The limits of comparative advertising

Folio: The Magazine for Magazine Management, August, 1989 by Slade Metcalf

The limits of comparative advertising

Those who grew up in the 1950s and 1960s and were fixated by the glories of television game shows and crazy sitcomes will remember those soap and detergent commercials where the pretty, perky housewife would laud the benefits of her favorite product rather than the disreputable Brand X. You would often try to guess the real identity of Brand X and wonder whether it would put holes in your clothes.

Those rudimentary origins of what is now known as "comparative advertising" reached maturity in the 1970s and 1980s. Advertisers were no longer reluctant to identify on air or in print their chief competitors. They boldly extolled the virtues of their products, explaining why they would last longer, dissolve quicker, run faster, or remove the dirt more easily than their competitors' products.

However, with the pronouncements of higher quality and more durability came, inevitably, the assertions that the ads were misleading and even downright false.

Advertisers who believed they were on the receiving end of these false or misleading comparisons needed some legal support to halt the continued distribution of the offending advertisements and, in some cases, to obtain compensation for lost sales or loss of goodwill.

One avenue of legal redress was a Federal statute known as Section 43(a) of the Lanham Act. That law authorized people to sue someone for "false description or representation" if the person suing had been or was likely to be injured by an advertisement for the other person's product. If the advertisement was false on its face, the court could issue an injunction halting the distribution of the ad, without any evidence of consumer confusion. If, on the other hand, the ad was merely misleading and not facially false, the injured person had to show a likelihood of deception or confusion on the part of the buying public that was caused by the misleading ad in order to obtain the injunction. To recover damages, the party suing had to establish actual consumer confusion or deception resulting from the false or misleading ad.

As examples, Avis Rent-A-Car System unsuccessfully sought an injunction preventing the continued use of a print advertisement of The Hertz Corporation that said, in part, "Hertz has more new cars than Avis has cars." Coca-Cola obtained a preliminary injunction halting the broadcast of a Tropicana television commercial because the commercial allegedly represented incorrectly that Tropicana's Premium Pack orange juice contained unprocessed, fresh-squeezed juice when in fact the juice was pasteurized (heated to about 200 degrees Fahrenheit) and sometimes frozen prior to packaging. (Coca-Cola manufactured Minute Maid orange juice.) Also, Fruit of the Loom attempted but failed to enjoin a television commercial for Hanes T-shirts that commented on the shrinkage percentage relationship between T-shirts made by the two companies.

A second avenue to remedy false and misleading advertisements has been the theory of unfair competition under state law. New York, for example, authorizes the issuance of injunctions and the award of damages if one party "passes off" his gods as those of another or misappropriates the skill, expenditures and labors of another. In other words, an advertiser uses the name or trademark of a competitor in an advertisement to "trade off" on or misappropriate the goodwill of the competitor's product in order to promote its own product. The offended party must show either a likelihood of or actual confusion in the mind of the consumer as to the origin of the product being advertised. One court found that a jury should decide whether the phrase "If you hike Estee Lauder ... You'll love Beauty USA" was likely to confuse consumers into thinking that Beauty USA was associated with Estee Lauder cosmetics company.

A third way to remedy injurious false advertising is called product disparagement. The nature of this claim is similar to a libel claim. The difference is that a libel claim negatively affects the reputation of the person or company that manufactures the product, whereas a product disparagement claim is based on a derogatory statement made about the product itself. A disparagement claim must be supported by special, articularized damages suffered by the person suing. For example, a manufacturer of triple-wall chimneys sued Meredith Corp., the publisher of Better Homes and Gardens Home Plan Ideas, based on an article that criticized the safety features of the type of chimney produced by this manufacturer.

Although the court permitted the case to proceed on the libel claim (injury to the manufacturer's reputation), it dismissed the product disparagement claim because there was no evidence in the record that the writer of the article either knew what he was writing was false, has serious doubts about the truth of the article, or harbored any ill motive against the manufacturer.

New Federal law

A variation of this product disparagement claim will soon be recognized by Federal law. On November 16, 1989, the Trademark Law Revision Act of 1988 will take effect. That statute revises Section 43(a) of the Lanham Act to permit in explicit terms a suit based on any "false or misleading description of fact, or false or misleading representation of fact, which ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities."