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US Law regarding BUG, Inc and electronic recording devices

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BUG, Inc., a company based in the city of Springfield, in the State of Columbia, U.S.A. designs, manufactures, and sells electronic recording devices. These devices are used by law enforcement agencies (police, FBI, etc.) to intercept and record sounds and voices. The equipment taps into telephone wires, cell phone transmissions, and picks up sounds and voices through the walls of a house or in open-air locations through the use of a remote microphone.

For each question about BUG, Inc. below, please provide the best answer of the four possible choices.

1. One of the reasons BUG devices work so well is because the parts use a special alloy of rare metals that are produced in BUG's facility for certain of the parts. Which of the following methods would be inconsistent with BUG using the law of trade secrets to ensure that its devices are the only ones that use this alloy?

A. Limiting the number of people who have access to the alloy's composition
B. Requiring all employees who handle the alloy to sign a non-disclosure agreement
C. Patenting the manufacturing method for the alloy
D. Keeping the blueprints for the devices under lock and key

2. One of BUG's main competitors is WIRETAP, Inc., a company based in the nearby state of Deseret. A WIRETAP employee used a fake name and applied for a job at BUG. This employee forwarded all of the e-mail he received to WIRETAP's corporate headquarters once a week for six weeks, and at the end of the six week period, he was given access to the special alloy that BUG uses in its devices. He was caught with a photocopy of the alloy's formula and manufacturing method in his briefcase when he left the BUG office. Which causes of action appear likely to succeed in a civil lawsuit by BUG against WIRETAP?

A. Fraud
B. Civil RICO
C. Misappropriation of Trade Secrets
D. All of the above.

3. If the spy sues BUG based on the security guard's conduct, what is the spy's best avenue for recovery of damages?

A. Civil RICO
B. Defamation
C. Respondeat Superior
D. Breach of Contract

4. BUG wants to start marketing its products to the public via the internet. However, another company called "Columbia Cybersquatter Corporation" has already obtained the rights to the web address www.buginc.com. What is the most effective legal cause of action available to BUG to obtain the rights to this website address?

A. Commercial Defamation (or "disparagement")
B. Violation of Trademark
C. Conversion
D. Fraud

5. A member of the Springfield Police Department was using one of BUG's devices to monitor potential criminal activity. The device included an earpiece that is supposed to be inserted into the user's ear so that the user can hear what the device is recording. Unfortunately, the earpiece on this particular unit shorted out and the unit caught fire. The police officer was badly hurt and will have some level of permanent hearing damage. BUG is liable for these injuries if which of the following is true:

A. BUG should have anticipated that a short-out might cause a fire while the device was in someone's ear, but this possibility did not actually occur to anyone in the company involved with the product, and no warning of this potential risk was attached to the product itself.
B. The specifications of the device are such that a short-out and fire will not happen, but this particular unit was made defectively due to an employee not paying attention while assembling the product.
C. The device was manufactured according to specifications, but the specifications included a defect that created a risk of the short-out and fire - even though at the time the device was designed and manufactured, it was considered "state of the art" for safety.
D. If any of A, B, or C were true, BUG is liable for the police officer's damages.

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Solution Summary

In a 1661 word solution, the response presents a clear and detailed view of the law with regard to electronic recording.

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1.a) patenting the manufacturing method for the alloy is the best way to ensure that BUGs devices are the only ones that use this alloy
The law says that a trade secret is:
A formula, process, device, or item of information used by a business that has economic value because it is not generally known or easily discovered by observation or examination and for which reasonable efforts to maintain secrecy have been made
- Trade secrets are a form of intellectual property. Many states have enacted laws which create an action for damages or injunctive relief against misappropriation of trade secrets by improper means. Information contained in a patent is not protected as a trade secret.

Question 2. D. Fraud, because he used a fake name and applied for a job at BUG, Civil RICO because he did not do the scam alone but was placed at BUG by WIRETRAP and Misappropriation of Trade Secrets because he forwarded the e-mails and was caught with the photocopy of the alloy's formulae.

The federal RICO statute is a part of the 1970 Organized Crime Control Act. The act sought to strip organized crime of the protection and profits it received through the infiltration of legitimate businesses. The act permits criminal prosecution and civil suits against groups and organizations that engage in a "pattern of racketeering activity" in order to acquire or maintain a business "enterprise." The terms of the law were broad, but were thought necessary to accomplish its purpose. In January, 1970, while testifying on the bill, Lawrence Speiser, legislative director of the American Civil Liberties Union (ACLU), endorsed the government's efforts to control crime but warned that there was "a serious danger that the government's zeal in the pursuit of organized crime may result in a pervasive undermining of important civil liberties... to the detriment of us all."

There are several aspects of the act that are left open to interpretation. The term "enterprise" is so vague as to encompass almost any grouping of individuals, even after efforts by the Supreme Court to narrow its application. The meaning of a "pattern of racketeering" is similarly ambiguous. RICO is now used in almost every area of business affairs and law, from securities and banking to landlord-tenant disputes, from discontented utility customers to intra-church spats. Rulings by the Supreme Court have so far found all of these uses of RICO constitutional. In the 1985 ...

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