Also known as: misappropriation doctrine · misappropriation
Written by attorneys — see sources below.
A principle that imposes liability for the unauthorized taking and commercial exploitation of another's intangible property or identity when the appropriation causes harm and unjust enrichment.
Danielle Dixon wrote a book detailing the life story of a famous athlete without permission and sold it for profit. The athlete sued, claiming the commercial exploitation of his identity caused harm. The court found liability because the use unjustly benefited Dixon by trading on the athlete's identity.
Dylan Duffy learned from a client that another attorney had taken client funds without authorization. Duffy considered the client's request to stay silent but reported the conduct to disciplinary authorities anyway. The obligation to report persisted despite the client's wishes because the information was not protected as confidential.
Deborah Dunn, an attorney, transferred client trust money into her personal account intending to replace it later. No client suffered loss and Dunn had an otherwise clean record. Disbarment followed because the knowing unauthorized use of entrusted funds constituted serious misconduct.
Dawson Steel gathered breaking financial stories and sold them to subscribers under strict timing rules. Dynamic Solutions copied the facts from early editions and retransmitted them to its own western clients for immediate publication. The court enjoined the copying while the stories retained commercial value.
The Associated Press is a cooperative organization incorporated under New York law. Its members are proprietors or representatives of about 950 daily newspapers. It gathers news worldwide through its own correspondents, exchanges with members, and other means at an annual cost of approximately $3,500,000 assessed upon the members. Each member agrees that news received through the service is for exclusive publication in a designated newspaper and place. No other use is permitted. No member shall furnish the news in advance of publication to any non-member. Each member also supplies its local news exclusively to the Associated Press. International News Service is a New Jersey corporation engaged in gathering and selling news to approximately 400 subscribing newspapers under contracts. Its annual operating cost exceeds $2,000,000. The two organizations compete directly in the distribution of news throughout the United States. The newspapers they serve likewise compete in their respective districts. International News Service obtained Associated Press news by copying from bulletin boards and early editions of newspapers published by Associated Press members on the East Coast. It transmitted the material by telegraph to its own western subscribers for publication. It sometimes rewrote the dispatches while using the same facts. It also obtained news before publication by bribing employees of Associated Press member newspapers and by inducing members to violate the by-laws. The bill was filed in the District Court for the Southern District of New York. The District Court granted a preliminary injunction against bribing employees and inducing by-law violations. It declined to enjoin the copying from bulletins and early editions. The Circuit Court of Appeals sustained the existing injunction. On the complainant's appeal, it modified the decree to add an injunction against bodily taking of the news until its commercial value as news had passed. The Supreme Court granted certiorari.
View caseDuffy Construction opened restaurants using the exact same layout, color scheme, and menu presentation as Delta Dynamics locations. Customers confused the two chains and sales at Delta Dynamics declined. The copying supported a claim because the distinctive appearance had acquired secondary meaning.
Taco Cabana, Inc., operates a chain of fast-food restaurants serving Mexican food. The first Taco Cabana restaurant opened in San Antonio in September 1978. By 1985 five more had opened in that city. Taco Cabana's Mexican trade dress features a festive eating atmosphere with interior dining and patio areas decorated with artifacts, bright colors, paintings and murals. It also includes a stepped exterior in a vivid color scheme using top border paint and neon stripes, bright awnings and umbrellas. In December 1985, Two Pesos, Inc., opened a restaurant in Houston that adopted a motif very similar to Taco Cabana's trade dress. Two Pesos expanded rapidly in Houston and other markets but did not enter San Antonio. In 1986, Taco Cabana entered the Houston and Austin markets. It expanded into other Texas cities including Dallas and El Paso where Two Pesos was also operating. In 1987, Taco Cabana sued Two Pesos in the United States District Court for the Southern District of Texas. The suit alleged trade dress infringement under § 43(a) of the Lanham Act and theft of trade secrets under Texas common law. The case was tried to a jury. The jury answered five questions. Taco Cabana has a trade dress. Taken as a whole, the trade dress is nonfunctional. The trade dress is inherently distinctive. The trade dress has not acquired a secondary meaning in the Texas market. The alleged infringement creates a likelihood of confusion on the part of ordinary customers as to the source or association of the restaurant's goods or services. The district court entered judgment awarding damages to Taco Cabana. It found that Two Pesos had intentionally and deliberately infringed the trade dress. The Court of Appeals for the Fifth Circuit affirmed the judgment. The Supreme Court granted certiorari to resolve a conflict among the courts of appeals.
View caseDenise Donovan licensed Bela Lugosi's image from a film studio for use in merchandise decades after the actor's death. Lugosi's heirs objected, asserting a continuing property interest in the commercial exploitation of the likeness. The claim failed because the right of publicity did not survive the actor's death under state law.
Bela Lugosi and Universal Pictures Company, Inc. concluded an agreement in September 1930 for the production of the film Dracula in which Lugosi contracted to and did play the title role. Paragraph 4 of the agreement granted Universal the right to photograph and exploit in connection with the photoplay any and all of the artist's acts, poses, plays and appearances and the right to use and give publicity to the artist's name and likeness in connection with the advertising and exploitation of the photoplay. Lugosi died in 1956. Commencing in 1960 Universal entered into many licensing agreements which authorized licensees to use the Count Dracula character in connection with the sale of commercial merchandising products such as plastic model kits, masks, posters, candy dispensers, T-shirts, and beverage stirring rods. The licensing agreements specifically authorized the use of Lugosi's likeness from his portrayal of Count Dracula in Dracula and Dracula's Daughter. On February 3, 1966, Lugosi's widow Hope Linninger Lugosi and surviving son Bela George Lugosi filed a complaint against Universal alleging that they were the heirs of Bela Lugosi and that Universal had appropriated property which they had inherited from Lugosi and which was not embraced in paragraph 4 of the 1930 agreement. The complaint sought damages, an accounting of profits, and an injunction against further licensing without their consent. The trial court found that the essence of the thing licensed by Universal was the uniquely individual likeness and appearance of Bela Lugosi in the role of Count Dracula. It concluded that Lugosi had a protectable property right in his facial characteristics and individual manner of likeness and appearance as Count Dracula that descended to his heirs under his will. The court awarded plaintiffs $53,023.23 in damages for licensing agreements executed after February 3, 1964, and issued a permanent injunction against further unauthorized licensing of Lugosi's likeness as Count Dracula on commercial products. Universal appealed. The Supreme Court of California granted a hearing, conducted an independent study of the issues, and adopted the opinion of the Court of Appeal, Second Appellate District, as its own after appropriate deletions and additions.
View caseNo. Liability can arise from unjust enrichment even without demonstrated loss to the plaintiff, as the focus is on the defendant's unauthorized exploitation of the protected interest.
Supporting sources
Yes. The doctrine protects commercially valuable intangibles created through investment when the defendant appropriates them at little cost, filling gaps left by formal intellectual property regimes.
No. Courts have applied it to sports scores, trade dress, and other intangible commercial values when substantial investment creates the asset and the defendant free-rides on that investment.
…has the characteristics of quasi-property as between competitors, sufficient to support an action for unfair competition by misappropriation. 2. The injunction against INS’s appropriation of AP’s fresh news is affirmed. 3. INS may not use the AP’s news as the source of its own news while the news retains commercial value,…