Changing values

Recurring headlines in the toy industry reflect continuing agitation, aggravation and the escalation of the costs of legal issues, as one company after another file copyright infringement suits. These violations of copyrights and other protections of original concepts hurt the entire industry. Recent cases filed in federal court indicate unfair competition and trade dress infringement in violation of state and federal law. Invariably, one company—the original designer, manufacturer and distributor of a popular product line—seeks damages and retribution against another company for the marketing and sale of blatant “knock-offs” of their product line.

These actions demonstrate not only the need for companies to protect their intellectual properties and ensure the integrity of their brand, but also to protect distributors, wholesalers, retailers and customers who are unknowing victims of these infringements.

“Copycats hurt everyone in the toy industry—and we all need to work toward a functioning standard,” says Marshall P. Gavin, executive vice president of B. Dazzle Inc. and co-chair of the independent Ad hoc Committee on the Code of Ethics for the Toy Industry, who, like many manufacturers, has seen the serious harm that has been done in these cases.

When a company produces an imitation product, the “knock-off” is often not recognized as such by buyers or consumers, but manufacturers recognize the infringement and their lawyers are ready and willing to stand up and take action so their products are not poached. They will vigorously assert every legal means to protect original products and refuse to tolerate illegal infringement. But the cost of these legal actions takes its toll on the bottom line of almost every company, hurts customers and affects the entire industry.

This is why the Code of Ethics Committee, formed two years ago, decided to take a stand on formulating a “Toy Industry Code of Ethics” that would put an end to plagiarism, copycats, copyright infringement, trademark misuse, and related issues. Each committee member is fully aware of the legal ramifications, costs and other problems first-hand and has decided to participate in the process. A great deal of discussion and exchange has taken place over many months. During the process, one member of the committee took a personal stand on the issue and dropped his company's membership in any trade organization not willing to adopt a code of ethics for members.

A proposed Code of Ethics document was drafted and has been presented to the Toy Industry Association (TIA). We expect the TIA board of directors, at its October meeting, to review the draft and work toward producing a final document to reflect the view of the industry and set a tone for ethical conduct by all members.

The proposal to TIA argues that a code of ethics is necessary for two reasons. The first is that TIA members' purpose, ultimately, is to benefit children by selling products that make their lives better, and that to tolerate and to appear to be accepting of unethical behavior that no parent would ever teach their children seems particularly hypocritical. The second reason is that in the long run, making money and staying in business depends upon honest business practices. The ability to sustain businesses is rooted in profits borne from risk capital, ingenuity and effort. The threat of “copycat” products further increases the financial risk of innovation, drains the pool of new ideas, discourages the creativity of new and established designers and inventors, and deters investment. Ultimately, this places the entire industry at risk.

While there are many controversies involved, the Code of Ethics is not meant to be a policing action, but rather a standard of conduct that members can proudly adhere to. The goal is to reinforce integrity and respect of each other's original works. It is hoped that through such a code, a new level of respect for the unique and creative work of toy designers, inventors, developers and marketers will be achieved.

>> The Committee's complete proposal to TIA can be read online at http://www.playthings.com/codeofethics

To comment on the issue, contact Stevanne Auerbach at drtoy@drtoy.com or Marshall Gavin at mpgavin@b-dazzle.com.