The Implications of Business Law
When you think about what a business is and what it does, it is often easy to forget that there is a large legal framework that surrounds it. Business law creates solid guidelines for business operations, contracts, the organization of companies, and the responses to civil and criminal violations. When companies create contracts, they often have to consider all aspects of multiple laws, both federal and state-specific. Business law also influences companies that may have dealings in foreign countries. Laws addressing the organization of companies help to create sets of procedures and standards that influence employee perceptions and productivity, workplace culture, and overall happiness . Business law also sets the legal course in the event that a business is sued either for malpractice or criminal behavior. Business law also dictates the outcome of civil disputes and can determine major penalties in some lawsuits including forced dissolution. Business law is the bedrock of many companies. While it may not always be easy to see, it is significant to operations and the future of most companies. Studying case studies can help others to understand the real-world applications and outcomes involved with business law.
Notable Business Law Cases
Significant precedential business law cases often help to shape current legal practices and principles in the business sector. A few landmark cases are discussed below.
Darton v. The Darton Group Ltd
The Darton v. The Darton Group Ltd case, decided by the Supreme Court of Canada in 2005, helps to clarify the ownership and post-termination protection of intellectual property. In this case, the plaintiff Darton created a system to protect a pharmaceutical product from drug counterfeiters. The defendant Darton Group Limited owned 100 per cent of the shares in the Plaintiff Darton. The Defendant then sold its investment in the plaintiff to the plaintiff’s competitor for approximately $300 million. Darton argued that he was entitled to approximately $20 million in compensation pursuant to his employment contract with the Defendant. The primary issue was whether the Plaintiff was entitled to any compensation. The case went all the way to the Supreme Court of Canada in a finding that the defendant Darton Group Limited did not have exclusive rights to the intellectual property. The Plaintiff Darton was joint owner of that Intellectual Property, since he created the system. This case is important as it gives individuals a large degree of protection when developing new products. It also helps to clarify the law surrounding who owns intellectual property, which can often be an unclear point in a case.
Honda Canada Inc. v. Keays
The Honda Canada Inc. v Keays case is another important case for businesses. This case began in 2003 as a Human Rights Action. Keays was employed by Honda to supervise a group of employees in its production department. Honda Canada Inc. v Keays could be known as Ontario’s most famous wrongful dismissal case. In this case, the plaintiff employee Keays was seeking compensation for being wrongfully dismissed from his position with Honda Canada Inc., as well as general damages and damages for injuries under the Human Rights Code. Honda Canada Inc. v Keays was the first case to make its way to the Supreme Court of Canada on the subject of damages for discrimination. The Supreme Court found that the plaintiff was not entitled to damages, however the court did provide guidance to lower courts in future cases addressing damages in Human Rights cases. The Supreme Court said that there should be a high degree of deference paid to the parties that would decide the amount of damages available. The facts along with the way the case was argued, led to the Court dismissing Keays application for damages. The Court also found that no general damages award was available under the Human Rights Code.
Business Law Case Study: Corporate Governance & Compliance Issues
Corporate governance refers to the systems, rules, and processes by which companies are directed, controlled, and held accountable. A recent corporate governance case study involves the Weil Gotshal & Manges Law Firm. Weil Gotshal & Manges was recently sued by its former partner, Frank Aquila, after his demotion from the firm in 2013. According to the lawsuit, Aquila was demoted by Weil Gotshal’s Chairman, but under guidance from the firm’s management committee. After Aquila’s demotion, he filed a demand for derivative action on behalf against the firm’s management committee members.
As a result of Aquila’s demotion, he sought $100 million in damages alleging breach of fiduciary duties, detrimental interference, tortious interference, violations of corporate law, and breach of contract. According to top lawyers, however, Aquila’s lawsuit faces some critical problems. One of the major issues in Aquila’s case is establishing standing necessary to bring a derivative suit on behalf of the firm. A top lawyer from New York stated that if Aquila lacks standing to bring the derivatives claims, then it will be game over for Aquila’s lawsuit. Aquila will face another major challenge if his case continues as he will have to prove that his demotion had an adverse affect on the firm.
Cases relating to Intellectual Property Rights
In addition to contract disputes and antitrust, the circuit courts have heard many influential business law cases concerning the scope and enforcement of intellectual property rights. While it’s more common for these cases to arise before the ITC or Patent Office, we have seen a number of such cases in the federal circuit courts, including:
Freecycle Sunnyvale
Freecycle Sunnyvale involved claims by Freecycle that its brand was being infringed by others. In Freecycle Sunnyvale, the defendant ran a site with some similarities to Freecycle, but applied a different name. The top-level domain was the same: freecycle.org. However, the owner of that domain added to it, with a second level domain: svp.com, so that he ran a brand called svp.freecycle.org. The district court granted summary judgment for the defendant because, among other reasons, when the page loaded in most browsers, the displayed page name was svp.freecycle.org. It was only visible in the page source code that the identifier Freecycle was used on a hidden part of the web page. The Federal Circuit reversed and remanded, holding that the district court erred in ruling that no reasonable trier of fact could find that svp.freecycle.org would confuse consumers about the source of goods sold thereon. Following an analysis similar to that used in Blinded Veterans Association v. United States, the Federal Circuit determined that the similarity of the two marks would lead some consumers to believe that the page at svp.freecycle.org originated from the Freecycle organization. Some of the factors considered by the court in this analysis included: In sum, this case shows that courts continue to use a flexible approach to trademark infringement cases, tailored to the interactive internet (with other approaches having been used to accommodate older issues such as signboard use).
Pitney Bowes
In Pitney Bowes, the Federal Circuit overturned the ITC’s conclusion that importation of certain products violated Section 337. The ITC held that a partially automated process for creating postage indicia infringed certain patents owned by PB, but also that the accused products did not infringe certain additional PB patents because the commission under the authority of the ITC did not violate Section 271(f)(1). The ITC reached this conclusion based on the finding that the "entirely domestic" claims at issue do not extend to straight-out-of-the-box English-language versions of software that require the additional action of a Trained Provider to change the language setting. The Federal Circuit vacated the ITC’s decision with respect to the "entirely domestic" claims, because the ITC failed to follow its own regulations regarding evidentiary standards. In addition, the Federal Circuit determined that the abbreviation "available" in the software did not constitute user input within the meaning of Section 271(f). Noting that Section 200 of Title 35 defines "manufacture" as "a product which is the result of manufacture," the court rejected the ITC’s conclusion that this definition includes "providing inputs necessary to produce a component" such as browser plug-in software.
Chemetall
The Federal Circuit in Chemetall determined that the phrase "that has a molecular weight of between about 4,000 and about 10,000 Da" was indefinite because a person of skill in the art could not identify any molecular weights in the disputed range of 4,000 to 10,000 Da. The court rejected Chemetall’s argument that the words "about" and "between" served to define the outer boundaries of the purportedly indefinite claim limitations, noting that "[w]hile the words ‘about’ and ‘between’ may some[times] serve to define the precise metes and bounds of a claimed invention, in the circumstances here they fail in that regard." Critically, the court held that "[f]or a numerical range to satisfy the definiteness requirement, the boundaries of the range must be adequately discernible." This case continues the development of the definiteness standard and puts to rest the issue of whether "between" and "about" are words that may define the outer limits of a term.
Case Studies in Antitrust & Competition Law
The Sherman Antitrust Act (1890) is the first and oldest federal antitrust law in the United States, and its impact has been massive since its passage. The act prohibits monopolies "in restraint of trade or commerce among the several States." Prison sentences and fines are set for anyone violating it. Federal Trade Commission (FTC) suits can also be filed to help promote competition within the marketplace.
A recent case, United States v. Aetna, Inc., saw the Justice Department overturn the merger of two of the nation’s biggest health insurers. In this case, Aetna and Humana were to merge, but they had competing business operations in fewer than 350 U.S. counties. The DOJ believed that the merger would result in huge market disruptions in the areas where both companies were already competing. The DOJ filed a complaint asking for an injunction against the merger, which was granted, effectively putting an end to it. In the end, the consolidation of the two companies would have cut competition, raising the cost of care for more than 1 million people.
In another case , Microsoft Corporation v. United States, a competitor claimed that Microsoft violated the Sherman Act by monopolizing the PC market, creating an unlawful monopoly in two markets specifically – Intel-compatible PC operating systems and Internet browsers. This case accused Microsoft of using monopolized technology from its Microsoft Windows operating system in order to create a new monopoly in browser development (Internet Explorer). The U.S. Court of Appeals for the D.C. Circuit found that Internet Explorer was an illegal monopolization in hosting Web site access, although in violation of an antitrust law, and there was no practicality in separating the browser app from the Windows operating system.
In 2004, the European Commission (EC) required Microsoft Corporation to unbundle some of its proprietary Windows client, releasing Windows Server Server Message Block 2.2 (SMB) communications protocols as free-to-use licenses, and 2008 led to the introduction of other Microsoft products to aid open source applications.
Cases in Business Law: Contract Law
Disputes arising from a breach of contract are exceedingly common in the business world. A business (or individual) will enter into a contract to perform certain services for another entity. If one of the parties does not fulfill his or her obligations under the contract, that may amount to a breach (though sometimes the allegation of breach can be thrown into doubt by the presence of a legal excuse). A party to an alleged contract breach dispute may pursue a claim for damages if, in fact, the contract was breached.
For example, in the recent case of B. Hemmle, Inc. v. Round Up Construction, LLC, the claimant alleged that the Respondent breached a contract to install a conveyor system required in the construction of a new facility for the claimant. Respondent denies that it breached the contract, and argues that the claimant unreasonably delayed giving the go-ahead for installation of the conveyor belt, thus causing the damages at issue.
This case is currently pending before the BBB. In the meantime, we can only make predictions as to the outcome. The tribunal in this case would need to determine whether the claimant has offered sufficient evidence to support any such claim for damages. The Tribunal would then have to consider the arguments of both parties and determine whether the claimant was entitled to an award of damages.
While the usual way to resolve a contract dispute is in court (if the value of the disputed contract is over $25,000), or in arbitration (if the contract contains an arbitration clause, and the amount in dispute is under $25,000), it is important to remember that more times than not, a lawsuit is not necessary to resolve a contract dispute. The parties can engage in mediation before filing a lawsuit, and often, the parties can arrive at a resolution on their own, without the need for any third party involvement.
Cases in International Business Law
Overview: Intellectual property, international mergers and acquisitions, transnational securities violations, and the complexities of international commerce in all its forms…these are just a few of the issues that have crossed the desks of business lawyers in a global economy. Let’s take a look at notable case studies that international business law attorneys are frequently called upon to deal with.
AMTO v. Republic of Zaire
Background: In 1982, ATMO, an American corporation, entered into a joint venture agreement with Zaire to explore the country’s gold reserves. After three years of exploration in the country, in which the government made various breaches of contract, ATMO sought, and was granted, recourse in arbitration for its damages. ATMO brought an action seeking arbitration against Zaire as a state and the directors of Zaires’ Ministry of Mines and Energy under The Washington Convention on Settlement of Investment Disputes between States and Nationals of other States, Article 25 (2) (b).
Element of International Law / dispute: Sovereign immunity and state and director liability in arbitral law.
Outcome: The court held that sovereign immunity was applicable. However , the court found that Zaire’s acts were commercial in character, rather than sovereign. The court illegitimized Zaire’s alleged demands for bribes and acknowledged ATMO’s claim for compensation for economic loss. Tortious conduct, by individuals acting on behalf of the State, was open to direct suit.
Bersch v. Midland
Background: In 1974, Midland Bank hired Aasleson & Goodyear, an American accounting firm, to audit its financial records, which it had based in the Bahamas to avoid United Kingdom taxes. Bersch and other shareholders in Midland sought class action accusing Goodyear of fraud on the part of Midland.
Element of International Law/ dispute: Jurisdiction over extraterritorial sales and SEC jurisdiction over non-American violators of Section 10 (b) of the Securities and Exchange Act of 1934 and Rule 10-b5.
Outcome: The Second Circuit held that Section 10-b5 did not confer subject matter jurisdiction in the U.S. with regard to a foreign business. The court also concluded that the presumption against extraterritoriality should not be applied in this case because Midland’s accounting practice was inherently domestic.