Alt Legal Connect Session SummaryNothing Compares to Using Others’ Brands?: Limitations of comparative advertising
Alt Legal Team | February 06, 2023
On Monday, February 6, Richard Lehv, Senior Litigation Counsel, Fross Zelnick Lehrman & Zissu presented the session, “Nothing Compares to Using Others’ Brands?: Limitations of comparative advertising.” Richard explained strategies and best practices for comparative advertising, how to minimize likelihood of confusion, and more.
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Richard began by discussing early comparative advertising. In the 1960’s, networks wouldn’t permit naming competitors and brands would refer to “Brand X” or “a leading competitor” and leave it up to the consumer to determine which brand was being referenced. In 1972, TV networks began allowing competitors to be named and the Federal Trade Commission weighed in and supported the change.
Richard discussed an early case in 1962, Dior v. Alexander’s Department Store. Alexander’s went to Paris and had cheap copies of Christian Dior clothing made and ran a commercial showing women wearing the copied clothing and singing a song continually referencing Christian Dior. At the time, the commercial was allowed – the Second Circuit reasoned that Alexander’s had the lawful right to make the dresses and the lawful right to advertise them. Richard questioned whether the Second Circuit would come to the same conclusion today, believing it goes too far.
In another early case, Smith v. Chanel, Smith advertised his perfume as, “duplicate 100% perfect the exact scent of the world’s finest and most expensive perfumes and colognes at prices that will zoom sales to volumes you have never before experienced!” The Ninth Circuit determined that Smith was permitted to use this language to advertise his product. The Court reasoned that someone who has copied an unpatented product sold under a trademark can use the trademark to advertise their copy.
Chanel went back to court and proved that the product was not an exact copy of Chanel’s perfume. The District Court determined that Smith had made false misrepresentations in his advertising and therefore, the Court granted Chanel a permanent injunction, later affirmed by the Ninth Circuit. As a result, perfume copiers can no longer make claims that a scent is a “100% perfect copy”, rather, they can say “If you like Chanel No 5, you’ll like XYZ Scent.”
False Advertising Under Trademark Act Section 43(a)
The Trademark Act Section 43(a) states that anyone conducting false advertising can be found civilly liable by any person who believes they will likely be damaged by the ad.
Changes from prior law.
-Originally, it didn’t cover false claims about another person’s goods/services as well as your own goods/services.
-Only includes competitors, not consumers. Consumers cannot sue under 43(a) and must sue under state consumer protection laws.
Basic Rules of False Advertising
Richard described the basic rules of false advertising:
- If the Plaintiff can show that the ad is false on its face, the court can enjoin it without further evidence.
- If the ad is ambiguous, but capable of conveying a false message, the plaintiff must show through evidence of “consumer reaction” – generally a survey – what that false message is.
- The false message must be material: that is, it must affect purchasing decisions.
Next, Richard showed several commercials. First, in a commercial showcasing Caitlyn Jenner advertising Tropicana orange juice, showing the juice as made from fresh oranges, not concentrate, and describing the juice as “pure pasteurized orange juice.” Coca Cola sued Minute Maid, makers of Tropicana, claiming that the ad was false on its face. The Second Circuit determined that the ad was indeed false advertising because there is no such thing as “pure pasteurized orange juice” and enjoined the ad.
The next commercial claimed that ASPIRIN FREE EXCEDRIN “works better” than EXTRA STRENGTH TYLENOL. The only difference between the products is that Excedrin contains caffeine, but the Second Circuit found that the studies that the makers of Excedrin provided did not support the claim that Excedrin works better than Tylenol, and therefore enjoined the ad. The lesson: if you make a claim that one product works better, and you don’t have valid research to back it up, the ad is false on its face.
The next commercial for CLORTIMETON, an allergy relief medication, where the ad claimed Benadryl makes users drowsy whereas Clortimeton does not. The parties agreed that Clortrimeton is less likely to make people drowsy and that Benadryl does not make everyone drowsy. The SDNY found that the ad was not literally false but enjoined the ad based on surveys showing that consumers believed that Clortrimeton would not cause drowsiness but that Benadryl does. Based on the parties’ agreed finding and the consumer surveys, the SDNY enjoined the ad.
The next commercial was run by Mastercard, but American Express claimed that the ad was false, as it represented that it was difficult to get cash with an AmEx card and consumers would have to go to remote locations to get cash. The SNDY found that the ad was not false on its face, but that the ad was pure puffery – a claim that cannot be objectively verified that no one would take to be a representation of fact.
The last commercial shows the maker of TUMS stomach antacid advertising that its product contains calcium, while MYLANTA, its competitor, contains aluminum. The commercial merely states that Mylanta contains aluminum and played off a later-debunked study that aluminum could cause Alzheimer’s. Johnson & Johnson, the makers of Mylanta offered a survey showing that the ad, though literally true, was misleading that aluminum was a health hazard. The Second Circuit found that Johnson & Johnson had not proved its case, determining that the questions were leading and suggestive. The question was posed: What, if anything, does the commercial say about the aluminum in Mylanta? Almost 40% responded that the aluminum was unhealthy, meanwhile, the commercial said nothing about the aluminum in Mylanta being unhealthy. Richard warned that this case shows that the way you phrase a question can be highly suggestive.
Richard then described several other cases involving false advertising and how courts dealt with specific fact patterns including: Coors Brewing Co. v. Anheuser-Busch Companies, Inc., Polar Corp. v. Coca-Cola Co., McNeil-PPC, Inc. v. Pfizer Inc. Chobani Inc. v. Dannon Co., and MillerCoors LLC v. Anheuser-Busch Cos., LLC.
Alternatives to Suing
Richard discussed alternatives to law suits in federal courts including sending a cease and desist letter which can product a quick result, but also support a lawsuit if you end up needing to sue. You can also receive a response with an attempt to substantiate their claim. The only downside is that the party may respond by suing for a declaratory judgment.
If there is a national ad, you can go to the National Advertising Division of the Council of Better Business Bureaus. You simply write a letter and they will respond with a decision within 60 days. There is no discovery and no trial or hearing. However, there is no injunction available. There is an appeals process, but this could cause further delays.
You can also make claims before the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC). The FDA handles prescription drug labelling and advertising and labelling of over-the-counter products and the FTC handles advertising of over-the-counter products. There is no private right of action under the FTC.
Additionally, you can run your own comparative ad. This occurs frequently in the political ads context. Richard showed ads ran by George Bush and Bill Clinton as examples.
Right of Publicity
Another consideration when it comes to comparative and false advertising is the right of publicity. As an example, Richard showed a paparazzi image of Katherine Heigl carrying shopping bags from the popular New York-based drugstore Duane Reade. Duane Reade posted the image to its Instagram account, but Heigl opposed the use and filed a complaint. In New York, Civil Rights Law Section 51 states that the a person whose name, portrait, picture, or voice is used for purposes of advertising or trade without written consent, can seek equitable action, namely, an injunction. This law applies to both celebrities and non-famous individuals.
In addition to arguing that an ad is not false or misleading, an advertiser can argue that their use of another party’s trademark is fair use (see Section 33(b)(4) of the Trademark Act). As an example, Richard referenced the famous case, Tiffany & Co. v. Costco Wholesale Corp. where Costco sold diamond rings called the “Tiffany” ring and Tiffany claimed trademark infringement. Costco claimed fair use and argued that the word “Tiffany” simply referred to the setting, which is an industry term for a particular type of 6-prong setting. The district court agreed with Tiffany and awarded $19.4 million to Tiffany, but the Second Circuit reversed, finding that a jury could reasonably believe that Costco was not using “Tiffany” as a trademark, rather, it was being used descriptively. Ultimately, the case was settled.
Richard also discussed Rogers v. Grimaldi where famous director Federico Fellini directed a film “Fred & Ginger” about a pair of aging dancers who had an act called “Fred & Ginger.” Ginger Rogers sued, claiming that it infringed her right of publicity. The Second Circuit found that the movie was not a consumer product, rather, it was an expressive work entitled to First Amendment protection. Additionally, the Court found that the title of an expressive work is entitled to First Amendment protection. The Court developed a test to determine whether a work is an expressive work, entitled to First Amendment protection:
The Lanham Act will not bar the use of a title “unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.”
The Court determined that both the characters’ story and the title were entitled to First Amendment protection. The Court noted in a footnote that this narrow construction does not apply where the title of one work is confusingly similar to the title of another work.
Richard noted that the next question that arises is whether Rogers v. Grimaldi applies only to creative works. This question is currently being presented before the US Supreme Court in Jack Daniel’s Properties, Inc., v. VIP Products. The case involves the makers of Jack Daniels whiskey suing the makers of a dog chew toy shaped like the Jack Daniels whiskey bottle. The question to be determines is whether the chew toy an expressive work entitled to First Amendment protections as outlined in Rogers or whether it is simply a commercial product where the applicable test is likelihood of confusion.
Richard mentioned another fair use defense, nominative fair use. This came up in a case involving a telephone survey where one of the questions was: Who is your favorite member of New Kids on the Block? NKOTB opposed this use because the survey owners made money off of the band’s name anytime someone answered the question. The district court found that there is a three-part test to whether the use should be considered nominative fair use:
- Is the product “not readily identifiable without use of the trademark”?
- Only so much of the mark may be used as is “reasonably necessary to identify the product.”
- The user “must do nothing . . . that would suggest sponsorship or endorsement by the trademark holder.”
In this case, the court granted summary judgment for the creators of the survey, finding that the use was nominative fair use.