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August 14, 2003

Allegedly Out-of-Date Comparative
Advertising Triggers Lawsuit

Comparative advertising sometimes begets litigation. An advertiser can take some simple steps to discourage its targeted competitor from running to the courthouse.

You've seen comparative ads -- "Gleam-So-Bright toothpaste contains 43% more whitening ingredients than Brand X." Brand X's people will tear apart the Gleam-So-Bright ads in search of anything that might be factually false or arguably misleading to consumers. If Brand X's lawyers think that they have a shot at a false-advertising claim, then Gleam-So-Bright can expect a cease-and-desist letter, or even a lawsuit (possibly without warning).

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UpShot found this out last month. UpShot is the provider of an on-line customer-relationship-management (CRM) system. It claimed in some of its ads that customers preferred UpShot's CRM solution by 2 to 1 over that of competitor Salesforce.com. It also claimed that the Salesforce offering lacked support for Microsoft Outlook. In July 2003, Salesforce filed a lawsuit for false advertising, unfair competition, and unfair business practices. See story.

Technically, Salesforce has the burden of proof. As a practical matter, however, UpShot will have to defend the truth of its advertising claims. Even if UpShot's advertising claims are bulletproof, the company still will have to spend a good bit of money, and a great deal of management bandwidth, in document production, depositions, interrogatory responses, motion practice, and trial preparation.

The UpShot case also illustrates why it's often preferable to be very specific about the version of the competitor's product that you're targeting in your comparative ad. The instant that your claims arguably become outdated, you may be in danger of being sued.

Possible lessons: If you're going to do comparative-advertising:

1) Try to make sure that your claims are as factually bullet-proof as possible.

2) Try to collect hard evidence in advance to support your factual assertions (your lawyer will thank you).

3) Consider the risk-reward ratio -- how much incremental benefit will you get from doing the specific comparison, versus how much additional risk are you courting by doing so.

4) Consider including a footnote with additional factual data, perhaps including (i) the applicable version numbers of the products in question and (ii) the date as of which your data is current.

(Of course, don't rely on this as a substitute for legal advice; click on the "Disclaimers & cautions" link at the top right of this page.)

August 14, 2003 in Marketing | Permalink

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