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Computer, Toy Firms Seeking Protection From Packaging Suits

September 12, 1997

The California Assembly is expected today to sign off on a bill designed to stem a tide of lawsuits against software manufacturers that allege deception under fair-packaging laws on the grounds the packaging is too large relative to the size of the software inside.

The measure, by Assemblywomen Martha Escutia (D-Bell) and Liz Figueroa (D-Fremont), would amend California's Fair Packaging and Labeling Act and the Unfair Competition Act to protect computer software and hardware firms from lawsuits they say are frivolous, time-consuming and expensive.

Chris Micheli, a lobbyist for a semiconductor industry group, said the lawsuits are particularly egregious because "anyone buying the product knows he or she is getting a CD-ROM or 3.25- or 5.25-inch disk and an instruction manual."

The bill creates 15 defenses, or "safe harbors," that companies can use to defend themselves from accusations that they have violated the Unfair Competition Act by packaging small items in what some claim are deceptively large wrappings.

About 14 of the 15 exceptions spelled out in the legislation reaffirm safeguards that now exist in state or federal law or in guidelines set by the state attorney general--namely that extra package space is acceptable if it serves a legitimate function, said Tom Papageorge, head of the consumer protection division of the Los Angeles County district attorney's office.

The only new safe harbor applies to the packaging of computer hardware and software.

A spate of lawsuits filed recently against toy companies, cosmetics makers and computer firms, including two Southern California companies, Quarterdeck and Touchstone Software, spurred the legislation.

These suits, including nine complaints filed against technology companies by Bay Area attorney William Henley, allege that manufacturers' boxes are too large and are in violation of state fair-packaging and -labeling laws. Eight of the nine suits filed by Henley have been coordinated and are set for a hearing in San Francisco County Superior Court on Oct. 17.

Software makers say the cereal-box-size packages that house CD-ROMS and other software are necessary to catch consumers' attention and to present information about the product.

"No one has ever complained a box was too large. If someone brought it to us and said, 'Gee, there's not enough stuff in this box,' we would give people their money back," said Rebecca Ranninger, director of legal affairs for Symantec, one of the firms named by Henley.

Henley, who's asking for $9 million from software companies, formed a corporation called Intervention to file the cases.

"My clients' ambition was to start with the nine defendants and to spread the litigation out over the whole industry," Henley said.

Another attorney, Don Driscoll, walked into a Contra Costa County courtroom last New Year's Eve and listed his mother as the plaintiff in order to file lawsuits against 15 major toy companies alleging deceptive packaging.

The Toy Manufacturers Assn. of America and Semiconductor Equipment & Materials International, which are among the bill's sponsors, say a number of similar suits have been filed in the last 18 months claiming products have excessive empty space in their packaging and seeking millions in damages.

Although the measure won't be retroactive, the bill's backers hope that if it is enacted it will put a stop to what they call frivolous lawsuits by allowing defendants in current suits to use the law as grounds to dismiss their cases.

Until the spate of private lawsuits, similar cases had been filed by district attorneys and resolved when manufacturers repackaged their products in smaller containers. Papageorge estimates his office has filed only 10 to 15 such cases over the last decade.

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Times staff writer Jennifer Oldham and Capitol Alert News Service

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