The performance of litigation as a Biglaw business line during the Great Recession has been widely viewed as disappointing. But at least one type of litigation seems to be picking up. From the New York Times:
A diamond is forever? Prove it.
Companies that were once content to fight in grocery-store aisles and on television commercials are now choosing a different route — filing lawsuits and other formal grievances challenging their competitors’ claims…. The goal is usually not money but market share. Companies file complaints to get competitors’ ads withdrawn or amended.
The cases themselves might seem a little absurd — an argument over hyped-up advertising copy that not many consumers even take at face value. Pantene has attacked Dove’s claim that its conditioner “repairs” hair better, and Iams has been challenged on one of its lines, “No other dog food stacks up like Iams.”
Dueling over dog food quality? Desperate times call for desperate measures.
Most consumers probably view the average advertisement with skepticism. But there are standards here:
Since advertisers are required by law to have a reasonable factual basis for their commercials, their competitors are essentially demanding that they show their hand. The increase in these actions may be a reflection of the dismal economy: in recessions, when overall spending lags, advertisers must fight harder for customers.
“In this economy, where margins are a bit tighter, a lot of marketing departments have decided to become more aggressive in going after their competitors in the hopes that they can either protect their market position or capture additional market share,” said John E. Villafranco, a law partner at Kelley, Drye & Warren who specializes in advertising.
Have we considered the possibility that ad agencies have just been watching too many episodes of Mad Men? After all, Don Draper is the most influential man in the world.
The evidence suggests an uptick in actions over advertising:
The number of complaints over ads from competitors filed with the National Advertising Division of the Council of Better Business Bureaus, the industry’s main self-regulatory program for national ads, is on track to set a record this year. There have been 82 formal complaints so far in 2009, after last year’s record of 84 challenges, a sharp increase from 62 in 2007 and 52 in 2006.
Other companies file false-advertising lawsuits under the Lanham Act, passed in 1946 to strengthen trademark law. While there are no reliable tracking numbers on cases filed under that law, lawyers say they are seeing an increase.
No, laid off Latham associates. You do not have a claim under the Lanham Act.
The advantage of filing a NAD complaint is that it’s inexpensive:
Filing a complaint with the National Advertising Division is cheaper than a lawsuit, costing $2,500 to $20,000. The downside is that the program is voluntary and it has no legal power. By going to court, [Manatt Phelps partner Linda Goldstein] said, companies can file for an injunction and get the ads stopped within days, versus the two to three months that the voluntary process takes, she said.
Over at Am Law Daily, Zach Lowe has an example of an advertising dispute of interest to the legal world:
In another dispute that hits closer to our world, the publishing company behind BAR/BRI filed a complaint with NAD against Kaplan, claiming that Kaplan’s ads inaccurately implied that only 73 percent of BAR/BRI students pass the bar.
C’mon, Bar/Bri — passing the bar exam is hard! Just ask these people.
(Here at Above the Law, we’d gladly take either BAR/BRI or Kaplan as an advertiser. So email us, guys; we have lots of law student readers.)
Read more, and check out other examples of disputes arising out of ads, via the links below.
Best Soup Ever? Suits Over Ads Demand Proof [New York Times]
Another Area of Law that is Booming: Advertising Litigation [Am Law Daily]