Competitor’s Comparative Advertising: Practical Guide and Best Practices in Winning Your Claims
Comparative advertising has become a valuable and effective tool in targeting the growing number of cost-sensitive consumers through advertisements that contrast products’ prices and qualities to alternative brands. A comparative advertisement specifically mentions a competitor by name for the purpose of comparing the advertiser’s product or service with a product or service of the competitor. The comparison can be done directly or indirectly. When comparisons are clearly identified, truthful, and non-deceptive, comparative advertising can be a powerful advertising tool. This advertising method is not without its pitfalls. A competitor’s false and deceptive campaigns have the potential to bring serious damages to your products and marketing efforts. Online providers have attempted to resolve comparative advertising issues by offering dispute resolution options via their websites. Brand owners also have the option of pursuing claims with the Federal Trade Commission and the National Advertising Division of the Council of Better Business Bureaus. Another option is pursue false advertising claims under the Lanham Act. However, there are certain factors to consider in pursuing and winning such cases so as not to impact the business and its bottom line.
In this two-hour LIVE webcast, our panel of thought leaders will discuss key issues regarding competitor’s comparative advertising. Speakers will cite and examine cases, provide valuable insight on regulatory updates and will offer tools and best practices to help you in winning your false advertising claims. A LIVE Q&A session is also included in this event.
Jami Gekas , Partner,
- Lawful comparative advertising: competitors have the right to say unflattering (or even nasty) things about the competition… as long as they are true! The FTC’s Policy Statement on Comparative Advertising encourages truthful comparative advertising and warns that the FTC will scrutinize self-regulatory and legislative attempts to restrain comparative advertising or make blanket prohibitions against “disparagement”.
- Considerations before launching a comparative ad campaign:
- Make your basis of comparison clear
- Timing is everything
- Know your market
- “Apples to apples” v. “apples to oranges”
- Unqualified general brand references may be considered line claims
- Make sure you have proper substantiation and reliable testing (Michael will elaborate)
- Be careful with implied claims (Norman will elaborate)
- Know your medium – different outlets may raise different compliance issues, e.g., online (William will elaborate)
- Confirm you are prepared to handle…
- A retaliatory ad
- and possible award of damages (Jeffrey will elaborate)
- Regulatory attention
- Negative publicity
- Make your basis of comparison clear
- If you are a target: practical considerations for bringing a challenge:
- Response in the marketplace, cease-and-desist letter, regulatory challenge, litigation or administrative complaint?
- Seeking expedited relief: when to move for a TRO or preliminary injunction
- Counterclaims (or counter challenges) are extremely common in false advertising matters, so before accusing a competitor of making a false comparative claim, review your own ads and make sure they are compliant and properly substantiated. Before bringing a counterclaim, a false advertising defendant should carefully weigh the leverage it expects to get from the counterclaim against the increased cost that will result from litigating an additional claim.
Norman C. Simon, Partner,
Kramer Levin Naftalis & Frankel LLP
When the Problem is Not What is Said, But What Isn’t…
How to Effectively Challenge Comparative Advertising That, While Literally True, Nevertheless Implies a Misleading and Harmful Message.
Topics on this subject will include:
- Whether to bring your challenge to an implied claim in federal court under the Lanham Act or at the National Advertising Division (NAD), and relevant considerations in deciding between the two, including burden of proof considerations applicable to establishing whether an implied claim is being made.
- How to meet your burden of proving what implied claim is being made, including best practices and common pitfalls in communication survey design, including:
- Issues related to population definition and sampling
- Issues related to Survey Questions and Structure
- The importance of Filter Questions
- The importance of Using of a Control
- Issues related to Coding and Data Analysis
- An obstacle presented by recent case law concerning when a court may refuse to consider survey evidence of consumer deception where “the meaning of a factually accurate and facially unambiguous statement” is clear in light of the context in which it is presented, such that no reasonable consumer could be misled by the challenged advertisement.
- The “false by necessary implication” doctrine, and the circumstances under which it may successfully be used by a challenger.
Michael T. Mervis, Partner,
- Comparative claims should be supported by consumer relevant testing.
- Testing should replicate actual consumer use conditions for the products at issue in the advertising.
- Although “stress tests” may reveal product performance differences, if they are not relevant to actual consumer use conditions they will not support comparative claims.
- Advertised comparative product differences should be based on test results that are statistically significant.
- Numerical differences in product performance, even if large, may not adequately substantiate a comparative claim if the differences are not statistically significant.
- Adopting a pre-test statistical plan is good practice, as it will help to ensure that the samplesize is large enough to yield statistically significant results.
- Wording of claims can impact the burden of proof.
- Especially in Lanham Act cases, how the claim is worded can impact the challenger’s burden of proof.
- E.g., an implied (non-literal) claim requires the challenger in a Lanham Act case to offer that the claim means what the challenger contends that it means.
- Claims that refer to supporting scientific testing (so-called “establishment claims”) only require a Lanham Act challenger to prove that the advertiser’s testing does not support the claim; the challenger need not prove through its own testing that the claim is affirmatively false.
- The more aggressive a claim is (e.g., literal and establishment claims), the more vulnerable it will be to a Lanham Act challenge.
William D. Schultz, Partner,
Merchant & Gould P.C.
- Use of comparative advertising in online keyword advertising. This subject relates to the purchase of keywords to generate online advertisements, generally on search engine results pages. This subject will touch on the legal agreements with the search engine providers, the case law, and methods to enforce against unwanted comparative advertising.
- Use of comparative advertising in online context based advertising. Context based advertising is advertising that is served based on surrounding content on the page. Many times, advertisers will not know where the ad will appear, which creates potential issues depending on the content of the advertisement.
- Use of comparative advertising in meta tags and other hidden online content. Meta tags are hidden text in the coding of a website that search engines use to locate and filter search results. Advertisers may use a competitor’s mark as part of its online content, which could create legal issues.
Jeffrey Klein, Principal,
- Identification of the framework for monetary recovery caused by a competitor’s comparative advertising. This subject will focus on recovery under the Lanham Act and includes plaintiff’s lost profits, disgorgement of defendant’s profits, and possibly corrective advertising.
- When seeking monetary recovery, identification of issues that should be considered and/or addressed. Topics that would fall under this subject include: historical reluctance to award damages, reflected in lower damage awards; disgorgement may provide larger damages, but theories regarding disgorgement of defendant’s profits may impact plaintiff’s ability to recover; and, discussion of any differences between jurisdictions.
- Discussion of specific considerations for comparative advertising when pursuing damage theories. For example, as plaintiff is mentioned in the advertisement, damages may be more easily proven. At the same time, an ability to prove actual damages may make it more difficult to recover under a theory of disgorgement of defendant’s profits.
Jami Gekas is an Intellectual Property partner in the Chicago office of Edwards Wildman. Jami represents her clients’ interests in connection with an array of advertising, marketing and traditional IP issues. The transactional side of her practice is focused on counseling e-commerce and start-up clients on ad clearance, claim substantiation, and legal compliance related to sweepstakes and contests, endorsements, mobile and new media, rebates/incentives, SEO marketing, green marketing, unsolicited email, privacy and other consumer protection issues. An experienced litigator, she also represents consumer product, retail, fashion and other clients in IP enforcement matters and adversary proceedings involving false advertising, unfair competition, and infringement. She has obtained favorable results in numerous federal district and appellate courts and is well-versed in the legal standards applicable to claims for expedited relief in competitor actions.
Jami Gekas is an Intellectual Property partner in the Chicago office of Edwards Wildman. Jami represents her clients’ interests in …
Norman C. Simon is a partner with Kramer Levin Naftalis & Levin LLP. As part of his varied commercial practice, Mr. Simon has litigated many advertising disputes under the Lanham Act and regularly represents clients in challenges before the National Advertising Division (NAD). He also has experience with consumer fraud and false advertising class actions. Mr. Simon counsels clients on prospective claims and has spoken on and authored several publications about advertising law. Mr. Simon has been recognized in New York Super Lawyers, Chambers USA and Legal 500 U.S., which has named him a “leading lawyer” in the advertising field for several years.
Norman C. Simon is a partner with Kramer Levin Naftalis & Levin LLP. As part of his varied commercial practice, …
Michael T. Mervis is a commercial trial lawyer resident in New York City and partner in Proskauer’s Litigation Department. Michael represents clients in Lanham Act and consumer class action false advertising cases. He regularly appears on behalf of advertisers in federal court preliminary injunction proceedings and trials, private arbitration and proceedings before the National Advertising Division of the Council of Better Business Bureaus and the National Advertising Review Board. Clients frequently call upon Michael for counsel regarding a variety of advertising law issues. He is recognized by US Legal 500 as “a rising star” and “one to watch” in the field of advertising law.
Michael T. Mervis is a commercial trial lawyer resident in New York City and partner in Proskauer’s Litigation Department. Michael …
Will Schultz is an intellectual property litigator and trial lawyer, representing clients in patent litigation, copyright litigation, trademark/trade dress litigation, and trade secret litigation. With a background in website development, his practice has an emphasis on Internet, electronics, and software issues. Dating back to college, Will has operated several online websites. Will’s background provides a unique insight into disputes related to online comparative advertising, domain names, social media, and keyword advertising. By understanding the technology from the corporate perspective, he works with clients to manage their online and offline presence in relation to their competitors. He has authored several articles and presented seminars regarding online advertising, Internet trademark surveys, software and social media patents, and protecting author’s online intellectual property rights.
Will Schultz is an intellectual property litigator and trial lawyer, representing clients in patent litigation, copyright litigation, trademark/trade dress litigation, …
Jeffrey A. Klein is a Principal in the Los Angeles office of LitiNomics, Inc., a firm specializing in providing financial and economic advisory services related to intellectual property rights. In this position, Mr. Klein focuses on the application of finance, economics and accounting to issues typically arising in complex business litigation. He has consulted on matters involving allegations of Lanham Act violations and unfair competition claims, including a number of engagements focused on quantifying the harm caused by a party’s alleged false advertising. His work also includes the study and measurement of the financial impact associated with alleged wrongful conduct involving breach of contract, infringement of other types of intellectual property and actions arising from tort claims.
Jeffrey A. Klein is a Principal in the Los Angeles office of LitiNomics, Inc., a firm specializing in providing financial …
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About Edwards Wildman
Edwards Wildman is an Am Law 100 firm with 600 lawyers in the US, UK and Asia. Its lawyers are known internationally for their work in private equity, venture capital, corporate and finance, complex litigation, insurance and reinsurance and intellectual property. The Intellectual Property group practices in patent and trademark portfolio strategy, prosecution, counseling, and opinions, as well as copyright and domain name protection, IP litigation, and media and technology licensing and transactions. Clients turn to Edwards Wildman for help structuring their advertising, promotions and sales campaigns to address regulatory compliance and navigate privacy, data security and consumer protection issues. Attorneys regularly review advertising copy and labeling requirements and oversee campaign implementation. Decades of brand strategy and counseling experience, combined with robust support systems and talent, ensure that our clients have the freedom and security to grow their business.
About Kramer Levin Naftalis & Frankel LLP
Kramer Levin Naftalis & Frankel LLP is a full-service law firm with offices in New York, Silicon Valley and Paris. The firm has one of the nation’s premier advertising practices, and regularly represents advertisers in Lanham Act and consumer fraud class action litigation, as well as before the National Advertising Division (NAD). U.S. News & World Report, Chambers USA and Legal 500 U.S. consistently rank Kramer Levin’s advertising practice as among the best in the nation.
Proskauer is a global law firm advising clients worldwide from offices in Beijing, Boca Raton, Boston, Chicago, Hong Kong, London, Los Angeles, New Orleans, New York, Newark, Paris, São Paulo, and Washington, DC. The firm has broad experience in all areas of practice important to businesses, not-for-profit institutions and individuals.
The partners in Proskauer’s False Advertising practice litigate false advertising cases in federal and state courts and before the NAD and NARB, with a tremendous track record in both jury and non-jury cases, and counsel clients on advertising substantiation law and strategy. They bring to these tasks a deep understanding not only of the law, but also of scientific test methods, statistics and consumer surveys.
Proskauer’s experience in the False Advertising area is unparalleled. Chambers USA, US Legal 500 and U.S. News and World Report-Best Law Firms consistently rank their capabilities as Band One.
About Merchant & Gould P.C.
Merchant & Gould has engaged exclusively in the practice of intellectual property law, including patent, trademark, copyright, unfair competition, trade secret, advertising and computer law, and related litigation including both trials and appeals, for 110 years.
With offices in Atlanta, Denver, Knoxville, Madison, Minneapolis, New York City, Seattle and Washington DC, and more than 100 practicing attorneys, the firm is one of the largest intellectual property law firms in the United States. Typically, our attorneys are admitted to practice in the state where they reside and nearly all are admitted to practice before the United States Patent and Trademark Office (USPTO). We are consistently ranked as a top patent, trademark and copyright firm both in the U.S. and globally. We value our client relationships, and actively partner with clients to understand, build, and implement technology and intellectual property driven strategies that add bottom-line business value. The depth and breadth of our legal and technical knowledge, coupled with years of experience in helping clients create and strategically manage global intellectual property assets, uniquely positions us to be a valued member of the client team.
About LitiNomics, Inc.
LitiNomics is a consulting firm dedicated to supporting corporations, law firms, and financial institutions as they address issues that arise in commercial litigation. Founded in 2007, LitiNomics is composed of professionals with extensive experience in providing expert research, analyses, valuations and testimony in complex areas concentrated in economic damages and forensic accounting, with a particular emphasis in intellectual property disputes.
From offices in Silicon Valley, Oakland and Los Angeles, LitiNomics’ professionals support clients on a national basis with many of our professionals holding advanced degrees in economics, finance, accounting, business, and law. Since our founding, we’ve grown rapidly and established ourselves as one of the premier boutique firms in our field.