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May 01, 2023


Is What Xenon Allegedly Did Ethical And/Or Legal? Why Do You Think It Is Legal/Ethical Or Not? Explain Your Position

Eliciting the trade secrets of other companies to gain a competitive advantage is unethical and may pose legal charges if protected by law (Searle & Vivian, 2021). Based on the case study scenario, it has been understood that both Xenon Inc. and Software Factory Inc. were in stiff competition. Both the companies entered the market for selling ERP solutions for SMEs, however, Software Factory Inc. has gained a massive competitive advantage when the market has developed over the next decade. They soon became the market leader competing with Xenon Inc., growing more rapidly than Xenon. This has raised curiosity to identify the competitive advantage that Software Factory possesses and Xenon has tried to access the data through fraud and unfair competition.  According to the Government of Canada (2022), the federal trade secret act is not present and is based on common law. However, one may file a lawsuit under criminal code or civil law which is enforced by the courts. This indicates since Xenon is located in Ottawa, Canada, the company comes under no jurisdiction; however, since Software Factory has logged a lawsuit against Xenon, it may file charges or penalties of such allegations. Furthermore, it has also been stated that trade secrets are not protected by law, however, they can be protected under intellectual property rights (IP) in case of misuse or acquired without any intimation. According to the Government of Canada (2022), trade secrets can be protected from third parties under non-disclosure or confidentiality agreements, confidentiality clauses, data encryption, password protection, and locking up valuable business information. Now, concerning the case study scenario, Xenon has not stolen or tried to access the trade secret, instead, they wanted to conduct a business deal with Software Factory by acting as a dummy company that does not exist. In this aspect, Software Factory can file a lawsuit against Xenon to the court of law. All the lawsuits against Xenon are appropriate and it is the salesperson’s fault of Software Factory that without any complete verification he must not have provided confidential documents and business information to a new buyer that may acquire their trade secret.  

Would You Do This Or Something Similar, If You Had The Opportunity? Explain Why You Would Or Would Not Do This.

Doing like what Xenon did is an unethical business practice that not only hamper business, but also reputation across the market. It would lead to market fall, fall of the stock prices, and customers as well. A company is not only for making profits and growth but to sustain in the market for a longer period. If I had the opportunity, I would have taken permission or proposed if they would sell the trade secret or disclose to the public in terms of taking permission, but I would have not taken the wrong or unethical way to procure or collect trade secrets to gain a competitive edge in the market. The avenue that Xenon has chosen is simply unethical and it does violate business laws and practices which a company must possess.  As indicated by Canadian Intellectual Property Office (2022), no federal trade secrets acts are there in the Canadian context. It is based on common law, principles which are enforced in the court of law in case of offences, breaches, and unethical conduct (Smith & Beaumont-Smith, 2019). The proceedings of Xenon can be termed as fraud and unfair competition that one business tries to access another business`s trade secrets to gain a competitive advantage in the market. In this regard, I would not have fallen into such business practices as it leads to breach, offence, and fraud conduct that might have hampered my business in the market. Instead, I would have consulted with the salesperson and the VP of Software Factory Inc. if they could disclose or sell a part of their trade secret with us. But the way that Xenon has proceeded needs to filed lawsuits under torts and offence. On the other hand, as per the Canadian court of law, trade secrets are mostly considered as the forgotten IP when it comes to lawsuits and prosecution (Macek & Punniyamoorthy, 2022). Supposedly if Software Factory has filed a lawsuit under theft of trade secrets, then the court can impose a penalty of up to $250,000 for an individual and up to $5 million for organizations (Silverman, 2018). Due to such proceedings and enforcements, I would refrain myself and my organization to get involved in such activities which may lead to paying heavy penalties and loss of reputation in the market which subsequently led to business fall.

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