CBA 400 EXAM FINAL
To prevail on a false-advertising claim under the Lanham Act, a plaintiff must satisfy the following elements:
(1) a false or misleading statement of fact; (2) that is used in a commercial advertisement or promotion; that (3) deceives or is likely to deceive in a material way; (4) in interstate commerce; and (5) has caused or is likely to cause competitive or commercial injury to the plaintiff.
River Blindeness
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Historical Context of Consumerism
1906 - Upton Sinclair, The Jungle, unsanitary conditions in the meatpacking industry. 1930s - Rise of Government Regulations 1960s - Consumer's Magna Carta, President Kennedy • The right to safety • The right to be informed • The right to choose • The right to be heard 1970s- Ralph Nader - auto safety regulations and devices
Corporate sustainability starts with...
A company's value system and a principles-based approach to doing business.
What is a corporation?
A creature of statute, an artificial "person." - Corporations can have one or more shareholders. - Owners called shareholders can be natural persons or other businesses. - Corporation substitutes itself for shareholders, the owners.
B-corp
A designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials
Limited Liability Companies (LLC)
A hybrid entity that combines the limited liability of a corporation and the tax advantages of a partnership. Are increasingly becoming the entity of choice for businesses. Are creatures of state law. The owners are called "members" (not shareholders) and their ownership is called an "interest" or "units" (not shares). Members enjoy limited liability
Consumerism
A lifestyle characterized by the acquisition of goods and services
"Deceptive" practices
A material representation, omission or practice that is likely to mislead a consumer acting reasonably in the circumstances
Hybrid Start Up
A new venture model - Corporate and entrepreneurial capabilities - Combines the assets of a corporation and the entrepreneurial capability of a start up - Corporations can use hybrid start-ups to create value in innovative ways from existing assets, including IP. - Create a balance between the corporation and entrepreneurial.
FTC may decide that...
A practice is unfair simply because it violates public policy, even if it does not meet these three tests
Tort
A tort is a legal term describing a civil violation where one person, business or governmental entity (the tortfeasor") causes damage, injury, or harm to another.
Tortfeasor
A tortfeasor incurs tort liability, meaning that they will have to reimburse the victimfor the harm that they caused them
Utilitarianism
Action benefits the most people
A "bait and switch" violation can also be...
Another violation under federal and state laws
What is principle 10 of the ten principles of the UN Global Impact Statement?
Anti-Corruption Businesses should work against corruption in all its forms, including extortion and bribery.
General Partnerships (GP)
Arises from an agreement, express, or implied, between two or more persons to carry on a business for profit
Liabilities of the LP - General
Assumes all management and personal liability.
Neurotech
At work Brain Sensors - Employee monitoring - Tracking Fatigue • Issue • Employee rights - right to mental privacy • Privacy laws and regulations • Transparency with terms of use and disclosure • Storing brain data
Bait and Switch
Bait and switch" advertising is grounds for an action of common-law fraud, unjust enrichment, and sometimes breach of contract. - Refuses to show the advertised item. - Fails to have reasonable quantities of it available. - Fails to promise to deliver the advertised item within a reasonable time. - Discourages employees from selling the item.
California Law
Cal. Bus. & Prof. Code § 17500, prohibits false or deceptive advertisement to the public about the nature of a product or service. This includes false or misleading statements in print, digital, or other advertising media.
Limited Liability Partnership (LLP)
California designed for professionals service firms, it allows limits on personal liability of the partners but allows "pass through" tax advantages. Allows professionals to avoid personal liability for the malpractice of other partners. Statutorily created - must file with the Secretary of State. Liability cannot be inputted to other partners for a partner's negligence.
FTCA Case Campbell
Campbell soup advertised "most" of Campbell's soups were low in fat and cholesterol and could fight heart disease. Missing from their advertisement was that its soups had high levels of sodium that could increase the risk of heart disease. FTC ruled the company's claims were deceptive
Italy
Chat gpt is banned in this country
By incorporating the Ten Principles of the UN Global Compact into strategies, policies and procedures, and establishing a culture of integrity...
Companies are not only upholding their basic responsibilities to people and planet, but also setting the stage for long-term success.
What are companies doing in regard to A.I.?
Companies of every size and business model, all over the world, are adopting AI solutions to optimize their operations, create new services and work modalities, and help their professionals to make more informed and better decisions.
Optional but if ten principle incorporated...
Companies should follow their own internal documents
Consumers do not have standing to bring false advertising claims but...
Companies that are in commercial competition with one another can bring action under this Act.
A.I. - Digital Employees
Companies want to provide workers with a more engaging experience Digital employees - Mimic human communication - Limitations - Inexpensive - What type do you create? - Copyright image Impact on Stakeholders - Community - Employees - Family - Law
Neurotechnology
Defined as the assembly ofmethods and instruments that enable a directconnection of technical components with the nervoussystem.
Federal Trade Commission Act
Enacted to further enforce antitrust laws such as Sherman Act and Clayton Act. Expanded to include deceptive act such as false advertising Enforced by FTC against "unfair or deceptive practices" with reference to a company's failure to publish its privacy policies online
What is principle 7 of the ten principles of the UN Global Impact Statement?
Environment Businesses should support a precautionary approach to environmental challenges;
What is principle 9 of the ten principles of the UN Global Impact Statement?
Environment Encourage the development and diffusion of environmentally friendly technologies.
What is principle 8 of the ten principles of the UN Global Impact Statement?
Environment Undertake initiatives to promote greater environmental responsibility; and
Systemic Issue
Ethical questions about the economic, political, legal, and other institutions within which businesses operate.
Online Advertisements
FTC Online Deceptive Advertising Monitors websites Guidelines - All ads - both online and offline - must be truthful and not misleading - The claims made in an ad must be substantiated - that is, advertisers must have evidence to back up their claims. - Ads cannot be unfair, which the FTC defines as 'likely to cause substantial consumer injury that the consumer could not reasonably avoid and that is not outweighed by the benefit to consumers or competition. - Clear and conscious disclosure of any qualifying or limited information
Federal Trade Commission
FTC is the primary federal agency that enforces advertising laws and regulations. Section 5 of the Federal Trade Commission Act (FTC Act) (15 USC 45) prohibits ''unfair or deceptive acts or practices in or affecting commerce.
Under the FTCA:
False advertising is subject to civil and criminal laws Advertising must be truthful and non-deceptive; Advertisers must have evidence to back up their claims; and Advertisements cannot be unfair.
Public Policy
Generally defined as a system of laws, regulatory measures, courses of action, and funding priorities concerning a given topic promulgated by a governmental entity or its representatives
More about General Partners
Governed by either common law or the Uniform Partnership Act* (in the absence of an express agreement ). - May registrar with Secretary of State in CA Each partner is deemed to be an agent and fiduciary of the other - Fiduciary - Duty of Care - Duty of Loyalty - There may be imputation of liability for partner's actions
Liabilities of the LP - Limited
Has no management rights, and liability is limited to the amount of investment; however a limited partner can be personally liable if he participates in management
Consumer Laws - What is the underlying ethical issue with these cases?
Honesty - Transparency
What is principle 2 of the ten principles of the UN Global Impact Statement?
Human Rights Make sure that they are not complicit in human rights abuses.
What is principle 1 of the ten principles of the UN Global Impact Statement?
Human Rights Businesses should support and respect the protection of internationally proclaimed human rights; and
Minimum, meet fundamental responsibilities in the areas of...
Human rights, labor, environment and anti-corruption.
Joint Liability of Partners (GP)
If partner is sued for partnership debt, partner has right to insist that other partners be sued with her.
Consumer Product Safety Commission (CPSC)
In 1969, the federal government estimated that consumer products caused 30,000 deaths, 110,000 disabling injuries, and 20 million trips to the doctor. - Toys were among the worst offenders, injuring 700,000 children a year. - Consumer Product Safety Act of 1972 (CPSA) was to prevent. - (CPSC) to evaluate consumer products and develop safety standards
Individual Issue
Individual decisions and actions
Stakeholders
Internal: Employees, Managers, Owners External: Supplies, Society, Gov, Creditors, Shareholders, Customers All connected to company
Limited Partnerships (LP)
Is an entity that limits the liability of some of its owners (the limited partners)
The purpose of tort law...
Is to provide an injured party with a remedy for the invasion of legally recognized and protected interests (personal safety, freedom of movement, and property).
Corporate Issue
Issue solved through corporate or company solutions
What is principle 3 of the ten principles of the UN Global Impact Statement?
Labour Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
What is principle 5 of the ten principles of the UN Global Impact Statement?
Labour The effective abolition of child labour; and
What is principle 4 of the ten principles of the UN Global Impact Statement?
Labour The elimination of all forms of forced and compulsory labour;
What is principle 6 of the ten principles of the UN Global Impact Statement?
Labour The elimination of discrimination in respect of employment and occupation.
Lanham Act
Lanham Act, Section 43(a) (15 US.C. 1125) - Two types of advertising claims are actionable under the Lanham Act: (1) statements that are literally false; and (2) statements that are literally true, but likely to mislead, confuse, or deceive.
Corporations are recognized as...
Legal "persons" and enjoy virtually the same rights and privileges under our Constitution as natural persons.
Advantages of the LLC
Liability of members limited to amount of investment. Management and Foreign Investors. Foreign investors can be member-owners of an LLC
POM Wonderful v. Coke-Cola P 2
Lower courts had ruled that POM Wonderful couldn't sue because competing firms were not authorized to sue one another for false labeling or advertising. POM Wonderful appealed, and the case went to the U.S. Supreme Court finding for POM Wonderful based on the following: • Competitors who manufacture or distribute products have detailed knowledge regarding how consumers rely upon certain sales and marketing strategies. • Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rule makers and regulators.
(GP) In the absence of a partnership agreement (oral or written) state statutes govern partner rights:
Management: equal, each one vote, majority wins; need unanimous consent for some actions. Interest in the Partnership: equal profits, losses shared as profits shared. Compensation: none. Inspection of the Books: always and also by rep. of deceased partner. Accounting: when other partner(s) committing fraud, embezzlement, wrongful exclusion, or anytime it is just and reasonable. Property Rights: Property acquired by the partnership remains partnership property. An individual partner has no right to sell, mortgage, or transfer partnership property
Under the CPSA (Consumer Product Safety Act of 1972)
Manufacturers must report all potentially hazardous product defects within 24 hours of discovery; The Commission can impose civil and criminal penalties on those who violate its standards; and Individuals have the right to sue for damages, including attorney's fees, from anyone who knowingly violates a consumer product safety rule.
FTCA Case Medlab
Medlab, Inc. advertised that its weight loss supplement (The Skinny Pill) would cause users to lose a substantial amount of weight rapidly. - Ad based on "clinical studies prove" lose as much as 15 to 18 pounds a week and 50% of all excess weight in just 14 days, without exercising or dieting. - FTC hired an expert who testified that to lose this amount of weight a person would have to run 2 marathons a day. - Court found that the advertisement was false and misleading and issues a permanent injunction
Samples of Hybrid Start Ups
Mercedes Benz - mobile onsite repairs Airbus - use data to start its hybrid start up to share data
State Law
Most states that have enacted false advertising laws have modeled them after the FTCA. Such state laws permit consumers who have been harmed by deceptive ads to sue companies responsible for the advertisement in question. A few states even provide for criminal punishment if fraud is part of the equation
Corporation - Limited Liability of Shareholders
One of the key advantages of corporations is the limited liability of shareholders In certain situations, the corporate "veil" of limited liability can be pierced, holding the shareholders personally liable.
Management of an LLC
Operating Agreement - An LLC can be either member-managed, or manager-managed. - Fiduciary Duties. Managers and members owe fiduciary duties to the LLC and each other
Different Types of Corporation
Private Public Publicly traded Benefit Nonprofit
Proposition 65
Proposition 65 requires businesses to provide warnings to Californians about significant exposures to chemicals that cause cancer, birth defects or other reproductive harm. These chemicals can be in the products that Californians purchase, in their homes or workplaces, or that are released into the environment. By requiring that this information be provided, Proposition 65 enables Californians to make informed decisions about their exposures to these chemicals.
Puffery v. Adequate Substantiation
Puffery refers to a usually harmless amount of exaggeration in sales and marketing materials. The FTC does not pursue subjective claims or puffery -- claims like "this is the best hairspray in the world." If an objective component to the claim -- such as "more consumers prefer our hairspray to any other" or "our hairspray lasts longer than the most popular brands" - Adequate substantiation about the claim. - A reasonable basis for a particular claim can vary, depending upon the nature of the claim, the product, the consequences of a false claim, the benefits of a truthful claim, the cost of developing substantiation for the claim, and the amount of substantiation that experts in the field believe is reasonable. - Health and safety claims generally require competent and reliable scientific evidence. These requirements apply both to explicit or express claims and to implied claims
Created the FTC
Receives complaints form various courses and investigates. If there is conclusion of deceptive advertisement, it issue a formal complaint. If successful in proofing that advertisement is unfair or deceptive, it can do any of the following: - Cease and desists order; or - Counter advertising; or - Restitution
Consumer Product Safety Act of 1972
Reduce the risk of injuries and deaths from products by: 1. Developing voluntary standards with industry 2. Issuing and enforcing mandatory standards 3. Banning consumer products if no feasible standard would adequately protect the public 4. Obtaining the recall of products or arranging for their repair 5. Conducting research on potential product hazards 6. Informing and educating consumers through media, state and local governments, private organizations, and by responding to consumer inquiries
A.I.
Refers to the stimulation of human intelligence in machines that are programmed to think like humans and mimic their actions Any machine that exhibits traits associated with a human mind such as learning and problem-solving
Formation of an LLC
Requires filing Articles of Organization with Secretary of State: Name of Business. Principal Address. Name and Address of Registered Agent. Names of the Owners - members How managed - manager managed or member managed
Employee Rights
Right to mental privacy
Right
Rule Everyone would have to follow
Ethics & A.I.
SIMAC - Stakeholders - Issue- Sort out issue by determining the type of issue involved - Models - Utilitarianism - Right - Application - Conclusion
What are some concerns with A.I?
Several concerns regarding AI ranging from the overexposure of individuals to cybercrime to the impact on populous intelligence, including the loss of jobs Another primary concern is the emergence of super- intelligent machines that fail to align with human values and safety. Legal, Ethics, and Cultural issues
Example of Switch
Signs on the front windows of the Advantage Tire Store advertise tires for $30 each. When consumers come in looking for the $30 tires, salespeople tell them those tires are sold out and then try to convince them to buy more expensive tires instead
Liability" is usually through damages... Compensatory: Two Types
Special damages & General damages
Special damages
Special damages cover quantifiable losses, such as medical expenses, lost wages and benefits, the loss of irreplaceable items, and the costs of repairing or replacing damaged property
Consumer Protection Laws
Stakeholders - Consumers Consumer Protection Laws protect consumers, from unethical and careless actions taken by businesses. This is achieved by various rules and regulations for certain transactions. - Federal, state, and local.
Unfair Acts or Practice Defined
The Commission considers a practice to be unfair if it meets all of the following three tests: 1. It causes a substantial consumer injury. 2. The harm of the injury outweighs any countervailing benefit. 3. The consumer could not reasonably avoid the injury.
Merchandise Mail, Telephone or Online (Mail Order Rules)
The FTC has established the following rules for these types of sales: - Sellers must ship an item within the time stated or, if no time is given, within 30 days after receipt of the order. - If a company cannot ship the product when promised, it must send the customer a notice with the new shipping date and an opportunity to cancel. If the new shipping date is within 30 days of the original one and the customer does not cancel, the order is still valid. - If the company cannot ship by the second shipment date, it must send the customer another notice. This time, however, the company must cancel the order unless the customer returns the notice, indicating that he still wants the item
POM Wonderful v. Coke-Cola P 1
The Food and Drug Administration regulates beverage labels, and it allows companies to name drinks using the juices that provide the flavor even if they don't provide the volume. Coke's Pomegranate Blueberry juice sold under its Minute Maid division contained 99.4 percent apple and grape juice. POM Wonderful sued Coke in 2008 under the Lanham Act, which prohibits false and misleading statements about a product. Notably, POM argued that Coca-Cola's product called Pomegranate Blueberry Flavored Blend of Five Juices was misleading because it contained only 0.3 percent pomegranate juice and .02 percent blueberry juice.
Sole Proprietorships
The owner is the business - Major disadvantage is the owner is personally liable for all losses or liabilities incurred by the business enterprise; however, insurance can limit exposure and contractual terms. - Owner might have to obtain license from local or state government and possibly file a dba or fictitious business name.
Civil Action - Cali Law
The state attorney general may bring a civil suit against companies who violate California Business and Professions Code 17500, which makes false and misleading advertising illegal. Consumers can also bring civil suit against companies for false advertising.
Switch
Then the seller switches customers from buying the advertised product or service that the seller initially offered into buying a different product or service that is usually at a higher price or has some other advantageous effect to the advertiser
How are the Ten Principles of the UN Global Impact Statement divided?
There are divided into sections... Human Rights Labour Environment Anti-Corruption
Joint and Several Liability (GP)
Third party can sue either one or all partners and the latter has to determine liability. 3rd party may collect against personal assets of all partners
At common law, a partnership was not a separate legal entity distinct from its owners...(GP)
Today, a majority of states recognize the partnership as a separate legal entity for many legal purposes... - To sue and be sued - To have judgments collected against it's assets, and individual partners' assets - To own and convey partnership property
True or False: Individuals and businesses cannot sue under the FTCA
True
Merchandise Mail, Telephone or Online (Mail Order Rule): Door-to-Door Sales
Under the FTC door-to-door rules, a salesperson is required to notify the buyer that she has the right to cancel the transaction at any time before midnight of the third business day thereafter
When does a partnership exist (GP)?
Under the UPA there is a presumption of a partnership if: 1. A sharing of profits or losses. 2. A joint ownership of the business. 3. An equal right to be involved in the management of the business
Merchandise Mail, Telephone or Online (Mail Order Rule {more info})
Under §5 of the FTC Act, anyone who receives unordered merchandise in the mail may treat it as a gift
The FTC Act prohibits...
Unfair acts or practices Ex. Google paid consumers $19 million to settle the FTC's complaint that it had unfairly billed parents for charges that their children made through apps downloaded from the Google Play app store
Criminal Prosecution - Cali Law
Violation is a misdemeanor punishable by imprisonment for up to 6 months and a fine up to $2500.00
Bait
When a seller creates an appealing but ingenuine offer to sell a product or service, which the seller does not actually intend to sell
Consumerism and Laws - Historical Perspective
• Caveat emptor - "Let the buyer beware." • This doctrine assumed that the buyer had as much knowledge of the product as the seller, but this was not correct.
Consumerism and Laws - Modern Day
• Caveat venditor - "Let the seller beware." • But how safe should a product be?• Laws and Regulations have curtailed but products cannot be "risk free"