Challenging Competitors' g g p Comparative Advertising Evaluating - PowerPoint PPT Presentation

Presenting a live 90 ‐ minute webinar with interactive Q&A Challenging Competitors' g g p Comparative Advertising Evaluating Legal Options to Respond to Competitors' False or Misleading Marketing TUES DAY, JANUARY 11, 2011 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific T d Today’s faculty features: ’ f l f Barry M. Benj amin, Partner, Kilpatrick Townsend & Stockton , New Y ork Christopher A. Cole, Partner, Manatt Phelps & Phillips , Washington Randall K. Miller, Partner, Arnold & Porter , McLean, Va. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

Continuing Education Credits FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: • Close the notification box • In the chat box, type (1) your company name and (2) the number of attendees at your location • Click the blue icon beside the box to send

Tips for Optimal Quality S S ound Quality d Q lit If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-869-6667 and enter your PIN when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail sound@ straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Qualit y To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again press the F11 key again.

“Challenging Competitor Comparative Advertising Claims” January 11, 2011 Barry M. Benjamin Bbenjamin@kilpatricktownsend com Bbenjamin@kilpatricktownsend.com 212.775.8783 4

INTRODUCTION • Comparative Ad claims rising not just in ways • Comparative Ad claims rising, not just in ways that hit major media • Generic drugs – database equivalency g q y claims, patent overlay • Regulated industries like construction and building materials competitor claims non- building materials, competitor claims non compliance with building codes • Woodworking tool manufacturer’s former bl d blade supplier advertises awards, actually li d ti d t ll tool maker that won awards 5

• Competitor X rolls out offending ads, your marketing clients are screaming at you ‘DO SOMETHING!!’ • What do you do? 6

1. Do Nothing. Least expensive in terms of l legal fees, but can company stand it? l f b t t d it? 2. Non-legal remedies – counter advertising campaign i 3. Legal remedies: • C Cease and Desist letter / Pick up Telephone d D i t l tt / Pi k T l h • Network Challenge • • Drop a Dime: Squeal to the government Drop a Dime: Squeal to the government • NAD • Federal Action 7

1. Do Nothing. Least expensive in terms of legal fees, but can company stand it? Does General Mills Does General Mills have to do anything in response to this? in response to this? 8

• Kelloggs’ ads - cereal “clinically shown to improve kids’ attentiveness by nearly 20%” improve kids attentiveness by nearly 20% • Study actually showed - Only half showed any improvement in attentiveness; only 1 in 7 improved by 18% or more and only 1 in 9 i d b 18% d l 1 i 9 improved by 20% or more • Kids who ate Frosted Mini-Wheats were compared against kids who ate nothing or only had water • FTC settlement (April 2009) and $10 5 • FTC settlement (April, 2009) and $10.5 million class action settlement (Nov. 2010) (plus $$$ for lawyers in the amount of ???) 9

2. Non-legal remedies – counter advertising campaign • November 18, 2009: “ AT&T loses request for injunction against request for injunction against Verizon's Map for That ads” • • The next day: The next day: 10

11

Before discussing Legal Remedies, consider i important issues before taking action: t t i b f t ki ti 1. Most likely result – offending ad stops, that’s it 2 2. M Monetary damages possible, but not likely t d ibl b t t lik l 3. Legal action expensive, likely won’t recover legal fees, costs for surveys, etc. y , 4. Counterclaim guaranteed 5. Insurance coverage issues 6. Discovery is painful 7. Prepare for publicity 12

• Legal remedies: – Cease and Desist letter / Pick up Telephone – Network Challenge – Drop a Dime: Squeal to the government – NAD – Federal Action 13

Cease and Desist letter / Pick up T l Telephone h • Counterpart at competitor, develop good relationship d l ti hi • Inexpensive; No publicity • No enforcement, ad continues to run during negotiations • No surprise if file action • If no resolution, lost time 14

Network Challenge • Inexpensive • Confidential • Enforcement – if successful network will require Enforcement if successful, network will require changes to ad • No discovery, sophisticated reviewers, no surveys required required • BUT: only applies to specific network • Inconsistent decisions among networks w/r/t same ad g • Huge number of channels not under Network umbrella 15

Drop a Dime: Squeal to the Gov’t • If taken up by gov’t, ad likely stops If t k b ’t d lik l t • Confidential while investigation conducted, but public when complete or if administrative but public when complete or if administrative complaint filed • Inexpensive to challenger p g • BUT: will gov’t be interested? • No control over investigation, no updates g p from gov’t on what they are doing • S…….L…….O…….W……. 16

NAD Challenge • National Advertising Division of the Council of • National Advertising Division of the Council of Better Business Bureaus • Relative to Federal court litigation, g inexpensive • Experienced lawyers on staff • Takes 3 4 months possibly longer • Takes 3-4 months, possibly longer • Voluntary tribunal, need advertiser’s consent to participate p p • Only get two submissions and one meeting with NAD lawyer 17

NAD Challenge • Filing fees in the $$$ thousands • Filing fees in the $$$ thousands • No discovery, no depositions, no subpoenas • No monetary damages No monetary damages • Non-binding decisions, but if non-compliance, NAD may refer to FTC • Burden of proof – only whether ad claims B d f f l h th d l i were substantiated or not, disting. from Lanham Act where B/P is falsity • Proceeding confidential, but decision is not • Consumer survey evidence optional 18

Federal Action – Lanham Act • “Nuclear Option” • Most publicized most expensive but if Most publicized, most expensive, but if successful, best results • Turn things over to Randy to discuss • Turn things over to Randy to discuss…. 19

L Lanham Act h A t Randy Miller, Arnold & Porter LLP Randall.Miller@aporter.com 703.720.7030 20

Lanham Act -- more potent over past 10 years  Courts more willing to find liability  Courts more willing to enjoin major campaigns 21

Rise of Necessary Implication Doctrine  Prilosec “One Pill. 24 Hours. Zero Heartburn”  Mylanta Nighttime  Nicoderm Sleep Disturbance  2d Circuit adopts -- Time Warner Cable 22

“Adver “Advertisin tising” is g is Broadl Broadly Defined y Defined Traditional advertising Traditional advertising l l Other promotional l communications l Verbal statements l Emails l PowerPoint Presentations 23

G Greater Possibility of Money Damages in t P ibilit f M D i Lanham Act Cases  PBM / Infant Formula  Bracco / X-Ray  Splenda Settlement 24

25 “Just as effective as floss” Just as effective as floss LISTERINE:

Splenda: “Made From Sugar” “More Natural Than Competition” p “Artificial Sweetener” Artificial Sweetener 26

27

Lanham Act Hurdles to Entry  Winter case  Irreparable harm will not be presumed, must be supported with evidence  Surveys usually needed, surveys more susceptible to Daubert attack ibl D b k  Defenses of unclean hands, voluntary cessation 28

Ra Rapid Pace p id Pace Liti Litigation g ation  TRO/Pl  Expedited Discovery  Advance Planning Desirable 29

Cost of Lanham Act Cases / Many Reasons to Avoid Lanham Act Lawsuit  Rambo tactics  expedited discovery  fast-paced motions practice  intense and fast moving battle of experts  publicity / counterclaims / class action lawyers p blicit / co nterclaims / class action la ers monitoring 30

Sometimes You Have to Litigate  Unreasonable adversary  Compromise not Compromise not possible / Impasse  Need to “send Need to send message” – To adversary – To other potential adversaries 31

S Sometimes You Have to File Lanham Act ti Y H t Fil L h A t Suit Despite Costs  Need for speed  Adversary’s campaign causing too much  Adversary s campaign causing too much immediate market loss 32