ARTICLE
4 December 2012

Contest Did Not Excuse Advertiser Duty To Substantiate Claim

FK
Frankfurt Kurnit Klein & Selz

Contributor

Frankfurt Kurnit provides high quality legal services to clients in many industries and disciplines worldwide. With leading practices in entertainment, advertising, IP, technology, litigation, corporate, estate planning, charitable organizations, professional responsibility and other areas — Frankfurt Kurnit helps clients face challenging legal issues and meet their goals with efficient solutions.
In response to a challenge by International Business Machines Corporation ("IBM"), the National Advertising Division of the Council of Better Business Bureaus ("NAD") reviewed print advertisements produced by Oracle Corporation ("Oracle") stating its Exadata server is "5x Faster Than IBM ... Or you win $10,000,000."
United States Media, Telecoms, IT, Entertainment

In response to a challenge by International Business Machines Corporation ("IBM"), the National Advertising Division of the Council of Better Business Bureaus ("NAD") reviewed print advertisements produced by Oracle Corporation ("Oracle") stating its Exadata server is "5x Faster Than IBM ... Or you win $10,000,000."

IBM argued these print advertisements, which appeared in The Wall Street Journal and other major newspapers, conveyed the message that the Extradata systems are 5 times faster than IBM Power systems and that the "contest element" did not negate Oracle's responsibility to substantiate this claim. Oracle argued that the advertisement did not make a performance claim but issued a challenge to consumers. It did not provide any speed performance tests, examples of comparative system speed superiority or any other data to substantiate its claim.

In its decision, the NAD concluded that, "even accounting for the sophisticated target audience, a consumer would be reasonable to take away the message that Oracle's Exadata systems do indeed run five times as fast as IBM's products. The fact that the claim was made in the context of a contest announcement [did] not excuse the advertiser from its obligation to substantiate this message of superior speed." The NAD likened the context of Oracle's claim to a money-back guarantee, stating in its decision that just because an advertiser is providing a money back guarantee does not protect it from having to substantiate whatever claim it is making about its product in its advertising. The NAD went on to state that by offering the $10,000,000, Oracle was displaying the "utmost confidence in the truth in its "5x Faster claim."

This is yet another decision underscoring that claims come in all shapes and sizes. No matter what form the advertising takes, be it a "contest" or a Youtube video that doesn't even mention the product (see here), the advertiser must still substantiate any claims that it communicates.

www.fkks.com

This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More