Australian Marketing Law-Referencing Essential

Week 2, Tutorial Question #2

            Based on the situation given, it is important to include into the contract a statement that would signify that Bleed-Em-Dry Inc allows Marmaduke Pty Ltd to use the image of one of their famous wrestler in endorsing the product to television. It could also be an agreement stating that Marmaduke Pty Ltd could freely use the image of “TankMan” for a certain period of time, say 3 years in any of its television commercials. This would give Marmaduke the right to use the image of “TankMan” without having any legal problems like passing off. Passing off involves the misinterpretation of the source of goods or services (Ipit-update.com 2004: 1). In this case, we can already consider “TankMan” as a commodity or a good and with this, using “TankMan” without the consent of Bleed-Em-Dry might result to legal suit since customers of Marmaduke might think that “TankMan” is already a part of their company where in fact it is not. Law suits between the two companies are not far from happening, and at the end of the day, there is a big possibility that Marmaduke Pty Ltd would lose in the case for they committed passing off.

As a case example for passing off, consider the case between Reckitt and Colman Products Ltd and Borden Inc (Reckitt and Colman Products Ltd v. Borden Inc. 1990 –Court of Appeals: 1). According to the case, Reckitt and Colman had successfully producing lemon juice packed into yellow plastic containers that are of lemon shaped. The prosperity in their operation continues until the arrival of their competitor, Borden Inc, which used the same marketing tactic of putting the lemon juice into lemon shaped containers that are of larger in size as compared to those of Reckitt and Colman. Due to this, Reckitt and Colman file a case of passing off against Borden and they were able to win the case after such time.

            Bleed-Em-All could also file a case against Marmaduke on the grounds of misleading the market or deceiving the market by using “TankMan” as an icon in the commercial of their product. Consumers might think that the product is produced by Bleed-Em-All or “TankMan” is already a part of Marmaduke. Since “TankMan” is a famous personality, it would be a breeze for Marmaduke to sell their products to the market. In short, Marmaduke deceived the consumers that “TankMan” is endorsing their product or he is already a part of the said company.

            As I have said a while ago, in order to prevent this kind of legal dilemmas, Marmaduke should get the consent of Bleed-Em-All of using the imager of “TankMan” into television shows and stating into the agreement the length of time Marmaduke could use the said image of “TankMan”. With this, Marmaduke could freely use the image of “TankMan” without having any legal case.

Week 3, Tutorial Question #2

            It was stated in the given case that Sturgeon Mobile Pty Ltd was able to develop a revolutionary mobile phone technology which embeds the technology into specially designed clothes. Together with this, Sturgeon would like to change their logo for their product which is “Clones” as a part of its marketing strategy but they did not register the said logo officially. Until such time wherein there is this competitor, Noptus Pty Ltd, who discovers the plans of Sturgeon and register under their name “Clones” as their trademark.

            Based from the situation above, there is a possibility of getting back the trademark from Noptus by filing it a case of passing off. This legal attack is not directly aiming for having back the trade mark but this will lead the company there. There is a basis for Sturgeon to claim that Noptus committed a passing off since the former is the first one to use it in the market. With this, customers already know that “Clones” is under Sturgeon, but here comes a competitor who uses “Clones” as a trade mark. Although legally, Noptus are entitled of using that trade mark but the thing is they are causing confusion on the part of the customers of Sturgeon on whether the Clones that they are buying from the said company is just the same as of the Noptus. With this, there is an enough reason for Sturgeon to file a case of passing off against Noptus. There is a great possibility for Sturgeon to win the said case and by the time the case is over, the trade mark registration of Noptus to “Clones” would be discarded and Sturgeon could now take it and put “Clone” under their name.

            As we could see in the above situation, it is really important that companies must register their logos and trademarks as soon as possible to avoid other companies of stealing it away. Sturgeon is still lucky for being able to receive back their trade mark since they are the first one to release it in the market and already establish to the consumer group that “Clone” is a product of their company. If this did not happen, then there is a little chance for Sturgeon to get their stolen trade mark.

            Sturgeon could also file a case against Noptus based on the grounds of deceiving the consumers. There is strong possibility that consumers might think that “Clones” that are being produced by Noptus is just like of the Sturgeon since the latter is the first one to present it to the market. Any defect on the “Clones” of Noptus might be associated to “Clones” of Sturgeon and the benefits and quality of the “Clones” of Sturgeon might also be expected by the customers to Noptus and this could cause a major effect on the market size of Sturgeon. With this, Noptus might give up with its registration of using “Clone” as their trade mark. Based from the Section 52 Trade Practices Act of 1974:

 “A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” (ComLaw 2007: 215).

With the existence of Section 52 of TPA, it is already enough for Noptus to be threatened by the possible penalties of the government. What is the best for Noptus to do is to hold back their registration of “Clones” as their trade mark. In the first place, both of the companies know who deserves to use the said logo as a trade mark.

            In order to give as a real life example of this dilemma, consider the case between Creative Gifts Inc and others and Michael and Karen Sherlock of UFO (Creative Gifts Inc, Fascination Toys and Gifts Inc and William Hones vs. UFO, Michael Sherlock and Karen Sherlock 2000- Court of Appeals: 1). Creative Gifts charged UFO of unauthorized usage of their trademark “Levitron”. Creative Gifts was able to register the Levitron to Patent and Trademark Office. Creative Gifts was able to market the said product for the period of 1994-1999. But during the end of 1995, Creative Gifts made an informal business arrangement with Sherlock. At first, the relationship of both parties are of good condition until such time when UFO began selling Levitron through website and have a domain name of “Levitron.com”. By the time Creative Gifts and Fascinations offer UFO of putting their usage of Levitron trade mark into an agreement, UFO responded that they already do not have to license the usage of Levitron into levitron website. With this, Creative Gifts, Fascination and others filed a trade mark case against UFO for not licensing their website to their usage of Levitron trade mark (Fisher 2000: 1). The case favored Creative Gifts and others due to the grounds that the court found out that indeed, UFO committed a violation in trade mark registration. The court ordered to prohibit UFO from using the trade mark of Creative Gifts and imposed 37 sanctions to UFO.

Week 4, Tutorial Question #1

            Market competition is really chaotic in nature and sometimes leads some of the business establishment into doing some drastic actions. Just like what happened to Howzat! Pty Ltd. In order for them to regain their sales from the loses that they incurred from market competition they tried to deceived their customers by falsely stating their discount rate as well as their act of not disclosing the price of their product in the market that will be subjected to discount rate. With the false information and not disclosing important details of their discounts, Howzat! could be convicted of committing market deception as to what is stated in the Australian Marketing Law. According to Section 52 of Trade Practices Act of 1974:

“Corporations must not engage into business transactions that are of deceiving in nature to the market and the one that has a possibility of deceiving the market” (Lewins 2003: 9).

The fact that Howzat! tried to mislead the market by offering discount rate that of very anomalous and not stating the prices of their products would be enough for any rational individual to say that Howzat! deceived their customers.

            One possible example of market deception is the lawsuit between the US District Court and Microsoft (Hruska 2007: 1), wherein the court accuses Microsoft of using bait and switch tactics over their Vista software. According to the complainant, Microsoft assures to their customers that what they are purchasing is a “Vista Capable” computer but the truth is, it is not, for it could not run some features of computers that Microsoft advertised as “Vista”. Incidentally Microsoft faced the court to justify their side and explain the side of their story. Herewith Microsoft faced the court to justify their side and explain the side of their story. One of the points that were raised in the case is what really makes a computer to be considered as “Vista” even other IT specialist could not determine the features that a “Vista” windows has.

            Therefore, the government could file a case against Howzat! on the grounds of advertising their product with some promotions included without any intention of doing so in the end. It is stated in the case that their offer of “Any 4 items in stores for the price of 1” is only available between 9am to 9:03am. This is madness! How could somebody be able to avail themselves of the offer with only a short period of time? Customers would not be able to pick up all the products in only 3 minutes and only small number of person can avail the offer if possible. This kind of set up is just tantamount to Bait Advertising which is being prohibited by law.

According to Section 56 of the Trade Practices Act of 1974, “A corporation shall not, in trade or commerce, advertise for supply at a specified price, goods or services if there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing that the corporation will not be able to offer for supply those goods or services at that price for a period that is, and in quantities that are, reasonable having regard to the nature of the market in which the corporation carries on business and the nature of the advertisement.” (ComLaw 2007: 218). Howzat!’s offer is just practically the same as not having intentions of letting their customers to avail their offer. A punishment of 1,000 penalty units is waiting for Howzat! if there is any of the consumers file a case or other businesses that was negatively affected by the said action of Howzat!.

Week 5, Tutorial Question #3

            There is a lot of law suits that could be filed against Cheops Ltd. Based from the case that is presented, Mei Ling clearly suffered from pyramid selling since she was given by Cheops a distribution right to the product in Victoria and she could divide the said share into smaller shares to various state to gain more profit. Moreover, the condition of half of the licensees’ purchases would be for her and the other half would be for the company is another element of pyramiding. And at the end of the day, she collected nothing from the goods that she able to sell. Mei Ling could file a case against Cheops on the grounds of pyramid selling. According to Section 65AAC of the Trade Practices Act of 1974:

“A corporation must not participate in a pyramid selling scheme [and] … must not induce, or attempt to induce, a person to participate in a pyramid selling scheme.” (ComLaw 2007: 228).

There have been a lot of companies that were convicted by the court from committing this kind of violation. It is also stated in Section 65AAC of TPA that corporations should not encourage any person to take part into pyramid selling.

As an example in 2004, World Netsafe Pty Ltd (Australian Competition and Consumer Commission 2007b: 1), summoned by the court by having thousands of participants who paid $2,389 for them to be able to join the AATM Scheme but unfortunately they were not able to receive any centavo of profit from the company.

Mei Ling could also file a case on Cheops on the grounds of paying out for the stocks without receiving the right amount of returns from the said investment. The return on the stocks could be considered as the goods in the transaction that was not able to provide by Cheops to Mei Ling. It is clearly stated in the Section 58 of TPA of 1974 that:

 “A corporation shall not, in trade or commerce, accept payments or other consideration for goods or services where, at the time of the acceptance the corporation intends not to supply the goods or services; or to supply goods or services materially different from the goods or services in respect of which the payment or other consideration is accepted; or there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing that the corporation will not be able to supply the goods or services within the period specified by the corporation or, if no period is specified, within a reasonable time.” (ComLaw 2007: 228-229).

This section covers the case of Mei Ling since after paying the stock, Mei Ling was not able to get the benefits that were promised by Cheops. It is the responsibility of the company to provide the goods right after they have received the payment of their client or based on the date that was agreed upon by both parties.

One possible real life case is the ongoing case between the EDirect Pty Ltd and the Federal court (Australian Competition and Consumer Commission 2007a: 1), which, according to ACCC, EDirect “telemarketed” their mobile phones into those areas wherein there is no network coverage and at the same time advising the consumer that they do not have network coverage into that area. The next hearing for this case is scheduled on the 22nd of October due to some delays in the process. Make things worst for EDirect, they were also being accused of deceiving their customers regarding the services and the costs that are included in the service plans.

Week 6, Tutorial Question #1

            It is pretty obvious that the action of the executives of Black Pty Ltd and Brown Pty Ltd is very unethical in nature and promote “dirty” competition. Their plan of not competing to each other is a manifestation that they would be combining their market influences to turn down the operation of White Pty Ltd. Economists might consider this as a form of cartel which is being prohibited by the law. Cartel is a group of companies that are making agreements usually for their own benefits without having any formal arrangements at all and at the expense of other companies in the industry where they belong (Motta 2006: 8).   The actions of Black Pty Ltd and Brown Ltd could be considered as a misuse of market power, wherein they are using their market connections and influences in order to attain their capitalistic goals at the expense of other market entity, as for this case that is the White Pty Ltd. The fact that they, Black Pty Ltd and Brown Pty Ltd, intended to remove their price discounts for those customers that would patronize the products of White Pty Ltd and they plan to double the price that is being charged to White Pty Ltd by Black Pty Ltd from the “Exit Rust” that the former needs for the production of its car paint products is enough to put them into court hearing. Moreover, Black Pty Ltd and Brown Pty Ltd agreed to under cut the price of White Pty Ltd by 5%. Since they have already been in the market for so long and has the most number of market share in the economy, then, it would be a breeze for them to conduct a cut throat competition. Cut throat competition is a kind of competition wherein the new entrants to the industry is being perished by the lowering of the pricing of the existing companies in the said industry until such time that the new entrant can no longer bare the loses on competing to this “established” companies in the said industry.

According to the Section 46 of the Trade Practices Act of 1974:

“A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market; preventing the entry of a person into that or any other market, or deterring or preventing a person from engaging in competitive conduct in that or any other market.”

All of the said prohibited acts in section 46 were done by Black Pty Ltd and Brown Pty Ltd against White Pty Ltd. With this, there is enough reason for White Pty Ltd to file a case against its two competitors.

An example of a legal case related to misuse of market power would be the case between the ACCC and Universal Music Australia Pty Ltd (Martin 2002: 2). It is said in the compliant of ACCC that Universal Music threatened the retailers, by using their market dominance, not to supply those with popular “chart” CD’s if the latter still choose to sell imported CD’s. Based from the investigation of ACCC, Universal Music indeed violated Section 46 of TPA since it uses its power to eliminate or hinder their competitors to engage in selling their products in the Australian market.

REFERENCES

Australian Competition and Consumer Commission. (2007a) EDirect Pty and others [online].Available: http://www.accc.gov.au/content/index.phtml/itemId/795621/fromItemId/684968. [Accessed 15 October 2007].

Australian Competition and Consumer Commission. (2007b) Federal court slams international ATTM Card Scheme [online].Available: http://www.accc.gov.au/content/index.phtml/itemId/87588/fromItemId/2332?url=%2Fcontent%2Findex.phtml%2FitemId%2F87588%2FfromItemId%2F2332&rewriteMember=116&pageDefinitionItemId=16940. [Accessed 15 October 2007].

ComLaw. (2007) Trade Practices Act 1974 [online].Available: http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/0/0E6F925DB18B678BCA2573520003B528?OpenDocument. [Accessed 15 October 2007].

Fisher, Patrick (2000) Creative Gifts Inc. v. UFO [online].Available: http://ca10.washburnlaw.edu/cases/2000/12/99-2247.htm#N_6_a. [Accessed 15 October 2007].

Hruska, Joel (2007) Microsoft accused of deceptive marketing, bait-and-switch tactics over Vista [online].Available: http://arstechnica.com/journals/microsoft.ars/2007/04/04/microsoft-accused-of-deceptive-marketing-bait-and-switch-tactics-over-vista. [Accessed 15 October 2007].

Ipit-update.com. (2004) Passing off [online].Available: http://www.ipit-update.com/passingoff.htm. [Accessed 15 October 2007].

Lewins, Kate (2003) The Cruise Ship Industry- Liabilities to Passengers under the Trade Prctices Act 1974 [online].Available: www.mlaanz.org/docs/Kate%20Lewins.ppt. [Accessed 15 October 2007].

Martin, Paul (2002) Misuse of Market Power: Federal Court Increases the Risks for Businesses [online].Available: http://www.findlaw.com.au/articles/default.asp?task=read&id=5520&site=LE [Accessed 15 October 2007].

Motta, Massimo (2006) On the Effects of EU Cartel Investigations and Fines On the Infringing Firms’ Market Value [online].Available: http://www.iue.it/RSCAS/Research/Competition/2006(pdf)/200610-COMPed-Motta.pdf. [Accessed 15 October 2007].

Reckitt and Colman Products Ltd v. Borden Inc. (1990). [online].Available: http://slcc.strath.ac.uk/scotslawcourse/ip/ip/trade/reckit.html. [Accessed 15 October 2007].