Realty Corp. v. Holbert, 227 Va. 441, 449 (1984).

    3. Misappropriation of Trade Secrets
      1. The Virginia Trade Secrets Act protects “information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Va. Code Section 59.1-336.
      2. Misappropriation of trade secrets requires the plaintiff to prove that:
          1. it possessed a valid trade secret;
          2. the defendant acquired the trade secret; an
          3. the defendant knew or should have known that the trade secret was acquired by improper means

        See Trandes Corp. v. Guy F. Atkinson Company, 996 F. 2d 655 (4th Cir. 1993); Religious Technology Center v. Lerma, 908 F. Supp. 1362, 1368 (E.D. Va. 1995).

      3. Generally, anything that is used to generate an advantage over competitors can be the subject of trade secret protection, but the plaintiff must take “reasonably security measures” to maintain the secrecy of the information. See Dionne v. Southeast Foam Converting and Packaging, Inc., 240 Va. 297 (1990).
  • Defamation
    1. Defamation includes libel and slander.
      1. Libel is the publication of defamatory matter by written or printed words. 50 Am. Jur. 2d Libel and Slander Section 7 (1995).
      2. Slander is the publication of defamatory matter by spoken words or gestures. 50 Am. Jur. 2d Libel and Slander Section 8 (1995).
    2. Generally, a defamation cause of action requires proof of:
        1. a defamatory statement by the defendant about the plaintiff;
        2. publication of the defamatory statement to a third person; and
        3. damage to the plaintiff’s reputation.

      See 50 Am. Jur. 2d Libel and Slander Sections 21-29 (1995).

    3. Types of Defamation
      1. 1. Defamation per se
          1. Imputes the commission of a criminal offense involving moral turpitude for which a party may be convicted;
          2. Imputes that the person is infected with a contagious disease which would exclude the party from society;
          3. Imputes an unfitness to perform the duties of a job or a lack of integrity in the performance of the duties; or
          4. Prejudices the party in his or her profession or trade.

        See Yeagle v. Collegiate Times, 255 Va. 293, 297 (1998); Freelander v. Eden’s Broadcasting, Inc., 734 F. Supp. 221, 225 (E.D. Va. 1990).

      2. Defamation per quod: The defamatory meaning of the published statement arises by innuendo based on a combination of the published statement and known extrinsic facts. See Freelander v. Eden’s Broadcasting, Inc., 734 F. Supp. 221, 226 (E.D. Va. 1990).
    4. Private Figure v. Public Figure
      1. Private Figure
        1. To recover compensatory damages, the plaintiff must show that the defendant acted negligently. See Gazette, Inc. v. Harris, 229 Va. 1, 15 (1985) (stating that the plaintiff must prove by a preponderance of the evidence that the defendant knew the statement was false, or believed it to be true but lacked reasonable grounds for such belief, or acted negligently in failing to ascertain the facts on which publication was based).
        2. To recover punitive damages, the plaintiff must show actual malice on the part of the defendant. See Great Coastal Express, Inc. v. Ellington, 230 Va. 142, 152 (1985).
      2. Public Figure
        1. The plaintiff must prove that the defendant acted with actual malice (i.e., with knowledge that the publication of defamatory matter was false or with reckless disregard of whether it was false). See Freelander v. Eden’s Broadcasting, Inc.; 734 F. Supp. 221, 229 (E.D. Va. 1990). Smith v. Huntsville Times Co., Inc., No. 102199, 2004 WL 473377 (Ala. Mar. 12, 2004); Tucker v. Philadelphia Daily News, No. 47EAP2001, 2004 WL 909704 (Pa. Apr. 29, 2004).
        2. The determination of whether the plaintiff is a public figure is “based on two considerations: the plaintiff’s access to the media, and the extent to which the plaintiff, by virtue of his position in the community or involvement in a particular matter of public concern, can be said to invite public comment and attention.” Freelander v. Eden’s Broadcasting, Inc., 734 F. Supp. 221, 229 (E.D. Va. 1990); see also Gertz v. Welch, 418 U.S. 323, 344-45 (1974).
    5. Defenses
      1. Truth
        1. In a defamation action, truth is an absolute defense. See New York Times v. Sullivan, 376 U.S. 254, 279 (1964).
        2. In Virginia, “truth is no longer an affirmative defense to be established by the defendant. Instead, the plaintiff must prove falsity, because he is required to establish negligence with respect to such falsity.” Gazette, Inc. v. Harris, 229 Va. 1, 15 (1985).
      2. Consent: If a person invites, requests, or consents to a statement, no defamation cause of action exists. See 50 Am. Jur. 2d Libel and Slander Section 272 (1995).
      3. Absolute privilege
        1. Protects defendant from liability even if the statement was false and defendant acted with malice. See 50 Am. Jur. 2d Libel and Slander Section 274 (1995).
        2. Examples include communications between spouses, and judicial, legislative, and executive proceedings. See Elder v. Holland, 208 Va. 15, 21 (1967); 50 Am. Jur. 2d Libel and Slander Section 275 (1995).
      4. Qualified privilege
        1. Protects defendant when he acted without malice and within the scope of his duties and authority. See Elder v. Holland, 208 Va. 15, 21 (1967); 50 Am. Jur. 2d Libel and Slander Section 276 (1995).
        2. “A communication made in good faith on a subject matter in which the person communicating has an interest, or owes a duty, legal, moral, or social, is qualifiedly privileged if made to a person who has a corresponding interest or duty.” See Great Coastal Express, Inc. v. Ellington, 230 Va. 142, 153 (1985).
        3. Reports of public hearings or meetings may be protected by a qualified privilege. The privilege excuses accurate reports of statements that were false when made but does not excuse inaccuracies in the reporting of the statements. See 50 Am. Jur. 2d Libel and Slander Section 277 (1995).
        4. Comment and criticism are subject to the qualified privilege if the matter commented on is something in the public interest. See 50 Am. Jur. 2d Libel and Slander Section 277 (1995).
      5. Wire-service defense
          1. the newspaper “reproduced, without substantial change, an apparently accurate article released by a reputable newsgathering agency”;
          2. there is no evidence that the newspaper knew the article contained falsities; and
          3. there is nothing in the article itself that could reasonably have placed the newspaper on notice of potential inaccuracy.

        See Howe v. Detroit Free Press, 586 N.W.2d 85 (Mich. 1998).

Please note: This page is provided for general informational purposes only and is a marketing publication of Gentry Locke Rakes & Moore, LLP. It is intended to alert visitors to developments in the law and is does not constitute legal advice or a legal opinion on any specific facts or circumstances. You are urged to consult your own lawyer concerning your situation and specific legal questions you may have.

[1] The term “commodity” includes any kind of real or personal property. Va. Code Section 59.1-9.3(c).

[2] The term “service” includes any activity that is performed in whole or in part for financial gain, including but not limited to personal service, rental, leasing or licensing for use. Va. Code Section 59.1-9.3(d). Advertising would qualify as a “service.” See Berlyn, Inc. v. Gazette Newspapers, Inc., 157 F. Supp. 2d 609, 626 (D. Md. 2001) (applying similar Maryland statute).

[3] “Literary works” includes “works, other than audiovisual works, expressed in words, numbers, or other verbal or numerical symbols or indicia, regardless of the nature of the material objects, such as books, periodicals, manuscripts, phonorecords, film, tapes, disks, or cards, in which they are embodied.” 17 U.S.C. Section 101.

[4] “Pictorial, graphic, and sculptural works” includes “two-dimensional and three-dimensional works of fine, graphic, and applied art, photographs, prints and art reproductions, maps, globes, charts, diagrams, model, and technical drawings, including architectural plans.” 17 U.S.C. Section 101.

[5] Works prior to 1978 , published without copyright notice.

[6] Works between 1978 and 1989 were given a five-year period to correct any publication without copyright notice.

[7] Government private subcontractors may obtain and transfer copyright to government.

[8] It is still common practice to give copyright notice. It is still required in some countries. We recommend: “‘Copyright symbol’ Copyright 2004 J. Scott Sexton, All Rights Reserved.” When giving the notice, the year of publication and author are required. On works for hire, the person paying for the work is designated as copyright holder (e.g. Reuters, Assoc. Press).

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Practices & Specialties
These articles are provided for general informational purposes only and are marketing publications of Gentry Locke. They do not constitute legal advice or a legal opinion on any specific facts or circumstances. You are urged to consult your own lawyer concerning your situation and specific legal questions you may have.