Business Torts

Discussion Problem
by Prof. Jay Feinman

Problem: MC

A relatively new environmental problem is “e-waste”—the disposal in environmentally

unsound ways of personal computers and consumer electronics containing toxic substances such
as lead, mercury, cadmium, and tortium. Campaigns are underway to have consumers and
businesses submit such products for appropriate disposal, rather than disposing of them in the
trash, which leads to toxic substances leaching into the environment when the disposed products
are landfilled. Products which are collected are then subjected to various processes to extract the
toxic substances and either dispose of them safely or recycle them.

Metals Corp. (“MC”) is a company that engages in treatment and recycling of computers.
One of its principal activities is to process certain computer parts to extract tortium, which is
then sold for reuse. This can be accomplished through various chemical processes, such as
heating the parts in certain ways and subjecting them to chemical processes.

MC purchased a special furnace from Thermo, Inc. for use in tortium recycling. The
furnace was not sufficiently effective at separating out the tortium until MC made a number of
modifications in the design and operation of the furnace, particularly in what is known as the
process of high-heat extraction. Both the scientific principles underlying high-heat extraction and
the way in which the principles are implemented in furnace operation are well-known in the
trade, but MC’s modifications to the process were novel.

With the modifications, MC was able to use the furnace to extract a purer grade of
tortium than many of its competitors. This result became a major promotional point for MC,
which it touted to prospective purchasers of the tortium it extracted, and which was noted in a
trade publication.

Because of its success with the modified furnace, MC desired to expand its operation.
Instead of buying a standard furnace and modifying it after the furnace was delivered, MC
decided to have the furnace manufacturer incorporate a number of the modifications at the time
of manufacture. Thermo’s furnace was relatively expensive, so MC approached Conco, another
furnace manufacturer. MC explained the modifications it needed, but Conco was unwilling to
make the modified furnace because it did not think it could do so at a competitive price.
Therefore, MC went back to Thermo, explained the modifications it needed, and purchased a
second furnace from Thermo, this time with the modifications incorporated.

MC also entered into an agreement with Metall AG, a German firm, under which MC
provided its modifications to Metall for use by Metall in its recycling operations in Europe.

About a year later, for reasons unrelated to this problem, Thermo went bankrupt. Tom,
Dick, and Harry, three of Thermo’s key employees, formed a new furnace manufacturing
company, TDH Incorporated. TDH began manufacturing furnaces. Recently, it made and sold to
Ray, Inc., a furnace that incorporated a number of the modifications to high-heat extraction
originally designed by MC. After Ray purchased and used the furnace to process tortium for a
while, Ray’s engineers made further modifications to make it more effective in extracting
contractium, and Ray has since used the furnace primarily for that purpose.

MC comes to you and relates these facts. Advise MC. If you need additional facts, state
what those facts are and why they may be significant.