Business Law

Federalism

The federal government and the 50 state governments share powers

Article 1

Legislative branch (federal law)

Enumerated powers

Certain powers delegated to the federal government

Article II

Executive branch

Article III

Judicial branch

The​ ________ Clause of the U.S. Constitution grants Congress the power​ "to regulate commerce with foreign​ nations, and among the several​ states, and with Indian​ tribes."

commerce

The​ ________ Clause of the​ ________ Amendment to the U.S. Constitution provides that a state cannot​ "deny to any person within its jurisdiction the equal protection of the​ laws."

Equal protection

Fourteenth

The due process of the fifth amendment

Applies to federal government action

Due process of the fourteenth amendment 

Applies to state and local government action

Substantive due provess

Requires that government statutes, ordinances, regulations and laws are clear on their face and are not overly broad in scope

The ________ process form of due process requires that the government give a person proper notice and hearing of legal action before that person is deprived of life, liberty, or property.

procedural due

Takings clause

A clause of the fifth amendment to the U.S. constitution that provides that the U.S. government may take private property from property owners for public use. The government must oay the ownerof the property just compensation for the taking 

Article IV of the Constitution contains the _______, which provides that “The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several states.”

Privileges and Immunities Clause

The Constitution has three main functions:

(1) it creates a national government consisting of a legislative, an executive, and a judicial branch, (2) it divides power between the federal government and the states, and (3) it protects various individual rights and liberties.

Certain powers delegated to the federal government are called:

Enumerated powers

Article I, Section 8 of the Constitution

grants Congress the power to declare war, raise and support an army and navy, coin money, collect taxes, pay debts, borrow money, regulate commerce with foreign nations and among the states, create courts inferior to the Supreme Court, establish rules for naturalization, establish post offices, punish felonies on the high seas, and other powers. Other articles and some amendments to the Constitution grant additional powers to Congress.

Reserved powers, think

State and local governments!

Any government activity or regulation that classifies persons based on a suspect class (e.g., race, national origin, religion, or citizenship) or involves fundamental rights (e.g., voting rights, access to courts) is reviewed for lawfulness using a

strict scrutiny test.

Rational basis example:

Providing government subsidies to farmers but not to those in other occupations is permissible.

_____ is (1) the threat of immediate harm or offensive contact or (2) any action that arouses reasonable apprehension of imminent harm. Actual physical contact is unnecessary.

Assault

Example of assault

Suppose a 6-foot, 5-inch, 250-pound person makes a fist and threatens to punch a 5-foot, 100-pound person. If the threatened person is afraid of being physically harmed, that person can sue the threatening person to recover damages for the assault

_____ is unauthorized and harmful or offensive physical contact with another person that causes injury.

Battery

When a person acts with the intent to injure one person but injures another.

Transferred intent doctrine

The intentional confinement or restraint of another person without authority or justification and without that person’s consent constitutes ____________.

false imprisonment (aka kidnapping)

False imprisonment example

A person who locks the doors of a house or automobile and does not let another person leave is liable for false imprisonment.

These statutes allow merchants to stop, detain, and investigate suspected shoplifters without being held liable for false imprisonment if:

There are reasonable grounds for the suspicion.

Suspects are detained for only a reasonable time.

Investigations are conducted in a reasonable manner.

Merchant protection statutes

Any attempt by another person to appropriate a living person’s name or identity for commercial purposes is actionable. The wrongdoer is liable for the

tort of misappropriation of the right to publicity

Emerson is a famous professional sports player and celebrity. If an advertising agency places Emerson’s likeness (e.g., photograph) on a billboard advertising a product without Emerson’s permission, it has engaged in the tort of misappropriation of the right to publicity. Emerson can sue and recover the profits made by the offending party, damages caused to the player’s reputation, and obtain an injunction preventing the unauthorized use of Emerson’s likeness by the offending party.

Example of tort of misappropriation of the right to publicity

Taking a photograph of someone in a compromising situation without authorization to do so, and reading someone else’s mail, email, or texts without authorization to do so, are examples of invasion of the right to privacy.

Invasion of the right to privacy

The tort of defamation of character requires a plaintiff to prove that:

1. The defendant made an untrue statement of fact about the plaintiff.

2. The statement was intentionally or negligently published to a third party. In this context, publication simply means that a third person heard or saw the untrue statement. It does not require appearance in newspapers, magazines, books, e-books, social media networks, chat rooms, or online forums,

A false statement that appears in writing or other fixed medium is____

libel.

An oral defamatory statement is ____.

slander.

A ______ statement is an untrue statement made by one person or business about the products, services, property, or reputation of another business.

disparaging

Prove disparagement

the plaintiff must show that the defendant (1) made an untrue statement about the plaintiff’s products, services, property, or business reputation; (2) published that untrue statement to a third party; (3) knew the statement was not true; and (4) made the statement maliciously (i.e., with intent to injure the plaintiff).

To prove intentional misrepresentation

The wrongdoer made a false representation of a material fact.

The wrongdoer had knowledge that the representation was false and intended to deceive the innocent party.

The innocent party justifiably relied on the misrepresentation.

The innocent party was injured.

Intentional infliction of emotional distress

A tort that says that a person whose extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another person is liable for that emotional distress

Malicious prosecution

A lawsuit in which the original defendant sues the original plaintiff. In the second lawsuit, the defendant becomes the plaintiff and vice versa.

To prove malicious prosecution

The plaintiff in the original lawsuit (now the defendant) instituted or was responsible for instituting the original lawsuit.

There was no probable cause for the first lawsuit (i.e., it was a frivolous lawsuit).

The plaintiff in the original action brought it with malice. (Caution: This is a very difficult element to prove.)

The original lawsuit was terminated in favor of the original defendant (now the plaintiff).

The current plaintiff suffered injury as a result of the original lawsuit.

Example of malicious prosecution

Two landowners have a dispute over the property line between their two properties. A survey of the properties establishes the legal property line. The neighbor who is disappointed by the result files a civil lawsuit against the other landowner, alleging that the landowner had engaged in intentional infliction of emotional distress, defamation, and fraud. A court determines that the claims are frivolous and were brought in spite and dismisses the lawsuit. Here, the landowner who had been the falsely accused can sue the other landowner and recover damages for malicious prosecution

Negligence is defined as

the omission to do something which a reasonable man would do, or doing something which a prudent and reasonable man would not do

5 key things needed to prove a negligence lawsuit

(1) the defendant owed a duty of care to the plaintiff,

(2) the defendant breached this duty of care,

(3) the plaintiff suffered injury,

(4) the defendant’s negligent act was the actual cause of plaintiff’s injury, and

(5) the defendant’s negligent act was the proximate cause of the plaintiff’s injuries. Each of these elements is discussed in the paragraphs that follow.

To determine whether a defendant is liable for negligence, it must first be ascertained whether the defendant owed a _____to the plaintiff.

duty of care

The courts decide whether a duty of care is owed in specific cases by applying a

reasonable person standard.

A ______ of care is the failure to exercise care.

breach of the duty of care
Example: hrowing a lit match on the ground in the forest and causing a fire is a breach of a duty of care.

Breach of duty of care example

Firefighters who refuse to put out a fire when their safety is not at stake breach their duty of care for failing to act when they had a duty to act.

A person who commits a negligent act is not liable until

Actual cause can be proven

Example of not having actual cause

Suppose a corporation negligently pollutes the plaintiff’s drinking water. The plaintiff dies of a heart attack unrelated to the polluted water. Although the corporation has acted negligently, it is not liable for the plaintiff’s death.

Proximate cause

A point along a chain of events caused by a negligent party after which that party is no longer legally responsible for the consequences of their actions

Proximate cause example

A person is walking on a public sidewalk smoking a cigarette. When the person finishes smoking the cigarette, which is still lit, the smoker negligently tosses it and it lands close to a house. The cigarette causes a fire that burns the house down. In this instance, the smoker is the proximate cause of the damage because it is reasonably foreseeable that tossing a lit cigarette could burn down the house. If the fire jumps and burns down the adjacent house, the smoker is still the proximate cause. If the third house in the row burns, the smoker is probably still the proximate cause. However, if the fire spreads and burns down 100 houses before it is put out (the smoker is the actual cause of all of the damage under the “but for” test), the smoker would not be the proximate cause of burning the 100th house because it would not be reasonably foreseeable that the smoker’s action of throwing a lit cigarette would burn down so many houses. Where does one draw the line of liability? At the fourth house? At the 20th house? The 40th house? This decision is left up to the jury.

A professional who breaches this duty of care is liable for the injury the professional’s negligence causes. This liability is commonly referred to as

professional malpractice.

Example of negative infliction of emotional distress

A father is walking his young daughter to school. A driver of a truck, who is an employee of a business and on company business, negligently runs off the road and onto the sidewalk, hitting the girl but not her father. Suppose that the young daughter dies from her injuries. The father suffers severe emotional distress by having seen his daughter die and manifests his distress by suffering physically.

The violation of a law / code / statute that proximately causes injury is known as

negligence per se

Example of negligence per se

A homeowner hires a building contractor to add a second story balcony to the homeowner’s house. The contractor completes the balcony. Several weeks later, when the homeowner is on the balcony, the balcony dislodges from the house and crashes to the ground, and the homeowner is severely injured. The reason the balcony broke was because the contractor failed to follow the government’s building codes in constructing the balcony.

Res ipsa loquitor

This doctrine raises a presumption of negligence and switches the burden to the defendant to prove that the defendant was not negligent.

Res ipsa loquitur applies in cases where the following conditions are met:

The defendant had exclusive control of the instrumentality or situation that caused the plaintiff’s injury.

The injury would not have occurred ordinarily but for someone’s negligence

Example of res ipsa loquitor

A patient goes in for major surgery and is given a general anesthetic to put the patient to sleep during the operation. Sometime after the operation, it is discovered that a surgical instrument was left in the patient, and the patient suffers severe injury because of this. The patient has no way to identify which doctor or physician’s assistant carelessly left the instrument. In this case, the court can apply the doctrine of res ipsa loquitur and place the presumption of negligence on the defendants. Defendants who can prove that they did not leave the instrument in the patient escape liability; defendants who do not disprove their negligence are liable.

In most jurisdictions, _______ requires a finding that the defendant engaged in willful misconduct or reckless behavior.

gross negligence

When you think of gross negligence, think of 

Reckless conduct

Example of gross negligence

If an automobile driver runs a stop sign by mistake and hits another car, causing injury to its occupants, the driver is liable for ordinary negligence. If that driver had been drinking alcohol before running the stop sign and the driver’s alcohol levels are well above the legal limit, the driver would be found liable for gross negligence because of reckless disregard for the safety of others, which is caused by excessive drinking and then driving.

The _______ doctrine is a special tort rule that imposes liability on a landowner to children who have trespassed onto the landowner’s property with the intent to play on the attractive nuisance and are injured or killed while doing so.

attractive nuisance

A ______ is a subsequent act that occurs after an original party’s act. If the subsequent act, and not the original party’s act, causes injury to a person it relieves the original actor of liability to the injured person.

superseding cause

Example of superseding cause

A manufacturer places a label on a product that explains what the product may be used for, provides instructions on how to use the product, and contains a warning of the dangers of not following the instructions. Taylor purchases the product and removes the label. Subsequently, Taylor is injured when misusing the product and sues the manufacturer to recover damages. Taylor would not have been injured had the instructions been followed and the danger warning adhered to. Here, the superseding cause is Taylor’s removing the label and not following the proper instructions for using the product. Thus, the manufacturer is not liable to Taylor.

An ________ is an act that occurs after the defendant’s negligent act that contributes to or exacerbates a victim’s injuries.

intervening cause

Example of intervening cause

Drew, who is texting on a cell phone while driving a car, runs a red light and strikes Briar, a pedestrian. Briar suffers substantial injuries. A passerby, trying to offer assistance, incorrectly moves Drew, causing a severe spinal injury. The act of the passerby is an intervening cause because it took place after Drew struck the pedestrian. Here, Drew is liable for the injuries caused to Briar by the car accident, but is not liable for the injuries caused to Drew by the passerby’s negligent act of moving Drew after the accident.

Example of the assumption of risk

A race-car driver assumes the risk of being injured or killed in a crash.

_______, which holds that plaintiffs who are partially at fault for their own injury cannot recover against the negligent defendant.

contributory negligence

Contributory negligence example

Suppose a driver who is driving over the speed limit negligently hits and injures a pedestrian who is walking across the road against a red “Don’t Walk” sign. Suppose the jury finds that the driver is 80 percent responsible for the accident and that the pedestrian is 20 percent responsible. The pedestrian suffered $100,000 in injuries. Under the doctrine of contributory negligence, the pedestrian cannot recover any damages from the driver.

Under this doctrine, damages are apportioned according to fault.

Comparative negligence

Several states have adopted a _______ (also called modified comparative negligence) doctrine, which provides that plaintiffs must be less than 50 percent responsible for causing their own injuries to recover under comparative negligence; otherwise, contributory negligence applies.

partial comparative negligence

______, another category of torts, is liability without fault. That is, a participant in a covered activity will be held liable for any injuries caused by the activity, even if the person was not negligent.

Strict liability

Strict liability qualifications

(1) there are certain activities that can place the public at risk of injury even if reasonable care is taken and that

(2) the public should have some means of compensation if such injury occurs.

Strict liability is imposed for ________ that cause injury or death.

abnormally dangerous activities

Strict liability activities

Activities such as crop dusting, blasting, fumigation, burning of fields, and storage of explosives are usually considered activities to which strict liability applies.

Trade secrets

A product, formula, pattern design, or any other business secret

Reverse engineering example

An inventor invents a new formula for a perfume. The inventor decides not to get a patent for the new formula (because patent protection is good for only 20 years). Instead, the inventor chooses to try to protect it as a trade secret, which gives the inventor protection for as long as the owner can successfully keep it a secret. Another party purchases the perfume, chemically analyzes it, and discovers the formula. The trade secret has been reverse engineered, and the second party may begin producing a perfume using the inventor’s formula.

Generally, a successful plaintiff in a misappropriation of a trade secret action can

(1) recover the profits made by the offender from the use of the trade secret,

(2) recover for damages, and

(3) obtain an injunction prohibiting the offender from divulging or using the trade secret.

The ____ is a federal statute that allows an owner of a trade secret to bring a civil lawsuit in federal court against a defendant for the misappropriation of a trade secret.

DTSA

DTSA extensive remodies for the misappropriation of trade secrets

EXTENSIVE

(1) recover the profits made by the offender from the use of the trade secret; (2) recover as compensatory damages its actual loss PLUS any unjust enrichment obtained by the defendant from the use of the misappropriated secret; and (3) obtain an injunction prohibiting the offender from divulging or using the trade secret.

The economic espionage act makes it….

A federal crime to steal another’s trade secrets

Protecting american intellectual property

Designed to prevent theft of intellectual property by foreign actors

A ______ is a grant by the federal government which permits the patent holder to exclude others from making, selling, or using the invention for a limited period of time.

patent

Applicants for patents must file an application with the

U.S. Patent and Trademark Office

An inventor may file a _____________ with the PTO. This provisional right gives inventors 12 months to prepare and file a final and complete patent application.

provisional patent application

Prior art…

…could be a reference, description, or event in the past that demonstrates that the invention in question is not new.

The ____________, a section within the PTO, reviews adverse decisions by patent examiners, reviews reexaminations, conducts post-grant reviews, and conducts other patent challenge proceedings.

Patent Trial and Appeal Board (PTAB)

If a patent is approved, the PTO issues a document called ___________to the holder, which evidences the grant of the patent.

Letters Patent

If a patent is granted, the invention is given a

Patent number

Most patents are _____ that is, they protect the functionality of the item.

utility patents;

Categories of innovation that can be patented include:

Machines (e.g., mechanical device, something with moving parts or circuitry)

Processes (e.g., new way to manufacture glue)

Article of manufacture (e.g., new tool)

Compositions of matter (e.g., chemical pharmaceutical)

Improvements to existing machines, processes, manufacture, or compositions of matter

Living material invented by a person (e.g., genetically modified organisms)

Laws of nature, abstract ideas, naturally occurring substances, mathematical formulas, and scientific principles _________.

cannot be patented

To be patented, an innovation must be:

1. Novel (new, not invented in the past)

2. Useful (must serve a practical purpose)

3. Nonobvious

An invention must be adequately described in the patent application. In order to obtain a patent, the patent application must explain enough about the invention so that someone skilled in the art can both make and use the invention. This is called the __________

enablement requirement.

Utility patents are valid for

20 years

After the patent period runs out, the invention or design enters the _____

public domain

In a suit for patent infringement, a successful plaintiff can recover

(1) money damages equal to a reasonable royalty rate on the sale of the infringed articles, (2) other damages caused by the infringement (e.g., loss of customers), (3) an order requiring the destruction of the infringing article, and (4) an injunction preventing the infringer from such action in the future

A _____ is a patent that may be obtained for the decorative nonfunctional design of an item

design patent

A design pattern has a term limit of

15 years

______ is a legal right that gives the author of qualifying subject matter, who meets other requirements established by copyright law, the exclusive right to publish, produce, sell, license, and distribute the work.

Copyright

Copyright revision act of 1976

The act establishes the requirements for obtaining a copyright and protects copyrighted works from infringement.