Business Law Essay Example

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6Business Law

Business Law

Question 1 — Trade Secret (Kaochs Sales Corp. v. CRA-MAR Video Center, Inc)

Being that Koach was in possession of CRA-MAR customers’ information suggested malice in their acquisition and (mis)use of the same. According to the court ruling, Kaoch’s activities deserved a preliminary injunction to bar him from further causing CRA_MAR an irreparable harm. It was important that the court determines that the CRA-MAR’s customer list as a trade secret in order for the injunction to take effect. In the process, the court established that the list’s value was lost once its contents had been made known to the competitor. In effect, the customer base that CRA-MAR boasted of had begun to decline, which would eventually force the company out of business. Thus, the court was justified to find that irreparable harm would prevail from Kaoch’s unchecked use of CRA-MAR’s customer list (Roger & John, 2003).

Furthermore, the court established that the resulting irreparable damage to CRA-MAR from Kaoch’s use of the trade secret outweighed the benefit that would be lost by Kaoch’s as a consequence of the injunction being imposed. Similarly, the decision as to whether or not the injunction would be issued depended on whether the public would be disserved in the process. Although the parties disagreed on the issue, the Uniform Trade Secrets was enacted to serve the public by protecting their trade secrets. In such a situation, the enforcement of the law through the injunction clearly serves the public, and thus the injunction was necessary (Rebel, 1995).

With reference to the enjoining him from redeeming the promotional postcards already mailed to the CRA-MAR’s list of customers, Kaoch argued that enjoining him from reaping the benefits of the previous use, was not proper. The court established that a status quo had to be maintained following the pending controversy

According to Marina (1998), it is advisable to avoid litigation associated with trade secret because of their expensive, time-consuming and distracting nature. Once a case of compromised trade secrets has been discovered, the plaintiff should establish the validity of the event. If opportunity exists, the plaintiff should seek to convince the judge to impose an immediate injunction on the defendant. This way, the risk of further irreparable damage will be avoided through the defendant’s persistent use of the acquired trade secrets.

As a valuable tool in the operation within the industry, trade secrets are vital incentives to innovate. Although the companies benefit from reaping the benefits of their innovative ideas, trade secrets instead of disclosing, suppress particular innovation to the public.

Upon the request of the plaintiff, the imposition of a preliminary injunction will depend on a number of factors. These factors emanate from the restatement of torts and though not actual law will determine whether or not the court will recognize their intellectual property as a trade secret. First, the court will seek to determine the extent to which the information (such as the customer list) is known beyond the plaintiff’s business. the information must be completely unknown to the competitors and the public as well, for it to be considered a trade secret (Chapman, 1990).

Secondly, the court will question the extent to which the employees know the information. Trade secrets stipulate that such information be released only the employees who need or use them. The courts will also the company’s efforts to protect the trade secret, as a third factor. Fourth, the court will consider the value of the information or materiality to the potential competitors. With highly valued information, the court will actively avail protection; and vice versa. Fourthly, the court will seek to ascertain the effort, time and money incurred by the plaintiff to acquire and preserve the information. Lastly, the difficulty with which ease of access to the information or intellectual property by other stakeholders, is considered by the court. The complexity of access will attract increased protection from the courts; and vice versa (Marina, 1998).

Question 2 — Cafazzo v. Central Medical Health Services, Inc

Having undergone a surgery to implant a mandibular prosthesis that was defective six years later, Caffazzo (Plaintiff) sued the defendants for product liability. Although sued for product liability, the defendants (surgeon and hospital) cannot be held responsible because they are not the sellers/manufacturers of the products. The plaintiff claimed that the product was defectively designed and was provided without a warning that would ensure safety.

In response to the issue as to whether a physician and the hospital can be held strictly liable for the defects in a product during the provision of medical services, the court ruled in favor of the defendant. This ruling outlined the relationship that the hospital and the physician had with the plaintiff; one of service delivery according to their skills and position as a provider. However, the defaulting product was a mistake of the manufacturer, hence reliving the defendant of strict liability (Simon et al., 1985).

In order to have won the damages caused by the surgeon and the hospital, the patient would have, before beginning the surgery, sought entered into an agreement with the defendant appertaining to the performance of the mandibular prosthesis. This way, the default six years after installation would be binding to the parties and thus guarantee compensation to the plaintiff (Shavell, 1980).

Similarly, in order to win damages for the faulty product, the patient should sue the manufacturer of the prosthesis; as the policy of strict product liability extends to the manufacturer. In the ruling, the court differentiated the seller and or the manufacturer of the product from the service provider.

According to Rebel (1995), the doctrine of strict liability for the defendant can be imposed without regard to fault, foreseeability, causation or standard of care. As long as an individual was involved in the stream of commerce for a given product (from producer to wholesaler, even to the retailer) will all be possibly held liable for the damages caused by the defective product. Although the injured party has to prove the default in the product, the doctrine does not necessitate prove of negligence on the side of the defendant. Neither is it a requirement that the injury was foreseeable or had a probable cause. Therefore, the patient would have qualified for damages hard the lawsuit been directed to the parties involved in the production and distribution of the prosthesis; instead of the physician and the hospital.


Chapman, Bruce (1990). ‘Punitive Damages as Aggravated Damages: The Case of Contract’, 16 Canadian Business Law Journal, 269-280.

Marina Lao. (1998). “Federalizing Trade Secrets Law in an Information Economy,” 59 Ohio State Law Journal. 1633.

Rebel J. Pace. (1995). “The Case for a Federal Trade Secrets Act,” 8 Harvard Journal of Law & Technology, 427.

Roger, E. S & John, R. T. (2003). Intellectual Property: The Law of Copyrights, Patents and Trademarks. Thomson-West, § 16.2.2.

Shavell, Steven (1980). ‘Strict Liability versus Negligence’, 9 Journal of Legal Studies, 1-25.

Simon, M. J., Wolf, R. G. and Perdoff, J. M. (1985). ‘Product Safety, Liability Rules and Retailer Bankruptcy’, 51 Southern Economic Journal, 1130-1141