Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property
Leonard Allan Gulley II
Strayer University
Professor Muhammad
12-16-2013

Treat others the way you would like to be treated is the main principle of ethics. Ethics is also the moral value of what is right and what is wrong which we are taught when we are at the preadolescence age and continue to develop that trait as we mature through life (Resnik, 2011). It is also up to the individual or group of individuals on how they carry out their judgments on what is ethical or unethical behavior. This is also a problem because what one person may believe is ethical another person may disagree because every individual sees and handles each situation differently based on their knowledge and their core set of values. Even though there are laws set in place to dictate what is legal and what is illegal, laws and ethical values are not the same but ethics does play a significant role to determine the factors of a law (Resnik, 2011). Ethics is also important in the business world to ensure companies are morally doing the right thing. This is significant especially for consumers so that companies do not take advantage of them and if this is the case a company may face serious consequences for doing so (Sandilands,n.d.). In marketing and advertising it is a common occurrence for ethical values to be brought up as a lot of companies straddle the fence on this sensitive subject. It is up to both the consumers and the businesses to determine their connection and how business operations should be handled to determine a positive outcome. Marketing and advertising may be unethical as companies try to target certain demographics which secludes others and this can be a potential problem because they are placing people into certain categories (“Issues in Marketing”, n.d.). That is stereotypical advertising and companies do this because it allows a consumer to relate to their product or message. A company may use this strategy by accident or on purpose to make a sales pitch towards the age, sex, or race of the audience they are trying to target for their products (Joseph, n.d.). Some may not even notice how these companies place their children into certain categories or groups. An example would be how toys are portrayed. You always see little girls playing with Barbie dolls and little boys playing with action figures such as a G.I. Joe. What is wrong with a little boy playing with a Barbie doll or perhaps little girls playing with G.I. Joe figurines? Girls are also often associated with flowers and the color pink while boys are associated by more masculine colors and nothing close that relates to a flower or anything that is considered feminine or girly (Joseph, n.d.). Stereotypical schemes also categorize the roles and actions between males and females. According to Joseph (n.d.), young men are typically considered “shallow and superficial” when advertisements are targeted towards that demographic group. This is indeed true especially during football season and a Bud Light advertisement is being shown during a commercial break. Their commercials usually involve a group of guys performing immature acts amongst each other or if you choose to drink a Bud Light that will help you attract a beautiful woman similar to a supermodel. Advertisements also depict males as being incapable of choosing household products as if it is some sort of rocket science to their “pea-sized” minds (Joseph, n.d.). This is when the female role of advertisements comes into effect. Joseph also states that “Ads for products like soap, laundry detergent, toilet tissue, and child care items depict the women as having the ultimate responsibility for making the buying decision for these products” (Joseph, n.d., para. 3). It is usually commonplace to see an advertisement where a woman is cooking, cleaning, and providing nurture for her children as if there is an abundance of stay-at-home like we are still living in the 1950s (Joseph, n.d.). Stereotypical advertisements that usually cause the most controversy are those in which racial discrimination is involved. Whether a company did it intentionally or unintentionally they have to be extremely meticulous that they do not offend a particular culture or race because they may face a lot of backlash and criticism for doing so. Most recently Dunkin Donuts in Thailand came under fire as they were trying to advertise their new “Charcoal Donut” (Taube, 2013). The problem with the ad was that it showed a female painted in all black with bright red lipstick and the Human Rights Watch were not reluctant on calling the company act for their actions for this advertisement (Taube, 2013). The Dunkin’ Donuts franchise in Thailand eventually apologized even though their owner was not willingly to until the situation became a worldwide topic (Taube, 2013). Another ethical issue relating to marketing and advertising are subliminal messages. According to Sandilands (n.d.), when a company uses subliminal message their intent is to try and control the mind of their target audience. At times the consumer may not realize the hidden agenda behind the company’s marketing scheme and this may cause the consumer to make decisions based on the evidence they were given (Thompson, n.d.). Companies that purposely send out subliminal messages may receive negative feedback or even worse they may be taken to court for their actions (Thompson, n.d.). Subliminal messages may help distinguish a product by assuming that it will improve your mood or perhaps offer you a better lifestyle (Thompson, n.d.). Also subliminal messages may be considered unethical like a cigarette company convincing young kids that smoking is the thing to do to be hip which intrigues them and this may lead to them beginning a bad habit (Thompson, n.d.). Currently there are not any laws set in place to stop companies from using subliminal messages but a consumer may take a company to court if their advertisement had a negative impact amongst them (Thompson, n.d.). The Federal Trade Commission (FTC) is to make sure that companies provide accurate facts about their products and if not, those companies may be punished by a fine (Thompson, n.d.). Other ethical issues relating to marketing and advertising include exploiting social paradigms, taking advantage of easily influenced consumers, and dishonesty after a purchase (Sandilands, n.d.). Sandilands (n.d.) explains that exploiting social paradigms would be advertising a man driving a top of the line car and being able to attract a woman which some people may find offensive in the end result. This gives the false impression that if a person buys this expensive car it will make them a woman magnet and it also perceives that that women only care about materialistic items when it comes to find the ideal man (Sandilands, n.d.). Fast food chains, especially McDonalds, tend to take advantage of easily influenced consumers such as children (Sandilands, n.d.). Not only do they promote unhealthy food, they also promote toys that would be included with a child’s meal known as the infamous Happy Meal. This could lead them to only wanting to eat McDonalds thus increasing that child’s chance of obesity (Sandilands, n.d.). Dishonesty after a purchase fools the consumer into thinking they are receiving something but in reality they are not. An example would be when you see a photo of a nice succulent steak and decide to order that item only to realize that the photo advertised and actual steak that you ordered looking nothing alike especially in size. There are also ethical issues dealing with intellectual properties which are man-made innovations which could be a written book, software, music, or even the design of a phone to name a few (Halbert & Ingulli, 2012). Inventions or ideas people have created are protected by copyrights, patents, and trademarks but as technology advances it is making it easier to invade those intellectual rights especially over the internet which enables the usage of peer-to-peer file sharing (Halbert & Ingulli, 2012). This has caused the music and movie industry to los a substantial amount of money. Instead of buying an artist’s album for thirteen dollars or seeing a movie for perhaps twenty dollars people are downloading those creative arts for free illegally which is copyright infringement. This has put peer-to-peer sites such as Morpheus, KaZaa, and Napster under a microscope giving them no option but to shut down the operations of their piracy site. Issues among patents are also a serious issue as well as it prevents others from distributing that item unless they are given permission by the inventor to do so (Halbert & Ingulli, 2012). Patents also have a span of twenty years and after those twenty years companies are allowed to make generic versions of that product without being involved in a patent infringement (Halbert & Ingulli, 2012). Recently Samsung and Apple have been going back and forth suing each other over there innovations and in one case Apple was awarded a little over one billion dollars because Samsung had copied the design of Apple’s iPhone 4 and even the operating system was similar to the iPhone which resulted in one of the biggest settlements ever in the United States. Patent law protection ranges from tools to prescription drugs and the expiration of patents are extremely essential in the medical field as it allows companies to make cheaper more affordable prescription drugs for the average consumers (Halbert & Ingulli, 2012). Trademark protection is also significant as it protects a company’s name, logo, and/or symbol that helps consumers easily identify their brand (Halbert & Ingulli, 2012). With trademark protection other companies are not allowed to use another company’s trademark for beneficial reasons or in cases that are considered detrimental to the owner of that specific trademark (Halbert & Ingulli, 2012). An example of trademark infringement would be boosters selling counterfeit items such as Gucci purses or Nike shoes. They are deceiving the consumer into thinking it is the particular brand when in actuality it is not. When an intellectual right is violated the person using it without the owner’s consent may be punished by a lawsuit, fine, or even serving time in prison. There are also ethical issues with the regulation of product safety. Luckily consumers are protected by the Food and Drug Administration (FDA), the Consumer Product Safety Commission (CPSC), and the National Highway Transportation Safety Agency (NHTSA) (Halbert & Ingulli, 2012). These agencies ensure that products are safe and that companies abide by the guidelines. The FDA is to regulate the safety of public health and they oversee products such as prescription drugs, food & beverages, cosmetics, and even tools or machines used in the medical field (Halbert & Ingulli, 2012). This agency is essential because products have to be FDA approved before they can accessible to the public. Even though products are FDA approved long-term effects may eventually come into the picture which may prevent the distribution of a prescription drug, ban the use of a particular ingredient in foods, or making sure a company provides a disclaimer stating the negative impacts of using such a product. Like the FDA the CPSC is responsible for the regulation of products that are deemed unsafe. Ethical issues surrounding the CPSC is the fact that some companies are not reporting their unsafe products that are faulty and may cause serious injuries (Romero, 2012). Studies have shown that multiple companies have been fined for this unethical behavior. In 2010 two companies were fined for this malpractice and in 2011 that number had spiked up to ten companies being fined (Romero, 2012). By law it is required that these companies are to report faulty products to the CPSC (Romero, 2012). The NHTSA was created in 1970 to prevent problems endured by motor vehicles and making consumers aware of these problems (Halbert & Ingulli, 2012). The NHTSA faces the same problem as the CPSC because companies are not reporting their faulty products as well. The NHTSA may not be informed that a product is defective until it results in people being seriously injured, killed, or that company finally being sued (Halbert & Ingulli, 2012). The main concern with the FDA, CPSC, and the NHTSA is the fact that they are underfunded which does not enable them to properly oversee a company’s product and unfortunately it is the consumer who has to suffer from this tremendous setback. Direct-to-consumer marketing is only allowed in two countries which include the United States and New Zealand. It can be in the form of mail, a television commercial, and/or even a salesperson knocking door to door trying to convince someone about why they should buy a certain product (Gregory, 2009). People feel that direct-to-consumer marketing forces the consumer to spend money on overpriced medications prescribed to them from their doctor (Kravitz, 2000). It also deceives the consumer by making them believe that if they use that specific product it will treat their symptoms more effective and that their life may be more enjoyable as the way it is portrayed by the paid actor in the commercial advertisement (Gregory, 2009). Another problem with direct-to-consumer marketing is the fact that companies spend millions of dollars on these advertisements thus increasing the price of the advertised drug that may even jeopardize the health of the consumer but these companies could care less as their main focal point is to meet their quota (Kravitz, 2000). The goal of direct-to-consumer marketing is to increase the awareness of the consumer but it actually manipulates the consumer’s mind into thinking they will be better off using that particular pharmaceutical drug for the disease they may be suffering from (“DTC Advertising Under Fire”, 2009). Compounding pharmacies are supposed to make drugs for patients who cannot access certain types of drugs already on the market (DeNoon, 2012). Examples are making adult drugs specifically for a child or altering the ingredients of a drug because a patient may have an allergic reaction to the original ingredients (DeNoon, 2012). Previously it was up to the FDA to oversee companies that manufacture the drug while the states overseen pharmacies and the Drug Enforcement Administration (DEA) watched over compounding pharmacies that are dealing with controlled substances (DeNoon, 2012). But recently President Barack Obama signed a bill called the Drug Quality and Security Act of 2013 (DSQA) that now gives the FDA more power to regulate compounding pharmacies. The new bill now allows compounding pharmacies to register with the FDA and go through similar inspections as those companies that manufacture drugs and this is to ensure that those compounding pharmacies are regulated properly (The Associated Press, 2013). The main reason for the new law is to prevent pharmacies from avoiding state and federal regulations like the pharmacy is Massachusetts which caused a meningitis outbreak that infected twenty-three states and caused over 60 deaths (The Associated Press, 2013). Smaller pharmacies have the option to still be regulated by the state as they would be considered traditional pharmacies (The Associated Press, 2013). The DQSA allows the FDA to know about what compound drugs those registered pharmacies are making, any problems pertaining the drugs, and being able to perform inspections to ensure the quality of the pharmacy (The Associated Press, 2013). Even though President Obama signed this new bill it is not mandatory that large pharmacies have to register with the FDA which many people question about this new law and it solely makes doctors decide between registered pharmacies and the traditional pharmacies (The Associated Press, 2013). While the indigenous people of Colberia live in their huts with no electricity or even running water, PharmaCare is taking advantage of “healer” providing information about possible cures and using that information for their own financial benefits. The use of Colberia’s intellectual property would be unethical in just about every category. Certainly PharmaCare is providing the Colberian citizens with job opportunities but that is the only positive aspect they are doing for the nation. They are taking advantage of the Colberian workers as they are paying them one dollar a day, which is way below minimum wage in the United States, to work under hazardous conditions. Under the utilitarianism approach a number of people are being affected negatively by PharamCare because they are being irresponsible about a drug that is supposed to slow the progression of Alzheimer’s disease. Because of PharmaCare deceiving the public this has caused over 200 cardiac deaths and the only people benefitting from this misconception are their greedy executives who are in charge of this unethical decision making. The deontogical approach is not being followed by PharmaCare neither. One of the golden rules for this approach is honesty and PharmaCare was not being truthful to the public about their AD23 drug as they allowed pople to suffer from their careless acts. PharmaCare’s executives definitely know the difference between right and wrong but refuse to differentiate the two. They are blinded by the virtue of greed thus taking advantage of the consumer and the Colberian culture. PharmaCare certainly did not follow the ethics of care approach because they showed total disregard towards the people being affected by their decision making process. If they really cared they would not have come up with the AD23 drug and advertised the product as something it really is not. They would also support the Colberian nation by helping them rebuild their community. Instead of taking advantage of Colberia they could actually build homes for them that have electricity and running water. Not only housing but they could invest in the nation’s education system to help transform a third world country into something more prosperous. Also instead of paying their Colberian workers one dollar a day they could actually implement the same minimum wage policy that is provided in the United States along with benefits especially medical benefits. The Colberian workers should also be provided with the proper supplies to do their jobs because walking five miles and carrying up to fifty pounds is definitely torture for a person to do. A company that faced similar issues as PharmaCare would be the Johnson & Johnson Company. They have a drug called Risperdal which is FDA approved to deal with the symptoms of schizophrenia but then representatives from their subsidiary Janssen convinced physicians that Risperdal could also treat other symptoms such as agitation, anger problems, dementia, attention deficit disorder (ADD), and autism (Davidson, 2013). The FDA had warned Janssen and Johnson & Johnson multiple times about deceiving the public about the usage of their drug Risperdal but the two companies refused to listen even providing extra incentives to representatives that promoted the off-label uses of the prescription drug (Davidson, 2013). This resulted in Johnson & Johnson and Janssen having to pay over two billion dollars in criminal and civil claims because they falsely advertised the drug Risperdal, which increased health complications in the elderly and increased the hormone levels in children (Davidson, 2013). Janssen and Johnson & Johnson are also required to change their business tactics involving anything pertaining to the drug industry (Davidson, 2013). Will shareholders be able to sue PharmaCare and WellCare? Yes they most certainly can because PharmaCare and WellCo committed an act of negligence which the shareholders had to endure (Lupica, 2013). Being in the pharmaceutical industry both companies are responsible for providing prescription drugs that are safe for the public to use which they clearly did not (Lupica, 2013). Their negligence resulted in over 200 cardiac deaths which makes these companies 100% liable for their actions and vulnerable to a number of lawsuits. As PharamaCare being one of the leaders in the pharmaceutical business they may consider this a minor setback because they are still known for delivering high-quality products that have helped millions of people. The first step they need to do is apologize to the public for their wrongdoings and to be honest and straight-forward about their products from here on out. They also need to cut ties with the decision makers behind this debacle. Another action PharmaCare should do is making sure their future prescription drugs are FDA approved and avoid going through any loopholes to avoid this process. Once they become more devoted to the safety of their products they may gain back the trust of its consumers slowly but surely.

References
Davidson, P. (2013, November 5). J&J to pay $2.2B in drug marketing penalties. USA Today. Retrieved December 16, 2013, from http://www.usatoday.com/story/money/business/2013/11/04/johnson-and-johnson-fines-drug-marketing/3432955/
Direct-to-consumer advertising under fire. (2009, August 1). WHO. Retrieved December 16, 2013, from http://www.who.int/bulletin/volumes/87/8/09-040809/en/
Gregory, S. (2009, February 4). Business & Money. TIME.com. Retrieved December 16, 2013, from http://content.time.com/time/business/article/0,8599,1876679,00.html
Issues in Marketing. (n.d.). Boundless. Retrieved December 16, 2013, from https://www.boundless.com/marketing/social-responsibility-ethics-in-marketing/ethics-in-marketing/issues-in-marketing/
Joseph, C. (n.d.). Types of Stereotyping in Advertising. Small Business. Retrieved December 16, 2013, from http://smallbusiness.chron.com/types-stereotyping-advertising-11937.html
Kravitz, R. (2000, October 1). Direct-to-consumer advertising of prescription drugs. NCBI. Retrieved December 16, 2013, from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1071087/
Lupica, M. (2013, December 9). What Is Corporate Negligence?. WiseGeek. Retrieved December 16, 2013, from http://www.wisegeek.com/what-is-corporate-negligence.htm
Resnik, D. (2011, May 1). National Institute of Environmental Health Sciences. What is Ethics in Research & Why is it Important?. Retrieved December 16, 2013, from http://www.niehs.nih.gov/research/resources/bioethics/whatis/
Romero, R. (2012, April 19). Consumer Product Safety Commission: Companies not reporting product problems. ABC Owned Television Stations. Retrieved December 16, 2013, from http://abclocal.go.com/kabc/story?id=8628365
Sandilands, T. (n.d.). Marketing Issues That Have Ethical Implications. Small Business. Retrieved December 16, 2013, from http://smallbusiness.chron.com/marketing-issues-ethical-implications-24089.html
Taube, A. (2013, December 11). 10 Ads That Companies Were Forced To Apologize For In 2013. Houston Chronicle. Retrieved December 16, 2013, from http://www.chron.com/technology/businessinsider/article/10-Ads-That-Companies-Were-Forced-To-Apologize-5056783.php
Associated Press. (2013, November 27). Nbc News Health. NBC News. Retrieved December 16, 2013, from http://www.nbcnews.com/health/obama-signs-bill-regulating-compounding-pharmacies-2D11665035
Thompson, V. (n.d.). Is Subliminal Advertising Ethical or Not?. Small Business. Retrieved December 16, 2013, from http://smallbusiness.chron.com/subliminal-advertising-ethical-not-60413.html