BUG, Inc. Case Study

BUG, Inc. Case Study

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BUG, Inc. designs, manufacturers, and sells recording devices that are used by law enforcement agencies to intercept and record sounds and voices. BUG employees write the software that supports BUG. BUG currently ha exclusive contracts with most state and federal law enforcement agencies within the United States. BUG is considering expanding its marketplace to an international level; the manufacturing plants are split between foreign countries and the United States.
Intellectual Property Patents, copyrights, trademarks, trade secrets, and names are intellectual property rights. Federal and states laws have been established in order to protect company’s assets from misappropriation and infringement (Cheeseman, 2004, pg. 323). Patents were created to protect inventors when making their inventions public and to protect patent inventions from infringement (Cheeseman, 2004, pg. 324). Established patents are not only recognized by the United States’ federal government, but by international trade organizations like World Trade Organization (Cheeseman, 2004, pg. 327). The Copyright Revision Act of 1976 protects copyrighted works from infringement (Cheeseman, 2004, pg. 332). Trademarks and logos are equally important to BUG, and they have established a logo that is used to identify the company with the different types of products with this symbol ® (Cheeseman, 2004, pg. 341), such as a ladybug wearing a set of headphones which is the company’s logo. Trademarks protect the owner's investments and goodwill in a mark. This prevents consumers from being confused as to the origin of goods and services.
WIRETAP Employees and businesses are expected and most often required, to conduct themselves ethically. Much of the law is based on ethical standards and the responsibilities set forth for business and its employees. When and if an employee is put into a situation in which they are led to question their duties and/or actions, this should then lead the individual to question the ethical relativism of the situation. Businesses have the responsibility to uphold their corporate citizenship. In this case, neither Steve nor Wiretap upheld their ethical responsibilities because Steve intentionally misrepresented himself with BUG, Inc. and Wiretap was negligent of Steve actions through the rule of respondent superior.
Steve, an employee of Wiretap, was sent to BUG who then hired Steve, without the knowledge that he was a current employee of Wiretap. Steve forwarded any and all information about BUG to Wiretap through interception and hacking. With that, Steve and Wiretap will face civil liabilities such as espionage of BUG’s trade secrets and / or confidential information.

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The Economic Espionage Act of 1996 was enacted that the stealing of trade secrets is a federal crime. According to the Business Law text, a person may face penalties including prison time and fines. In this case, Steve and Wiretap will face a civil lawsuit for their illegal actions and acts of espionage. Steve obtained confidential information and secrets from BUG through theft and hacking therefore committing a tort, therefore violating his duty of accountability with Bug. Wiretap is then liable for Steve tortuous conduct because Steve was acting within the authority of Wiretap.
Walter’s Interrogation a current BUG, Inc. security guard, Walter, learned of the identity and knowledge of the illegal actions of Steve. With the finding of Steve’s actions, Walter then interrogates Steve for approximately six hours in which Walter threatens harm upon Steve. Walter has the responsibility to uphold his duty of cooperation with Steve even though Steve committed an illegal act. If Walter did act out against Steve, BUG would be held negligent for Walter’s actions. Walter then exceeded his scope of authority by taking actions into his own hands, and was wrong for threatening physical harm against Steve. BUG would be held liable for the intentional tort of its employee, Walter. If Walter did harm Steve, he would have committed a wrongful act by attacking Steve, which would then impose liability against BUG, Inc and would be an intentional tort through the work-related test and a civil suit against Walter.
While BUG plans to sell their product over the Internet, they have many concerns about how they will be able to adhere to interstate and international e-commerce. Needing uniform law, the Uniform Electronics Transaction Act was developed by the National Conference of Commissioners with the purpose of facilitating electronic commerce. By establishing electronic transaction records, electronic contracts and signatures became just as enforceable as paper transactions (Cheeseman, 2004, pg. 365). When a company finds that someone else owns the domain name corresponding to their corporate name or product trademark, the company can choose a different domain name, pay a hefty price for the domain name, or dispute the domain name from the current owners. If BUG decides to dispute, the Internet Corporation for Assigned Names and Numbers will have to be approved through arbitration procedure (Cheeseman, 2004, pg. 359).
Shady Town Crime Wave The tort liability that BUG may incur is a victim pursuing a civil suit for personal injury from the employees, negligence against BUG from the vendor and premises liability from the vendor because of the criminal trespassing and committing a crime against the vendor. Property owners are increasingly being held responsible for crimes committed on their property (Florida, 2007). Strategy for business owners should include knowledge of worker’s compensation laws, documentation of community security standards, periodic security inspections with surveys and knowledge of crime statistics in the area (Schmedlen, 2007).

“Liability theories include breach of contract, strict products liability, negligence, breach of warranty, negligence and intentional misrepresentation and neglect and strict failure to warn,” (Bodiford, 2007). These are all possible torts being used against companies that encounter violence against employees and vendors. Publicly accessible places such parking lots could be pivotal in cases unless the victim can prove that they were pursuing BUG’s business and not personal business (Schmedlen, 2007).
Community standards for security is basically a comparison of what other businesses in the industry and in the area are doing to provide a safe working environment for their employees and vendors. Surveys and documentation from similar industries or neighboring companies, as well as BUG’s security measures will be helpful should someone sue BUG in a liability suit. Security surveys should be performed and documented quarterly by an outside source to protect BUG in litigation (Schmedlen, 2007). An important ally for the third party security inspector should be BUG’s own security director who will have additional insight and real world experience as to which areas seem to be affected by the current problem being experienced by BUG. Current crime statistics for the area used as raw data should be researched further to provide comprehensive information for the jury and judge (Schmedlen, 2007).
For BUG to protect their liability against claims, it is recommended that the following five basic elements to be used to construct a violence prevention program. The five components include:
1. Management and employees should combine forces to combat violence.
2 .Work site analysis to identify existing hazards.
3. Develop measures to protect employees.
4. Training and education: provide all employees with education and training regarding the potential security hazards and the procedures for protecting themselves and their coworkers (Terror, 2007).
5. Evaluate the workplace violence prevention program by encouraging communication with management and employees (Terror, 2007).
Steve’s Investigation Passed in 1970, the Civil RICO law, Racketeering and Influenced Corrupt Organizations, was established to protect legitimate businesses from organized crime (Gunst et al, 1990). The law can be interpreted on racketeering activities by an enterprise including murder, extortion, kidnapping, mail fraud, and telephone fraud (Gunst et al, 1990). In order to bring a successful action against WIRETAP for civil RICO, BUG must prove that Steve’s actions constituted criminal activity. BUG may need to prove that Steve hacked and intercepted email messages, which represents a violation of the sections of RICO that deal with mail fraud. BUG will need to prove that Steve, on behalf of WIRETAP, did more than commit a single illegal act. RICO statute applies to a person who commits any two of 35 federal state crimes (Joffe, 2006). If found responsible, Steve and WIRETAP could be fined up to $25,000 and or up to 20 years in prison (Joffe, 2006).
Sally DoGood Negligence and Duty is a tort law that Sally DoGood could use to develop a successful case against BUG, Inc. For the most part, companies have a duty to reasonably protect their customers from harm while using their products. The moment BUG became aware that there was a hazard and the possibility of personal injury by not having the insulator, they should have announced a recall and/or provided an insulator to the owners of the older model at no charge. By announcing the recall, BUG would have satisfied their responsibility and liability. BUG made the decision to do nothing. Sally’s injury could have been prevented by receiving an insulator to use with the older model. Since BUG was aware of this defect, as well as the fact that it could cause personal injury, but chose to do nothing, they would likely be found liable for the personal injury that was incurred due to the defect.
There are many considerations for BUG when taking a step that BUG needs to be aware of such as copyrights, employee ethical standards and company liabilities. Without the proper awareness of these topics, BUG may not be able to make the transition they are hoping for successfully. Knowledge and good information are the keys here.

Bodiford, R. Inadequate security: liability for security system failure retrieved on July 27, 2007 from http://www.raymondbodifordlaw.com/CM/FirmPublications/FirmPublications91.aspCheeseman, H. R. (2004). Business Law: Legal, E-Commerce, Ethical and International Environments.
Einstein Law, Inc., (2004). In Understanding Negligence and Tort Law/ Personal Injury Law. (sect. Negligence Cases and Tort Law). Retrieved July 27, 2007, from http://www.personalinjuryfyi.com/personal_injury_negligence.htmlFlorida Personal Injury Defense Law: General retrieved on July 27, 2007 fromhttp://www.weblocator.com/attorney/fl/law/pidefgen.htmlGunst, P. H. & Levlin, R. B. (1990, Jan.). In RICO: A Runaway Anticrime Law. (sect. Nation’s Business). Retrieved July 25, 2007, from http://findarticles.com/p/articles/mi_m1154/is_n1_v78/ai_8287473/pg_3Joffe, (2006). (sect. RICO Cases). Retrieved July 28, 2007, from http://www.joffelaw.com/rico.htmlSchmedlen, R. H. Premises liability: heading off the liability headache retrieved on July27, 2007 from http://www.securitymanagement.com/library/000383.htmlTerror and violence in the workplace retrieved on July 27, 2007 fromhttp://www.elt-inc.com/Terror_and_Violence_in_the_Workplace.htmlWikipedia, (2007). Retrieved July 27, 2007, from http://en.wikipedia.org/wiki/Tort
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