CBC Video Case Studies #1 & #3
CBC CASE STUDY #1: Showdown on the Virtual Frontier (Cyber liability)
- What was the legal issue respecting the toy sale web-site?
The issue of cyber liability continues to puzzle many ecommerce entrepreneurs today. While ecommerce gives people the benefit to reach out to global audiences at the click of the mouse, little do they realize the complexities associated with online businesses today. In simple terms, cyber liability can be defined as the risk posed by people conducting business over the Internet, or over other networks. Many excited entrepreneurs start their business online, knowing little about the laws that govern them or the legal liabilities that they may run into. Janet Clark’s case is related to this. Janet Clark downloaded certain derivatives of Disney’s on her website without getting any form of written permission from Disney’s. She used the pictures and logo of certain prominent cartoon characters of Disney’s to attract global clients for her toys. Now, without getting the prior permission of Disney’s, who is the rightful owners of those characters and names, Janet is liable to be prosecuted under the copyright Act. Copyright is a form of protection given to the authors or creators of a work that is their own. This means that, as Janet had included the cartoon characters and their names on her website without the written consent of Disney’s, she has bypassed law, and committed copyright infringement. She can thus be charged with criminal intent and face charges. “Under 17 USCS § 101, a derivative work is a work based on one or more pre-existing works such as dramatization, art reproduction, condensation, or any other form in which a work may be recast, transformed or adapted. However, a derivative work can be construed to be non-infringing if the work (Janet’s) was created pursuant to the consent of the copyright owner (Disney’s) of the underlying work” (USLegal.com, 2014).
Even though Janet Cark wrote to Disney’s seeking permission to use certain derivatives on her webpage, she has no legal cover to protect her from civil litigation. The Copyright Act clearly states that no work without the consent of the rightful owner of that copyright, has legal immunity.
2. What was the legal issue respecting the E-Northern Brokers Web site?
The E-Northern Brokers were planning to enter the online brokerage business, but they were also going to do things that could bring liability issues to them. The problem they face is that there are no clear laws available to distinguish between infringement and patent ownership. They were going to launch an online chat board, where brokers could log in and discuss issues pertaining to their business. As Desai said, their line of business had no laws to prove that they were going to have liability issues. They simply created a technology that has no laws, and so, they were ready to take the risk and be the leaders of that business. They were more or less going to be service providers than are brokers. There are clauses that bind service providers.
A. Second Cup Scenario
1. The large organization which grants the franchise license is called the franchisor, and the small unit owner who runs the local store pursuant to the license is called the franchisee.
2. Paul Dollan, the franchisee owner of the Second Cup franchise had to break his franchisee agreement with Second Cup because of the rent fee that was set to go up. He was downsized after 3 years; the lease was raised and the landlord wouldn’t agree to the current rent.
3. Paul Dollan would have to pay the higher rent that was put up by the landlord, but while he was willing to pay the lease fee, he couldn’t continue with the higher rent that was discussed.
4. The franchisee business did well in the first 3 years of operation. He was able to expand his business by opening another franchisee outlet.
5. The evidence that Paul Dollan had to support his view that he lost his money in the franchise was the production of the recording of a voice mail from Second Cup.
6. If the franchise agreement did not have any term covering the rental amounts on renewal of the lease, it would owe a duty under contract law to act reasonably in deciding to renew the lease. “Franchising is an agreement wherein, a productive relationship between two parties contribute to the production or distribution of the product or service” (Hadfield, 2011). Every Franchisee lease agreement has a number of clauses that basically favors the franchisor. “A franchisor must give its Franchise Disclosure Document (FDD) to prospective franchisees before they sign the franchise agreement” (scc.virginia.gov). The FDD will include disclosure about what the roles and responsibilities of the two parties to the agreement are. Some of the disclosures include, the history of the company, the franchisee fee, litigation, the network of franchisees, the terms of the franchise agreement and so on.
7. Is the fact that franchisors often control the lease pointed out in the text? If so, what is said?
B. Robin's Donuts Case
1. “It was a like a goldmine,” was how Dale Hunt answered the question on whether the franchisee’s business made any profit in its initial year.
2. The franchisor had all the advantages from running the business. The agreement showed that the franchisor would get the major share of the profits, commissions and rebates. They had to buy raw materials from the franchisor, who charged an exorbitant rate. Also, they couldn’t buy raw materials from outside vendors, and couldn’t function in the way they wanted. They had to follow the style and rules of the franchisor.
3. The franchise agreement governed that the franchisor could open competing stores near the franchisee at a distance of half a mile refusal rate. This meant that there would be no other franchisee within half a mile, but if a franchisee sought to start one more of his franchisee near the earlier one, he would have to pay the franchisee fee or surrender it to the franchisor.
4. There was a term in the franchise agreement that stated who could keep the savings from volume purchasers, and it stated that franchisor could keep the profits, commissions and rebates from the savings from the group/volume buyers.
5. Did the text point out any problems regarding volume buying
Works Cited
Commonwealth Corner: Investor Updates, Retrieved April 3, 2014, from https://www.scc.virginia.gov/srf/cons/files/FDD.pdf
Hadfield, G, K, (2011), Problematic Relations: Franchising and the Law of Incomplete Contracts, Retrieved April 3, 2014, from http://infofranpro.wdfiles.com/local-- files/1990401-problematic-relations/Problematic%20Relations.pdf
USLegal: Derivative Work Law and Legal Definition, Retrieved April 3, 2014, from http://definitions.uslegal.com/d/derivative-work/
