Winning Ways to Compare Products in Advertising

Comparative advertising is legal as long as it's truthful. But the truth can be a difficult concept and competitors often sue for damages and seek injunctions to stop the ads.
GavelThe courts don't always side with the party who is offended by an advertisement. Here are two cases of companies that won in legal struggles with their competitors:
Truth in pizza advertising. You can't make false or misleading claims about a competitor's product. But traditionally, an exaggeration or hyperbole in an ad has been considered puffery and isn't considered deceptive. For example, not everyone agrees that Ringling Bros. and Barnum & Bailey circus is "The Greatest Show on Earth." The Federal Trade Commission doesn't regulate puffery, which it defines as opinions that "reasonable people" don't believe and can't be proved to be true or false.
In one case, Pizza Hut sued Papa John's for false advertising based on its slogan "Better Ingredients. Better Pizza." Initially, a jury agreed and a judge awarded Pizza Hut $467,000 in damages. But on appeal, the Fifth Circuit Court reversed the ruling and the damages, saying Papa John's claims were simply the "typical puffery" used in ads.
"This simple statement, 'Better Pizza,' epitomizes the exaggerated advertising, blustering, and boasting by a manufacturer upon which no consumer would reasonably rely," the court stated. This case went to the Supreme Court, which refused to review it.
Papa John's continues to use "Better Ingredients. Better Pizza" as its motto today.
Copyright infringement denied. Courts generally rule that you can use a competitor's copyrighted material if the ad uses only as much of the material as is necessary to make a valid comparison.
In one case, Sony sued a software company, Bleem, over Bleem's use of copyrighted PlayStation game images in an ad campaign. Bleem made software that allowed users to play Sony games on personal computers without buying a PlayStation console. The screenshots compared the look of the games when played with a Sony console on a television screen to what they looked like when played with Bleem's software on a computer.
Sony argued that Bleem could not use the screen shots because they were Sony's copyrighted material. Bleem claimed that using the screen shots was protected as a "fair use" under the Copyright Act. The Ninth Circuit Court agreed and noted "the entire premise of comparative advertising is that the consumer is being made aware of the true choices."
Despite the successes of Sony and Papa John's, companies must be very careful when embarking on a comparative advertising campaign.
Keep in mind: Even if you avoid copyright infringement, you also need to make sure that you avoid trademark infringement and don't create consumer confusion. These are other ways that a company can wind up in serious legal trouble.
 
Porte Brown - Accountants & Advisors
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