Advertisement War Between Competitors: Fair Game Or Disparagement

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In words of Leo Burnett, “Good advertising does not just circulate information. It penetrates the public mind with desires and belief.” Advertising does not only sell a product, it makes the product an indispensable part of one’s life which becomes so necessary that without which a person cannot live a satisfied life.

Today’s dynamic business market revolves on the ideology of selling the idea that one brand is superior over another. Companies adopt different kinds of advertising techniques such as a covert advertisement or celebrity advertisement to bring their products to catch the attention of its consumers. Some of them even resort to making use of their competitor’s trademarks and comparing their products. Such form of advertising is known as comparative advertising.

Competitors go great lengths to gain an upper hand in the “eyeball wars,” and in the process, some of them end up disparaging competitor’s trademark. To discourage disparagement of competitor’s trademark during commercial advertisements/representations and ensure fair play between competitor’s, Sec 43(a)(1)(B) of Lanham Act was passed by the Congress.

According to the Act for representations to constitute commercial advertising or promotion under § 43(a)(1)(B) of the Lanham Act, they must be: (1) commercial speech; (2) by a defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing consumers to buy defendant’s goods or services (4) must be disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion within that industry.

There have been many cases where the competitors have locked horns to win the advertisement war, but as a foodie my favorite case is:

Pizza Hut, Inc. v. Papa John’s International, Inc.

Pizza Hut filed a case against Papa John’s claiming that the tagline used by in advertising by Papa John’s, “Better Ingredients. Better Pizza,” while comparing with Pizza Hut’s pizza’s is a clear violation sec 43(a)(1)(B) of Lanham Act.  The court went into the details of the case and stated that for an advertisement to be in violation of the Act mentioned above, it has to be seen in entirety but not in fragmented parts.

Papa John’s had put on record that it claimed better ingredients because it used the fresh sauce and filtered water vs. pizza hut’s remanufactured sauce and tap water, Pizza Hut did not deny or dispute any fact but claimed that it still did not make any difference in preparation of the dough. While Papa John lawyers argued that this statement “quite simply is not a statement of fact, but rather a statement of belief or opinion. A statement of opinion or belief conveys the speaker’s state of mind, and even though it may be accepted or rejected, but not proven true or false.”

The court after analyzing all the contentions put forth by both the pizza giants and analyzing the defense of puffery it held that Papa John’s advertisement, “Better Ingredients. Better Pizza.” standing alone is not an objectifiable statement of fact upon which consumers would be justified in relying. Thus, it does not constitute a false or misleading statement of fact actionable under section 43(a) of the Lanham Act. The court also laid down a two-point test that further explains Non-actionable “puffery’ defense.

Non-actionable “puffery” comes in at least two possible forms:

(1) An exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying; or

(2) A general claim of superiority over comparable products that are so vague that it can be understood as nothing more than a mere expression of opinion.

From the above case, it is clear that there is a fragile line of boundary between disparagement and fair game and competitors are always at a risk of being sued. However, this does not stop competitors from comparing their products with their competitors whether directly or indirectly to win the war.

 

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