The NYT reports that more companies are challenging claims made in competitors’ ads.
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. Longtime foes like Pantene and Dove, Science Diet and Iams, AT&T and Verizon Wireless, and Campbell Soup and Progresso have all wrestled over ads recently.
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 Companies file complaints to get competitors’ ads withdrawn or amended.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 advertisers, however, argue that these claims can mislead consumers and cause a pronounced drop in sales. 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.
Apperception says:
This is the new model of competition — get the government intervene when your business model can’t compete on the merits.
Hooray!
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November 22, 2009, 11:35 pmGuy says:
You know, I often make towers out of dog food, and in my experience each brand can lend itself to its own unique stacking experience. I think the Iams claim is therefore valid.
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November 22, 2009, 11:54 pmDavid Schwartz says:
Shades of the “better ingredients, better pizza” lawsuit. Is there anything that’s more obvious puffery than the term “better”?
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November 22, 2009, 11:58 pmMCM says:
Since both Pizza Hut and Papa John’s are inedible crap, can’t we just be happy they’re both being bled dry by their respective attorneys?
But seriously, Pizza Hut lost that suit on appeal, I believe?
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November 23, 2009, 12:08 amantiquus says:
Apperception, IMHO you are correct to say that they cannot compete on their business model. This is a consequence of the computer/communications world in which we live. There are very few actual products, and we have many people making similar or knock-off versions; in reality, none is better than any other.
For example, the electronics industry is dominated by “reference designs”, where one company produces a chip to do a function, then tells everyone how to hook it up. The USB-key market is dominated by this model, and the only “ingenuity” one might add is (say) a retractable plug, or a way to hang it from a necklace. Internally they are all using similar, if not the same, chips from one of a few manufacturers, and even those are uniformly similar.
Other high-tech industries, like detergent and dog food, are now founded on computer modeled development. The equations don’t lie, and the computers all converge to the same solution. My shampoo is probably just as good at breaking down protein stains as yours, because our chemical models are similar, the algorithms to explore them are similar, the market requirements are similar, and we all reach some “optimum” that is coincidently similar — well, duh!
There is no business model competition possible when all products are uniformly max’d-out for every application. Many of our “scientific disciplines” have achieved such a high degree of understanding and modeling, and are so driven by an all-or-nothing mentality, that there is very little product differentiation left. It is highly likely that our people all trained using similar data sources (e.g., wikipedia, Prentice-Hall and lexusnexus), so the problem itself is recursive.
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November 23, 2009, 12:23 amReasoner says:
The thing that has been bugging me lately is the digital cameras being sold by the “interpolated” resolution. Almost every camera reported as 1.3MegaPixels really isn’t. Interpolated resolution in cameras is almost always an undesirable feature because it wastes bandwidth and storage for no real increase in image quality. What’s worse is that any camera can have infinite MegaPixels if interpolated resolution counts.
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November 23, 2009, 12:39 amOren says:
Reasoner, until you devise a mass-market CCD (or CMOS) sensor that can read three wavelengths at a single point, interpolation will be absolutely unavoidable. The good DSLRs will let you have the raw image data right off the sensor if you like, for whatever that’s worth to you.
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November 23, 2009, 1:13 amGuy says:
Isn’t many suppliers with identical products one of the prerequisites for perfect competition? It seems to me the economic problem isn’t uniformity, but rather irrational consumers. If a consumer can really be swayed by a brand name when the underlying product is essentially identical (as they probably can be) then that’s the requirement for perfect competition that fails, and the source of market inefficiency.
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November 23, 2009, 2:10 amRicardo says:
I’d say the problem is information asymmetry. This may in turn be driven by irrationality as consumers do not invest the time to make informed purchasing decisions — on the other hand, it may be rational ignorance. Non-tech-savvy consumers (most people) would have no way of easily knowing that different USB drives, might come from the same manufacturer in Korea or Taiwan only with a different brand name printed on them. When people put a premium on reliability they tend to purchase branded products from brands they or their friends have previous experience with or from brands that are well-known and touted as reliable. How can you be sure the no-name brand gadget you are about to buy won’t stop working after six months? No-name DVD players are largely crap quality, for instance, based on my own experience of going through three different players within one year.
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November 23, 2009, 3:08 amGuy says:
Ricardo,
You’re right, of course, I was including “perfect information” as a component of “rationality”, when it would be better understood as a separate factor. My basic point still stands, though.
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November 23, 2009, 3:24 amReasoner says:
That’s not what I’m talking about. The typical 1.3 MegaPixel video web cam or cell phone camera, only has 640x480=307200=0.3MegaPixels. That’s 153600 green pixels, 76800 red pixels and 76800 blue pixels. When they interpolate to 1.3 MegaPixels they’re just making it up. Increasingly they’re even calling 640x480 cameras 3MegaPixel or 5MegaPixel. The only reason they don’t tell even bigger lies is that too many buyers will look too closely at hard to believe MegaPixel numbers. The lies are most common in the digital video web cam and cell phone market, but they’re even starting to bleed over into the digital still camera market.
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November 23, 2009, 4:14 amReasoner says:
I’m using Firefox 3.5 under ubuntu 9.10 amd64 and this mess happened when I tried to edit my comment.
antiquus wrote:
I disagree strongly. Of course “very few” is a highly relative term, but I think it’s a stretch to say there are very few unique products. While it is true that there are a lot of nearly identical products based on reference designs, there are still a lot of unique products competing with those reference designs, and even a lot of product categories where there are still no reference designs at all, but only single source proprietary designs from different manufacturers. And even between different implementations of a reference design, there can be considerable variation in features, quality, and aesthetics. Even among your example of USB memory sticks, which is one of the product categories most dominated by reference designs, I’ve seen a fair amount of variation in performance between products, proving they have significantly different designs.
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November 23, 2009, 5:00 amShag from Brookline says:
There’s nothing like “prefect” information for “prefect markets.” As Louis Armstrong questioned in “Loveless Love,” there’s a need for a “Pure Food Law”?
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November 23, 2009, 5:10 amDarwin says:
I always thought it odd that the courts seem to believe their was a difference between false advertising and “mere puffery.” I didn’t like the concept when I learned about it in law school and I still don’t like it now. Not to mention the serious issue of non-compete clauses. I just read about that subject on this legal blog: http://lawblog.legalmatch.com/2009/10/27/competing-with-non-compete-clauses/
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November 23, 2009, 7:56 amGlenn Bowen says:
I’m reminded, in my youth, I made pizza pies from beer.
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November 23, 2009, 8:19 amBama 1L says:
There’s nothing new about it.
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November 23, 2009, 8:29 amMCM says:
Precisely. Welcome to medieval guilds.
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November 23, 2009, 9:07 amyankee says:
I never liked it either. It leads to a situation where virtually any factual claim in an advertisement is a lie, but the courts won’t do anything about it.
How is it “competing on the merits” when your competitors are lying to consumers to sell their products?
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November 23, 2009, 10:28 amDotar Sojat says:
Trial lawyers.
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November 23, 2009, 11:24 amLarryA says:
Fascinating. I’d think for law profs this would be a superb example of pursuing cases that establish legal precedents that are highly likely to circle back and bite you in the ass.
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November 23, 2009, 11:27 amOren says:
Unless they are buying some intangible quality (aside from reliability or information-related concerns). I hardly thing 10¢ of syrup and carbonated water would be worth $1.00/L without the intangible quality of Coke (or Pepsi). They aren’t stupid to invest billions in silly advertisements.
Except that’s not how images are represented in a computer. A bitmap is (more or less) an array of RGB values — it must have a value for all three colors at every point in the image (as opposed to having “green pixels” or “blue pixels”).
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November 23, 2009, 12:45 pmKevin R says:
July 2010: Kelloggs sues General Mills, with the claim that advertising Lucky Charms as “magically” delicious is invalid without confirmed wizards or sorcerers employed by General Mills. Depositions from General Mills employees “The Amazing Blandini” and “Enoch the Red” are forthcoming.
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November 23, 2009, 1:27 pmbob says:
Where is the Chamber of Commerce denouncing these frivolous lawsuits?
Shouldn’t we have a cap on such litigation limiting damages to, say, $250K.
It’s no wonder that soap and cereal cost so much given the amounts that it costs companies to defend themselves against this litigation lottery.
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November 23, 2009, 1:40 pmloki13 says:
I think a good example of this is AT&T’s recent suit against Verizon over their “there’s a map for that” ads. Personally, I think the Verizon ads were highly misleading (especially before they revised them after the suit was filed). Here’s why:
1. The maps they show, with whited-out areas, seems to indicate that AT&T has no service in most of the country. This is untrue. They added a little blurb under threat to say that you wouln’t be out of voice and data... see if you catch it.
2. They’re playing around with the what constitutes 3G service and coverage. AT&T pursued a different tack, and their base (non 3G service) called EDGE is faster than Verizon’s, and comes close to Verizon’s 3G service in speed. AT&T 3G service is much faster than Verizon’s antiquated 3G service. So, again, highly misleading by singling out a standard instead of talking about actual speeds.
Now, all of that being said, I think the best remedy (since I don’t know think they’re outright fraudulent, just VERY misleading) is more speech– AT&T counterads. I also think AT&T’s voice network often blows, because too many people are on it and they haven’t built up to accomodate (in case you think I’m an AT&T partisan). But they’re a perfect example of ads that tread the line between highly misleading and fraudulent.
(Why did Verizon do this? Because the iPhone phenomenon is hurting them, because they’re trying to push the droid before Christmas; because they’re trying to push themselves as a premium provider worth the premium price with their superior call coverage; and because they might experience difficulties with the upcoming 4G switchover when all the carriers will be operating on the same technology.)
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November 23, 2009, 2:29 pmHelene Edwards says:
The best ad slam job I’ve heard is by The Shane Company, asserting that its competitors’ diamonds “look like dried spit.”
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November 23, 2009, 3:40 pmReasoner says:
I’ve seen cameras with images sensors made up of 307200 sub-pixels of various colors, “interpolated” into 5 MegaPixel cameras. It doesn’t matter how the stuff is represented in the computer bitmap file, that’s just fraud. However the image is represented in the bitmap, there is no justification for a camera with 307200 sub-pixels being called 1.3 MegaPixels or anything more than 0.3 MegaPixels. In fact it is even a stretch to call it a 0.3 MegaPixel camera, since each pixel isn’t even a real full pixel, but rather is a sub-pixel without full and real color information for that pixel location. However it is the standard in the digital camera industry to count a sub-pixel as a full pixel. As deceptive as that standard is, at least it allows meaningful comparisons, whereas interpolated resolution is a completely meaningless comparison of camera resolution.
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November 23, 2009, 5:52 pmTweets that mention The Volokh Conspiracy » Blog Archive » Puffery Plaintiffs -- Topsy.com says:
[...] This post was mentioned on Twitter by Hot Web Cams, Anthony,Leech. Anthony,Leech said: The Volokh Conspiracy » Blog Archive » Puffery Plaintiffs: Other high-tech industries, like detergent and dog f.. http://bit.ly/07NntVp [...]
Misty Barfield says:
Awesome I enjoy the various articles which were written, and especially the comments posted! I’ll come back!
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February 4, 2010, 4:52 am