The Legal Issues Surrendering The Defective Widget from an Online Delaware-based Business and The Stealing of Information by a Foreign Terrorist Group

Abstract

This paper analyzes legal issues that may be encountered given a scenario where multiple legal events are happening. In the scenario, a customer receives a faulty product from your wholly online Delaware-based business. They then open a lawsuit against the business, while starting a blog that is spreading lies and is affecting the reputation of the business, while claiming their Constitutional rights as a defense. Additionally, a foreign terrorist group steals intellectual property owned by the business and is attempting extortion for money. Each one of these issues will be broken down and discussed in the context of the various laws that they may fall under.

Legal Issues Surrounding the “Widget” Scenario

For the purpose of this paper, there is given a hypothetical scenario focusing on multiple legal incidents surrounding a product that I created and sell online called the “Widget”. The first incident takes place 6 months after starting the Delaware-based and strictly online business to sell the Widget. A customer in California receives a defective Widget, and files a lawsuit against me. The same person subsequently starts a blog claiming that my Widget business is a front for distributing child pornography, and my revenue drops as a result. While attempting to shut down the website, the customer claims their First Amendment right of freedom of speech in voicing their opinion. Concurrently, there is a second incident in this scenario where German terrorists steal the idea for the Widget and attempt to extort me for money. They claim that they will use it for evil unless I pay, prompting me to report this to local police. Given the incidents in these hypothetical situations, each legal issue and the possible avenues of defense or prosecution will be discussed in the following sections.

Angry Californian Customer

With the customer that received a defective widget, there are a couple of separate legal issues that must be addressed. One is the fact that they brought me to court over a defective widget, and the other is the defamatory statements that they are posting about my business. The first issue could potentially deal with forming contracts online as an e-business, as well as jurisdiction in their lawsuit against my business. The second issue deals with the potential liability of defamatory statements, as well as First Amendment Constitutional issues raised when the person claimed that I was trying to violate their rights by attempting to shut down the blog. The former issue will be discussed first.

Defective Widget Lawsuit

Given that I have sold someone a product online it could be inferred that we have entered into some form of contract. According to Craig (2013), "website owners can limit their liability and the remedies available to a plaintiff under the [Uniform Commercial Code] by contract" (p. 81). Therefore, if I have a limited liability statement, I could potentially avoid litigation for the defective Widget. This could have been done through a liquidated damages provision, or another statement that could provide limited remedies and put a limit on my liabilities, as Craig explains (p. 81).

The other issue at hand is about jurisdiction, in which Craig explains that subject matter jurisdiction is the authority of a court to hear the case, while personal jurisdiction is the power of the court to actually bring a party to court (p. 3). Given that there is no specific court that hears cases about receiving defective products, the personal jurisdiction of California to bring my business to court is the only relevant jurisdictional issue. The California Long-Arm Statute states that "A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States" (California Code of Civil Procedure § 410.10). Given this, Craig writes that the defendant (me) needs to have purposefully conducted their business with a resident of the state, while the claim must also directly relate to this business that was conducted, and it must also be reasonable and fair under due process rights of the Constitution (p. 3). As it seems I would have fit these criteria, the angry customer would be able to file the lawsuit against me as a California resident, while my business is operated from Delaware.

Defamatory Blog Posts

The second issue with the angry customer from California is the fact that they have started a public blog claiming that my Widget business is a front for distributing child pornography. According to Craig (2013), the four common elements to prove defamation are “(1) that defendant made a defamatory communication to a third person, (2) that the statement was false, (3) that defendant was at fault in communicating the statement, and (4) that plaintiff suffered harm” (p. 164). While 2, 3 and 4 are obviously met given the scenario, 1 is also met, as Craig writes “It is well-settled that posting material to a website satisfies the publication requirement for defamation” (p. 164). While I may be able to prove that the customer made defamatory statements, their defense is where it may get tricky.

The defendant claims that they have a right to claim their opinion in the matter of the defamatory statements, and claims I am infringing on their Constitutional rights. Craig (2013) writes that statements that are not parody, satire, or a protected opinion but contain a fact that can be verified (as true or false), the person who made the statement may be held liable (p. 174). However, while talking about another case involving opinion and defamatory statements, Rasmussen (2011) states that “allegedly defamatory comments published on anonymous blogs or in widely distributed email messages like the one the court was considering also lack the level of credibility readers would give similar remarks made in other contexts” (p. 30). It could then be surmised that my business could run into some trouble given the context that the statement is in a non-credible format. If it is found that the defendant made statements deemed defamatory, they then would not be protected by the Constitutional rights that they claim, as Craig writes that defamatory speech is not protected by the First Amendment (p. 160).

German Terrorists

Now that the issue of the angry Californian customer is out of the way, the issue of German terrorist organization may be discussed. Jurisdiction, intellectual property, and cybercrime are going to be the main topics affecting how my business deals with the situation.

Since the Widget is a scientific product as outlined in the scenario, I would most likely have filed a patent for this invention. In patent law, Craig (2013) states that civil patent infringement cases are under the subject matter jurisdiction of the federal Circuit Courts (p. 60). This is separate from the criminal aspect of the intellectual property infringement, which will be discussed shortly in this paper. If the German terrorist organization did infringe my patent, I could attempt to use Patent Agents or Patent Attorneys to “pursue foreign patent protection through foreign associates” (Craig, p 56). However, since it is a German terrorist organization, I doubt I would have much luck in them cooperating if I began with filing an international civil case.

In dealing with the criminal aspect of the German terrorist organization making threats to use my Widget for evil unless I gave them 1 million dollars, I was correct in reporting it to the police as stated in the scenario. If I were to have paid the 1 million dollars, I could potentially be criminally liable for the terrorist act of financing of terrorism, even if it were indirect (Galicki, 2005, p 745-746). By reporting the incident to the local authorities, the U.S. Government could attempt to extradite the criminals to prosecute them with criminal charges in the United States. As for what exactly they could be tried for, it could be inferred that because they vaguely threatened to use it ‘for evil’, it could be used as the mens rea for some type of illegal conspiracy. As an example for why I believe that this would be successful, a most-wanted cybercriminal was recently extradited from Germany after hacking U.S. ATMs to steal money (Strohm, 2015). It could also be assumed that I would also be able to pursue a civil case once they are extradited.

Conclusion

While my hypothetical business has a lot of legal issues on its hands, they can all be dealt with appropriately after breaking down the legal issues surrounding each of them. The lawsuit regarding the faulty Widget should be subject to a limited liability clause that was agreed to when the customer purchased the product, which should absolve me of any liability. Additionally, I should have a basis to file a lawsuit against the customer for making defamatory statements on a blog, since their statement doesn’t fall under the protection of opinion or Constitutional rights. Lastly, the German terrorists should be able to be extradited and tried for their intent to commit a crime, also allowing me to possibly pursue civil litigation against them.