Chapter 1Globalization©McGraw-Hill Education. All

Chapter 1
Globalization
©McGraw-Hill Education. All rights reserved. Authorized only
for instructor use in the classroom. No reproduction or further
distribution permitted without the prior written consent of
McGraw-Hill Education.
1
Learning Objectives
LO 1-1 Understand what is meant by the term globalization.
LO 1-2 Recognize the main drivers of globalization.
LO 1-3 Describe the changing nature of the global economy.
LO 1-4 Explain the main arguments in the debate over the
impact of globalization.
LO 1-5 Understand how the process of globalization is
creating opportunities and challenges for management practice.
©McGraw-Hill Education.
2
What Is Globalization? 1 of 3

Learning Objective 1-1 Understand what is meant by the term
globalization.
The Globalization of Markets
Falling barriers to cross-border trade and investment
Global tastes
Benefits small and large companies
Significant differences between national markets
Products that serve universal needs are global
Competitors may not change among nations
3
Globalization refers to the shift toward a more integrated and
interdependent world economy
The globalization of markets refers to the merging of
historically distinct and separate national markets into one huge
global marketplace.
The Globalization of Production
Sourcing goods to take advantage of differences in cost and
quality of factors of production
Early outsourcing was confined to manufacturing
Technology now used for outsourcing
4
The globalization of production refers to the sourcing of goods

and services from locations around the globe to take advantage
of national differences in the cost and quality of factors of
production (such as labor, energy, land, and capital).
The Globalization of Production continued
Robert Reich and “global products”
Impediments
Formal and informal barriers to trade
Transportation costs
Political and economic risk
Coordination
5
The Emergence of Global Institutions 1 of 6
General Agreement on Tariffs and Trade (GATT)
World Trade Organization
International Monetary Fund
The World Bank
The United Nations
General Agreement on Tariffs and Trade (GATT) International
treaty that committed signatories to lowering barriers to the free
flow of goods across national borders and led to the WTO.

6
The World Trade Organization
Polices the world trading system
Ensures nation-states adhere to the rules
Facilitates multinational agreements among members
164 nations account for 98 percent of world trade
World Trade Organization The organization that succeeded
GATT as a result of the successful completion of the Uruguay
Round of GATT negotiations.
7
The International Monetary Fund
Established to maintain order in the international monetary
system
Lender of last resort
Requires nation-states to adopt specific economic policies
aimed at returning their economies to stability and growth
The International Monetary Fund International institution set up
to maintain order in the international monetary system.

8
The World Bank
Promotes economic development
Focused on making low-interest loans to cash-strapped
governments in poor nations that wish to undertake significant
infrastructure investments
World Bank International institution set up to promote general
economic development in the world’s poorer nations.
9
The United Nations
Peace through international cooperation and collective secur ity
193 countries
UN Charter – four basic purposes
Maintain international peace and security
Develop friendly relations among nations
Cooperate in solving international problems and in promoting
respect for human rights
Be a center for harmonizing the actions of nations
United Nations (UN) An international organization made up of

193 countries headquartered in New York City, formed in 1945
to promote peace, security, and cooperation.
10
Group of Twenty (G20)
Finance ministers and central bank governors of the 19 largest
economies in the world, plus representatives from the European
Union and the European Central Bank
Represents 90 percent of global GDP and 80 percent of
international global trade
Group of Twenty (G20)
Established in 1999, the G20 comprises the finance ministers
and central bank governors of the 19 largest economies in the
world, plus representatives from the European Union and the
European Central Bank.
11
Drivers of Globalization 1 of 4
Learning Objective 1-2 Recognize the main drivers of
globalization.
Declining Trade and Investment Barriers
1920s-30s: Barriers to international trade and foreign direct
investment
High tariffs resulted in retaliatory trade policies
GATT lowered barriers
Uruguay Round
Established World Trade Organization (WTO)

International trade occurs when a firm exports goods or services
to consumers in another country.
Foreign direct investment occurs when a firm invests resources
in business activities outside its home country.
12
Knowledge Society and Trade Agreements
The value of world trade in merchandised goods has grown
consistently faster than the growth rate in the world economy
since 1950.
Trade across country borders is 2.6 times higher than world
production.
Knowledge society has produced more informed consumers,
driving demand.
Removal of restrictions to FDI
More trade agreements
Figure 1.1 Value of world trade, world production, number of
regional trade agreements in force, and world population from
1960 to 2020 (index 1960 = 100).
Jump to long description in appendix
Sources: World Bank, 2017; World Trade Organiza tion, 2017;
United Nations, 2017.

Figure 1.2 Comparisons of world trade and world population;
world trade and number of regional trade agreements; world
population and world production; and world population and
world trade (index 1960 = 100).
Sources: World Bank, 2017; World Trade Organization, 2017;
United Nations, 2017.
Role of Technological Change
Communications
Development of the microprocessor
Moore’s Law
Internet of things
Half the world’s population uses the Internet
Global e-commerce sales over $2 trillion
The Internet is an equalizer
Moore’s law predicts that the power of microprocessor
technology doubles and its cost of production falls in half every
18 months).
16

Role of Technological Change continued
Transportation technology
Commercial jet travel, superfreighters, and containerization
Implications for the globalization of production
Has become more economical
Worldwide communications network
Implications for the globalization of markets
Convergence of consumer tastes and preferences
17
The Changing Demographics of the
Global Economy 1 of 6
Learning Objective 1-3 Describe the changing nature of the
global economy.
The Changing World Output and World Trade Picture
U.S. has experienced a relative decline reflecting the faster
economic growth of several other economies
China and BRIC countries growing more rapidly
Developing nations may account for more than 60 percent of
world economic activity by 2025

The Changing Foreign Direct Investment Picture
Non-U.S. firms are increasingly investing across national
borders
Desire to disperse production activities to optimal locations and
to build a direct presence in major foreign markets
stock of foreign direct investment (FDI) refers to the total
cumulative value of foreign investments as a percentage of the
country’s GDP.
19
Figure 1.3 Share of FDI stock outward as a percentage of GDP.
Sources: OECD data 2017, FDI stocks.
Figure 1.3 shows how the stock of foreign direct investment by
the United States, China, Japan, United Kingdom, European
Union countries, Developed Economies, and the World changed
between 1995 and today.
20
Figure 1.4 FDI inflows (in millions of dollars)
Source: United Nations Conference on Trade and Development,
World Investment Report 2017. (Data for 2018–2020 are
forecast.)

21
The Changing Nature of the Multinational Enterprise
Non-U.S. multinationals
In 2003, 38.8 percent of the world’s 2000 largest multinationals
were U.S. firms
By 2017, 27 percent of the top 2000 global firms are now U.S.
multinationals, a drop of 236 firms
A multinational enterprise (MNE) is any business that has
productive activities in two or more countries.
22
The Changing Nature of the Multinational Enterprise continued
The rise of mini-multinationals
Medium- and small-sized businesses
Internet is lowering barriers

23
The Changing World Order
Former communist countries present export and investment
opportunities
Signs of growing unrest and totalitarianism
China moving to industrial superpower
Latin America debt and inflation are down, more private
investors, expanding economies
24
Global Economy of the Twenty-First Century
Barriers to the free flow of goods, services, and capital have
been coming down
Strengthened by the widespread adoption of liberal economic
policies by countries that had firmly opposed them
Globalization is not inevitable
Countries may pull back
Risks are high

A multinational enterprise (MNE) is any business that has
productive activities in two or more countries.
25
The Globalization Debate 1 of 7
Learning Objective 1-4 Explain the main arguments in the
debate over the impact of globalization.
Antiglobalization Protests
1999 protests at WTO meeting
Detrimental effects on living standards, wage rates, and the
environment.
Globalization, Jobs, and Income
Critics of globalization argue:
Falling trade barriers allow firms to move manufacturing
activities to countries where wage rates are much lower
Destroy manufacturing jobs in wealthy advanced economies
Services also being outsourced
Contributing to higher unemployment and lower living
standards in their home nations
Globalization, Jobs, and Income continued

Supporters argue:
Benefits outweigh the costs
Free trade will result in countries specializing in the production
of goods and services that they can produce most efficiently,
while importing goods and services that they cannot produce as
efficiently
As a result, the whole economy is better off
Companies can reduce their cost structure, and consumers
benefit
Globalization, Jobs, and Income continued
Data suggests the share of labor in national income has declined
Share of national income by skilled labor has increased
Unskilled labor experienced a fall in income, but not
necessarily standard of living due to economic growth
The weak growth rate in real wage rates for unskilled workers is
likely due to a technology-induced shift within advanced
economies
Technological change has a bigger impact than globalization on
declining share of national income enjoyed by labor
Globalization, Labor Policies, and the Environment
Critics argue:
Labor and environmental regulations

Lack of regulation can lead to abuse
Adhering to regulations increases costs
As countries get richer, they enact tougher environmental and
labor regulations
Supporters argue:
Tougher environmental regulations and stricter labor standards
go hand in hand with economic progress
Figure 1.6 Income levels and environmental pollution
Source: C. W. L. Hill and G. T. M. Hult, Global Business
Today (New York: McGraw-Hill Education, 2018).
While the hump-shaped relationship depicted in Figure 1.6
seems to hold across a wide range of pollutants—from sulfur
dioxide to lead concentrations and water quality—carbon
dioxide emissions are an important exception, rising steadily
with higher-income levels.
31
Globalization and National Sovereignty
Critics argue:
Shift of power from national governments toward supranational
organizations
WTO, EU, United Nations
Supporters argue:

The power of supranational organizations is limited to what
nation-states collectively agree to grant
These organizations exist to serve the collective interests of
member states
Globalization and the World’s Poor
Critics argue:
Gap between the rich and poor nations has gotten wider
Totalitarian governments
Poor economic policies
Corruption and lack of property rights
Expanding populations in developing countries
Debt burdens
Supporters argue:
The best way to change the situation is to lower barriers to trade
and investment and promote free market policies
Managing in the Global Marketplace
Learning Objective 1.5 Understand how the process of
globalization is creating opportunities and challenges for
business managers.
Managers
Managing an international business differs from managing a
purely domestic business
Need to vary practices from country to country

More complex decisions required
Need to understand the international trading and investment
system, currency exchange
An international business is any firm that engages in
international trade or investment.
34
Appendix of Image Long Descriptions
Appendix 1 Figure 1.1 Value of world trade, world production,
number of regional trade agreements in force, and world
population from 1960 to 2020 (index 1960 = 100).
A line graph shows world trade, world population, world
production, and regional trade agreements from 1960-2020. As
regional trade agreements increase year-by-year, so does world
trade across country borders at the same pace.
Return to original slide
Appendix 2 Figure 1.2 Comparisons of world trade and world
population; world trade and number of regional trade
agreements; world population and world production; and world

population and world trade (index 1960 = 100).
World trade and world population are both rising, but world
trade has risen much faster since about 1972.
World trade and number of regional trade agreements have risen
in tandem since about 1970.
World population and world production have risen on a mostly
parallel path.
World population and world trade shows that as world
population had steadily risen, world trade passed it in about
2004 and has since far exceeded it.
Appendix 3 Figure 1.4 FDI inflows (in millions of dollars)
Figure 1.4 illustrates two important trends—the sustained
growth in cross-border flows of foreign direct investment that
has occurred since 1990 and the increasing importance of
developing nations as the destination of foreign direct
investment.
FDI inflows in developing countries have exceeded those in
developed countries in every year since 1990.
1. Risks and Liabilities
A. Negligence Risk Situation 1:
Poor Employee Training
· As Clean is primarily a commercial cleaning company, and
uses high-potency commercial grade liquid and solid cleaning

agents in order to carry out its work effectively for customers.
Employees need to be highly trained and educated about the
various methods of using and disposing of aforementioned
cleaning agents, as they can be highly dangerous to the general
public if left unchecked, creating liability for the company.
B. Negligence Risk Situation 2:
Poor Storage Methods
· Since Clean is headquartered in the shopping center, it will
store at least some of the cleaning agents there itself. Any form
of leak and/or spillage for any reason whatsoever, whether it be
a natural disaster, poor quality containers, or something else,
can lead to accumulation of hazardous cleaning agents in the
shopping center, creating a health hazard for the general
populace and creating a liability for Clean.
1. Negligence Risk Situation 3:
Inadequate Security Protocols
1. Since the nature of chemicals stored by Clean is hazardous in
nature, they must, as an organization, ensure installation of
proper security protocols to ensure that only authorized
personnel have access to them. Failure to do so can lead to
theft, which in the case of chemicals, can be disastrous, as the
criminals may choose to use them to deadly effect elsewhere,
creating criminal negligence liability for the company.
2.Policies and Procedures
1. Policy/Procedure for Negligence Risk Situation 1: Ensure
Industry Standard Training
· All Clean employees, upon joining should be made to go
through a rigorous training and education period of 2-3 months
to ensure they have adequate knowledge of the various tools,
and chemicals they will be working with, as well as best
practices in terms of using and disposing of aforementioned
agents. Industry certified instructors may be hired on a
contractual basis to conduct training sessions and ensure all new
employees are tested.
2.policy/Procedure
for Negligence Risk Situation 2:

a.Move headquarters to a dedicated facility, AND/OR
· Shifting headquarters to a dedicated facility will help ensure
any accidental spillage caused does not affect people outside of
the organization, as it eliminates the proximity of customers of
other businesses present in the shopping center.
b. Ensure Industry Grade Storage Protocols
· This can be done in conjunction with the procedure mentioned
above, or in the event that moving headquarters proves too
costly an endeavor. Ensuring that storage of chemicals and
agents is done in a manner that minimizes or eliminates chances
of leakage will also minimize the risk. This can be done by
creating a dedicated facility for storage, consisting of multiple
layers, acting as fallbacks for one another, as well as using
Industry-grade containers to ensure no accidental spillage or
leakage occurs.
3.Policy/Procedure for Negligence Risk Situation 3:
Ensure Installation and Implementation of High-End Security
and Surveillance Protocols
1. Installation of Identity and Access Management (IAM)
Software, Surveillance cameras, assigning of roles and duties
based on authorization and experience can help ameliorate some
of the risk associated with Security. Advanced features such as
Biometrics, Access Logs, and others may also be used to keep
an account of all those who have accessed the storage.
Learning Activity W3
TO: Winnie James, Ralph Anders
FROM: Daeyoung Yoo

DATE: April 2, 2022
RE: EPI and Clean Product Liability
Introduction
Viral Clean group has launched the products during the
coronavirus, and it is a
highly competitive time for marketers. Being a member of the
consultancy group, I have to
guide them that they are making the wrong choice by reselling
EPI from their marketplace.
The coronavirus has taught that the products should be owned
and cleaned of all claims and
liabilities. When the company has decided to resale EPI
products, there is a list of possible
product liability claims.
A. Identify and explain the possible liabilities claims (EXCEPT
omit warranty
liabilities) Clean could face under product liability law for
reselling EPI cleaning
products directly to customers from its public place of business.
The first product liability claim that the company could face is
the express warranty.
The company will resale the products; the strict liability is

difficult to give because it is
observed that the companies usually create the unique
description that the customers get to
use the product. It is impossible to give such a description
during resale for anything like this.
The implied warranty is stricter than the other because Clean
does not know how the situation
could be changed for the consumers on using the products.
Making claims on the products by
writing the model safety and the description will be a risk for
the company. Section 2-315 of
the UCC imposed a liability known as the fitness for a
particular purpose. Many resellers
claim that the product is fit for a certain purpose, and they
remain successful as well, but
there is a risk if the product does not remain fit for the
mentioned particular purposes. Tort
please note instructions are to NOT discuss wrranties; and all
products do not carry an express warranty
?/unclear re: "get to use the product" ?
do you mean strict product liability? strict liability a different
tort - see Instructor Notes, please
again we are not discussing warranties in this assignment; it

would not be Clean's responsibility to write modelsafety and
description. This is the responsibility of the manufacturer
again we are not discussing warrantnies
what does "other" refer to directly? unclear?
what is meant by "owned and cleaned" needs clearer explanation
1
2
3
4
5
14
15
negligence is one of the biggest product liabilities claims that
Clean could face because it has
not made the product itself. There might be a design error or the
product error that may lead
to product use issues. It is important to know that the company
should be aware of all the
above-mentioned products (Government Regulation and the

Legal Environment of Business,
2012).
B. Recommend specific actions that Clean could take to reduce
its liabilities under
product liability law for reselling EPI cleaning products
The company requires certain actions to take to reduce the
product liability. First, it
should recognize as the reseller instead of a brand. The brand
and company are responsible
for all the liabilities, torts, and negligence. In contrast, the
resellers claim that the
modification and the originality of designs depending on the
company's real manufacturer.
The next step is to use the product before referring it to the
customers frequently. For
example, the fitness for a particular purpose and the implied
liability can only be prevented
when Clean employees have personally experienced the product.
The company can also
reassure that there will be no error or defect after the product
comes to Clean, but the real
manufacturers are liable for all the defects, errors, and
negligence. The customers should

claim the product liabilities to the original manufacturers
(FindLaw, 2017).
Conclusion
In conclusion, it is suggested that Clean members should be
aware of liability claims.
The customers and the regulatory authorities can ask for
clarification on the product liability.
There are various types of product liabilities, and good
companies have sufficient information
about the products and the relevant claims.
this is product liability law and we are not discussing
negligence except as negligence under product liability is part
of the defective product claims
unclear what this means??
good idea
Clean can also be liable as can anyone in the chain of
distribution
unclear?
what are some ways Clean could do this?
unclear?
6

7
8
9
11
12
13
Reference
FindLaw. (2017, January 30). Product Liability: Manufacturing
Defects vs. Design Defects -
FindLaw. Retrieved April 2, 2022, from
https://corporate.findlaw.com/litigation-
disputes/product-liability-manufacturing-defects-vs-design-
defects.html
Government Regulation and the Legal Environment of Business
(2012). Saylor Academy
References always has an S on the end
10
Learning Activity W1 2

1. Analyze and explain whether the Delaware restriction on the
sale of Shine-It violates the Interstate Commerce Clause.
The interstate commerce law is an integral part of the USA
constitution, and it has been designed to recognize the police
power related to commerce activities among Nations and states.
The clause was launched in 1887 and the US constitution is
considered to be the base of all laws. It mentioned that
Congress possesses exclusive jurisdiction to manage regulations
or commerce in international countries, Indian tribes, and
different states. In the given case scenario, Delaware's
restrictions on "Sale of Shine" actions are against the US
Constitution because the company operates in other states,
making it "interstate commerce" where the states are directly
divested from the power to impose and regulate such
prohibition. State and federal courts honor each other in a
highly complicated manner (Government Regulation and the
Legal Environment of Business, 2012). The Delaware restriction
must not be enforced on the Shine It without prior agreement
and consent of Congress because the Federal department of the
government can only practice the Interstate Commerce clause.
2. Analyze whether the doctrine of "police powers" derived
from the 10th Amendment of the U.S. Constitution applies to
the Delaware law.
The case can be evaluated under the 10th Amendment of the
USA constitution. The doctrine of police power States The
power not directed to the USA by the Constitution, nor is
prohibited to the state, is reserved to the people, or states
respectively. In simple words, the "police power doctrine"
enables the separate state to have regulations if that does not go
in opposition to federal law. However, in the case of Delaware
restriction, it is crucial to mention that the doctrine does not
justify prohibition. The primary reason is that the "interstates
commerce Clause" divests the USA states from interstate
commerce regulations. Therefore, the given case can only be
solved by the involvement of Delaware and Congress, as a state

have no right to enforce these restrictions under police doctrine
of the "10th Amendment." The latter is only implicated if the
USA constitution does not delegate the power. In the USA there
is a check system to ensure the power is effectively separated in
various branches of government. This is known as separation of
power manner (Government Regulation and the Legal
Environment of Business, 2012). Still, “exclusively delegate” to
Congress makes the Doctrine of police power inapplicable.
3. Discuss why it is essential for businesses to understand the
impact of the Interstate Commerce Clause and state police
powers.
To understand the direct regulatory body, any company needs to
be entirely aware of the potential use of the state police power
and interstate commerce Act. A business must operate in its
state of origin would only be regulated by the given state as its
operations do not apply to other nations or states. For this
reason, the company would not fall under this jurisdiction of the
interstate commerce clause, and they would be directly
accountable by the state police powers. However, a company
that operated in multiple states would be under the impact of the
interstate commerce clause. In the given case scenario, the
business needs to be aware of the restrictions of the state polic e
power about their activities.
Moreover, the main issue would be taken to Congress (under
commerce clause) directly because of the lack of the State's
power regulating such industries manner (Government
Regulation and the Legal Environment of Business, 2012). The
interstate commerce clause is also implicated in companies
operating in the international market as it directly mentions that
regulations are also imposed on commerce working in foreign
countries. Therefore, when a business decides business
expansion outside its state of origin, it would directly enter the
domain of Federal and Congress law.
Reference
Government Regulation and the Legal Environment of

Business (2012). Saylor Academy.
FROM: Daeyoung Yoo
DATE: 26 March 2022
RE: Clean Negligence Risks and Liabilities
1. Jack is the company employee, and he had to face a serious
injury because of two boxes placed by Client's An employee.
After analyzing the facts, it is assumed that Jack cannot have a
negligence claim against the client. The negligence claim must
have the four components to prove the negligence of another
company. These components include duty, breach, causation,
and harm. No doubt, Jack has the causation and harm during the
case, and these can be used to prove the negligence claim, but
he does not have breach information. The breach could occur if
the client promised him that there would be no barriers on the
way. It is important to understand that it will come in
comparative negligence if a negligence claim is filed (FindLaw,
2019)
2. If Jack raises the negligence claim against the client, he must
have enough conditions and defenses against client A. on the
other hand, client A has different potential defenses against
Jack. The possible defenses against the employee are
assumption of risk, contributory negligence, and comparative
negligence. The assumption of risk states that the employee
should know that the pathway cannot be cleared of the people
and the obstacles. No doubt, he ensured that there was nothing
in the hallway, but he just had it in his mind that there might be
the people or the other instruments. Moving on, contributory
and comparative negligence can both be raised as a defense. The
contributory negligence may claim that Jack broke his ankle to
avoid the work and take a rest. The client may raise the defense
that Jack should admit his mistake, and there will be an
investigation against the workers of client A. Jack will also be

shown his fault if there is the employee's fault. It should be
noted that the client may have to raise the potential defense
because Jack did not have any deal or duty with the client, and
he is not responsible for the loss.
3. After determining the facts and the legislation, it is observed
that the situation is not recommended for the lawsuit. Both the
parties should cooperate and should analyze the laws. It might
be possible that both parties resolve the issue by discussion.
The lawsuit will require the complete demonstration of the
facts, and the loss will be compensated by client A. If the loss
has to be compensated, the negligence from Jack will also be
demonstrated. Both the parties will be at risk of reputation
damage. For this purpose, it is recommended that the parti es
should inform the negligence claim and the defenses. The client
may offer compensation in the form of treatment. It was a minor
fracture, and no major surgery was needed in this case
(Saylor Academy, 2012).
Reference
FindLaw. (2019, September 30). Elements of a Negligence
Case. Retrieved March 26, 2022, from
https://www.findlaw.com/injury/accident-injury-law/elements-
of-a-negligence-case.html
[Saylor Academy]. (2012, June 26). Saylor.org BUS205:
“Business Law” [Video]. YouTube.
https://www.youtube.com/watch?v=_KHIWhwj5as&feature=you
tu.be
FROM: Daeyoung Yoo
DATE: April 2, 2022
RE: EPI and Clean Product Liability
Introduction
Viral Clean group has launched the products during the

coronavirus, and it is a highly competitive time for marketers.
Being a member of the consultancy group, I have to guide them
that they are making the wrong choice by reselling EPI from
their marketplace. The coronavirus has taught that the products
should be owned and cleaned of all claims and liabilities. When
the company has decided to resale EPI products, there is a list
of possible product liability claims.
A. Identify and explain the possible liabilities claims (EXCEPT
omit warranty liabilities) Clean could face under product
liability law for reselling EPI cleaning products directly to
customers from its public place of business.
The first product liability claim that the company could face is
the express warranty. The company will resale the products; the
strict liability is difficult to give because it is observed that the
companies usually create the unique description that the
customers get to use the product. It is impossible to give such a
description during resale for anything like this. The implied
warranty is stricter than the other because Clean does not know
how the situation could be changed for the consumers on using
the products. Making claims on the products by writing the
model safety and the description will be a risk for the company.
Section 2-315 of the UCC imposed a liability known as the
fitness for a particular purpose. Many resellers claim that the
product is fit for a certain purpose, and they remain successful
as well, but there is a risk if the product does not remain fit for
the mentioned particular purposes. Tort negligence is one of the
biggest product liabilities claims that Clean could face because
it has not made the product itself. There might be a design error
or the product error that may lead to product use issues. It is
important to know that the company should be aware of all the
above-mentioned products (Government Regulation and the
Legal Environment of Business, 2012).
B. Recommend specific actions that Clean could take to reduce
its liabilities under product liability law for reselling EPI
cleaning products
The company requires certain actions to take to reduce the

product liability. First, it should recognize as the reseller
instead of a brand. The brand and company are responsible for
all the liabilities, torts, and negligence. In contrast, the resellers
claim that the modification and the originality of designs
depending on the company's real manufacturer. The next step is
to use the product before referring it to the customers
frequently. For example, the fitness for a particular purpose and
the implied liability can only be prevented when Clean
employees have personally experienced the product. The
company can also reassure that there will be no error or defect
after the product comes to Clean, but the real manufacturers are
liable for all the defects, errors, and negligence. The customers
should claim the product liabilities to the original
manufacturers (FindLaw, 2017).
Conclusion
In conclusion, it is suggested that Clean members should
be aware of liability claims. The customers and the regulatory
authorities can ask for clarification on the product liability.
There are various types of product liabilities, and good
companies have sufficient information about the products and
the relevant claims.
Reference
FindLaw. (2017, January 30). Product Liability: Manufacturing
Defects vs. Design Defects - FindLaw. Retrieved April 2, 2022,
from https://corporate.findlaw.com/litigation-disputes/product-
liability-manufacturing-defects-vs-design-defects.html
Government Regulation and the Legal Environment of Business
(2012). Saylor Academy
Sample PowerPoint Slide
Note the parallel between the content of the Slide and the
narrative in the Speaker Notes.

Syllabus and Late Policy
Syllabus: Important UMGC policies are included in the
Syllabus >>Content >>Syllabus.
Please review the Syllabus information yourself and refer
students to the Syllabus for their review.
Please closely review the UMGC policies for “Incomplete”
grades.
Late Policy: Please review the Late Policy posted in the
classroom by >>Content>>Late Policy. There have been
changes to the Late Policy.
Please refer students to the Late Policy for their review.
The class syllabus includes important information for the
student as well as the assigned faculty instructor. It is located
under the CONTENT tab in a specific module labeled Syllabus.
Assigned faculty instructors are reminded to review the
Syllabus at the onset of each class as some content may have
changed. Instructors should also remind their students of the
Syllabus as a resource to answer many of the questions they
may have about the class, assignments, UMGC policies, etc.
The syllabus also included a generic class schedule. Instructors
are encouraged to amend this schedule with actual assignment
due dates.
Among the UMGC policies reflected in the Syllabus is 170.71
Policy of Grade of Incomplete. The Incomplete (I) grade is
entered when circumstances beyond the student’s control make
it impossible for the student to complete the required workl oad
(e.g., class assignments) within the scheduled class period. The
eligibility for an Incomplete course grade is included in this

policy statement.
The Syllabus also includes a separate statement on the Late
Policy. Note that in many classes the Late Policy has 1) been
lifted from the Syllabus and is presented as a separate Module
in CONTENTS or 2) is replicated in CONTENTS. In any case
their should be no significant difference between any iteration
of the class Late Policy. The Late Policy is very important to
students as it can have a direct impact on the grade assessment
for their class assignments. Assigned instructors should direct
their students to review the Late Policy.
2
Project 1 (Worth 15 points/15%)
· Submit to Assignment Folder.
· Due Tuesday, 11:59 pm ET.
Purpose: This project requires you to identify and assess legal
issues, apply the law to the facts and make recommendations.
The issues relate to the concepts and assigned materials
covered in weeks 1, 2, and 3.
This project will guide you in preparing a PowerPoint
presentation.
This project meets the following course outcomes:
· recommend appropriate actions in the business environment
based on an understanding of sources of law, substantive legal
concepts, legal process and procedure, and available remedies;
and
· analyze tort rights, obligations, liabilities, and remedies in the
business environment.
Background/Facts: TLG is continuing to work with its new
client, Viral Clean (Clean), a commercial cleaning company
incorporated in Maryland, but doing business in all Mid-
Atlantic states. Clean's owners have primary concerns about
negligence risks and liabilities related to potential accidents
occurring in their public business space to employees and/or

customers.
Clean is headquartered in commercial space in a local shopping
center. This is a public space that includes private business
offices, a public reception area, a conference meeting area, and
space for potential and existing clients to meet to discuss
cleaning jobs, buy cleaning products, and complete contracts for
cleaning services. The shopping center is busy and heavily
trafficked with shoppers.
Winnie and Ralph request that you research and recommend a
plan to identify potential negligence risks/liabilities and ways to
minimize those potential negligence risks in Clean's public
facility. You will then make a PowerPoint supported
presentation to the Clean owners. The Clean owners will use the
plan to refine policies and procedures to prevent and/or
minimize their liabilities.
Instructions
Prepare a PowerPoint (PPT) presentation to:
(1) develop a plan to identify and explain potential negligence
risks/liabilities, and
(2) recommend ways to minimize those potential negligence
risks in Clean's public facility.
(3) The plan focuses on potential tort liabilities for negligence
(do not discuss or include the tort of strict product liability in
this project).
The PowerPoint presentation will be labeled in 2 parts:
There is no set number of PPT slides required, but it is
important to be complete and comprehensive in the
presentation.
Use only the assigned resources available in the classroom for
the project.
Formatting
· An opening slide with your name, class name and number and
date of submission
· An Introductory slide is always appropriate and appreciated
· A Summary or Conclusion slide is also appropriate
· The Speaker Notes on a final slide titled “Resources” should

reflect the full APA citation of all resources. (Note: There
should be an in-text citation in the Speaker Notes narrative
wherever a supportive resource is referenced.)
· Using PowerPoint slides, create two (2) distinct parts of your
presentation:
1. Identify and explain 3 different specific situations that could
create negligence risks/liabilities for Clean in its public facility.
Explain why/how each situation creates possible negligence
liability
· Part I. Risks and Liabilities
A. Negligence Risk Situation 1
B. Negligence Risk Situation 2
C. Negligence Risk Situation 3
2. Develop and explain policies and/or procedures Clean could
implement to prevent or minimize the negligence risk/liability
for each situation discussed in 1 above.
· Part II. Policies and Procedures
1. Policy/Procedure for Negligence Risk Situation 1
Remember you are the “presenter” and, as such, you will be
reading your Speaker Notes the same way you would a
presentation paper. (The “narrative”, which is a clear, complete
explanation of the content and points you are making, goes in
the Speaker Notes). The Clean owners (audience) will be
looking at the slides which should include highlights and
illustrations of your comments for that slide. The slide content
should align with the narrative in the Speaker Notes. (See the
attached PowerPoint sample.) Please see the attached “Sample
PP Slide”
· HINT: Many presenters will compose their presentation first,
then divide it into the PowerPoint slide format by placing the
narrative on the Speaker Notes area of each slide and using the
slide itself to underscore important points.
· Alternatively, some presenters create an outline of their
presentation, then paste elements of the outline onto the

PowerPoint slides. They then compose the narrative in the
Speaker Notes to describe and expound on the slide.
1. Textbook Chapter 17- Products Liability
https://saylordotorg.github.io/text_law-for-entrepreneurs/s20-
products-liability
2. Product Liability: Manufacturing Defects vs. Design Defects
https://corporate.findlaw.com/litigation-disputes/product-
liability-manufacturing-defects-vs-design-defects.html
3. Exploring Warranties and Product Liability
https://www.lawteacher.net/free-law-essays/contract-
law/exploring-warranties-and-product-liability-contract-law-
essay.php
4. Implied Warranty: Merchantability; Usage of Trade
https://www.law.cornell.edu/ucc/2/2-314
5. Implied Warranty: Fitness for Particular Purpose
6. Express Warranties by Affirmation, Promise, Description,
Sample.
7. Exclusion or Modification of Warranties.
1. Textbook Chapter 7- Introduction to Tort Law
· https://saylordotorg.github.io/text_advanced-business-law-
and-the-legal-environment/s10-introduction-to-tort-law.html
2. Instructor note 1
· IT IS IMPORTANT TO BE VERY PRECISE WHEN
DISCUSSING LEGAL DEFENSES.
· PLEASE NOTE: THE LEGAL DEFENSES TO NEGLIGENCE
ARE ASSUMPTION OF RISK, COMPARATIVE NEGLIGENCE
if permitted as a defense in the state in question) OR
CONTRIBUTORY NEGIGENCE (if permitted as a defense in
the state in question).

· IT IS IMPORTANT TO REVIEW ALL THE INFO BELOW.
Negligence law is complex and this information is aimed at
helping you sort it out and understand and correctly analyze
negligence situations.
· Please review the Summary Comments modules in week 1, just
below the week 1 module in Content. It is very important as a
guide to improving work each week.
· _____________________
· There is a lot of info and material to cover in this class.
Please read all the assigned materials and use them as resources
for completing assignments. Please do not use the internet for
searching other materials or legal cases. Much of the internet
legal info is inaccurate, outdated and/or misleading and
confusing. This is particularly true of legal cases. A few cases
are used as examples in assigned materials, but they are clearly
explained and thus, can be useful.
· When creating analyses for Discussion and Learning
Activities, identify the precise issue(s) on which the assignment
is bases, and the precise question(s) being asked. Respond to
the precise issues and questions. It is important to be careful to
include irrelevant info that can weaken an argument and li kely
create an inaccurate analysis. Resist telling the reader
everything you have read/learned; just focus on the relevant
information that directly an clearly supports your conclusions.
· For example:
· Discussion 1 in week 1 focused on state jurisdiction in the
case between ABC and Clean and whether and why the VA
court could have jurisdiction in the case. This was a case
involving two states and diversity of citizenship between the
parties. The precise issue was whether the VA courts could
have personal jurisdiction over both parties and if so, why. It
was not an issue of federal jurisdiction. To discuss federal
jurisdiction is irrelevant and can confuse the reader.
· Subject matter jurisdiction is usually automatic as each case is
presumably and typically filed in the correct court or it would
be automatically moved to the proper court with subject matter

jurisdiction before personal jurisdiction would even be
considered. It is ok to explain subject matter jurisdiction it in
the Learning Activity in week 1, but actually not necessary as
the more important and precise issue was the VA court
obtaining personal jurisdiction over both parties.
· _________________________
· Negligence Information - ULTRA IMPORTANT
· Contributory and comparative neglige nce are discussed in
some of the assigned readings, and it is easy to fall into a "trap"
and get off track on these concepts. To avoid the "trap", digest
the following.
· 1. Contributory and comparative negligence are simply
defenses a defendant in a negligence case MIGHT raise IF
either is permitted as legal defense in the state in which a case
is heard. .
· For example:
· Consider that Windows R Us is sued for negligence by Joe
who claims Windows negligently installed a new window in his
house that fell out when he tried to open it and severely cut his
arm. Windows might defend itself by claiming that Joe was
also careless (negligent) and partly responsible for the injury
when he hammered on the window to get it open. IF
comparative negligence is allowed as a defense in the
jurisdiction in which the case is heard, then Windows can raise
this defense. It might or might not be successful, but Windows
can raise it. If the accident is found to be partly due to Joe's
hammering the window, then the court will determine to what %
Windows is responsible for the accident /injury and to what %
Joe is responsible. Assume Windows is found to be 30%
responsible for the accident/injury and Joe 70% responsible.
Windows will pay 30% of the total expenses/compensation
damages in the case, Joe will pay for the other 70% of the
expenses.
· 2. Contributory and comparative negligence
are NOT permitted to be used as a defense in all jurisdictions
(states). Only 5 states permit contributory negligence, so it

cannot be raised as a defense in most states. Because
contributory negligence is a common law concept that if
permitted as a defense in a state, is considered unfair to an
injured plaintiff because it bars all recovery by the injured
plaintiff. So, if a plaintiff is ruled to have contributed to ANY
degree to the injury, the plaintiff cannot recover any damages
for the injury.
· For example, in Joe's scenario above, if contributory
negligence had been permitted as a defense and Joe was found
to be even 1% negligent, he would not be able to cover ANY
expenses/compensation damages.
· If a class question asks you to describe all possible legal
defenses in negligence, it is appropriate to explain assumption
of risk and contributory and comparative negligence. However,
in discussing contributory and comparative negligence as
defenses, it is necessary to explain they are not permitted in all
states and thus cannot be raised as defenses unless one or the
other is permitted in a state. Assumption of risk is a legal
defense that can be raised in all states.
· Please note that defendants can raise permitted legal defenses,
but it is not guaranteed that any defense will be successful.
· If contributory negligence is not permitted as a defense in a
state, it cannot ever be raised as a defense by a defendant -
period.
· Comparative negligence is permitted in many states, but not
all states. Unless a state permits it as a defense, it cannot ever
be raised as a defense by a defendant - period.
· Neither contributory Nor comparative negligence can be raised
in ANY case unless it is clear that one or the other is permitted
in as state. IN OUR ASSIGNMENTS, NEITHER
CONTRIBUTORY NOR COMPARATIVE NEGLIGENCE CAN
BE RAISED AS A DEFENSE UNLESS THE FACTS WE ARE
GIVEN TELLS US ONE OR THE OTHER IS PERMITTED IN
THE STATE.
· 3. Please do not, do not, do not mention contributory or
comparative negligence in an analysis UNLESS the scenario

facts tell you that one or the other is permitted as a defense in
the jurisdiction involved in the scenario. To discuss either
defense when the facts have not told you one or the other is
permitted in the jurisdiction muddies the analysis, is irrelevant
and can weaken the analysis.
· 4. Contributory and comparative negligence are NOT
both permitted in any state. Each state permits one or the other,
or neither.
· If neither is permitted, a defendant has other legal defenses to
raise.
3. Instructor note 2 (Negligence)
· Additional Comments on Negligence:
· Negligence is such an important area in biz law, but complex
and more difficult that it appears on its face – negligence and
product liability are the most difficult areas of law we cover.
Tort law can be confusing and cause you to get mired in the
abyss of torts. Please follow my guidance for analysis and you
will stay out of the abyss (not meaning to sound arrogant, but
this comes from decades of teaching biz law) and it is my job to
keep you from falling into the abyss. :-)
· Here goes…
· Negligence cases should be analyzed as follows, and in this
order:
· Examine the 4 elements to Negligence in order: duty, breach,
causation, harm. Let's look at them individually.
· 1. duty: Is there a duty - under the totality of circumstances
- to the injured party (this is important)? Consider the different
levels of duty, i.e., common carriers have a heightened duty of
care, duty to invitees is greater than the duty to guests, etc.
Review this info in the book – the level of duty of care owed is
essential to the analysis.
· If no duty exists, examination of elements over, no case. If
duty exists, go on to 2nd element, breach of the duty.
· As an aside: For example, there is no duty to rescue (no,
there isn’t, contrary to popular myth), so assume Joe is walking
down the street, sees that little Susie has fallen off her bike and

her leg is bleeding. Does Joe have a duty to help Susie under
the circumstances? NO, end of examination, no case. If Joe is a
physician, does that create a duty under these circumstances?
NO. Suppose no one comes along for an hour to help Susie and
the bleeding and injury is worsened by the fact that no one
stopped to help. Is Joe liable, did he have a duty to help? NO,
end of examination, no case.
· I know what you are probably thinking: we have Good
Samaritan laws in each state to protect from liability people
who choose to help those in peril, but Good Sam laws do not
create a duty to rescue. Yes, ethical arguments can be made to
help others, but there is no general legal duty.
· There are circumstances where there is a duty to rescue. For
example an ON-duty police officer has a duty to help in most
circumstances, a physician ON duty in an ER has a duty in most
circumstances, etc.
· 2. breach: If a duty exists, then what constitutes being as
"careful" as possible - under the totality of
circumstances? Was the party as careful as possible - under the
totality of the circumstances? Is it reasonably foreseeable,
under the circumstances, that if one acts carelessly an accident
could occur?
· If so, then no breach, examination of elements over, no case.
If the party was unduly careless - under the totality of the
circumstances - then there is a breach, proceed to the next
element. .
· 3. causation: Here it gets really tricky. If there is duty, a
breach of duty by careless conduct, then examine the precise
careless conduct that occurred viz a viz the harm/injury that
occurred. Is this careless conduct the DIRECT
cause (synonymous with actual cause and proximate cause)of
harm/injury that occurred – under the totality of the
circumstances? AND, was it the direct cause of the type of
injury that occurred to the specific plaintiff? Was it
reasonably foreseeable – under the totality of circumstances –
that if the party acted carelessly in the specific manner he/she

acted, that a specific harm/injury is likely to occur, and to a
specific plaintiff who was injured? IF so, there is causation,
proceed to final element of harm.
· If not, then no causation exists, examination of elements over,
no case.
· A party can have duty, breach that duty by acting carelessly,
but the careless conduct MAY NOT be the direct cause of the
harm that occurs; the careless conduct MAY NOT be reasonably
foreseeable to cause the type of harm that occurred or to the
specific party that was injured. If this is true, then no
causation, examination of elements over, no case.
· Please forget the phrase, “but for”, take it out of your
vocabulary. You don’t need it to analyze a negligence case and
it is more confusing than helpful, particularly in res ipsa
loquitor cases and negligence per se cases (more on these later).
· 4. harm: If there is duty, breach of duty and causation, is
there actual harm/injury to person or property? If so, likely
there is a valid case, and off to court we go with the injured
party seeking damages.
· If there is no actual harm/injury, then examination of elements
over, no case. There MUST be harm/injury to proceed to court
in a negligence case. People often have a duty to be careful,
and act carelessly, but no harm results, thus no case. For
example, people frequently drive over the speed limit but no
harm occurs, thus no case.
·
_____________________________________________________
_______
· This is the way to analyze negligence claims. Notice how I
have inserted direct/actual/proximate cause into causation.
Note that “totality of circumstances” is included in each
element (essential to examine ALL the circumstances –
negligence does not occur in a vacuum). Note where
foreseeability fits into the analysis: it means foreseeability of
the type of harm/injury that occurred as the result of the
specific careless conduct, and it refers to foreseeability of the

specific plaintiff who was injured by the specific careless
conduct.
· Example Analysis: Brakes, Inc fixes A’s car brakes but does
so incorrectly so they are likely to fail. Neither party is aware
of this, so A leaves with the supposedly repaired car. A is
driving carefully (not negligently) down the city street when A
hits the brake at a stop sign, but the brakes fail and A hits a
tree. A’s car is damaged and A has a broken arm. A sues
Brakes for negligence. Is Brakes liable?
· Go through the analysis:
· duty: Does Brakes have a legal duty to A to repair A’s brakes
carefully, under the circumstances? Absolutely, and a
heightened one: A is an invitee viz a viz Brakes.
· breach: Did Brakes breach the duty by acting carelessly under
the circumstances? Is it reasonably foreseeable that if Brakes
acts carelessly/negligently that an accident could occur?
Absolutely, Brakes was careless in repairing the brakes –
remember negligence involves careless accidents with NO
INTENT to be careless or cause harm.
· causation: was the careless conduct (repairing the brakes
incorrectly/carelessly) under the circumstances the direct cause
of the accident (that is, the brakes failing and causing A to hit a
tree?) that occurred? Absolutely. Is it reasonably foreseeable
that if you are careless in repairing brakes that the brakes may
fail and an accident is likely to occur with the car? Absolutely.
Is it reasonably foreseeable that the type of accident (brakes
failing, car crashing) that occurred could result from careless
brake repair? Absolutely. Is it reasonably foreseeable that the
specific plaintiff (the driver of the car) could be injured as a
result of the faulty brake repair? Absolutely.
· harm: did actual harm occur from the breach of duty/careless
conduct? Absolutely: harm to the car (personal property) and
physical injury to A.
· Off to court we go, A sues for compensatory damages for harm
to the car and for medical expenses for his arm injury. Easy

case, A wins.
· Example 2 Analysis: Let’s consider a slightly different case.
· Brakes, Inc fixes A’s car brakes but does so incorrectly so
they are likely to fail. Neither party is aware of this, so A
leaves with the supposedly repaired car. A is driving carefully
(not negligently) down the city street when B runs a stop sign,
hits A’s car causing A’s car to skid; A hits the brakes but they
fail and A hits a tree. A’s car is damaged and A has a broken
arm. A sues B for negligence and damage to his car and arm.
Is B liable?
· duty. Does B have a duty to drive carefully, not negligently,
under the circumstances (on a public street)? Absolutely.
· breach: Was the careless conduct of running a stop sign, a
breach of duty to drive carefully, under the circumstances? Is it
reasonably foreseeable that if B runs a stop sign an accident
could occur? Absolutely.
· causation: Was the careless conduct of running a stop sign the
direct cause of the accident that occurred (that is, A’s hitting a
tree)? Absolutely. (No, the faulty brakes were not the DIRECT
cause of A’s hitting the tree; the direct cause was B running the
stop sign). Was it reasonably foreseeable that if B runs a stop
sign an auto accident is likely to occur and harm/injury likely to
occur to those involved in the accident, i.e, the drivers of the
cars? Absolutely.
· Don’t be misled; the direct, foreseeable cause of the accident
that occurred is not the failure of the brakes. Just because
Brakes repaired A’s brakes carelessly, it is not foreseeable that
B will run a stop sign causing A to hit a tree, etc. This scenario
fails for breach and causation.
· 4. harm: Did harm occur? Absolutely – to A’s car and arm.
Was it reasonably foreseeable that if B ran a stop sign, there
might be a car accident involving B and another car? And
reasonably foreseeable that the driver of the other car could be
harmed, as well as the driver of the other car? Absolutely.
· Off to court we go…..A collects damages from B. Easy case.

· Example 3 Analysis: Let’s make it a bit more complicated.
· Brakes, Inc fixes A’s car brakes but does so incorrectly so
they are likely to fail. Neither party is aware of this, so A
leaves with the supposedly repaired car. A is driving carefully
(not negligently) down the city street when B runs a stop sign,
hits A’s car causing A’s car to skid; A hits the brakes but they
fail and A hits a parked car which explodes. Pieces of
exploding car metal fly in the air several yards and hit Mary
who is walking on the sidewalk; Mary’s arm is cut badly so
stitches are required. Mary sues Brakes for negligence. The
owner of the parked car that exploded also sues Brakes in a
separate case. Who wins?
· Go thru the analysis:
· Brakes has a duty to repair cars carefully, they breached that
duty by carelessly repairing the brakes. But were the carelessly
repaired brakes direct cause of the specific type of accident that
occurred and the specific harm that occurred to Mary?
· NO, it fails on causation. It was not reasonably foreseeable
that by carelessly repairing the brakes, B would run a stop sign,
hit A causing A to hit a parked car, causing the car to explode,
causing flying metal to hit a pedestrian. The carelessly repaired
brakes are NOT the direct cause of the injury to Mary OR to the
damage to the parked car. There is NO foreseeability, end of
case, Mary is out of luck. It may seem unfair to Mary but also
would be unfair to Brakes (or any defendant) to hold them liable
for every remote accident that occurs involving A’s car.
· Is Brakes liable to the owner of the parked car? NO, it fails
on causation. It was not reasonably foreseeable that by
carelessly repairing the brakes, B would run a stop sign, hit A
causing A to hit the parked car, causing the car to explode.
The carelessly repaired brakes are NOT the direct cause of the
injury to the parked car.
· BUT, assume Mary sues A or B for negligence in this case.
Are either of them liable?
· A is not liable; A did not breach a duty of care or act
negligently at all.

· B is not liable; the claim fails on causation again. It is not
reasonably foreseeable that by B’s carelessly running a stop
sign, hitting A causing A to hit a parked car, the car w ould
explode, causing flying metal to injure Mary. The accident that
occurred causing the harm, and the plaintiff that was injured are
too remote from the point of the careless conduct (running the
stop sign) to constitute direct causation.
· BUT, if A sued B for damage to A’s car, A would have a good
case as there is duty, breach and causation as well as harm that
is foreseeable under the circumstances. If B runs a stop sign, it
is reasonably foreseeable B might hit a car and cause damage to
the car and/or driver.
· If you find a long, unlikely chain of events leading to ultimate
injury to a person, it is likely a case without direct causation
because it was not directly foreseeable that the accident/injury
that occurred would have occurred to the particular plaintiff in
question.
· https://www.wcc.state.md.us/gen_info/wcc_benefits.htmlI
· Introduction to Torts
· Introduction: Torts are civil wrongs or offenses against
persons or property resulting in some level of injury. There are
numerous specific torts that fall into four general categories:
(1) unintentional torts, e.g., negligence, (2) intentional torts,
e.g., trespass to property, and (3) strict liability, which includes
liability for abnormally dangerous activities, e.g., use of
explosives, and (4) strict product liability for defective
products. The primary goal of tort law is to compensate for
damages incurred. Among the types of damages for which an
injured party may recover are compensation for property loss or
damage, for medical expenses, for loss of earnings capacity, and
for pain and suffering; in some cases, punitive damages may be
awarded to punish the wrongdoer for a particularly egregious
offense. Tort law is based primarily in state case law and
statutory law with the Restatement of Torts (2nd) used by courts

and legislatures as a guideline.
· Intentional Torts/Business Torts
· Introduction: Intentional torts are civil offenses in which a
wrongdoer (tortfeasor) intentionally commits an act against
persons, property or a business that the wrongdoer knew or
should have known would result in some level of harm to
property, persons, or business. Types of intentional torts
against persons include civil assault and battery, false
imprisonment, intentional infliction of emotional distress,
defamation, invasion of privacy, appropriation, and fraudulent
misrepresentation. Intentional torts against property include
trespass to land, trespass to personal property, conversion, and
disparagement of property. Special business torts are wrongful
interference with a contractual relationship, wrongful
interference with a business relationship, and disparagement of
a product.
· Negligence
· Introduction: Negligence is an unintentional tort in which
the wrongdoer does not intend to cause harm as a result of the
wrongdoer’s conduct. Negligent acts are the result of the
wrongdoer acting carelessly, or failing to act, thus, not
exercising an ordinary level of care that a reasonable person
would have exercised under the same circumstances. To create
liability, a wrongdoer’s conduct must create a risk of harm that
is reasonably foreseeable under the circumstances. The
plaintiff/injured party must prove the elements of negligence
that include, (1) that the defendant/wrongdoer owed a legal duty
of care to the plaintiff under the circumstances, (2) that the
wrongdoer acted in a careless manner so as to breach the duty
of care, (3) that the breach was the cause of harm to the
plaintiff, (4) and resulted in specific harm for which damages
can be recovered. A defendant may attempt to defend against a
negligence claim by asserting legal defenses of a superceding
event, or assumption of risk, or, in certain jurisdictions,
comparative or contributory negligence on the part of the
plaintiff.

6. Elements of Negligence Summary
· https://www.findlaw.com/injury/accident-injury-law/elements-
of-a-negligence-case.html
7. Premises Liability
· https://www.nolo.com/legal-encyclopedia/what-premises-
liability.html
8. Introduction to Torts (Video)
· https://youtu.be/_KHIWhwj5as
9. Maryland Workers’ Compensation Law
· https://www.wcc.state.md.us/Gen_Info/WCC_Benefits.html
U.S. Constitution
We the People of the United States, in Order to form a more
perfect Union, establish Justice, insure domestic Tranquility,
provide for the common defence, promote the general Welfare,
and secure the Blessings of Liberty to ourselves and our
Posterity, do ordain and establish this Constitution for the
United States of America.
--Preamble to the United States Constitution
The Constitution acted like a colossal merger, uniting a group
of states with different interests, laws, and cultures. Under
America’s first national government, the Articles of
Confederation, the states acted together only for specific
purposes. The Constitution united its citizens as members of a
whole, vesting the power of the union in the people. Without it,
the American Experiment might have ended as quickly as it had
begun.
Police Powers Law and Legal Definition
Police powers are granted to states in the 10th Amendment to
the U.S. Constitution, which reserves to the states the rights and
powers "not delegated to the United States," which include
protection of the welfare, safety, health and even morals of the
public. Police powers denotes the basis for many regulatory

subjects, such as licensing, inspection, zoning, safety
regulations, and working conditions as well as law enforcement.
Police powers may be used, for example to detain people or
search things like vehicle.
It is a general term that expresses the fundamental power vested
in every state to limit and regulate the exercise of private rights
in the interest of public health, public morals, public safety, and
the general welfare of the community. Governments have
exercised police power to prohibit the sale of liquor and
cigarettes and gambling. Cities and towns have prohibited the
making of bricks in a town, the maintenance of livery stables,
public laundries, billboards, public garages, coal yards and
slaughterhouses.
The Police Power
Police power is the right to protect the country and its
population from threats to the public health and safety. The
term “police power” predates the development of organized
police forces, which did not develop until the postcolonial
period. In the colonial period, police power was used to control
nuisances, such as tanneries that fouled the air and water in
towns, to prevent the sale of bad food, and to quarantine
persons who were infected with communicable diseases. Many
of the colonies had active boards of health to administer the
police power. This was one of the main governmental functions
in the colonial period.
Under the Constitution, the states retained much of their police
power but share the right to regulate health and safety issues
with the federal government. Examples of the federal use of the
police power are food and drug regulations, environmental
preservation laws, and workplace safety laws. The states have
companion laws in most of these areas, plus local public health
enforcement such as restaurant inspections, communicable
disease control, and drinking water sanitation. In most cases,

the states share jurisdiction with the federal government and the
courts will enforce whichever is the more strict law. State and
local public health laws are exercises of the police power.
Jurisdiction
Jurisdiction is the authority granted by law to the courts to rule
on legal matters and render judgments, according to the subject
matter of the case, and the geographical region in which the
issue took place. Areas of jurisdiction apply to local, state, and
federal laws, which means that, for instance, a violation of
federal law is tried in federal court. To explore this concept,
consider the following jurisdiction definition.
Definition of Jurisdiction
Noun
1. The power and authority to administer justice by hearing and
deciding legal cases
2. The territory over which such authority is exercised
3. The geographical area of a court’s legal authority, or of a law
enforcement agent’s authority
Origin
1250-1300 Middle English <Latin jūris dictiōn
What is Jurisdiction
Jurisdiction is the term that refers to the limits of a legal
authority. It can refer to both political territories and
geographic regions, as well as the types of legal matters over
which a legal body has authority. A formally authorized legal
body is a court, political or governmental office, and in many
situations, law enforcement agency. When a legal body holds
jurisdiction, it has the authority to administer justice within that
jurisdiction.
In the court system, there are three primary types of
jurisdiction: subject matter, territorial, and in
personam jurisdiction. If a court without proper jurisdiction
hears a case, it does not have the authority to render a

judgment, to provide the plaintiff with a remedy to his legal
issue, or to hand down sentencing. For this reason, it is
important for all parties involved to be sure the case has been
filed in a court of proper jurisdiction. This is one of the first
things that should be determined by the judge as well, before
allowing the case to proceed.
Typically, a court holds more than one jurisdiction type in any
case. This might mean the court can hear cases that originate in
its geographical jurisdiction, and it has subject matter
jurisdiction as well. As an example of jurisdiction, a family
law court has the authority to hear and decide matters related
to divorce, child custody, child support, and other related
issues, if the family lives in its geographical region. Family
court does not, however, have jurisdiction to hear a criminal
case, even if it somehow relates to a family issue.
For example:
Jack and Anna have separated and are going through the divorce
process, including a child custody battle. Anna initially left
Jack after he had beat her up badly, putting her in the hospital,
and sending the children to stay with their grandparents. Jack
was arrested that day, and charged with felony spousal assault.
The family court is handling the issues of divorce and child
custody, which are greatly affected by the behavior of the father
for the past several years. It does not, however, have authority
to try Jack on his criminal charges. That authority rests solely
with the criminal court.
Courts of General Jurisdiction
Courts of general jurisdiction have authority to hear any type of
case within its geographical and governmental jurisdiction,
except where prohibited by law. These courts are often called
“district courts,” or “superior courts,” depending on the state. In
the state of New York, the state court of general jurisdiction is
called the “Supreme Court,” which can be confusing, as it is not
actually the state’s supreme court.
This means, for instance, that a state trial court of general

jurisdiction might have authority to hear cases regarding a
variety of subjects, within its geographical and governmental
jurisdiction. In most states, however, the superior or district
courts are divided by subject matter, with a specified court
assigned all cases dealing with that topic. For instance, separate
courts, or judges, will hear family court matters, civil lawsuits,
small claims lawsuits, traffic court, drug court, and criminal
court. These are known as courts of “limited
jurisdiction.”Determining Whether a Court Has Jurisdiction
In order to determine which court has jurisdiction over a legal
matter certain questions must be addressed. These are:
1. Which court has jurisdiction in that geographical area (a civil
lawsuit for an accident that occurred in Florida cannot generally
be heard in California)
2. Which court has jurisdiction over the defendant (or over the
person being charged or sued)
3. Which court has jurisdiction over the subject matter (is it
family law, traffic violation, or civil lawsuit)
If the court in which any legal matter is filed lacks jurisdiction
in even one of these areas, it does not have the authority to
render judgment.
Subject Matter Jurisdiction
Subject matter jurisdiction is the authority of a court to hear
cases involving a certain subject matter. A few examples of
subject matter include bankruptcy, divorce, civil
rights violations, and probate. The purpose of dividing a court
system into such subject matter jurisdictions is to ensure that
judges hearing certain types of cases are experienced in that
area of law, as they work within it on a daily basis. It is just
common sense that a judge specializing in bankruptcy cases not
be allowed to hear a personal injury lawsuit.
Some types of jurisdiction, or lack thereof, can be waived by
the parties, allowing the court to hear the case anyway. Subject
matter jurisdiction, however, cannot be waived. If a court that
does not have subject matter jurisdiction over a case makes a

ruling on that case, the ruling can be invalidated.
For example:
As Alton was backing out of a parking space at the local mall,
another car speeding down the aisle struck his car. While he had
a stiff neck from the impact, Alton was more concerned about
getting his car repairs taken care of, but the other driver’s
insurance company is denying his claim.
A couple of weeks later, when Alton has to seek medical
attention for the worsening pain in his neck and shoulder, he
realizes he will have to file a civil lawsuit against the man who
hit him, and against his insurance company. Alton knows where
the courthouse is because he had hearings on his divorce there
two years ago.
When Alton takes his civil lawsuit complaint to be filed with
the court, he is told that the family law court cannot hear his
personal injury lawsuit. Alton is redirected to the court that has
subject matter jurisdiction over civil lawsuits and personal
injury, to file his claim.General Jurisdiction in State Courts vs.
Federal Courts
While most states have courts of general jurisdiction, even if
they have a system of courts with limited jurisdiction. On the
other hand, the federal court system is limited by Article III of
the U.S. Constitution as to subject matter. A primary issue in
whether a federal court has jurisdiction over a civil case is
whether the plaintiff has claimed a violation of the U.S.
Constitution or federal law has occurred. This is referred as
“federal-question jurisdiction.”
Criminal cases may be brought in either a state or federal court,
depending on whose laws were violated. A defendant charged
with violating a state theft law cannot be charged with that
crime in a federal court. If he is accused of violating a federal
law, such as trafficking in child pornography, he can be charged
and tried in federal court. In some cases, a person may be
charged and tried in both state and federal courts related to
different elements of the same crime, and it has been ruled that
this does not amount to double jeopardy.

Territorial Jurisdiction
Territorial Jurisdiction refers to the authority a court has over
cases within its specific geographical territory. If the court
lacks territorial jurisdiction, it does not have the authority to
make a ruling, or to hand down a sentence. Unlike subject
matter jurisdiction, the defendant may be allowed to waive
territorial jurisdiction in certain cases.
Territorial jurisdiction also applies to the geographical territory
of a law enforcement agency, and therefore the prosecutor for
that region. For instance, if Bob commits a crime in
Bakersfield, California, the Bakersfield police have the
authority to investigate, and the District Attorney for
Bakersfield has the authority to bring criminal charges and
prosecute the case. The criminal case would then be heard in the
state court in Bakersfield.
There are certain exceptions. If someone is accused of
committing crimes in more than one county or city within a
single state, the crimes could be prosecuted in any of those
jurisdictions, or each may choose to prosecute separately for the
crime committed within its boundaries. If that person committed
crimes in more than one state, or crossed state lines while
committing the crime, the federal court has territorial
jurisdiction.
In Personam Jurisdiction
The Latin term in personam jurisdiction, refers to a court’s
jurisdiction over the person, though it also applies to an entity.
Legal actions must be filed in a court that has some connection
to the event, or to the parties involved. This only comes into
play in certain situations. For instance, Jack drives across the
boarder from his construction business in California, to do some
construction repairs on a home in Nevada, then returns home.
Later, the homeowner complains that Jack’s work was terrible,
and that he was bilked out of his hard-earned money.
The homeowner files a civil lawsuit in Nevada, but Jack

complains to the court that, because the homeowner hired the
services of his business, which is based in California, it has no
jurisdiction. The lawsuit should be filed in California.
Generally, the Nevada court has no jurisdiction over Jack or his
construction company, as they are based in another state. That
court can, however, assert in personam jurisdiction, or personal
jurisdiction, over Jack and his company, and hear the case
where the work was done.
Police jurisdiction
Like the courts, law enforcement agencies are subject to issues
of jurisdiction. Police jurisdiction refers primarily to the
agency’s assigned geographic region. Within a single state,
there may be several law enforcement agencies, which work
together in a sort of choreographed maneuver:
· City police officers – have authority only within their city’s
limits
· County sheriff’s deputies – have authority within their county,
not including activities within the city limits
· State police or state troopers – have authority to act within
their state, though they have authority only in limited
circumstances within a county or city’s geographical regions
Each of these law enforcement agencies has their own
territories, or police jurisdiction, but they work together to help
ensure services are provided seamlessly between the regions.
For instance, if city police chase a car across the city limits,
they may be joined by county deputies to bring the chase to an
end. State police often have broad authority, and are invited
into the city or county jurisdictions to assist in certain cases.
Federal law enforcement officials have authority to arrest a
person who has violated a federal law, regardless of which
jurisdiction he is in. This is because they have authority to act
when federal laws are violated, regardless of location within the
U.S.
In general, a law enforcement officer does not have the
authority to arrest someone outside his jurisdiction. Similarly,

an off duty police officer, who is on vacation in another state,
has no authority to detain or arrest someone in his official
capacity as a police officer. This lack of police jurisdiction does
not prevent the officer from making a citizen’s arrest while
waiting for officers to arrive.
An Example of Jurisdiction
One of the first considerations for any court in the land is
whether it has jurisdiction over any case brought before it.
Laypeople bringing their own suit are often unaware of
limitations to jurisdiction, which is understandable. This leaves
the court responsible for making that determination before the
case can move forward.Foreign Company Sued over Faulty Part
In the 1980s, a young couple were riding a motorcycle which
crashed because of a faulty valve that had been produced in
Japan. The driver was seriously injured, and his wife, riding as
passenger, was killed in the accident. The victim filed a civil
lawsuit in the California court, where the victims lived, and the
accident happened, against the Taiwanese distributor of the
value, Cheng Shin Rubber Industrial Co. Cheng Shin Rubber
had purchased the valves to use in their assembly of thousands
of motorcycle wheels.
Cheng Shin filed a complaint with the court, asserting that the
faulty valves had been manufactured by Asahi Metal Industry
Co, in Japan, and that Cheng Shin had no knowledge that they
were faulty. The complaint asked to be relieved
of responsibility in the lawsuit, and that Asahi instead be held
responsible. Asahi argued that the court in California had no
jurisdiction over the company. The California court, however,
ruled that it had personal jurisdiction based on the company’s
awareness of the scope to which its products would be
distributed internationally.
A series of appeals ensued, until the matter was brought before
the U.S. Supreme Court in 1986. In Asahi Metal Indus. v.
Superior Court the Court addressed the issue of whether the
state court properly took personal jurisdiction over the Japanese

company, simply by the fact that it should have known that its
products, which were sold to a Taiwanese company, and shipped
directly to that company, would make it into the California
market.
The Court applied the following test to determine whether the
state court could assert personal jurisdiction over a foreign
defendant:
· What is the burden on the defendant to bring his case in a
foreign land?
· What are the interests of the state in which the lawsuit was
filed in the litigation?
· What is the interest of the plaintiff in litigating the matter in
that state?
· Does the allowance of personal jurisdiction serve interstate
efficiency?
· Does the allowance of personal jurisdiction serve interstate
policy interests?
The U.S. Supreme Court ruled that California could not claim
personal jurisdiction over the Japanese company, which has no
presence in the U.S., does no business in the country, and owns
no property in the country. The Court held that, should the
California court be allowed to exercise jurisdiction over Asahi,
the act would be “unreasonable and unfair.”
Related Legal Terms and Issues
· Appellate Court – A court having jurisdiction to review
decisions of a trial-level or other lower court.
· Authority – The right or power to make decisions, to give
orders, or to control something or someone.
· Defendant – A party against whom a lawsuit has been filed in
civil court, or who has been accused of, or charged with, a
crime or offense.
· Judgment – A formal decision made by a court in a lawsuit.
· Plaintiff – A person who brings a legal action against another
person or entity, such as in a civil lawsuit, or criminal
proceedings.

Jurisdiction in Cyberspace
This article was edited and reviewed by FindLaw Attorney
Writers| Last updated March 26, 2008
American Bar Association Section of Business Law
Cyberspace Law Committee
Coping with Personal Jurisdiction in Cyberspace
ABA Subcommittee on Internet Law Liability Report #3
Until the Internet's advent, a business operating within one state
was subject to suit only in that state. Only a business
developing a national or international focus had to assess the
risk of becoming subject to suit in other states or countries.
Performing that risk assessment was usually simple.
Traditionally, whether a particular court can exercise control
over a particular defendant depends on their physical locus,
described in such terms as residence, domicile or place of
business. For example, a corporation can generally be sued in
any state where it maintains a place of business. The Internet
introduces a new dimension towards the question of where a
party is subject to suit. If a company has a Web site, it has a
presence everywhere that Web site can be accessed. In short,
across the entire world. Over the Internet, an individual can
have the same impact on entities in other states and countries as
can a multi-national corporation. Now, even smaller businesses
must assess the risk, arising from use of the Internet, of
becoming subject to suit in other states or countries. The
location of a company's cyberassets, its maintaining a Web site,
or its use of the Internet can all effect where it is subject to suit.
Top of Form
Bottom of Form
Already, numerous courts have examined the question of when a
defendant's operation of a Web site creates personal
jurisdiction. The decisions of these courts are not always
consistent, but they are starting to reflect some common themes.
This paper's purpose is not to review the body of decisional

law,[1] but to examine the emerging themes and discuss their
application to actual business planning.
Personal Jurisdiction Basics
The judicial decisions to date in the United States, regardless of
their result, are based upon well-developed and long established
personal jurisdiction doctrines. Understanding these doctrines is
essential to analyzing the emerging decisional law related to
Internet use. Personal jurisdiction is based on the interaction
between an affirmative statutory or common-law source law
dictating the scope of the court's jurisdiction, and limitations
imposed by constitutional due process rights. State courts can
always assert jurisdiction over an entity or things physically
present in the state.[2] State courts also assert personal
jurisdiction over entities located outside of the state using
"long-arm statutes." Long-arm statutes differ from state to state,
but tend to be similar. The Uniform Interstate and International
Procedure Act is typical.
1.02 [Personal Jurisdiction Based upon Enduring Relationship]
A court may exercise personal jurisdiction over a person
domiciled in, organized under the laws of, or maintaining his or
its principal place of business in, this state as to any [cause of
action].
1.03 [Personal Jurisdiction Based on Conduct]
(a) A court may exercise personal jurisdiction over a person,
who acts directly or by an agent, as to a [cause of action]
arising from the person's:
(1) transacting any business in this state;
(2) contracting to supply services or things in this state;
(3) causing tortious injury by an act or omission in this state;
[or]
(4) causing tortious injury in this state by an act or omission
outside this state if he regularly does or solicits business, or
engages in any other persistent course of conduct, or derives
substantial revenue from goods used or consumed or services
rendered, in this state...
(b) When jurisdiction over a person is based solely upon this

section, only a [cause of action] arising from acts enumerated in
this section may be asserted against him.[3]
In determining whether the court has jurisdiction, the first step
is to examine the applicable long-arm statute, or common-law
equivalent, to determine whether the statute grants the court
jurisdiction over the out-of-state defendant. The second step is
to evaluate whether the exercise of jurisdiction in the particular
case violates due process rights granted under the United States
Constitution.[4]Constitutional due process is satisfied if the
defendant has "minimum contacts" with the forum state so that
subjecting the defendant to suit in that state satisfies
considerations of "fair play and substantial justice."[5]In
determining whether "minimum contacts" exist, the court should
consider "the relationship among the defendant, the forum, and
the litigation."[6] In determining whether exercising
jurisdiction will satisfy "traditional notions of fair play and
substantial justice" the court should focus on the contacts in
light of other factors such as:
1. the burden on the defendant;
2. the forum state's interest in adjudicating the dispute;
3. the plaintiff's interest in obtaining the most efficient
resolution of the controversy;
4. the interstate judicial system's interest in most efficient
resolution of controversies; and
5. the shared interest of the several states in furthering
fundamental substantive social policies.[7]
Establishing jurisdiction requires "some act by which the
defendant purposefully avails himself of the privilege of
conducting activities within the forum state, thus invoking the
benefits and protections of its laws."[8]Activities within a state
that can result in a party subjecting itself to suit in that state
include purposefully selling goods in the state,[9] maintaining a
physical office or store in the state, entering into a contract with
someone in the state,[10] or committing a tortious act within the
state. In general, the more passive the defendant was with
respect to a transaction, and the fewer events related to the

transaction occurred within the forum state, the less likely the
court will exercise jurisdiction over the defendant. The
difficulty arises in determining when maintaining a Web site,
accessible to people in a state, is an activity directed at a state
sufficient to allow the state to exercise personal jurisdiction
over the Web site owner.
Personal Jurisdiction, Multimedia and Broadcasting
In evaluating the ability to obtain personal jurisdiction over a
defendant due to operation of a Web site, a parallel can be
drawn to print publications. Print publications, like Web sites,
come into contact with several jurisdictions, based on conduct
that occurs primarily in one location. Print publications are
created by conduct concentrated at the location of the author
and publisher. The activity creating a Web site occurs in the
state in which the Web site is developed, and the locus of the
Web server. However, like a broadly distributed magazine or
broadcast, a Web site is accessible everywhere.
The United States Supreme Court has held that a state can
exercise personal jurisdiction over a publisher accused of
publishing libelous material about a resident of that state when
the publisher targets its economic activity at that state.
In Keeton v. Hustler Magazine, Inc.[11], the United States
District Court for the District of New Hampshire was able to
exercise personal jurisdiction over an Ohio corporation because
the defendant's magazine circulation in the state of New
Hampshire created minimum contacts with that state.
Jurisdiction was appropriate because of the state's interest in
discouraging libel by the defendant against its citizens.
In a companion case, Calder v. Jones [12], the Supreme Court
held that a California court could exercise personal jurisdiction
against an author and editor, both resident in Florida, who had
libeled a California resident in an article published in the
National Enquirer newspaper. The court determined that the
defendants had purposefully targeted their libelous activity at
California by publishing their article containing libelous
material about a California resident in a magazine which they

knew was sold and circulated in California and "must
reasonably anticipate being haled into court" in California.
In these cases, the tortious act is the knowing publication in the
state attempting to exercise personal jurisdiction over the
defendant. The results differ if the tortious act is unrelated to
the act of publication. If, instead of publishing an article in a
magazine or newspaper circulated in the forum state, the
defendant submits advertising to a nationally circulated
magazine or newspaper, the fact of that advertising is generally
not sufficient to create jurisdiction, unless the claim arises from
the advertising. For example, in IDS Life Insurance Company v.
SunAmerica, Inc.,[13] the defendant advertised in nationally
circulated newspapers and magazines and on national television,
and maintained an Internet Web site. The District Court for the
Northern District of Illinois held that such advertising did not
involve systematic and continuous contact with the forum state,
Illinois, and concluded that it did not have personal jurisdiction
over the defendant.[14] In Gaingolo v. Walt Disney World
Co.[15] a district court judge noted that allowing national
advertising to make a defendant subject to suit wherever the
advertisement appeared would "substantially undermine the law
of personal jurisdiction."
Personal Jurisdiction Based on Internet Contacts
Based on the rules expressed in cases like IDS Life
Insurance and Gaingolo, operating a Web site or advertising on
the Internet should not, by itself, subject a party to global
jurisdiction. But, based on the Keeton and Calder decisions, a
person committing a tortious act using the Internet should
expect to be subject to jurisdiction in the state at which the
tortious act is directed. Several courts have addressed the issue
of whether maintaining a Web site accessible from a state
subjects the owner of the Web site to personal jurisdiction in
that state.
The developing theme in the cases is to base jurisdiction on the
extent to which the activity performed by maintenance of the
Web site is directed toward the forum state. Important factors

include the level of interactivity in the Web site, whether the
Web site content is directed toward an audience including
residents of the forum state, whether the Web site has been
accessed by residents of the forum state, or whether a particular
activity of the Web site giving rise to the cause of action was
directed at the forum state. Some decisions have expressed this
analysis as sorting Web sites into three categories.[16] Where
the defendant actively does business over the Internet directed
at the forum state, the forum state can exercise jurisdiction over
the defendant. Where the Web site provides a lower level of
interactivity by allowing the defendant to exchange information
with customers over the Internet, the court must assess the level
of interactivity and commercial nature of the Web site to
determine if sufficient contacts exist to warrant the exercise of
jurisdiction. Where the defendant passively provides
information or an advertisement on a Web site, without other
contacts existing with the forum state, the forum state can not
exercise personal jurisdiction over the defendant.
Most Internet jurisdiction cases, like that resulting in
the Panavision International, L.P. v. Toeppen decision, involve
trademark disputes involving use of the Web site domain name
and hold that the forum state can exercise jurisdiction over the
owner of the Web site because the infringing conduct targets the
forum state and thus creates a basis for specific
jurisdiction.[17] As in the publishing arena, the Web site must
knowingly target potential viewers in the forum state. An
alleged injury related to the operation of the Web site is
insufficient to create jurisdiction where the Web site operation
is not directed at the forum state and no other contacts with the
forum state are found.[18] Further, when Web site operation is
unrelated to the conduct, courts have generally not allowed
exercise of general jurisdiction based on the presence of a
passive advertising Web site.[19]
One early decision is Inset Systems, Inc. v. Instruction Set,
Inc.[20] A Massachusetts corporation allegedly used a
Connecticut corporation's trademark as its domain name. The

defendant advertised its goods for sale using a Web site
available through the contested domain name. The Connecticut
"long-arm" statute[21] allows personal jurisdiction over a non-
resident on any cause of action arising from business solicited
within Connecticut, if the solicitation was repeated. The court
concluded that advertising using a Web site, by itself, is a
sufficiently repetitive contact sufficient to allow Connecticut to
exercise personal jurisdiction under its "long-arm" statute. The
court then, in addressing the constitutional issues, stated that:
In the present case, Instruction has directed its advertising
activities via the Internet and its toll-free number toward not
only the state of Connecticut, but to all states...advertisement
on the Internet can reach as many as 10,000 Internet users
within Connecticut alone. Further, once posted on the Internet,
unlike television and radio advertising, the advertisement is
available continuously to any Internet user. ISI has therefore,
purposefully availed itself of the privilege of doing business
within Connecticut.
The United States District Court for the Eastern District of
Missouri reached a similar result in Maritz, Inc. v. Cybergold,
Inc. In that case, which also involved a trademark dispute over
use of a domain name, a California company advertised on the
Internet and received at least 131 hits from Missouri residents.
The District Court held that this was sufficient for a Missouri
court to obtain personal jurisdiction over the California
defendant.
The United States Court of Appeals for the Ninth Circuit
reached a different result in another trademark case, Cybersell,
Inc. v. Cybersell, Inc.,[23] because it determined that the Web
site was not directed at the forum state. The plaintiff was an
Arizona corporation that advertises for commercial services
over the Internet. The defendant was a Florida corporation that
offered Web site construction services over the Internet under
the name "Cybersell." The court found that no part of the
defendant's business was sought or achieved in Arizona. The
only contact with Arizona was the fact that the defendant's Web

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