229
Unit Two
Focus on Ethics:
Ethics and Torts and Crimes
See Separate Lecture Outline System
INTRODUCTION
Few other areas of the law are more dynamic or engender more controversy than those relating to torts and crimes.
Developments in these areas are constantly in the public eye. This is partly because these areas involve ethical and legal
questions on such issues as fault (including liability without fault), compensation, the public security and safety versus individual
rights, the influence of lawyers in the judicial system, the use of the Internet to commit wrongful acts, and the nature of
personal responsibility. This Focus on Ethics highlights some ethical issues that have emerged in the application of the law in the
areas of torts and crimes.
ADDITIONAL RESOURCES—
230 INSTRUCTOR’S MANUAL TO ACCOMPANY BUSINESS LAW, TWELFTH EDITION
marketing strategy for off-label uses of an FDA-approved drug. A veteran sales rep assures him that the strategy is
appropriate. The scene addresses corporate culture, whistleblowing, and the legality and ethics of marketing drugs for
patented drug and to invite the doctor to serve as an advisor regarding the drug’s potential new uses. The legal issues
include the ethics and legality of marketing strategies and the relationship between pharmaceutical companies and the
medical profession.
VIDEO SUPPLEMENTS
The following video supplements relate to ethical issues on topics discussed in this feature—
Business Law Digital Video Library
The Business Law Digital Video Library at www.cengage.com/blaw/dvl offers a variety of videos for group or
individual review. Clips related to topics in this feature include the following.
• Drama of the Law
Intellectual Property: Trade Name: Rally Round the Trade Name—The name of your business is an important
intellectual property right. When the name of your business is subject to confusion with another business, a dispute
may occur.
• Legal Conflicts in Business
Privacy in Information Sharing—Solicitation of potential customers, by phone or direct mail, is a common practice
for businesses to generate interest in their products. When a customer list is obtained under questionable
Choosing a Business Name and a Domain Name: Wizard for Hire dot com—A start-up software company finds that
there are others who have similar business and domain names. What options do they have for resolving the conflict?
frame?
• Ask the Instructor
Constitutional Law: Monitoring Employees’ E-mail and Internet Usage—The constitutional right to privacy protects
us from government intrusion. But employers in the private sector are free to monitor their employees, subject only to
specific state laws.
Ethics: Business Ethics an Oxymoron?—Businesses that act ethically can and do succeed in the marketplace. Like all
human activity, business is dependent upon at least a basic set of moral standards. And in the long run, since unethical
conduct is detrimental to relationships and reputation, ethical corporate conduct can be a competitive advantage.
• Real World Legal
UNIT TWO: FOCUS ON ETHICS—ETHICS AND TORTS AND CRIMES 231
• LawFlix
Breaking Away—Others do get ahead by cheating (Scene in which the Italian racing team switches his gears on a
hill, gesture rudely, then uses their tire pump to get him out of the race).
Hooziers—Lines you would not cross; individual safety (Scene in the quarter finals in which a player’s stitches are
pulled, and the coach tells the doctor to patch the player up, against the doctor’s advice.)
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FOCUS OUTLINE
I. Privacy Rights in an Online World
The text presents some of the privacy issues that arise in the online environment: the stealthy nature of data
collection, the undisclosed use of the data collected, and the risky disclosure of personal data.
A. THE INCREASED VALUE OF PERSONAL INFORMATION
Online businesses commonly post privacy policies describing what they do with information obtained from their
customers. Businesses willing to buy and sell personal information must be careful not to violate individuals’
privacy rights.
ADDITIONAL BACKGROUND—
Remsburg v. Docusearch, Inc.
Docusearch, Inc., operates Docusearch.com, an Internet-based information service. Liam Youens, a resident of
New Hampshire, paid Docusearch for information about Amy Boyer. Later, Youens drove to Boyer’s workplace and
fatally shot her, and shot and killed himself. Helen Remsburg, Boyer’s mother, filed a suit in a federal district court
against Docusearch and others, claiming the defendants acted wrongfully. The court asked the New Hampshire
Supreme Court whether, under the state’s common law, a person who sells information about another has a duty to
the other party with respect to the sale.
disclosing the information. The court reasoned that the risk of criminal misconduct is sufficiently foreseeable to impose
harm to the victims, and often results in the victim experiencing post-traumatic stress disorder, anxiety, sleeplessness,
able or even cause the victim to be incarcerated.”
If an information broker obtains information by means of a deceptive phone call to the person to whom the
information relates, should the broker be held liable to the person deceived for any damages caused by the sale? Yes.
The defendants argued that there should be no recovery because an investigator who makes a pretextual phone call to
obtain information does not conduct any “trade” or “commerce” with the person deceived by the phone call. The New
Hampshire Supreme Court reasoned, however, that the state’s “Consumer Protection Act defines ‘trade’ and
There is no language in the Act that would restrict the definition . . . to that affecting the party deceived by the
this state.’ . . . Here, the investigator used the pretext phone call to complete the sale of information to a client. Thus,
Does a person generally have a duty to protect others from the crimes of third parties? No. As the court pointed
UNIT TWO: FOCUS ON ETHICS—ETHICS AND TORTS AND CRIMES 233
sonable risk of criminal misconduct, a duty is owed to those foreseeably endangered.”
B. PRIVACY RIGHTS IN THE WORKPLACE
What is the extent of employees’ privacy rights in the workplace?
II. Should Civil Liberties Be Sacrificed to Control Crime and Terrorist Activities in the Cyber
Age?
Traditionally, civil liberties have been guarded to the greatest extent possible, or at least protests against their
restrictions have often been heard. The text notes the controversy over some provisions of the USA PATRIOT Act and
the difficulty with weighing personal freedom against greater protection.
III. Global Companies and Censorship Issues—Google China
“Google China” (Google.cn) is a version of Google that Google, Inc., tailored to the Chinese government’s censorship of
Web sites that offer pornography, criticism of the government, or information on sensitive topics, such as the
Tiananmen Square massacre in 1989.
A. THE CHINESE GOVERNMENT’S DEFENSE
The Chinese government argued that it was simply doing what other governments do. The United States, for
example, has outlawed the dissemination of child pornography over the Internet.
C. CHINA’S CYBERATTACK AND GOOGLE’S RESPONSE
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IV. Do Gun Makers Have a Duty to Warn?
How should tort and strict liability apply to harm caused by guns? Would it be fair to impose this, or are the dangers
“open and obvious”? Courts generally hold that gun makers do not have a duty to warn.
V. Pharmacies and the Duty of Care
Should pharmacies that dispense mind-altering drugs to drug abusers be liable to third parties who are injured by the
drug users’ actions?
A. THE SANCHEZ CASE
A woman under the influence of the psychotropic drug hydrocodone caused a car accident in which one man was
killed and another person seriously injured. The victims’ families sued the pharmacies that had filled the woman’s
prescriptions. The court held that the pharmacists did not owe a duty of care to third parties.
B. THE CONTROVERSY CONTINUES
VI. Trademark Protection v. Free Speech Rights
Cybergripers, cyberparodists, consumer advocates, and others often complain in cyberspace about businesses and
their policies or products, sometimes by opening a Web site with a domain that includes the business’s name with
“sucks” or something similar added Businesses have not succeeded in suits to obtain the “sucks” domains, which can
be defended on the ground of freedom of speech. Trademarks are not infringed because the public is not likely to be
confused.
VII. Trade Secrets v. Free Speech Rights
The text notes a case considering the extent to which tort law, in an action for misappropriation of trade secrets,
encroaches on the freedom of speech. The case involved the posting of computer code that allows its users to de–
TEACHING SUGGESTIONS
1. In the e-world, most, if not all, businesses need to form policies regarding customer data. Ask students about the
issues that arise in this context. How much is too much for a company to know about its customers? What should the
company’s policy be concerning the use and dissemination of the data that it collects? What are the consequences of
UNIT TWO: FOCUS ON ETHICS—ETHICS AND TORTS AND CRIMES 235
not protecting consumers’ privacy? Should a business be required to disclose this information under a court order, or
could it justifiably refuse?
2. Have students discuss their experiences with computer viruses. In light of these experiences, and considering of
the publicized examples of virus (and denial-of-service) attacks, ask students how real they think the danger from
viruses is. What tort principles might apply in this context?
arguments against this position? Instead of extending or shortening the term of copyright protection, should the nature
and subject of that protection be changed?
Cyberlaw Link
In the war on terror, or in the battle with crime, how should a balance be struck between the needs for security
and privacy? Would new standards and laws help to protect sensitive consumer data? How can an individual protect
his or her privacy online? Does the simple existence of cyberspace mean that there should be a change in the purpose
of copyright and trademark laws?
ADDITIONAL QUESTIONS
2. What is the difference between cybergripers and cybersquatters? Both may be using another’s trademark in whole or
in part without the owner’s permission. A cybergriper may use that mark to protest, or otherwise complain, in good faith and
without profit, about the owner’s product or policy. A cybersquatter may use that mark to exploit the owner’s good will or fame
for profit, which is often construed as a bad faith use of the mark. Is there an ethical difference between these parties and their
acts?
ACTIVITY AND RESEARCH ASSIGNMENT
Ask students to research the most recent examples of some of the ongoing controversies discussed in this feature.
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acceptable for a private company such as Google, Inc., to censor the information that it provides in other nations at the
request of a foreign government. The United States prohibits the dissemination of certain types of materials, such as
child pornography, over the Internet. The U.S. government monitors Web sites and e-mail communications to protect
ETHICS AND TORTS AND CRIMES—
ANSWERS TO DISCUSSION QUESTIONS
1. Some observers maintain that privacy rights are quickly becoming a thing of the past. In your opinion, is it possible
to protect privacy rights in today’s online world? Privacy rights are protected under constitutional law, tort law, and
various federal and state statutes. Protecting privacy rights in the online world is complicated by individual users’ lack
of awareness about how and why their personal information is collected, used, and sold by Internet companies and
others who collect it. Among other methods, cookies are planted in computers to track users’ Web movements and
scan and save other information. In the private sector, this data is important to marketers.
could exercise care in obtaining, retaining, and dispensing the data. For example, private companies can protect their
computer systems by employing passwords and installing firewalls and antivirus software. Passwords can be
determined, firewalls breached, and codes broken, however, so the protections should be ever-changing and updated
2. Many argue that the federal government should not be allowed to monitor the Internet activities and e-mail
exchanges of its citizens without obtaining a warrant. Yet others maintain that in some situations, when time is of the
essence, such monitoring may be necessary to keep Americans safe from terrorists. Where should the line be drawn
between justifiable and unjustifiable governmental interference with American citizens’ civil liberties? The position on
one side of the line between justifiable and unjustifiable governmental interference is that the government should not
be allowed to monitor the Internet activities and e-mail exchanges of its citizens without obtaining a warrant. Civil
situations, particularly when time is of the essence, monitoring may be necessary to keep Americans safe from
terrorists. Online criminal communications can be controlled to some extent by monitoring the e-mail and other
The line between justifiable and unjustifiable governmental interference with American citizens’ civil liberties is
constantly shifting, sometimes in response to emergency situations like the terrorist attacks in September 2001, and
often redrawn. The USA PATRIOT Act enacted in the wake of those attacks, for example, is seen by some as giving law
enforcement personnel too much authority to conduct electronic surveillance, such as monitoring Web sites and e-mail
exchanges. Others, however, contend that a trade-off of some civil liberties is necessary for greater national security.
3. Do companies that do business on a global level such as Google have an ethical duty to foreign citizens not to
suppress free speech, or is it acceptable to censor the information that they provide in other nations at the request of a
foreign government? Doing business on a global scale can involve serious ethical challenges. For example, different
fundamental events. In support of the notion that property rights should be given precedence, in a case involving
encryption to protect the rights of the owners of copyrights to movies, as discussed in the text, the court held that the
therefore be protected it to a lesser extent.
stakeholders. Besides, its search engine informed users which sites were being censored. If it had not cooperated,
Chinese residents would have had less user-friendly Internet access. And this was a step toward more open access in
These points might be countered with the contention that companies such as Google that do business on a global
imprisoned. In the United States—Google’s home—free speech is an important political principle and it is protected as
and it should certainly not be traded off in the pursuit of profit. Besides, the Internet is international and
4. In your opinion, should gun manufacturers have a duty to warn gun users of the dangers of using guns? Would
such a warning be effective in preventing gun-related accidents? Yes, gun manufacturers have a duty to warn gun
users of the dangers of using guns because a warning would be effective in preventing gun-related accidents. Gun
makers whose marketing or sales practices cause a large influx of guns into the illegal secondary market in particular
should be held liable, possibly under a public nuisance theory.
No, gun makers do not have a duty to warn gun users of the dangers of using guns because such dangers are
open and obvious. There is no duty to warn of open and obvious dangers. This is the controlling principle even in cases
in which person have been injured by the illegal use of handguns.
5. Generally, do you believe that the law has struck a fair balance between the rights of intellectual property owners
and the rights of the public? The law has struck a fair balance between the rights of intellectual property owners and
the rights of the public. As discussed in the text, a company’s ownership rights in a trademark used as a domain name
has been held not to outweigh the free speech rights of others who use a similar domain name to criticize or parody
the company. This is an appropriate application of the law because the freedom of speech, which is protected by the
First Amendment to the U.S. Constitution, is a principle more important than property rights. In the specific case of
trademarks, a primary reason that trademarks are protected under U.S. law is to prevent customers from becoming
confused about the origin of the goods for sale—and the use of a domain name that resembles a company’s
trademark to criticize or parody the company certainly does not create such confusion.
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