1. Business Ethics: Cases and
Selected Readings, 7th Ed.
Marianne M. Jennings
Unit 8
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

2. Employee Covenants Not to
Compete
• State law (California and North Dakota)
• Necessary (something to protect)
– e.g. sales techniques; preservation of customer relationships; customer lists (California)
• Reasonable in time and geographic scope
• Balance between their right to earn a living and
your need to protect proprietary information and
goodwill
• Things that help: advance knowledge of
covenant; nature of market; their conduct
310© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

3. Alternative Theories
• Tortious interference with contracts
• Confidentiality/nondisclosure
agreements
311© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

4. Employee Non-Solicitation
Clauses
• Promise not to recruit other employees from
the firm if they leave
• Different from non-compete
• More easily enforced
312© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

5. Trade Secrets and
Confidential Information
• Secret or confidential information must be
protected for it to remain secret and be
entitled to protection under the law
• Role of covenants in protection of trade
secrets
• Boeing and the documents
313© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

6. The Employee Conversation
• Griffin:
– We just took a Procurement Integrity Law class. I
can’t believe you did that.
• Erskine:
– I was hired to win … and I was going to do
whatever it took to do it.
314© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

7. Starwood vs. Hilton
• List the information the employees took to
Hilton
• List the employees who transferred to Hilton
315© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

8. The Starwood Covenant
________acknowledges that during the course of his/her employment with
[Starwood], Employee will receive, and will have access to, ‘Confidential
Information’ ... of [Starwood] and that such information is a special, valuable and
unique asset belonging to [Starwood]... All [Documents (broadly defined)] which
from time to time may be in Employee’s possession ... relating, directly or
indirectly, to the business of [Starwood] shall be and remain the property of
[Starwood] and shall be delivered by Employee to [Starwood] immediately upon
request, and in any event promptly upon termination of Employee's employment,
and Employee shall not make or keep any copies or extracts of the Documents ...
Employee shall not disclose to any third person any information concerning the
business of [Starwood], including, without limitation, any trade secrets, customer
lists and details of contracts with or requirements of customers, the identity of
any owner of a managed hotel, information relating to any current, past or
prospective management agreement or joint venture, information pertaining to
business methods, sales plans, design plans and strategies, management
organization, computer systems and software, operating policies or manuals ...
financial records or other financial, commercial, business or technical information
relating to the company ....”
316© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

9. 317
Seeking Fame
“We’d be interviewed in every magazine. We’d
be in like . . . We’d be, who were the people of
the ’80s? Boesky? Michael Milken. We’d be
bigger than that. It’s fun. If you don’t get
greedy.”
Marisa Baridis, former ethics officer at Morgan Stanley to a
college friend as she gave him inside information on pending
Morgan deals
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

10. Little Jonathan Lebed
• “Pump and dump”
• He’s done nothing different from what all the
analysts do.
• The fall-out?
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
318

11. Private Equity Buy-Outs
• Would you enjoy the benefits of a private-
equity buy-out if you could?
• What is the impact of the buy-out on the
company, the employees, and the
stakeholders?
319© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

12. Stakeholders in Private-equity
Buy-outs
• Investors in the private firm
• Employees of the company
• Suppliers for the company
• Shareholders for the company
• Communities where plants are located
• Customers for products of company
• Creditors of the company
• Target and its shareholders
320© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

13. 321
Statutory Protections
• Trademarks for logos
• Registration and self-enforcement
• The Gray Market
• The Knock-off Market
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

14. Stakeholders in Knock-offs
• Owner of trademark
• Landlords
• Customers/Owners of real trademarked goods
• Shareholders, creditors, suppliers of
trademark owner
• Innovation
322© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

15. • Protect authors of books, magazine articles,
plays, movies, songs, dances, photographs
• Runs for lifetime of author plus fifty years
• 100 years from creation or 75 years from
publication, which ever is shorter, if company
holds rights
Copyrights
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
323

16. • Works automatically copyrighted but no suits
can be filed until the copyright office is given a
copy
• Damages include profits, costs, attorney’s fees
Copyrights
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
324

17. Copyrights
• Federal Statutes:
– Sonny Bono Copyright Extension Act
– Digital Millennium Copyright Act
– Computer Software Copyright Act of 1980
• Fair use is permitted – short quotes; research
copies, criticism, commentary and parody
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
325

18. Stakeholders in Google’s
Snippets
• Authors
• Publishers
• Book purchasers – these books and future
books
• Future writers
• Bookstores
• Shareholders and creditors for publishers
• Vendors for publishers
326© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.

19. • 20 years from filing/14 years for design patent
• Exclusive rights to use and profits
• Must be non-obvious, novel, and useful
• Using the idea without consent constitutes
infringement
Patents and the Windshield
Wiper
© 2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
327