Monthly Archives: June 2012

Apple fined A$2.29m over Australian ’4G’ iPad

June 21, 2012

SYDNEY: Apple was today fined A$2.25 million (US$2.29 million) for misleading Australian consumers about the local 4G capability of its next-generation iPad, in a case brought by regulators.

The tech giant was also ordered to pay A$300,000 in costs by the Federal Court in a case brought by regulators, who said the penalty sent a message to global companies that there were consequences for breaching the law.

Justice Mordy Bromberg found that Apple misled people with claims in its advertising implying that the “iPad with WiFi + 4G” could connect with fourth generation cellular networks in Australia, when it could not.

The judgment found the company engaged in conduct liable to mislead the public and contravened Australian consumer law.

“The conduct concerned was deliberate and very serious”, Bromberg said.

The Australian Competition and Consumer Commission (ACCC), which initiated the proceedings, said it was delighted with the outcome.

“The $2.25 million penalty reflects the seriousness of a company the size of Apple refusing to change its advertising when it has been put on notice that it is likely to be misleading consumers,” chairman Rod Sims said.

“This decision should act as a renewed warning that the ACCC will continue to take action against traders who take risks in their advertising, regardless of their size.”

Apple had offered in March to refund Australian customers who felt they had been misled, and publish a clarification about the popular tablet’s capabilities.

The product is now advertised outside North America as “Wi-Fi + Cellular” – a change that came into effect on May 12 – with a clear caveat on its Australian site that “it is not compatible with current Australian 4G LTE and WiMax networks.”

“Apple does not seek to deny the deliberateness of its conduct and there are no facts before me which seek to excuse or explain the conduct, other than that the conduct occurred at the behest of Apple’s parent company,” Bromberg said.

The iPad was the world’s best-selling tablet in the first three months of 2012, outgunning its Android-powered rivals, with sales more than doubling from a year earlier to send Apple’s profits soaring.

The iPad’s 4G capabilities are supported by some networks in the USD and Canada.

Matthew Rimmer, an expert in intellectual property at the Australian Nation University, said Apple had been “careless.”

“It shows some of the dangers involved in overhyping products and sets a very important precedent,” he said, adding that other countries would take not of the outcome.

Asked if it could open the floodgates to similar law suits elsewhere, he said: “It all depends on the nature of consumer regulations in each country.”

Earlier this month, Apple agreed to settle the case with the ACCC.

But Bromberg delayed an official ruling until he had details on how many iPads had been sold and were returned under the refund offer and further information on Apple’s financial position.

He said yesterday the risk of contravening Australian consumer law would have been “reasonably obvious” to Apple. – AFP

Apple faces $2.2m fine over Aussie 4G iPad

June 12, 2012

Sydney – Apple agreed yesterday to a A$2.25 million (US$2.22 million) fine for misleading Australian customers about the local 4G capability of its next-generation iPad, in a case brought by regulators.

The Australian Competition and Consumer Commission (ACCC) told the Federal Court that the US tech giant had agreed to the penalty for implying in advertising that the 4G function on its latest iPad worked in Australia.

Apple offered in March to refund Australian customers who felt they had been misled by the “iPad with WiFi + 4G” promotion and publish a clarification about the popular tablet’s capabilities after the ACCC took it to court.

Though the iPad’s 4G function only works on networks in the United States and Canada it had been widely promoted as one of the tablet’s features globally, which the ACCC said amounted to false advertising.

It is now advertised outside North America as “Wi-Fi + Cellular”, with a clear caveat on its Australian site that “it is not compatible with current Australian 4G LTE networks and WiMax networks.”

The matter was due to go to a full trial this week but ACCC lawyer Colin Golvan said Apple had agreed to pay the Aus$2.25 million fine and the commission’s legal costs as part of an out-of-court settlement.

It is half the maximum A$4.4 million fine open to the ACCC in the case.

Apple described it as “more than adequate having regard to the conduct and all the other circumstances” and stressed that the concessions made in the case were only applicable in Australia.

The “iPad + 4G” promotion was in place for two months worldwide including major technology-mad cities in Asia.

Golvan said the “substantial” penalty would send a strong message to the booming smart-phone and tablet industry that “such conduct will not be condoned”, according to a report of the hearing in The Australian newspaper.

But judge Mordecai Bromberg refused to make an official court order until he had the details of how many iPads had been sold and were returned under the refund offer, along with information about the extent of the 4G advertising.

“The parties put forward proposed settlement and consent orders, however His Honour requested further information to be provided for the consideration of the court, which will happen next week,” an ACCC spokesman told AFP.

Apple agreed to provide a confidential brief to the judge by June 13, with a final decision on the penalty and settlement of the case to be handed down at a later date. – AFP

Is It Unhealthy Competition?

June 07, 2012

By Nguyen Tan

Disputes arose after a product image on the website of a company had been used for advertisement by its rival. Legal experts thought it was an act of unfair competition while the Department of Competition Management ruled that there was not sufficient evidence to conclude a violation.

Tien Tien Engineering-Construction-Trading Company (Tien Tien Co.) is a manufacturer and installer of steel buildings. In 2011, after discovering that two images of its products were used by Viet-My Industrial Company (Viet My Co.), a rival in the steel building industry, Tien Tien Company sent a letter to Viet My Co.,  requesting the latter to remove the images from its website, and Viet My did so. After that, however, Viet My continued using dozens of other Tien Tien’s images for the advertisement of the company’s products on its website.

Naturally, after seeing that this was unfair and possibly violating copywrite infringement law, Tien Tien took their case to the Department of Competition Management. After preliminary investigations, the agency suspended the investigation on the grounds of “insufficient evidence to conclude a violation of the Competition Law.” Tien Tien then appealed this decision. In its official response to Tien Tien, the Department of Competition Management on one hand confirmed Viet-My’s action as “non-violation,” but on the other hand reckoned that Viet-My’s action was not under its settlement authority. It suggested that Tien Tien “should contact other relevant authorities, i.e. journalism, publishing, information and media, intellectual property, advertisement and trading, for guidance.”

Unhealthy competition?

Vu Thi Ngoc Van, Head of the Trading Division of Tien Tien Co., said the images used on Viet-My’s website were pictures of Tien Tien products and construction works which were all taken by Tien Tien, and could be verified by its clients. Some of its works were An Bien Hospital, Ninh Thuan police office building, and a police training center.

Meanwhile, speaking to the Saigon Times, Nguyen Manh Thanh, general director of Viet-My Co., said that if Tien Tien wanted to have these images exclusive, they should have registered with the authorities. This was something the Department of Competition Management failed to clarify in its settlement.

Nevertheless, the exclusiveness of the images is not the dispute. The legal basis for Tien Tien’s complaint against Viet-My are articles 40 and 45 of the Competition Law on the prohibition of two unhealthy competition behaviours, i.e. “misleading information” and “advertisement leading to unfair competition.” According to Ngoc Van, the usage of the images has made a lot of Tien Tien’s customers confused. “For example, our toilet product is priced at VND29 million, but with this product’s image, Viet-My offers just VND23.8 million. Our customers are wondering why Viet-My offers a low price for the same product, and they do not know its product and ours are different,” explained Ngoc Van.

Most legal experts agree that the above act is one of unfair competition. However, it will be controversial to invoke articles 40 and 45 in this case. According to Dr. Nguyen Van Nam, a lawyer, it is good to cite either article. Unfortunately, Article 40 is not explicit enough, and there has not been any guidance from the Government yet. Also according to Dr. Nam, prohibition on “advertisement leading to unfair competition” under Article 40 does not make sense not comply with international practice. “Deceptive and misleading advertising is obviously an act of unfair competition and should be banned. Therefore, “advertisement leading to unfair competition” is unnecessary. It can be argued that “I make an advertisement to sell my product, not for any other purposes”, explained Dr. Nam.

Dr. Nguyen Anh Tuan of LCT Lawyers reckons this is misleading advertising, in violation of Article 45 of the Competition Law. Citing Article 40 is not appropriate because this article is limited within the scope of intellectual property.

Le Quang Vu, a lawyer from the Law Office for the Poor, shares the same opinion. He said that if a company uses images and designs of another company’s products on its own website for advertising purpose, it has deliberately misled information to customers, and can be deemed as “advertisement leading to unfair competition under Clause 3, Article 45 of the Competition Law.” Vu considered the Department of Competition Management’s decision unsatisfactory. Tien Tien Co. may appeal to the Ministry of Industry and Trade.