Reprinted from the Houston Business Journal, November 14, 2003
All too often, bad publicity takes the form of a competitor's false advertising claims, disparaging comments or infringement of a company's copyrights, trademarks or advertising ideas or slogans.
If a competitor chooses to use confusingly similar marks or slogans, such conduct may be actionable. One company's slogan, "The Beer of Beers," was found to have infringed Budweiser's "The King of Beers."
Of course, where the slogans do not identify and distinguish the source of such goods or services, they are likely not protectable.
For example, it has been held that slogans such as "Be Sure With Sure" (deodorant) and "Escape From The Ordinary" (clothing) were merely descriptive, and thus, not protectable. However, if a mark has developed a "secondary meaning" (i.e., as being associated with a particular product or service), it may be protectable (such as Excedrin's slogan "Extra Strength Pain Reliever").
Under the Lanham Act, Federal Trade Commission and many states' statutes, an advertiser must substantiate its claims. Industry or proprietary research or testing is generally used to determine whether a particular claim is substantiated, although courts will look to the overall impression the advertising or marketing conveys to the consumer.
False or misleading claims about a company's own product or a competitor's product, may also constitute false advertising, unfair competition or trademark dilution under the Lanham Act, state statutes or common law.
What should a company do when a competitor releases an advertising campaign believed to be unsubstantiated, false, overreaching or that unfairly compares products and services to theirs?
- Request substantiation for the claim. Request the competitor to substantiate the claims made.
This places the competitor on notice of a problem, benefits the company if the competitor fails to act in good faith, documents claims if subsequent litigation or FTC proceedings occur and saves some embarrassment if obtaining a response that indeed substantiates the claims.
Drawbacks: A company should inspect its own glass house before throwing stones. A demand for substantiation will only cause the competitor to closely scrutinize the company's advertising and marketing.
- Contact the FTC. Complaints can be submitted with anonymity if desired.
The FTC may choose to investigate if substantial supporting information is provided and will often initiate a letter of inquiry to the competitor to substantiate, change or discontinue the practice. It may also implement particular guidelines that may benefit the "white hat" advertiser.
Drawbacks: The FTC is not required to start an investigation, so it often takes years for the process to play out. A company may not be apprised of any information regarding an investigation until its conclusion since it is confidential, and the FTC will likely scrutinize all advertisements in the particular sector, including the company's own.
- Initiate a television network challenge. If the subject advertisement is national in scope, consider initiating a television network challenge pursuant to the standards and rules of the networks (which are often more stringent than FTC rules). Or, initiate a National Advertising Division of the Council of Better Business Bureaus challenge.
NAD can issue a challenge to the competitor to substantiate its claims, and issue a decision regarding whether such claims are substantiated or need modification.
Drawbacks: If a challenge is issued by NAD, compliance with its findings is voluntary, although it may refer the case to the FTC if the competitor refuses to comply.
- Contact local district attorneys or attorneys general. If there is a distinct local interest, clear falsity or other egregious conduct constituting a fraud on the public or affecting public safety, seek a referral to the local district attorney or attorneys general.
Drawbacks: As in complaints to the FTC, this process will take time, will likely be held in confidence by the agency and will invite strict scrutiny to the advertising and marketing.
- Consider litigation. It is hard for a competitor to ignore a lawsuit filed against it, alleging violations of the Lanham Act and other applicable federal and/or state statutes and common law.
A company can seek not only injunctive relief to stop misleading or false advertising, but also have any such ads pulled and corrective advertising in its place. In addition, a company can seek damages, and in some cases, attorneys fees and costs.
While this alternative may be more expensive than other options, it is often more effective, and a successful result may of course have a substantial positive effect on a company's future advertising and marketing.
Although advertising is indeed "lubricant for the free-enterprise system," it is imperative to stay within the bounds of advertising law and to protect a company's advertising ideas and slogans against unscrupulous competitors.