BRIGHT STAR, DARK STAR: Why STAR is a "Trade Association", and What That Means About What STAR Can and Can't Do  By Charles B. Kramer,  Attorney Throughout history, tradesman have gathered to grumble, hob nob and share information. So in gathering in STAR, the shareware community has something in common with medieval guilds, 19th century societies of accountants, and modern associations of magicians, engineers, and dry cleaners. Each is a trade association: a gathering of related businesses to discuss and solve their similar problems and to advance the success of their trade. When members of a trade gather, lots of good can result. The time-line boundaries of the United States, for instance, are a legacy of cooperation among competing railroads who needed to coordinate their train schedules. Similarly, the rules governing checks are a direct descendant of payment systems devised by merchants centuries ago. But the gathering of a trade creates -- power! -- that can also easily go wrong. The same power that can pool resources for educational advertising campaigns can also -- quite innocently -- be used to make the business of the trade less free in ways that are improper. ŠBRIGHT STAR The proper functions of trade associations consist principally of education, information sharing, and standard setting, in each case with the purpose of furthering the interests of the trade as a whole. Standard setting can take the form of "seals of approval" meant to influence purchasing decisions, or "ethical standards", like a rule that "members will endeavor to advertise accurately". Speaking in 1980, Mortimer B. Doyle described some of the proper functions of trade associations this way: Ž [1] [Trade Associations] work to create a favorable Ž attitude toward their industry or profession. This effort Ž includes the media, the general public, consumers.... Ž [2] They keep abreast of change. They advise their Ž members what is happening, and what is likely to Ž happen.... Ž [3] They work to maintain high ethical standards in their Ž industry or profession.... Ž [4] Associations work with and challenge government when Ž necessary. Government, particularly the legislative Ž branch, needs and requests the assistance of voluntary Ž associations on virtually every bill that is drafted..... Ž [5] In addition, they are national and international in Ž outlook.... as members realize that their concerns and Ž their opportunities are worldwide in scope. STAR, of course, not need do all of these things. STAR may choose principally to educate by starting a newsletter, and by making periodic mass mailings to CIO's informing them of the benefits of shareware. STAR could alternatively choose principally to share information by collecting statistics on the success of different types of registration schemes for different types of shareware. And -- no doubt! -- other parts of STARgazer will amply discuss the merits and demerits of STAR choosing to set ethical or other standards. But, while education, information sharing, and standard setting are the things trade associations do best, they can also be where trade associations go wrong, for each of these has a dark side. ŠDARK STAR The dark side derives from the fact that trade associations are organization of competitors. In STAR's case, vendors compete with vendors, authors compete with authors (at least to the limited extent their programs perform interchangeable functions), and BBSs compete with BBSs (at least to the limited extent they provide the same sorts of services, and draw their membership from the same geographical area). The law regards any agreement among competitors with suspicion. For that matter, the law regards even regular meetings among competitors with suspicion, and with good reason. The more competitors meet, the more they will be tempted to make arrangements that intentionally reduce competition among them. Since STAR plans to structure itself in a way that will preserve the voice of all elements of the shareware community, it may defuse these temptations, but they will remain. The bigger danger of the dark side of trade associations is how easy it is for them to unintentionally reduce competition. For instance: Š[1] "PRICE" Competitors can't agree to the minimum (or maximum) price they'll charge for their products. This may seem obvious, but STAR could cause such an agreement without realizing it. Shareware authors for instance, sometimes limit the price vendors charge for their disks so customers will be less likely to believe they've bought the program that's on it. Such a limit, which would be improper absent the author's copyright, is proper when imposed by authors individually. But STAR might be found to be improperly price fixing if it recommended use of a standard form of VENDOR.DOC that contains such a term, because authors could be seen as *agreeing* to charge the same price. Similarly, while "information sharing" is one of the proper functions of trade associations, the regular sharing of price information has sometimes been found improper. The thing to remember is trade associations and prices don't mix: any STAR practice that involves or could effect prices is potentially improper. Š[2] BOYCOTT "Boycotts" occur when a group of businesses decide they will not deal with another business or class of businesses. A boycott might be found, for instance, if STAR decided "STAR authors will only deal with STAR vendors", or if it decided "since shareware is cheapened by advertising it in comic books, no STAR vendor shall advertise in them". The thing to remember is that STAR should be cautious about making a rule that limits who its members should deal with. Š[2] STANDARD SETTING If standard setting has been one of the greatest strengths of trade associations, it has also been the way they most often go wrong. To be proper, standards should have an objective basis and a reasonable health, safety or utilitarian purpose. Equally importantly, the trade association should provide a fair procedure for determining whether and when one of its members has violated a standard, and should even-handedly impose reasonable penalties. Fines, suspension from the trade association, expulsion, and denial of a right to use the association's "seal of approval" may or may not reasonable in particular circumstances. A thing to remember is, the more the penalty interferes with a member's power to do business in the trade, the greater danger it could be found improper. Here's an excerpt from an "advisory opinion" by the Federal Trade Commission, that lists factors it considers when determining whether a trade association's standards are proper: Ž [1] Standardization and certification programs must not Ž have the effect of boycotting or excluding competitors. Ž [2] Where certification is involved, no applicant for Ž certification may be denied certification for any of the Ž following reasons: (a) that he is a non-member of any Ž association or organization; (b) that he is a foreign Ž competitor; or (c) that he is unable to pay the fee or Ž cost of certification. Ž [3] Membership in groups or organizations sponsoring, Ž promulgating or administering standardization or Ž certification programs must be open to all competitors, Ž domestic or foreign. Ž [4] Due process must be accorded all parties in or Ž affected by a standardization or certification program.... Ž Due process includes... the conduct of timely hearings Ž with prompt decisions on claims respecting standards or Ž the denial of certification. Ž [5] Standards and certification programs, unless Ž otherwise clearly required by considerations of safety, Ž may not be used to reduce, restrict or limit in any Ž manner, the kinds, quantities, sizes, styles or qualities Ž of products. Ž [6] All standards must be voluntary. None of this is intended to discourage any of the free thinking, sometimes rambunctious process of self-creation that STAR has entered. Probably one of the most exciting things about STAR is the number of useful, new and sometimes contradictory ideas this process has created. But as STAR settles into some sort of shape, it will need to reflect on whether it is a bright STAR, or a STAR that has fallen to one of the dark temptations that comes from being a trade association.