Do the Owners of Normandale Have Personal Liability to Mathis for Damages? Explain.

Running head: LEGAL AND ETHICAL LEADERSHIP AND MANAGEMENT 1

Legal and Ethical Ideals Concerned with Unauthorized Copying of a Product and

Selling Counterfeit Items for Profit

Jeffrey L. Ellis

Argosy University Online

LEGAL AND ETHICAL LEADERSHIP AND MANAGEMENT 2

Abstract

LEGAL AND ETHICAL LEADERSHIP AND MANAGEMENT 3

Mathis, Inc. is a designer and manufacturer of women’s clothing and specializes in high-end women’s winter fashions. Normandale, a retailer, sells high-end products in malls throughout the country. With Mathis’s high costs, Normandale is unable to make a profit from the sale of Mathis’s products.

Countess Lori-Ann (CLA) is a Mathis competitor. Normandale sends photographs and samples of the Mathis line to CLA and instructs them to make an identical line at a lower price. Mathis labels are easily discernible in the photographs and the samples have the Mathis label attached. CLA copies the Mathis line for Normandale.

CLA sells the clothing to Normandale at a low price allowing Normandale to sell the products for a total gross profit of nearly $3 million, an increase of nearly 50% over its sale of Mathis products. Mathis discovers that Normandale is selling counterfeit products, and sends several cease-and-desist letters to them—to no avail. Mathis then sues Normandale alleging Normandale has engaged in illegal conduct. Normandale counters that it did nothing wrong.

Was it ethical for Normandale to sell the alleged knock-off products at a lower price? Explain.

In this author’s opinion, it is not ethical for Normandale to sell “knock-offs” (Cut price: to decrease the price of something by a particular amount) at any price without permission...