United States: Litigating and Resolving Advertising Disputes

Last Updated: August 6 2015

I. Introduction

A. This outline provides an overview of the actions an advertiser can take when it believes a competitor’s claims are unsubstantiated or otherwise false and misleading and the pros and cons of the various approaches, which include:

  1. Direct contact with the competitor/demand letter
  2. Direct contact with the media/networks
  3. Initiating a proceeding with the NAD (National Advertising Division, the advertising industry’s self-regulatory organization)
  4. Initiating litigation (under the Lanham Act or state laws that pertain to deceptive trade or business practices)
  5. Filing a complaint with the Federal Trade Commission
  6. Filing a complaint with a state Attorney General
  7. Initiating a counter-campaign or public relations effort

B. An advertiser may pursue one or more of these actions, often simultaneously, or sequentially if one or more options has been pursued but did not result in a favorable resolution.

C. This outline will also examine in particular the factors that may assist an advertiser in determining whether to pursue a lawsuit under the Lanham Act or an NAD action and how federal courts have treated NAD decisions in Lanham Act litigations. Finally, the outline provides a summary of some interesting advertising cases that we will discuss at today’s presentation. (See Case Summaries.)

II. Direct Contact with Competitor/Demand Letter

A. Direct contact with a competitor may be in the form of letters between CEOs, meetings or phone conversations of outside and/or inside counsel, etc.

B. Pros:

  1. Direct contact with the competitor may provide a fast resolution if you can get the competitor to agree to resolve the dispute.
  2. It may help develop or maintain a good working relationship with your competitor while demonstrating that you are keeping an eye on what they are doing.
  3. It can be prepared quickly, and may be a good first step, unless there is immediate and irreparable harm being caused by your competitor’s campaign.
  4. It demonstrates you have made a good faith attempt to resolve the dispute which may be useful in subsequent proceedings. Note that it is generally a prerequisite to initiating a network challenge.
  5. Cost can be minimal.

C. Cons:

  1. There is no guarantee your competitor will agree to your demand and generally there is no ability to enforce any understanding you may reach if your competitor later changes its mind.
  2. An offensive ad will continue running while you await your competitor’s response (setting a time limit for response is a good idea.).
  3. You should be prepared to take additional steps to maintain credibility.
  4. It could give your competitor time to launch a counter-offensive before you have had the time to act.

III. Direct Contact with Media/Networks

A. Pros:

  1. Major networks have advertising standards and procedures that apply to challenges.
  2. You may succeed in getting an offending ad off the air in a particular media outlet, although ads generally continue to run during a challenge.
  3. This can provide a fast resolution, but the timing of a resolution, if any, is unpredictable.
  4. It can provide the same result as initiating litigation and getting a temporary restraining order for minimal cost.

B. Cons:

  1. Such an approach may require you to work with many outlets simultaneously, some of which may have no procedure for handling disputes between advertisers and can lead to conflicting results.
  2. Your competitor may also file a complaint with the network challenging your ads.
  3. Networks are sometimes reluctant to take a major advertiser’s ads off the air (since the advertiser can be a significant source of revenue).
  4. There is no guarantee that the ad won’t be shown somewhere else (e.g., a network challenge won’t prevent the ad from running on cable).
  5. No appeal available.

IV. NAD Complaint

A. The National Advertising Division (NAD) of the Council of Better Business Bureaus (CBBB) is the advertising industry’s self-regulation forum for resolving disputes over truth and accuracy in national advertising claims. The NAD’s dispute resolution service is intended to be faster, less costly, and more private than litigation. Claims are brought by competitors or by the NAD itself.

B. NAD accepts written submissions from the advertiser and the challenger and issues a final decision which is published in the NAD Case Reports. When reviewing a case, the NAD relies on and refers to:

  1. The CBBB Code of Advertising
  2. NAD’s own precedent, as reflected in previously published NAD case reports
  3. FTC Guidelines and Rules (e.g., FTC Guides Concerning Use of Endorsements and Testimonials in Advertising; FTC Guide Concerning Use of the Word “Free” and Similar Representations)
  4. Specific industry laws (e.g., Dietary Supplements Health and Education Act)
  5. FTC administrative rulings
  6. State and federal court decisions
  7. Professional expertise and judgment of NAD

C. Participation in the NAD process is voluntary, as is compliance with NAD’s final rulings. The only remedy that NAD can provide is a request that the advertiser modify or discontinue its advertisement if NAD finds that the claim in the ad is not adequately substantiated or is otherwise not true or accurate. The NAD encourages compliance by reminding advertisers that it routinely refers cases of non-compliance to the Federal Trade Commission. The FTC has repeatedly and publicly said that referrals from NAD “go to the top of the pile.” NAD decisions can be appealed to the National Advertising Review Council.

D. Pros:

  1. It is an informal proceeding.
  2. NAD attorneys are experts in evaluating ad claims.
  3. The proceedings are not publicized and submitted documents do not become part of the public record (although the NAD usually issues a press release when a decision is issued and includes a report in its case reports). The NAD has rules to protect the confidentiality of submitted documents.
  4. Although written statements and supporting documents are submitted, there is no discovery.
  5. An NAD decision can be appealed to National Advertising Review Board (“NARB”).
  6. The process is relatively inexpensive. Filing fees are $3,500 for Corporate Partners of the Council of Better Business Bureaus; and $6,000 to $20,000 for non-Partners depending on their annual revenue.

E. Cons:

  1. A resolution may take 3-6 months at NAD, plus time for any appeals. A competitor’s campaign may have reached the end of its life by the time the case is resolved.
  2. NAD review is limited to national advertising although NAD stretches to keep jurisdiction.
  3. Additional costs may be incurred for counsel fees, tests, surveys, experts, etc.
  4. NAD decisions have little or no precedential value with courts.
  5. The primary way NAD encourages compliance with its decisions is to remind participants that non-compliance is referred to the FTC.
  6. There are no monetary damages.

V. Litigation

A. The federal Lanham Act, 15 U.S.C. § 1125(a)(1), allows an advertiser to file a claim to recover for injury resulting from false and/or misleading claims made by competitors. A plaintiff must show:

  1. The competitor’s ad contains a false statement of fact about its own or another’s product.
  2. The statement deceives or has a tendency to deceive.
  3. The statement is material (i.e., it affects the purchasing decision).
  4. The statement appears in commercial advertising in interstate commerce.
  5. The statement is likely to cause injury.

B. Interim Injunctive Relief:

  1. Obtaining interim injunctive relief (a temporary restraining order or preliminary injunction) will require you to establish a likelihood of success on the merits, the balance of equities/hardships weighing in your favor, and a likelihood of irreparable harm without the requested relief.
  2. In Lanham Act cases, where plaintiff can demonstrate that the challenged claim is literally false (or false by necessary implication), deception is presumed without the need for consumer perception survey evidence. Literal falsity means that in context, the clear meaning of the statement is unambiguously false. At the interim injunction stage, a plaintiff will also generally benefit from a presumption of irreparable harm in literal falsity cases.
  3. For establishment claims (“tests prove xx”), a plaintiff need not prove the claim itself false, but only that the tests on which the claim are based are inherently unreliable as support or irrelevant to the claim. The same presumptions will apply as in literal falsity cases.
  4. To the extent a claim is literally true but impliedly false (e.g. because of multiple potential readings or real-world conditions which alter the depicted results), a court will require evidence of actual consumer confusion, generally through consumer perception testing, prior to granting relief.

C. Pros:

  1. A TRO (temporary restraining order) or PI (preliminary injunction) will suspend offending ads immediately. Although difficult to obtain, injunctive relieve is critical where the ads are causing long-term damage to your brand.
  2. Filing a claim under the Lanham Act allows you to forum shop; some jurisdictions have more developed advertising law than others, which can be an advantage.
  3. Remedies may include damages and requiring your competitor to run corrective advertising (though this is rarely granted).
  4. Attorneys fees and costs can be awarded to the prevailing party in “exceptional” cases.
  5. Filing a litigation sends a message to your competitor that you are serious.

D. Cons:

  1. Counterclaims are possible
  2. Discovery and trial, if required, will demand substantial time from your businesspeople and ad agency.
  3. Most documents will become part of the public record, and press coverage may be substantial.
  4. Litigating a Lanham Act claim can be very expensive. Filing fees are minimal, but fees for outside counsel, experts, consumer surveys and testing firms can be substantial.
  5. Resolution (other than a TRO/PI) may take a very long time.
  6. There may be a negative public relations backlash that is difficult to control, particularly if an injunction is denied.

VI. FTC Complaint

A. While there is no private right of action under Section 5 of the FTC Act, an advertiser can file a complaint with the Federal Trade Commission (FTC) asking it to investigate and file a complaint against a competitor for violating Section 5, which prohibits false and deceptive acts or practices. An ad that clearly causes consumer harm is more likely to be of interest to the FTC than a mere dispute between competitors.

B. Pros:

  1. FTC intervention will be taken very seriously by a competitor.
  2. The cost is minimal unless outside counsel is engaged.
  3. The FTC can act very quickly if it chooses to.

C. Cons:

  1. Once you petition the FTC, you have no control over the proceeding and you will have little or no knowledge of the investigation if the FTC acts on your petition. This also means there will be little or no publicity about an investigation.
  2. There is no guarantee that any action will be taken at all. The FTC handles an extremely small number of national advertising cases.
  3. There is no formal process or timetable. It could take a long time before it is resolved.
  4. When you involve the FTC, it may lead to the FTC having a dialogue with your competitor and/or examining industry practices. Therefore, be sure you have “clean hands” regarding your own practices.

VII. State Attorney General Complaint

A. An advertiser can also file a complaint with a state Attorney General alleging that a competitor is violating state unfair business practices or consumer protection statutes.

B. Pros:

  1. Some state AGs (and even some local District Attorneys) are very aggressive in pursuing deceptive advertising claims.
  2. An AG investigation can trigger negative PR for your competitor.
  3. Involving the AG is an excellent resource for regional advertisements if the AG believes that consumers are injured by the false claims.
  4. The cost is minimal.

C. Cons:

  1. Involving the AG does not allow you any control over the proceeding.
  2. There is no guarantee that any action will be taken at all (advertising issues may not be a priority for your AG).
  3. There is no formal process.
  4. Timing is unpredictable; it may take a long time before it is resolved.
  5. Remedy is limited by jurisdiction (i.e., a state AG’s jurisdiction extends only to the boundaries of the state).

VIII. Lanham Act Lawsuit vs. NAD Action

A. Type of claim: An NAD action is limited to national advertising; the Lanham Act encompasses a broader range of claims.

B. Burden of proof: A Lanham Act claim requires you to meet a higher burden of proof than in an NAD proceeding; the plaintiff bears the initial burden of proof to demonstrate that the advertising is either literally false, or while literally true, is nonetheless misleading. The defendant does not need to justify its advertising practices until the plaintiff has established the false or misleading nature of the advertising at issue.

  1. Additionally, where a challenger does not present NAD with a consumer survey evidencing that the challenged advertisement conveys a deceptive message to consumers, NAD will substitute its judgment and determine the reasonable consumer take-aways. When seeking a preliminary injunction, however, “full-blown consumer surveys . . . are not an absolute prerequisite” but “the movant . . . must present evidence of deception” or consumer confusion. Scotts Co. v. United Indus Corp., 315 F.3d 264, 276 (4th Cir. 2002); see also Millenium Import Co. v. Sidney Frank Importing Co., No. Civ. 03-5145 JRT/FLN, 2004 WL 1447915, at *7 (D. Minn. June 11, 2004) (explaining that NAD determined the ad deceived and misled consumers but made the determination without the benefit of consumer surveys).

C. Cost: An NAD proceeding is relatively inexpensive compared to litigation. Lanham Act actions can subject you to enormous discovery burdens, substantial expenditures in evaluating scientific evidence or conducting consumer perception surveys, and to potentially damaging counterclaims that need to be defended.

D. Remedies: Compliance with an NAD proceeding is voluntary and no damage awards are available; a successful Lanham Act claim can result in an immediate TRO and/or damages and attorneys fees and costs.

E. Courts’ Treatment of NAD Decisions: Courts have questioned whether NAD decisions are admissible under the Federal Rules of Evidence in order to support the plaintiff’s or defendant’s case. See Expedia, Inc. v. Priceline.corn Inc., No.009-0712RSL, 2009 WL 4110851, at *1 (W.D. Wash. Nov. 23, 2009); Glaxosmithkline Consumer Healthcare, L.P. v. Merix Pharmaceutical Corp., Civ. No. 05-898(DRD), 2005 WL 5980802, at *1 (D.N.J. June 23, 2005) (denying motion to exclude NAD decision but holding that it could not “be used to prove the truth of the matters contained therein”). For example, in Rexall Sundown, Inc. v. Perrigo Co., 651 F. Supp. 2d 9 (E.D.N.Y. 2009), the defendant asserted a counterclaim of implied falsity with respect to certain of Rexall Sundown’s advertisements and argued that the NAD and NARB decisions analyzing the same claims constituted extrinsic evidence that the statements were misleading. The court rejected the argument and explained that NAD and NARB decisions, “like judicial findings, are generally characterized as inadmissible hearsay that cannot be used to prove the truth of the matter asserted.” Id. at 36-37.

  1. However, other courts appear to have permitted a party to rely on an NAD decision in a Lanham Act litigation. See, e.g., Millenium Import Co. v. Sidney Frank Importing Co., No. Civ. 03-5145 JRT/FLN, 2004 WL 1447915, at *7 (D. Minn. June 11, 2004) (noting that plaintiff “bolster[ed]” its argument by pointing out that NAD determined the ad deceived and misled consumers).

Case Summaries

National Advertising Division

The Proctor & Gamble Co.: Charmin Ultra Strong, NAD Case #5199 (Aug. 30, 2010)

Challenge: Kimberly-Clark Global Sales, LLC (“Kimberly-Clark”), maker of Cottonelle Ultra bath tissue, challenged certain claims and comparative demonstrations featured in advertisements by The Proctor & Gamble Company (“P&G”) for its Charmin Ultra Strong bath tissue. Specifically, P&G asserted that Charmin “leaves fewer pieces behind than [Cottonelle]” and “holds up better.” A comparative demonstration of Charmin versus Cottonelle utilizing a felt sloped surface reinforced the “pieces/no pieces” message, as the demonstration depicted Cottonelle leaving behind large, visible pieces of toilet paper, whereas the Charmin felt was clean with no visible pieces. Similarly, the Charmin television commercials featured an animated mother and baby bear comparing Charmin against Cottonelle. After the baby bear uses Cottonelle, the mother inspects the baby, who has large pieces of toilet paper stuck to his rear end, and expresses her disapproval. A voiceover then announces, “You can’t pass inspection with pieces left behind.” After the bear uses Charmin, however, he is shown with “no pieces” and the mother bear gives her approval.

Advertiser’s Response: For its “holds up better” claim, P&G relied on wet tensile strength testing, which demonstrated that Charmin was two and a half times stronger than Cottonelle. In support of its “leaves fewer pieces behind” claim and related demonstrations, P&G pointed to its rub testing, in which the two competitive bath tissues were rubbed across black felt and the lint left behind was analyzed. P&G also relied on actual consumer-use testing, where subjects used the bath tissues following a bowel movement and then were examined by clinicians to determine whether the bath tissue left “pieces behind.”

Decision: NAD determined that P&G’s tensile testing provided a reasonable basis for its “holds up better” claim. NAD also determined that P&G provided a reasonable basis for its “fewer pieces left behind” claim, as P&G’s clinical study tested the competitive products as they are actually used by consumers. However, NAD recommended that P&G discontinue the product demonstrations because they exaggerate the respective performance of the two products and convey the misleading message that Charmin leaves no pieces behind. Although the voiceover accompanying these demonstrations stated “fewer” pieces left behind, NAD determined that this language was directly contradicted by the visual representation and could not detract from the overarching and misleading message of “no pieces” that was conveyed to consumers by the “impactful” demonstrations.

Frito-Lay North Am., Inc.: SunChips Sancks, NAD Case #5237 (Oct. 19, 2010)

Challenge: NAD, as part of its routine monitoring program, requested that Frito-Lay North America, Inc. (“Frito-Lay”) provide substantiation for the environmental benefit claims disseminated in print advertising for its SunChips snacks, specifically: “My chips are made with SOLAR POWER” and “In California, SunChips snacks are made with the help of the sun.” (The second claim was accompanied by the disclaimer, “Solar collectors at one of our plants in Modesto, California capture solar energy to help make SunChips snacks.”)

Advertiser’s Response: Frito-Lay represented to NAD that it had permanently discontinued the claim “My chips are made with solar power” prior to NAD’s inquiry and thus did not provide any substantiation with respect to that claim. To support the claim “In California, SunChips snacks are made with the help of the sun,” Frito-Lay explained that 100% of the Sun chips snacks made in California are made with the help of solar energy. Frito-Lay also pointed out that its plant in Modesto, California represents up to 25% of its production of Sun Chips across the United States. However, Frito-Lay informed NAD that it had also decided to voluntarily discontinue this claim.

Decision: NAD determined that Frito-Lay’s decision to discontinue the claim “In California, SunChips snacks are made with the help for the sun” was necessary and proper because the claim could reasonably convey the misleading message to consumers that all SunChips snacks are made in factories that were one hundred percent solar-powered. NAD noted that the disclosure did not eliminate the risk of such a false consumer-takeaway, especially in light of the fact that the claim appeared in the context of a shining sunny wheat field, blue skies and a sun-kissed woman. NAD explained that the disclosure contradicted, rather than cured, the inaccurate message.

Ocean Spray Cranberries, Inc.: 100% Juice Fruit & Veggie, NAD Case #5205 (Aug. 17, 2010)

Challenge: Campbell Soup Company (“Campbell’s”), maker of the V8 line of vegetable and fruit juices, challenged claims by Ocean Spray Cranberries, Inc. (“Ocean Spray”) concerning the relative amount of vegetable juice in Ocean Spray’s 100% Juice Fruit & Veggie juice product. The challenged claims included: 2 servings of fruit and vegetables* (*combined); the fruits you love mixed with the veggies you need: a farm stand in every bottle; the tastiest way to drink your veggies; the extra nutrition of vegetables! Every 8 oz glass has 2 full servings of fruits and vegetables plus the antioxidant vitamins A, C, and E.” Campbell’s asserted that such claims conveyed the false message to consumers that the Ocean Spray 100% Juice Fruit & Veggie juices contain equal amounts of fruit and vegetable juice, when, in fact, the product contains approximately 75% fruit juice and 25% vegetable juice. Additionally, Campbell’s contended that an in-store display for 100% Juice Fruit & Veggie touted (in the silhouette of a V8 V-Fusion bottle and under the headline “Drink Your Veggies”) “40% more for your money” than the “other veggie brand,” thus misleadingly suggesting to consumers that the vegetable and fruit juice components of Ocean Spray’s 100% Juice Fruit & Veggie are comparable to V8’s V-Fusion product, which is half vegetable juice and half fruit juice.

Advertiser’s Response: Ocean Spray contended that it did not convey any express or implied messages about the relative amounts of fruit and vegetable juices in the 100% Juice Fruit & Veggie drink. Ocean Spray noted that after the product name, the most prominent element of its Fruit & Veggie product packaging was the names of fruits (not vegetables) and a visual depiction of large fruits with “a few carrots peeking out from behind, clearly emphasizing fruit over vegetable.” Neither party submitted consumer perception evidence. With respect to the “40% more” claim, Ocean Spray contended that the claim was simply truthful: at retail prices, the consumer receives 40% more juice (64 ounces) with Ocean Spray’s product for the same amount of money as other fruit-and-vegetable juice products (46 ounces), including V8 Fusion.

Decision: NAD recommended that Ocean Spray modify its 100% Juice Fruit & Veggie product label so that the vegetable content is disclosed in a clear and conspicuous manner. Additionally, NAD determined that consumers could reasonably understand claims referring to “2 servings of fruits and vegetables” (which were included on the product label as well as in television commercials and in-store promotions and displays) to mean that the product contains one serving of vegetables and one serving of fruit, which is an unsupported take-away. Thus, NAD advised that these statements should be revised to more clearly convey to consumers the amount of vegetables in every 8 ounce glass of 100% Juice Fruit & Veggie. With respect to the “40% more” claim, NAD determined that such claim was in fact a straightforward price comparison, and nothing on the display drew the consumers’ attention to the vegetable content of competing brands or implied that Ocean Spray’s product had the same vegetable content of such other brands.

The Proctor & Gamble Co.: Swiffer Dust & Shine Furniture Spray with Febreeze Freshness, NAD Case #5141 (Feb. 5, 2010)

Challenge: S.C. Johnson & Son, Inc. (“S.C. Johnson”) challenged claims made in a television commercial by the Proctor & Gamble Company (“P&G”) for its Swiffer Dust & Shine Furniture Spray with Febreze Freshness (“Swiffer with Febreze”), such as: You’ll love Swiffer Dust & Shine so much, you may never go back to your old furniture polish (spoken while a yellow aerosol can appeared on screen and the song “Love Stinks” was played); the only furniture polish with Febreze freshness; eliminate odors while you clean and condition; and so your furniture is Swiffer-clean and your home is Febreze-fresh. Specifically, S.C. Johnson alleged that the commercial conveyed the false and misleading implied messages that S.C. Johnson’s Pledge furniture polish has an unpleasant odor and that Swiffer with Febreze is as effective and long-lasting as Febreze air fresheners in deodorizing a room and keeping it smelling fresh.

Advertiser’s Response: P&G countered that the commercials conveyed only truthful and accurate express and implied messages. P&G explained that its use of “love stinks” was simply a play on the relationship theme of the commercial (which featured a heartbroken “man” (the competitor’s traditional furniture polish) attempting to win back his love (the woman cleaning). Furthermore, P&G argued that its Swiffer with Febreze was repeatedly identified throughout the commercial as a furniture spray and was used throughout the commercial on various surfaces; thus, P&G asserted, consumers could not possibly understand from the commercial that Swiffer with Febreze works as well as Febreze air deodorizers or is somehow an equivalent to that line of products. Additionally, P&G submitted testing demonstrating that its Swiffer with Febreze does in fact help reduce odors on surfaces at the 95% confidence level.

Decision: NAD concluded that the challenged commercial simply conveyed the truthful message that P&G’s Swiffer with Febreze offers the air-freshening fragrance benefits of Febreze whereas other products do not; the commercial did not convey the implied message that S.C. Johnson’s Pledge product has an unpleasant smell. Specifically, NAD explained that use of the song “Love Stinks” was consistent with P&G’s theme of unrequited love and break-ups (which had also been featured in other commercials) and that the overriding message conveyed by the lyrics was that it is love that “stinks,” not Pledge. NAD further determined that consumers were unlikely to take away the understanding from the commercial that Swiffer with Febreze was as effective as Febreze air freshening products with respect to controlling odor and keeping a room smelling fresh over time. The commercial only suggested that Swiffer with Febreze is a furniture polish with the added benefit of some odor reduction benefits. This decision was affirmed by NARB.

Kent Nutrition Group, Inc.: World’s Best Cat Litter, NAD Case #5301 (Mar. 9, 2011)

Challenge: Clorox Pet Products (“Clorox”), makers of makers of Fresh Step and Scoop Away brand cat litter products, challenged advertising by World’s Best Cat Litter (“WBCL”) for its World’s Best Cat Litter products line. Specifically, Clorox asserted that WBCL makes overall superiority, comparative performance, establishment, endorsement, comparative safety, and environmental claims on its product packaging, on the WBCL website, and in other media that convey express and implied messages to consumers that WBCL cannot substantiate. Some of the challenged claims include: With HIGHLY SUPERIOR PERFORMANCE, proven benefits, and 100% all-natural ingredients, World’s Best Cat Litter is the only litter that can call itself ‘the best’; scientifically proven; ends odor the best; clumps the quickest; scoops the easiest; patented clumping formula; save time and money; lasts the longest; pet and people safe; unlike clay litters, there’s no silica dust for you or your cat to breathe; renewable; 100% biodegradable; and septic-safe and flushable.

Advertiser’s Response: WBCL declined to participate in NAD’s self-regulatory process

Decision: NAD referred WBCL’s advertising to the FTC for review.

S.C. Johnson & Son, Inc.: Ziploc Evolve, NAD Case #5225 (Sept. 27, 2010)

Challenge: NAD, through its routine monitoring program, requested that S.C. Johnson & Son, Inc. (“S.C. Johnson”) provide substantiation for certain claims made in print and television advertising for S.C. Johnson’s Ziploc Evolve plastic bags, specifically: Introducing Ziploc Evolve. The new ultralight bag that’s better for the environment. Made with 25% less plastic; and Made with wind energy* (*Made with a combination of renewable energy and energy from traditional sources). NAD also requested that S.C. Johnson address the issue of whether these claims implied that Ziploc Evolve is manufactured wholly from wind energy.

Advertiser’s Response: S.C. Johnson explained that Ziploc Evolve was created as part of the company’s commitment to create less waste and reduce reliance on fossil fuels. The bags are made from a new resin that contains approximately 25% plastic without sacrificing performance. Additionally, S.C. Johnson asserted that it uses significant amounts of wind energy at the plant where the Evolve bags are manufactured and that, as a result, more than 29 tons of greenhouse gases are kept out of the atmosphere each year. S.C. Johnson also contended that the claim “Better for the Environment” is sufficiently qualified by the narrow, specific and substantiated claims about less plastic and wind energy.

Decision: NAD agreed that S.C. Johnson has a reasonable basis for the claim that Ziploc Evolve bags “are made with 25% less plastic.” However, NAD continued to have concerns regarding the “made with wind energy” claim and S.C. Johnson’s disclosure (“*Made with a combination of renewable energy and energy from traditional sources”), which appeared in small type and “only fleetingly” in the television commercial. NAD determined that this disclosure was not sufficiently clear and conspicuous so as to appropriately qualify the overall “made with wind energy” message, which was underscored by the images of windmills and wind-blown fields. NAD thus recommended that the “made with wind energy” claim be modified to expressly communicate that the product is made “partially” from wind energy. Finally, NAD agreed that “Better for the Environment” was adequately qualified with substantiated claims.

Echostar Communications Corp.: DISH Network Satellite Television Service, NAD Case #5193 (June 29, 2010)

Challenge: Time Warner Cable, Inc. (“Time Warner”) challenged the truthfulness and accuracy of claims of “99% Signal Reliability” made by DISH Network, L.L.C. (“DISH”) in television and radio commercials, print advertisements, and on the DISH website. Time Warner contended that these claims convey the message that DISH customers actually receive a signal (television picture and sound) 99.9 percent of the time, not simply that DISH satellites are operational and emitting a signal at such a high percentage rate.

Advertiser’s Response: DISH responded that the most common-sense understanding of signal reliability is the availability of the DISH signal nationwide from the DISH satellite network, and DISH submitted data to NAD demonstrating that its signal availability actually exceeded 99.9 percent in the prior 16 months. DISH explained that it cannot predict cable outages due to “mother nature” but should be free to tout that it offers a product that is highly reliable in its ability to deliver a digital signal from its satellite network.

Decision: NAD determined that consumers could reasonably interpret the claim to mean that they will be able to receive a signal and enjoy DISH without interruption 99.9 percent of the time, a claim which was not supported by DISH’s data.

DIRECTV, Inc.: DIRECTV, NAD Case #5208 (Aug. 25, 2010)

Challenge: Comcast Cable Communications LLC (“Comcast”) challenged claims by DIRECTV, Inc. (“DirecTV”) touting DirecTV’s “On Demand” service, 130 high definition channels, “99.9% worry-free signal reliability,” and the purported benefits of DirecTV over Comcast, such as more channels and better picture. Comcast charged that DirecTV does not offer “On Demand” as consumers reasonably understand that service, as it can take hours for DirecTV’s content to fully download and be available for viewing. Comcast also claimed that DirecTV does not in fact offer over 130 different channels and was “double counting” both NY and LA feeds of major networks and including standard definition and pay-per-view channels in its high definition count. Comcast also contended that DirecTV’s “better picture” claims are false and misleading because they are based solely on the 1080p picture quality, which is only available for certain movies and the small percentage of customers who own high definition television sets which can actually display this high quality picture format. Finally, Comcast challenged DirecTV’s “99% signal reliability” claims as misleading because customers “rightfully and reasonably” expect that the figure represents the percentage of time that they actually will receive DirecTV service without any disruption.

Advertiser’s Response: DirecTV countered that it does in fact deliver over 130 HD channels and that pay-per-view channels are properly included in that number. DirecTV also responded that it offers On Demand in the sense that all consumers understand it, in that consumers are able to begin watching content whenever they choose, and even movies will be downloaded within 2 minutes, well within their playing time, so that consumers are never waiting for their programming. With respect to its “Best HD Picture” claim, DirecTV emphasized that a substantial percentage of consumers own televisions capable of displaying 1080p quality. To support its signal reliability claims, DirecTV submitted internal data and an FCC memorandum purporting to show that its signal is operational over 99.9% of the time.

Decision: NAD determined that DirecTV provided a reasonable basis for its “On Demand” claim because consumers understand that service as offering programming when they want to view it, and DirecTV’s On Demand content is available for viewing whenever consumers choose. NAD also found that DirecTV substantiated its “over 130 HD channels” claim and did not “double count” to arrive at that number. With respect to the “better picture quality” claims, NAD recommended that DirecTV modify such claims by specifying either the number of movies and/or programs available in the high display quality or otherwise indicate that not all movies and/or programs are available in such high quality format. Finally, NAD determined that DirecTV’s 99.9% reliability claims could reasonably convey to consumers that they will receive uninterrupted DirecTV television service at such a high percentage rate and thus recommended that DirecTV discontinue the claim.

Heartland Sweeteners. LLC and Ganeden Biotech, Inc.: Nevella with Probiotics, NAD Case #5203 (Aug. 9, 2010)

Challenge: McNeil Nutritionals (“McNeil”), manufacturer of Splenda® No-Calorie Sweetener, challenged claims by Heartland Sweeteners and Ganeden Biotech, Inc. (“Heartland”) for Nevella with Probiotics, a no-calorie sweetener supplemented with probiotics derived from Ganeden Biotech’s patented GanedenBC30 strain. Specifically, McNeil challenged Heartland’s health benefit claims (Nevella no calorie sweetener now comes with all the health benefits of probiotics; Nevella with probiotics provides you with a health, tasty way to cut calories from your diet while gaining the added benefits of probiotics; Provides digestive and immune system health benefits in every packet); Heartland’s comparative claims (GanedenBC30 is 10 times more effective than yogurt in delivering live cells* (* in an independent lab study of a simulated gastric environment with a pH of 2.0 for two hours, GanedenBC30 delivered more than ten times the live cells than a leading probiotic yogurt); and the implied claim that consumers will receive digestive health and immune system support by using Nevella with Probiotics. McNeil asserted that these claims are unsubstantiated and should be discontinued, as Heartland failed to actually test its Nevella product and instead insufficiently relied on studies of the Ganeden BC probiotic strain.

Advertiser’s Response: Heartland argued that it is not disputed that probiotics provide digestive and immune health benefits and that studies on Ganeden BC published in journals are an appropriate basis for the challenged claims.

Decision: NAD noted that product performance claims should be supported by competent and reliable evidence, the gold standard being studies on the product itself, and thus recommended that the challenged efficacy claims for Nevella with probiotics, including that the product provides all the immune system and digestive health benefits of probiotics, be discontinued given the absence of any product testing. NAD also recommended that the comparative superiority claims against yogurt be discontinued given the lack of substantiation (i.e., one study examining one probiotic yogurt and a Consumer Reports article, which did not even evaluate the GanedenBC30 strain of probiotics).

Lanham Act

POM Wonderful LLC v. Welch Foods, Inc., 2010 WL 4633549 (C.D. Cal. Sept. 13, 2010)

Case: POM Wonderful LLC (“POM”) asserted a Lanham Act claim against Welch Foods, Inc. (“Welch’s) based on Welch’s use of the word “pomegranate” in its 100% White Grape Pomegranate (“WGP”) product, which POM claimed actually contained little to no pomegranate juices. Welch’s countered that any recovery by POM was barred by the equitable defense of unclean hands, because POM, prior to filing the lawsuit, had been engaged in substantially the same conduct, i.e., false advertising, for which it was suing Welch’s.

Result: Jury verdict in favor of POM finding: (i) that the name and marketing of Welch’s WGP product was deceptive since WGP is mostly grape juice; and (ii) that Welch’s intended the name, label, packaging, or advertising to mislead consumers; but (iii) that POM failed to prove that it suffered any injury, measured either by lost sales or loss of goodwill stemming from Welch’s conduct.

AT&T Mobility LLC v. Cellco P’ship d/b/a Verizon Wireless (N.D. Ga. 2009)

Case: AT&T Mobility LLC (“AT&T”) sought a temporary restraining order and permanent injunction against Cellco Partnership d/b/a Verizon Wireless (“Verizon”) in connection with Verizon’s advertisements featuring maps comparing Verizon and AT&T’s 3G wireless coverage. AT&T argued that these “There’s a map for that” advertisements misled consumers by suggesting that AT&T does not have wireless data coverage throughout much of the United States. Verizon responded that its advertisements are truthful and that the advertisements indicate that the maps only apply to 3G coverage and not regular 2.5G services.

Result: Temporary restraining order denied. AT&T launched a responsive advertising campaign shortly thereafter.

Nat’l Prods., Inc. v. Gamber-Johnson LLC, 669 F. Supp. 2d 1232 (W.D. Wash. 2010)

Case: National Products, Inc. (“National”), seller of vehicle laptop mounting systems, brought an action against Gamber-Johnson LLC (“Gamber-Johnson”), a competitor, alleging violations of the Lanham Act and state law based on purportedly false statements in a promotional video regarding the safety features of various parts of the respective companies’ mounting systems.

Result: $10 million verdict against Gamber Johnson, reduced by the Court to $500,000 after post-trial motions.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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