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Ethical Structure in Business Decision Making

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In today’s global economy the business world faces many challenges and achieving success is gotten more challenging and complicated. Many factors contribute to organizational success, but innovative cultures and ethical behavior can bring significant advantages to a business. Ethics in business give much significant worth to conduct that enables business owners and officials to decide how they should react to a variety of challenging business situations and circumstances. Moreover, innovation is symbolic to a business having the capacity to improve its manufacturing methodology and introduce new and better products and services to the consumers, not only but also it can be sold or licensed to increase the bottom line.

The intellectual property framework provides businesses security to protect their inventions and other business secrets. Knowledge of intellectual property and applying it successfully is an essential part of business strategy to stay ahead of the competition. Four types of intellectual property can be filed patents, trademarks, copyrights, and trade secrets, and every business holds the intellectual property. A patent grants exclusive rights on the invention to the inventor for the next 20 years of using their invention and restricting others from using their innovation. Congress has the power to issue patents under the authority as per Article I Section 8 of the Constitution. USPTO (The U.S. Patent and Trademark Office) awards patents for innovations that meet four statutory criteria; the innovation must be new, useful, non-obvious, and subject matter eligible. There are three most common categories of patents; utility, design, and plant; a drug patent falls under a utility patent category. The patent holder has a legal right to sue the infringing business in the federal court, and the federal court can stop any infringement and can even receive compensation. However, the patent holder owns the primary responsibility for policing and initiating action against the infringer.

When a drug patent is granted, it does award complete ownership on the invention but does not give a license to the inventor to market the drug and may need FDA approval. Two categories of drugs are sold in the US, prescription drugs and over-the-counter (OTC) drugs, The US Food and Drug Administration (FDA) manages and regulates drugs in the US. Federal law required that all prescription drugs prove to be safe and effective before marketing. FDA regulates prescription medication through the New Drug Application (NDA) process, the procedure to get FDA clearance for a drug. FDA also regulates over-the-counter (OTC) drugs through OTC drug monographs. In some instances where OTC drug confirms to the FDA monograph, the drug may not need any additional FDA clearance for marketing.

FDA (The US Food and Drug Administration) also grants exclusivity, an exclusive right to market drugs upon approval. Exclusivity also works the same as patent, but it is an altogether different process and managed by separate regulatory institutions, and an exclusivity period may last from three months to seven years depending type of exclusivity.

Acme Inc. received a drug patent which can provide immortality to people. However, the president of Acme Inc decided not to manufacture and market the drug, but during the same time duration, another pharmaceutical company Beta Inc imitated the patent and released a copy drug on the market at cost and chose not to make any profits. The matter of contention for this situation included patent infringement, the ethical dilemma with the decision of not to market immortality drug by Acme Inc and Beta Inc to copy the patent, and how alternative dispute resolution can resolve the issue.

Discovering a new drug and getting a patent for the same is a long and remarkably expensive process and the discovery of immortality could change the face of humankind. Beta Inc. copied the patent and launched a new drug on the market without Acme, Inc’s consent or license. Beta Inc, is fully responsible for incurring infringement consequences and Acme Inc has the right to sue Beta Inc in court. Despite having the law on their side, Acme Inc. must be facing many ethical dilemmas like suing Beta Inc. for financial compensation or not getting into litigation because by selling the drug at cost Beta Inc. doing good to populations. Acme Inc has an ethical responsibility toward the general community and by there decision not to market the drug was an infringement of their obligation to society. However, at the same time, it also raises a big question “by playing God” and extending the human life expectancy brings significant ethical issues and policy dilemmas that how longevity will impact the public policies. Numerous studies have been published focusing on the subject of investment in research towards life extension and ethical problems. The bigger question is, what degree of life extension adds to the advantage of society.

Additionally, Beta Inc faces a dilemma on how to handle the allegation of patent infringement, should they to accept and try to work out some financial arrangements with Acme Inc or just reject the argument on the basis of ethics and Acme never had a market exclusivity under CFR Title 21.

Kent’s theory of a deontological also known as duty-based ethics decides morality by looking at actions instead of objectives accomplished. Kant trusted that every individual has the right to be treated with respect as the equivalent of each other and that every individual has the comparing obligation to approach every other person with deference as an equivalent. If we apply Kent’s hypothesis of a deontological in Acme, Inc case, their decision not to move forward with the drug probably will not be a moral one. Whereas, Beta Inc.’s decision violates the intellectual property law is controversial but acceptable according to the deontological framework.

Utilitarianism is a standout amongst the most critical and compelling ethics hypotheses of present-day times. In many regards, it is the standpoint of David Hume, writing in the mid-eighteenth century. Be that as it may, it got the two its name and its most unambiguous proclamation in the compositions of Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873). Indeed, even today Mill’s publication ‘Utilitarianism’ stays a standout amongst the most broadly shown pieces of the tenet. Three rules fill in as the fundamental of utilitarianism. First, Happiness is the only element that genuinely has inherent value. Second, actions are directly in proportion as they will in general advance happiness, wrong as they will, in general, produce unhappiness. Thirst and final, everyone’s satisfaction is equally valuable. As per the guideline of utilitarianism. Acme Inc’s actions would not deliver any happiness and good to the society and stakeholders; the utilitarian principle would see this case as unethical. In contrast, Beta Inc.’s choice to sell a replica of the drug at cost is justifiable according to utilitarianism.

When business managers prioritize the investment in corporate social responsibility (CSR), it is always a desire to have a win-win scenario with all stakeholders, but there could be a possibility that a manager has to trade off some of the stakeholders’ interests. There are different types, and groups of stakeholders in every organization for example employees looking for a better and secure work environment or shareholders would anticipate high returns. The challenge is how does the business manager manage and balance the different level of interest effectively. Ethically, no group is superior to another, and the manager should consider the benefit of all stakeholders possible. However, in this fast-changing business environment, stakeholders’ interests may change; the manager needs to prioritize stakeholder importance and interest in his decision-making. The manager should identify the stakeholders’ contribution to the company and if not looking for any immediate returns than the stakeholder’s interest can be delayed. Stakeholders may not generally bolster the organization’s choice; for example, in case the of Acme Inc. stakeholders may not be very unhappy with the company’s decision not to market the drug, but the manager needs to prioritize stakeholders’ interest based on the situation.

Analysis Group-USA has published a study about US patent litigation trends. In June 2018 the US Patent and Trademark Office (USPTO) granted its ten millionth patent, at the same time the prosecution of IP conflict has radically expanded, just in 2013 over 6000 litigation cases were filed. There are some impediments to the United States Court case, for instance, a patent infringement case may cost up to US$2.6 million (AIPLA), the decision takes longer, and judgment can be challenged in a higher court. Because of these reasons, Arbitration of Intellectual Property Disputes is becoming popular, Alternative Dispute Resolution (‘ADR’) is the process to settle the dispute outside of the courtroom. ADR usually is less formal, more affordable, and less tedious than a court case. ADR can likewise give individuals a greater chance to decide when and how their dispute will be settled.

There are four types of ADR are mediation, settlement conferences, neutral evaluation, and arbitration. In the case of Acme Inc, arbitration may be appropriate because of its rising use demonstrate the advantage of using arbitration to resolve IP disputes in recent years. The arbitration process is private and provides confidentiality to the businesses. Intellectual property disputes have some specific attributes that are better handled by arbitration over by court prosecution for instance Judges may not be well educated on utility patents or intellectual property. Here is a case example of arbitrations conducted under the WIPO Rules, A US-based software development company registered a trademark for their software product in the United States of America and Canada. Another computer hardware company also registered the same trademark in many Asian countries. Both companies were fighting legal battles globally. Finally, both companies entered into an agreement based on the WIPO arbitration clause.

In conclusion, Intellectual property (IP) rights are the most far-reaching assets for any organization because it gives a competitive edge over your competition and business owners own the responsibility to protect it and initiate action against any infringement. In today’s tough cut through global business environment business owners faces many challenges and to address those obstacles and resolve any dispute organization must consider an ethical framework in their decision. In the case of Acme Inc. and Beta Inc, the matter of conflict includes patent encroachment, the dilemma with the decision of not to market immortality drug by Acme Inc, and what is the best approach to resolve any dispute. In this research, we discussed the deontology and utilitarianism frameworks, and the two hypotheses can be considered as the ethical structure in their decision making. Thus, the Alternative Dispute Resolution (‘ADR’) has numerous critical favorable circumstances over traditional court cases, and any dispute can be settled through mediation.   

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Ethical Structure In Business Decision Making. (2022, April 29). GradesFixer. Retrieved May 17, 2022, from
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Ethical Structure In Business Decision Making [Internet]. GradesFixer. 2022 Apr 29 [cited 2022 May 17]. Available from:
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