Chapter 8

Question 1

The Consumer Protection Act

Answer 1

The Consumer Protection Act provides for better protection of consumers in order to compensate consumers by awarding them relief and compensation where appropriate.

Question 2

A patent

Answer 2

A patent is an exclusive right granted for an invention, which is a product or a process that provides a new way of doing something, or offers a new technical solution to a problem.

Question 3

The most common patents include:

Answer 3

biological patents
business method patents
chemical patents
software patents

Question 4

Note the following benefits of patents:

Answer 4

reduce the number of competitors in the market y generate revenue from licensing
increase the value of a company
sell patents in cases of liquidation

Question 5

A copyright

Answer 5

A copyright is an exclusive right granted by law for a term of years to an author or designer for his/her original work.
Every copyright has a life span of 50 years. The copyright sign is an encircled c-symbol ©. One has to request permission to copy someone else’s work

Question 6

A trademark

Answer 6

A trademark is a brand name, a slogan or a logo that identifies the services or goods of a company and distinguishes them from the goods and services of competitors.

Companies have to register their trademark so that they can be offered protection
under the Act governing them. Unregistered trademarks are also protected but only under common law terms.
A registered trademark can be protected forever, on condition that it is renewed after every ten years. However, the company has to pay a renewal fee.

Question 7

Why do we trademark product

Answer 7

Products are patented in order to brand them so that consumers can easily link them to a particular organisation.
Organisations then design a symbol to position the product they have developed.

Question 8

Brand protection

Answer 8

a brand should be protected because there may be other businesses that illegally use a particular brand name, logo or image to scam customers. This will definitely have a negative impact on the brand.

Question 9

The benefits of brand protection are to

Answer 9

safeguard the value of marketing investments protect revenue and profits
help protect brand reputation
identify abuse of a brand
protect against counterfeiting

Question 10

Note the following technologies for brand protection:

Answer 10

authentication numbers/serial numbers

unique bar codes

Question 11

The importance of product safety from the manufacturer’s and consumers’ perspectives.

Answer 11

Because product safety is such a vital issue, commissions have been established to protect consumers from unreasonable injuries or death.
When products do not conform to the safety standards, the commission has the right to recall the products.

Question 12

The following are the possible consequences of failure to meet product safety standards:

Answer 12

litigation

payable penalties stipulated by the Safety Commission

Question 13

The following are the minimum safety requirements for consumer products:

Answer 13

All South African products must be South African Bureau of Standards (SABS) approved. How does one identify if a product is SABS approved?
All SABS approved products have the SABS logo.
Imported products are checked by customs officers to see if they pose any health hazards.
Products should contain labelling with information on the ingredients or materials y used.
The rationale is that some consumers may be allergic to certain ingredients.
Products should have instructions on how to assemble and use them.
Take children’s toys, for example: the instruction on the packaging may state “Not for use by children under 3 years of age”. Pharmaceutical products have dosage instructions.

Question 14

A product design

Answer 14

A product design is defined as the idea generation, concept development, testing and manufacturing or implementation of a physical object or service.

Question 15

Note the following advantages of product designs:

Answer 15

lower production costs which improve profit margins
better communication with customers through effective design
attracting customers by making the product appeal to them in terms of usability user-friendly products

Question 16

Legal production issues

Answer 16

Legal production issues vary from industry to industry. For instance, there are legal production issues relating to products and film production.
There are regulatory bodies such as SABS that oversee that the technology used in a product design is not harmful to humans.
In film production, for instance, there are standards that specify age restrictions and also state if there are violent or offensive scenes in the film.
These standards are set by the Broadcasting Commission.

Question 17

The general principle of ASASA

Answer 17

The general principle of ASASA is that advertising should be honest and inoffensive. The Authority regulates commercials under consumer, advertising and sponsorship codes.

Question 18

Independent Communications Authority of South Africa (ICASA)

Answer 18

In South Africa, the Independent Communications Authority of South Africa (ICASA), which falls under the Department of Communication, is the regulating authority that oversees broadcasting and telecommunications in the public’s interest and also handles complains. According to the Advertising Standards Authority of South Africa’s (ASASA’s) commercialisation standards, comparative advertising is forbidden.

Question 19

Competitive Legal Issues

Answer 19

Competition is advantageous for both consumers and companies.
The advantages for consumers are that the market offers a variety of products and has a bargaining power advantage in that they may negotiate prices.
The advantage for companies is high market share, especially in industries where there are entry barriers.
Cartels relate to competitive issues which are legally unacceptable. Such issues occur when competitors form an alliance when bidding for tenders or setting prices for products.