Quiz 8: Ethics and Social Responsibility of Business


Section 43(a) of Federal Lanham Act: It provides that the company or person who is indulged in any form of false advertising will be criminally liable for any damages beard by other person who believed the facts of such advertising. Company PJ was engaged in Pizza business and adopted a new slogan for advertising. He did huge expenditure on making the slogan known by everyone. Another Company PH also in the business of Pizza, launched an advertising program which declared war against poor quality pizza. It also filed a suit against PJ for false advertising. False Advertising: It refers to the use of misleading, untrue or confusing statements while advertising or promoting a product. Puffery: It refers to use of exaggerative phrases or ways while promoting a product. It is generally defined as the use of highly optimistic statements in advertising which cannot be used as a base of liability. The difference between puffery and false advertising is that puffery is legally acceptable and allowed whereas false advertising is illegal and not allowed. Customers of today's era know the difference between false advertising and puffery. They can easily make out the puffery in the advertisements used by the company. The slogan used by PJ cannot be termed as false advertising as there was no misleading or untrue statement. However, the advertisement strategy used by the company can be termed puffery.

Section 201(b) and 201(c) of Federal Ant bribery and Gratuity Statute: It provides that no person or entity should offers or promises to offers anything of value to government official to do or not to do any action which is in favor of the person shall be liable for a prosecution against him. Any official who accepts such offer or demands anything of value to do or not to do any action shall also be liable for a prosecution against him. Company SD gave agricultural officer tickets for a sports event, meals, luggage and other such valuable things when two matters related to the company was pending with the official. Later the matters were decided in favor of SD. The state sued the company for bribery under section 201(b) and (c). The conduct of the company was not ethical. It offered the expensive meals and event tickets to the official at the time when its matters were pending with that official. It can be assumed that he offered these high value things to the official to pass the matter in its favor. It uses wrong way to get its work done. As per section 201(b) and 201(c) prohibits any person to offer any high value article to any government official for doing or not doing any act. The acts done by SD can be considered as bribe as it provides the valuable articles when its matter was pending with the official. Thus, it can be concluded that SD violated the provision of law.

Facts of the Case A famous retail chain, allegedly copied the trade design of the children's clothing line. The retailer got one of its suppliers to manufacture the clothing line. The final products were sold at very cheap rates. The designer of the children's clothing line filed a law suit for the trade dress infringement. Issue The issue was whether the new product's design had acquired a secondary meaning before being protected as a trade dress. Language of the Court The court upheld the case in favor of the designer. It said that in a case of infringement of unregistered trade design, a product's design is protected only when the original producer shows with evidence that the infringed feature is likely to cause confusion with the product. Decision Court held that product's design must acquire a secondary meaning before being protected as a trade dress under section 43(a) of Lanham Act. 1. Trade dress is a legal term that refers to characteristics of the visual appearance of a product or its packaging or design to signify the source of the product to consumer. In this case designer's designs must have been protected by trade dress so that could not be infringed by the retailer in the first place. 2. The retailer did not act ethically. It violated the ethics of virtuous conduct, where every organization should engage in morally right conduct, without cheating their competitors or the society. 3. The designers can protect themselves only by being distinctive and recognizable. Trade dress as opposed to trade mark or trade name has no formal registration requirements. The company must distinguish its product from competitors in the eyes of the consumers by its distinctive designs or colors.

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