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December 2006 | Vol. V - No. 12
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Toy Industry Code of Ethics

Sign on and Help Toys Stay Honest


Recurring headlines in the toy industry reflect continuing agitation and the escalation of the costs of legal issues, as one company after another files copyright infringement suits. These violations of copyrights and other protections of original concepts hurt the entire industry. 

This is why the Code of Ethics Committee, formed two years ago, decided to take a stand by formulating a “Toy Industry Code of Ethics” that would put an end to plagiarism, copycats, copyright infringement, trademark misuse and related issues. 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 to drop his company’s memberships in trade organizations not willing to consider and adopt a code of ethics for members. 

A proposed Code of Ethics has been drafted and presented to the Toy Industry Association. As yet, there has been no action taken. As the open market of Toy Fair looms around the corner, the need for such a Code becomes ever more urgent.

Please read the proposed Code below and encourage all toy industry trade organizations to adopt its precepts.

Please also feel free to respond to this proposal with questions, concerns and ideas:

Stevanne Auerbach, Ph.D./Dr. Toy
drtoy@drtoy.com

Marshall P. Gavin
Executive Vice President
b. dazzle, inc.
mpgavin@b-dazzle.com

You may also take a quick survey on the state of ethics in the toy and game industry by clicking here.



THE ESTABLISHMENT OF AN EFFECTIVE CODE OF ETHICS FOR THE TOY INDUSTRY


The toy industry is enduring challenging times that underscore, and sometimes magnify, the risks associated with entering and competing in the toy business. 
 
In addition to normal business challenges everyone faces, there is an additional challenge that should be on the decline, but instead seems to be on the rise:  Unethical practices that, unless identified, pursued, and overcome through appropriate channels, will continue unfettered and will undermine the values and practices of the entire industry.
 
There are very few organizations that have the scope and influence to impact this vital issue. We believe TIA, as the strongest and most influential institution in the toy industry, is the essential beacon for ethical business conduct in our industry. 
 
TIA’s leadership in the right direction is expressed by its establishing its “Member Commitment to Corporate Social Responsibility” and TIA “Member PLEDGE to Comply with the ICTI Code of Business Practices and ICTI CARE Process.”

We believe these two sets of ethical commitments, when accepted together by TIA members, advertisers, and trade show exhibitors, comprise a satisfactory and necessary “Code of Ethics” for our industry. 

The time has come for leaders and members of the industry associations to take a stand for ethical business practices.

Here are at least two compelling reasons:

1. Right Action
Our purpose, ultimately, is to benefit children by selling products that make their lives better. To tolerate and to appear to be accepting of unethical behavior that no parents would ever teach their children seems particularly hypocritical. Children learn from examples. The Toy Industry Association, therefore, has a responsibility to set an example in society, serving as a beacon that illuminates what is right business conduct.

2. Remaining Profitable
In the long run, making money and staying in business depends upon honest business practices.  Our ability to sustain our business 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.

We are confident that the leaders in our industry support and follow ethical tenets.  Setting and publishing standards of ethical business conduct will provide an environment that encourages change for any company that is in deliberate violation.   If transgressions are identified, there must be tangible, consistent consequences for offenders to protect the common good of our industry. Proper channels are available for appropriate legal use, licenses, distribution and proper agreements. Copying and unfair competition hurt the entire industry, and litigation has a heavy cost in both time and money.  Setting industry standards that are followed and enforced creates a higher level of value, productivity, and trust.

Proposal:

1. Amend TIA’s Member Commitment. TIA’s “Member Commitment to Corporate Social Responsibility” is a powerful document that lays out many essential guidelines for being a productive and honest member of the toy industry.  We ask that you consider an amendment to TIA’s Member Commitment that will more precisely define and effectively reduce plagiarism, copycatting, unfair labor standards, and related behaviors.  Specifically, we recommend amending Item #5 in the Member Commitment to Corporate Social Responsibility as follows:

“I/We declare that I/we do not intentionally market counterfeit toys/games nor willfully copy any intellectual property of another company without permission, and I/we understand that a judgment against me/us, whether brought privately or otherwise, for such copyright or trademark infringement may cause the Association to investigate and take such action as it deems appropriate, including, but not limited to, expulsion. I/We also agree to abide by decisions of courts of competent jurisdiction, arbitrators, or other such bodies.  Further, I/we agree that our company will not knowingly engage in business transactions of any kind with companies that I/we know are violating any part of this Member Commitment.”

The above changes will accomplish several things:
  • Broaden the definition of IP so it is not just “counterfeiting,” which could be interpreted narrowly as only a direct rip-off of a product in its entirety.
  • Affirmatively state members will abide by the rules of ethical conduct.
  • Encourage honest business practices and avoid dishonest ones. 
2. Require signed acceptance of both the revised “Member Commitment for Social Responsibility” and the “Member PLEDGE To Comply with the ICTI Code of Business Practices and ICTI CARE Process” as a prerequisite to and a condition of TIA membership and trade show exhibition. 

With the privileges of membership and exhibition comes the responsibility to our industry of compliance with the TIA Code of Ethics, which the revised Member Commitment and the Member PLEDGE To Comply with the ICTI Code of Business Practices and ICTI CARE Process would comprise.

3. Establish a process to deal with unethical behavior. Once TIA requires its members and exhibitors to comply with the TIA Code of Ethics comprised of the revised Member Commitment and the Member PLEDGE To Comply with the ICTI Code of Business Practices and ICTI CARE Process, the natural and expected next step would be TIA’s establishment of a “due process” for enforcement and discipline, including specified penalties.

The worst offenders in the industry, by violating rules established to benefit the common good, are unlikely to become committed to ethical behavior simply by signing a piece of paper. They may be accustomed to ignoring the law and assume they will not be called to task. Therefore, equally important to the signed acceptance of the TIA Code of Ethics, comprised of the combined revised Member Commitment and the Member PLEDGE To Comply with the ICTI Code of Business Practices and ICTI CARE Process, is enforcement of the TIA Code of Ethics. We believe TIA and its members must demonstrate to all — members, non-members, suppliers, and consumers — that the ethical standards to which we are subscribing are more than words; they are a commitment by TIA, its members, and its exhibitors to an ethical way of conducting business.

We must lead by example with the expectation that all TIA members and exhibitors will follow, but with a realistic expectation that some will not.  Those who do not comply with the TIA Code of Ethics, therefore, must be disciplined if the TIA Code of Ethics is to have any standing and respect within our industry.  It would be hypocritical, on the one hand, to be dedicated to bringing high quality, innovative toys to our children, and then, on the other hand, to support and/or advertise and display those manufacturers who would steal an idea, copy a product, or engage in exploitive labor practices in foreign lands that would be found repulsive in our own.

While we acknowledge that we cannot immediately curtail all unethical behavior by adopting new rules, we hope that by setting a unified, industry-wide standard, we will decrease support and rewards available to deviant companies and, instead, find official and widely accepted ethical principles to which most in the industry will adhere. 

After all, if we are unwilling to publish the standards of conduct in which we believe, our commitment to those standards will have no credibility and, therefore, no influence on others. There must be an enforceable standard and a mechanism that identifies those companies that violate the rights of other companies and a review process that provides an effective way to determine the future of violators. This is not legal recourse, which may yet be required, but an interim deterrent that may avert the costs and aggravations that are inherent in the judicial process.  Such a review process and mechanism for sanctions may be sufficient to serve as a deterrent to future offenders.

4. Widely publish the TIA Code of Ethics so that other related industries, businesses, and the public can be informed of our toy industry’s tenets, as a means of establishing within our economy a common and consistent expectation of high standards of ethical behavior among all TIA members, exhibitors and advertisers.

We sincerely appreciate your input, participation, and leadership for being involved in constructive change at TIA.  We trust you will consider embracing and supporting the suggested TIA Code of Ethics. 


Members of the Committee include:
Stevanne Auerbach, Ph.D.
Marshall P. Gavin
Alan Hess
Judy Folkmanis
Frank Martin
Stuart Montaldo
Penny Norman, Ph.D.
Phil Pohlmeyer
Tina and Rob Pourtahmassebi
Renee and Len Trinca
With participation and editing services of
Jim Dugan (Retired IBM editor) and Mark Stevens (Editor-in-Chief, Siemens International Business Services).
Dozens of TIA and other industry members have reviewed the document in process.



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