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Company uses smear campaign against Dropbox at Texas trade show

Business competition helps to drive a healthy marketplace and keeps prices reasonable for consumers. Under most circumstances, it’s normal and acceptable for businesses to be competitive with each other. However, companies run into problems and open the door for possible business litigation when one or more competitors engage in unfair competition or tortious interference.

The CEO of Golden Frog, a competitor of the popular online storage company Dropbox, says he thought his company’s smear campaign against Dropbox would be a fun way to generate interest in his own business. During the tech trade show South By South West, Golden Frog’s campaigners distributed pamphlets slamming Dropbox’s services, and invited them to visit a website set up by Golden Frog for the purpose of encouraging Dropbox’s users to dump the service.

Golden Frog hid their involvement, instead disguising the campaign as a grassroots movement. They were only discovered when some online users became suspicious and noticed similarities between Golden Frog’s site and the false grassroots campaign’s site. Only then did the company’s CEO admit they were behind the campaign.

A corporate lawyer says that Dropbox could sue for unfair or deceptive trade practices, since Golden Frog’s campaign may have violated the Federal Trade Commission Act that prohibits false advertising. Although it’s perfectly all right for businesses to compete with each other and advertise their own services, it would be wise for company executives to think carefully before making claims against another business, or they could find themselves in the midst of a legal corporate dispute.

Source: Herald Sun, “Unmasked: Golden Frog admits to creating sleazy DumpDropbox scare campaign,” Claire Porter, Mar. 13, 2013

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