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BugUSA, Inc. – Case Scenario Essay

This scenario presents the case of BugUSA, Inc.; as a team, we endeavor to address the legal ramifications of each company’s activities. BugUSA, Inc. has legal rights to intellectual property protection, and this paper explores the options available within that realm. WIRETAP, Inc. will face civil liability claims if caught in its underhanded measures, and possibly a civil RICO suit; BugUSA’s security guard Walter, however, has also created a case against its own interests. When another company owns the rights to a web domain that suits BugUSA’s needs, it faces the challenge of how to acquire the domain with as little hassle and as much protection as possible. A robbed vendor may present new tort liabilities for BugUSA, and we explore potential defenses. Finally, an injured police officer may have further claims against BugUSA in light of the company’s manufacturing decisions.

A. Define the different type(s) of legal protections BUG should have for its intellectual property. Explain why these protections are necessary.

A patent would protects BugUSA, Inc. from having other parties copy the design of their electronic devices for 20 years from the date they file with the United States Patent and Trademark Office; a copyright would protect the object codes and source codes of any computer programs created by BugUSA, Inc. or its employees that are used in conjunction with their surveillance equipment; finally, a trademark would protect BugUSA’s ladybug logo from being copied by competitors (Mallon, Barnes, Bowers & Langvardt, 2004). Trademarks, like patents, must be registered with the United States Patent and Trademark Office – registration lasts for 10 years rather than 20, but can be renewed for additional 10-year periods (Mallon et al., 2004).

B. Earlier this year, WIRETIME, Inc., a relatively new company trying to compete with BugUSA Inc., sent an employee to BugUSA, Inc. to get a job. BugUSA, Inc., not realizing Steve was an employee of WIRETIME, hired him to work in its research and development department located in Any State, U.S.A. While working at BugUSA Inc., Steve forwarded any BugUSA, Inc. e-mail he received to WIRETIME Inc. This included e-mail between BugUSA, Inc. officers (both domestic and abroad) that Steve intercepted using his hacking ability. At the end of each week, Steve met with his boss at WIRETIME, Inc. and gave him all the information he obtained about the BugUSA, Inc. product lines. Discuss in detail what type(s), if any, of civil liability Steve and/or WIRETIME Inc. face if caught.

Steve and WIRETIME may face several types of civil liability to include patent infringement, misappropriation of a trade secret, and interference with prospective advantage. WIRETIME would be liable for patent infringement if they used any information or sold any product that contained elements of a patented invention, which they might have received information on from Steve. They would also be liable if a recently designed or changed product had similar elements to any product that BugUSA, Inc. had patented, even if the product was different in design. Since Steve assisted WIRETIME in obtaining information, he could also be liable for contributory infringement, if the information he obtained was used to infringe on the patentee’s rights.

Depending on the information received and used by WIRETIME, they might or might not be liable for patent infringement. Though they might not be held liable for patent infringement, they have are at risk of being liable for misappropriation of a trade secret. A trade secret is defined as, “any secret formula, pattern, process, program, device, method, technique, or compilation of information used in the owner’s business, if it gives its owner an advantage over competitors who do not know it or use it (Mallon et al., 2004).” If the information that WIRETIME received was considered a secret and of potential value, WIRETIME will most likely be held responsible for misappropriation liability.

A misappropriation liability occurs when a secret is acquired by improper means or an individual breached a duty of confidentiality regarding the secret. In Steve’s case, both were committed. First, WIRETIME committed fraud by sending one of their employees to be hired by BugUSA, Inc. in order to gain inside access to the company. Secondly, Steve intercepted certain emails by using his hacking ability and broke his confidentiality agreement by giving WIRETIME information that was probably confidential.

The last civil liability WIRETIME might face is interference with prospective advantage. Since WIRETIME intentionally interfered by stealing certain information, BugUSA, Inc. could argue that they lost an advantage in their industry because of information that was placed into the wrong hands. In order for WIRETIME to be liable, BugUSA, Inc. would have to prove that they had an advantage and that the advantage was lost by the illegal actions of one of their competitors.

C. Walter, a security guard for BugUSA, learns that Steve really works for WIRETIME. Walter takes Steve to a small soundproof room where he keeps him for six hours. During this time, Walter continues to ask Steve what he is doing at BugUSA and what information he has given WIRETIME. Walter tells Steve that he will hurt him if he does not tell him everything. Steve finally tells Walter what he wants to know. Walter then lets Steve go home. Has Walter committed any torts? If so, explain. Discuss any liability BugUSA may have for Walter’s actions.

Walter has committed at least two torts. The first one is false imprisonment and the second is assault. The definition of “false imprisonment is the intentional confinement of another person for an appreciable time without his consent (Mallor et al., 2004, p. 173).” Walter took Steve to a soundproof room and kept him there for six hours, questioning him about what information Steve has given to WIRETIME.

When Walter tells Steve that he will hurt Steve if he does not tell him everything, Walter has committed the tort of assault. “Assault is a tort which merely requires the threat of unwanted touching of the victim, while battery requires an actual unwanted touching (Mallor et al., 2004, p. 175).” According to this definition assault was committed, however since Walter apparently did not actually hurt Steve, Walter did not commit battery.

D. BugUSA has come to you for advice regarding interstate and international e-commerce. BugUSA wants to sell its products through the Internet. BugUSA is concerned about privacy, security, infringement issues, email contract validity, and various other things. BugUSA is also concerned because a company that buys famous and/or company name domain names seems to own the rights to BugUSA.com. The company is willing to sell the domain name for a high price. Advise BugUSA on all e-commerce issues that could possibly affect them. Be detailed in your response.

When dealing with business in the United States, copyright, US patent and trademark laws can help BugUSA in selling products through the internet. When dealing with overseas businesses, BugUSA may turn to the Tariff Act of 1930, the Lanham Act, and patent statute, and the Copyright Act (Mallor et al., 2004). If goods are counterfeited, BugUSA can use the Trademark Counterfeitng Act of 1984 to pursue both civil and criminal actions against the perpetrators. This act allows the company to recover three times the actual damages caused by such acts.

When using the domain name, BugUSA should become a member of the Internet Corporation for Assigned Names and Numbers, This registration would aid in any disputes that might arise. Also, members of the corporation agree to be bound by arbitration would is usually a faster way to resolve disputes than using the Courts. Therefore, BugUSA should use all protections afforded to the company. Becoming a member of different organizations will aid in protections for the company.

E. Shady Town, U.S.A. has been plagued with a recent crime wave. The BugUSA plant in Shady Town has experienced vandalized vehicles in its parking lot and some second shift employees have been robbed as they walked to their cars at night. BugUSA receives shipments of parts and other items from vendors at its receiving/shipping dock located at the rear of each plant. The parking lot and dock areas are well lit; however, some lights are now out. While waiting for the dock manager to return from lunch, a vendor was attacked and robbed of his wallet and electronic chips he was delivering. Discuss what, if any, tort liability BugUSA may have to the vendor and to the BugUSA employees that were attacked. What defenses may be available to BugUSA? Explain your answers.

Both the employees and vendor are considered invitees. An invitee is someone who is on the premises to conduct business, directly or indirectly. As such, the possessor or owner of the premises owes a duty to protect both the employees and vendor from harm arising out of a condition on the premises. Two criteria exist:1.The risk from the harm is unreasonable; and2.The owner of the property knew about the risk.

BugUSA knew both conditions existed. BugUSA knew that the crime in the area had risen. BugUSA knew that crime had reached the premises of BugUSA because employees had already been robbed. Furthermore, BugUSA was responsible for replacing the lights in the parking lot and had not done so.

Defenses available to BugUSA would be that no vendor had been robbed before this time. BugUSA could also say that one step taken to aid in the security of the area was that it was well lit.

F. The attorneys for BugUSA have completed their investigation of WIRETIME and its employee, Steve. If they want to bring a successful action against WIRETIME for civil RICO, what do they need to prove? What type(s) of damages could BugUSA receive?To qualify for civil RICO action, BugUSA will face two challenges. The first is demonstrating that WIRETIME is guilty of two or more violations of RICO anti-racketeering provisions within the previous 10 years – without “‘predicate’ criminal offenses that constitute the necessary pattern of racketeering activity (Mallor et al., 2004, p. 157),” long-term racketeering activity will be improvable. Further, the company must show that it was damaged by the activities it alleges to be RICO violations; given the Supreme Court decisions that individuals are inherently separate from business entities (Mallor et al., 2004), it is likely that it would not face difficulty in establishing that a “person” committed the offense.

Should BugUSA present a successful action against WIRETIME, it could receive triple the amount of damages claimed; WIRETIME could also see its assets frozen and the individuals involved would face “substantial fines and imprisonment for up to 20 years (Mallor et al., 2004, p. 157).”G. Sally DoGood, a police officer in Shady Town, was sitting in a police van monitoring wiretaps placed in the Crime Boss hideout. The equipment she was using, which was an older model purchased from BugUSA, short-circuited and injured Sally. An insulator that could have prevented the possibility of shorts was not included in the original design because of its effect on production costs. The newer models, not yet purchased by the Shady Town Police, have the insulator installed. Sally may have a successful case against BugUSA for what tort(s)? Explain your answer(s).

Sally may have a successful against BugUSA for negligence. In order to prove negligence a plaintiff must show “that the defendant owed a duty of care to the plaintiff; that the defendant committed a breach of this duty; and that this breach was the actual and proximate cause of injury experienced by the plaintiff (Mallor et al., 2004, p. 202).”When the police purchased the equipment from BugUSA they did so with a reasonable expectation that the equipment was safe to use.

BugUSA committed a breach of this duty when they decided to not install the insulator in the equipment even though BugUSA knew there was a possibility of shorts without the use of the insulator. When the equipment short-circuited and injured Sally, BugUSA became liable for personal injury to Sally. Because BugUSA knew the insulator was needed on the equipment used by Sally, when Sally became injured, she would have been eligible for punitive damages as well because BugUSA made a “conscious or reckless disregard for the safety of those likely to be affected by the goods (Mallor et al., 2004, p. 506)” when they decided to save money and not install the insulator.

Strict liability would apply in this case because the company, as a whole, knowingly sold a defective product. A defective product is defined as one with a defect in the design that would have a foreseeable risk of harm. In this case this happened because of the decision to not install the insulator.


Mallor, J. P., Barnes, A.J., Bowers, T., & Langvardt, A. W. (2004). Business law: The ethical, global, and e-commerce environment. (13th edition). The McGraw Hill Companies.

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