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Question: Novell, Inc., produces its NetWare networking software in two forms: original and upgrade. The upgrade version is substantially identical to the original in function; the primary difference is its lower price as the upgrade is available only to owners of previous versions of the software. Network Trade Center, Inc. (NTC) purchased older versions of the NetWare software in bulk at discounted prices, and ordered the cheaper upgrade of the newer software from authorized Novell distributors. (At no time was NTC an authorized distributor of Novell software.) NTC then advertised the "upgrade" as "New Retail" or as a "Special Novell Promotional Package" while showing pictures of the "original" NetWare box, and sold it to end users. Many end users expressed confusion to both NTC and Novell about the extent of the license they obtained: some thought that they had received the "original" retail version, and others thought that they could register the upgrade with Novell. Some became so frustrated that they returned their copies to NTC. Once Novell discovered NTC's practice, Novell ordered NTC to stop, but NTC continued to advertise the product. Novell has filed suit, alleging, among other claims, that NTC is in violation of the Lanham Act's prohibition against false advertising. Has NTC engaged in false advertising? Why, or why not?

Management Theories, Management Studies

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