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October 15, 2003

Advertising Heartburn

Sometimes it seems there’s no shortage of object lessons about the troubles that over-enthusiastic advertising can cause. Procter & Gamble (P&G;) ran ads for a new heartburn product, Prilosec OTC. The ad copy read, "One pill. 24 Hours. Zero Heartburn" The ad copy apparently gave Johnson & Johnson heartburn of a different sort – it filed suit against P&G.;

In response to J&J;’s motion for a preliminary injunction, a federal judge in New York found that P&G; had engaged in false advertising. The judge prohibited P&G; from continuing its ad campaign pending a full trial. (Johnson & Johnson-Merck Consumer Pharmaceuticals Co. v. The Procter & Gamble Company, No. 03 Civ.7042(JES) (S.D.N.Y. Sept. 25, 2003).)

If the parties don't settle before trial, P&G; may find itself staring down the barrel of a big damages award for corrective advertising, under precedent such as one of my favorite case stories, that of U-Haul v. Jartran.

Literally False Claims

First let's take a quick look at the law of false advertising from 10,000 feet. It's actually pretty straightforward -- as Judge Sprizzo noted in the J&J; v. P&G; case, “To prevail on a false advertising claim, a plaintiff must establish that defendant's advertisements are either (1) literally false or (2) although literally true, likely to deceive or confuse consumers.”

Judge Sprizzo zeroed in on the first prong of this test, i.e., whether the P & G ads were literally false. That seemed to be a no-brainer, at least to the judge:

[T][he claim advanced by P & G's advertising--essentially, that 24 hours heartburn relief can be achieved with one pill of Prilosec OTC--is literally false. "One pill. 24 Hours. Zero Heartburn" simply does not equal "One pill. Wait 5 hours. Only then Zero Heartburn for the next 24 hours."
(Emphasis added.)

Coming Soon: J&J;’s Quest for a Damage Award?

P&G;’s legal troubles almost surely aren’t over. It likely will have to face J&J;’s claim for sizeable monetary damages. On that subject, I used to like to tell clients the story of the U-Haul v. Jartran case from the 1980s. Jartran was found liable for false advertising that compared its rental trucks and trailers to those of U-Haul. In the wake of the ad campaign, Jartran's sales had boomed, and U-Haul's sales had slumped. The court awarded damages to U-Haul in the amount of $40 million, representing:

  • the $6 million cost of Jartran’s ad campaign, on the theory that Jartran must have derived at least that much benefit from its ad campaign; plus
  • the $13.5 million cost of U-Haul’s corrective-advertising campaign; plus
  • another $20 million (in effect doubling the award) as a kind of punitive damages permitted by the Lanham Act in exceptional circumstances. The increase in damages presumably was motivated by what the trial court described as Jartran's “deliberately false comparative [advertising] claims.”
The $40 million damage award was upheld by the appellate court. U-Haul Intern., Inc. v. Jartran, Inc., 793 F.2d 1034 (9th Cir. 1986).

Possible Lessons

It doesn't take a rocket scientist to figure out the lessons here:

  • Be careful about the factual statements and implications that you put in your advertisements and other marketing materials.
  • Be even more careful if you're going to run ads comparing your products or services -- even implicitly -- with those of a competitor.

October 15, 2003 in Communications, Embarrassments / Bad Career Moves, Marketing | Permalink


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