Top Ten Advertising Bloopers And How You Can Avoid Them INS IGHT - - PowerPoint PPT Presentation

Top Ten Advertising Bloopers

And How You Can Avoid Them

INS IGHT ADVERTIS ING & MARKETING LAW CONFERENCE NOVEMBER 25, 2005

Jeff S canlon McMillan Binch Mendelsohn LLP

Agenda

• Advertising Bloopers:
• Contests
• 4 bloopers
• Misleading Advertising
• 1 blooper
• Comparative Advertising
• 4 bloopers
• Intellectual Property
• 1 blooper

Contests and the Criminal Code

The Skill-Testing Question

• Paragraphs 206(1)(a) to (d) of the Criminal Code

prohibit schemes for disposing of property by “ any mode of chance”

• S

upreme Court of Canada has clarified that only games of “ pure chance” are prohibited

• A proper skill-testing question converts a game
• f pure chance into a game of mixed chance and

skill

Contests and the Criminal Code

“No Purchase Necessary”

• S

ection 206(1)(f) of the Criminal Code makes it an offence to

dispose of any goods, wares or merchandise by any game of chance or any game of mixed chance and skill in which the contestant or competitor pays money or

• ther valuable consideration

Contests and the Criminal Code

Penalty

• Indictable offence punishable by

imprisonment for a term not exceeding two years OR

• summary conviction offence punishable by a

fine not exceeding $25,000

Contests and the Competition Act

Full Contest Rules

Adequate and Fair Disclosure:

• Number and approximate value of prize;
• Area or areas to which they relate; and
• Any fact within the knowledge of the contest

sponsor that materially affects chances of winning

Contests and the Competition Act

• Short List Disclosure in Ads:

Packaging Point-of-S

ale

Billboards TV Radio Internet

Contests and the Competition Act

Competition Bureau’s Program of Binding Written Opinions

$1,000 fee 2 weeks for “ simple” contests 6 weeks for “ complex” contests

• 1. McDonald’ s
• Blooper
• Game piece promotion on product containers
• Marketing company personnel stole winning pieces

and collected prize money

• Led to negative publicity and FBI investigation
• McDonald’ s published apologies in newspapers and

awarded $10 million in prizes

• Lesson
• Identify and manage any security risks surrounding the

prize fulfillment offer

• S

trong brands can rise above past gaffes

• 2. Ultramar
• Blooper
• Gas coupons were to be awarded,

including 3 grand prizes for $1500 of fuel

• Printing error created hundreds of grand

prize winners

• Lesson
• Insert clause in rules to address this

possibility

• Over-redemption insurance can be applied

to cover unanticipated responses

• S

imilar to bloopers by Coca Cola (S uper Bowl) and Pepsi (Philippines)

• 3. Popsicle Industries
• Blooper
• Points collection program that offered Nintendo game as

prize; but demand exceeded supply

• Although rules allowed substitute prizes, prizes selected

were of inferior quality

• Company paid $250,000 to honour demand for games and

paid fine of $200,000 for untimely delivery of prizes under Competition Act

• Lesson
• Ensure that you can deliver on your offer to avoid

misrepresentation claims

• Carefully review language in rules

• 4. Hoover
• Blooper
• Contest promised consumers in Europe free

airline ticket with the purchase of a vacuum

• Hoover was flooded with requests for vacuums by

consumers seeking cheap airfares; tickets cost more than the revenue generated from the sale

• f the vacuum
• Cost $10s of millions, years of litigation and

negative PR

• Lesson
• Ensure realistic assessment of costs of contest

Misleading Advertising

• The Competition Act contains criminal and

civil provisions prohibiting misleading representations and deceptive marketing practices

• Any representation, in any form, which is false or

misleading in a material respect is prohibited

• The test for materiality is whether the

representation could influence a consumer to buy a product or service

• The court will look at the general impression

conveyed by the representation in addition to its literal meaning

Misleading Advertising

Penalties

• S

ummary offence punishable by fine of up to $200,000, imprisonment for up to one year, or both OR

• Indictable offence punishable by a fine at

the discretion of the court, imprisonment for up to five years, or both

Misleading Advertising

Representations on the Internet

• The Competition Act’s misleading

advertising provisions apply equally to material online representations

• Includes both Internet representations which

could influence on-line purchases and off- line purchases

• For more info, see The Competition Bureau’ s

“ Information Bulletin on the Application of the Competition Act to Representations on the Internet ”

• 5. KFC
• Blooper
• KFC advertising referred to the

nutrition value of a skinless chicken breast

• Commercials failed to mention the

actual levels of fat, saturated fat, trans fat and cholesterol in its chicken breasts with skin

• KFC’ s implicit health claim that eating

KFC chicken was part of a healthy lifestyle was false

• 5. KFC
• Lesson
• Advertisers must consider both the

literal and general impression conveyed by ad

• Advertisements should be evaluated

from the viewpoint of a consumer “ acting reasonably under the circumstances”

• The advertiser is responsible for all

reasonable interpretations

Comparative Advertising

• No prohibition against direct comparative

advertising

• Part of the misleading advertising

sections of the Competition Act

• Companies must understand the

boundaries and restrictions on comparative advertising re: ordinary price claims, performance claims and trade-marks

• 6. Forzani (S

port Check)

• Blooper
• Forzani’ s price claim, “ compare at” with respect to

the ordinary prices offered by suppliers was

• verstated; Forzani had failed to support the key

requirements for making such price claims, namely that:

1)

suppliers in the relevant geographic market area had sold a substantial volume of products at or above the claimed prices within a reasonable time before making the representation and;

2)

The suppliers offered products at or above the claimed prices in good faith for a substantial time period recently before making the price claims

• 6. Forzani (S

port Check)

• Lesson
• Retailers should establish a sound corporate

compliance regime that will ensure adherence to the ordinary pricing provisions

• f the Competition Act

• 7. General Mills Inc.
• Blooper
• Television commercial in U.S

. suggesting that eating “ Total” instead of “ S pecial K” would increase weight loss

• This statement not supported by underlying research
• Lesson
• S

ince “ performance claims” test is not what advertiser intended to communicate, but what was actually said (explicitly or implicitly), be sure to prove your performance claims before starting ad campaign and be narrow in your comparison with competition

• 8. Pringles
• Blooper
• Pringles using image of Lay’ s

product in its advertising

• Lesson
• If you mention a competitor’ s

registered trade-mark in a negative context, you could be found to have depreciated the value of the value of its goodwill

• Focus on the differences

between the products rather than the similarities

• 9. FedEx
• Blooper:
• Ads that make prominent use
• f a competitor’ s trade-marks

could lead to “ passing off” lawsuits

• Lesson:
• Your own trade-marks should

always be more prominent than your competitors and use a disclaimer

Intellectual Property

• Intellectual Property
• Trade-marks
• word, symbol, slogan, design
• that is used by a person
• for the purpose of distinguishing the wares or

services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others

• Domain Names

• 10. PricewaterhouseCoopers
• Blooper
• PWC spent £75 million renaming its consultancy arm to “ Monday”
• PWC did not check to see if similar name was already in use by a

listed company on the stock exchange; PWC paid a firm called “ One Monday” £3.5 million for exclusive use of the word “ Monday”

• PWC did not secure domain name in the UK; customers were

directed to a parody website set up to mock PWC

• Lesson
• Always conduct a thorough trade-mark search to see what is

available and whether you may be infringing existing trade-marks

• Always check variations and geographic coverage of domain

name

Top 10 Advertising Tips

1)

Identify and manage any security risks surrounding the prize fulfillment offer

2)

Insert clause in contest rules that allows solution if contest does not run according to plan or if error

3)

Ensure that you can deliver on your offer to avoid misrepresentation claims

4)

Ensure realistic assessment of costs of contest

5)

Consider both the literal and general impression conveyed by your ad

• advertisements should give the whole story – don’ t leave out

essential information and make sure you disclose any limitations

• n the representations you have made

Top 10 Advertising Tips

6)

Establish a sound corporate compliance regime that will ensure adherence to the ordinary pricing provisions of the Competition Act

7)

Ensure proof for performance claims before starting your ad campaign

8)

When using competitor’ s trade-marks in your advertising, focus on the differences between the products rather than the similarities

9)

To avoid claims for passing off, ensure that your own trade-marks are more prominent than your competitors’ and use a disclaimer

10)

Check availability of all variations of your domain name and always conduct a thorough trade-mark search to see whether you may be infringing existing trade-marks

Jeffrey S canlon McMillan Binch Mendelsohn LLP Email: j eff.scanlon@ mcmbm.com Tel: 416-865-7197