United States: Top 10 Things to Know Before You Launch A Comparative Advertising Campaign (IP Advisory)

Comparative advertising is an effective way to inform consumers about your product and how it compares to your competition. Competitors, however, are quick to respond to comparative advertising — no one wants the consuming public to think their brand is inferior. Comparative advertising is entirely legal in the United States, but, as with any advertising, it cannot be false. The requirements of truthful comparative advertising are designed to protect the consuming public and ensure they can make informed purchasing decisions. The following will help you stave off challenges to your advertising or, if avoidance is not possible, to prevail in a challenge.

Before determining if an advertisement is true, you must analyze exactly what the advertisement says — what claims does the advertisement make? Such comparative claims can include statements like "longer lasting," "three out of four dentists recommend," "consumers prefer" and "tastes as good as." There are two reasons why it is important to determine the specific claims made. First, without knowing the specific claims, you cannot know what substantiation is required to support them as true. Second, when testing has already been done on the product, advertisers often extrapolate claims from that technical data and those extrapolated claims may no longer be properly supported by the prior testing. Thus, it is necessary to know exactly what claims are made so that they can be compared to the previously generated support to confirm that they are still true.

Often overlooked when analyzing an advertisement’s claims are the implied meanings that, while not literally stated, consumers nevertheless reasonably understand from the advertisement. Thus, the important inquiry is: what does a consumer understand from the advertisement even if not expressly stated? Liability for false comparative advertising will attach if the implied claims are false. An advertiser may also be liable, even though the claims are literally true, if the overall message of the advertisement is deceptive or misleading. For example, in one case concerning an advertisement for a pain reliever, it was found that, while the express claims (that advertiser’s product was better for inflammation) were literally true, the overall message understood by consumers (that the advertiser’s product was generally better than the competitor’s) could not be substantiated and thus was deceptive.

Consumer surveys are an excellent tool to help determine, in advance of a challenge, the implied meanings, if any, that consumers take away from an advertisement. While surveys can be valuable, they can also be dangerous if not done properly. To be effective in a challenge, a survey must be valid, reliable and done in accordance with the rigorous standards imposed by the courts. These forensic standards are often different than the ones used in most commercial consumer studies, and attorneys and forensic survey experts with relevant experience should be consulted.

By now you should know exactly what your advertisement says, both expressly and impliedly. Next, you should examine whether the messages delivered by the advertisement are truly "claims" or are merely "puffing." Puffing is a statement that a reasonable consumer does not expect to be literally true. As an example, a claim that a light bulb burns "brighter than the sun," is mere puffing. Puffing claims do not expose an advertiser to liability for false advertising because consumers do not expect the claims to be literally true.

Now that you know what express and implied claims are made in your advertisement, and which statements are mere puffing, you should determine whether the claims are actually true. Clinical tests can be used to substantiate comparative advertising claims. The most frequent mistake is that the tests, while valid, do not support the precise claim made; it is important to confirm that the exact claim made is actually supported by the test results. Any such clinical test must also be unbiased, meet the relevant scientific or industry standards and the relied-upon results must be statistically significant. When an advertising claim says or suggests that "tests prove" or "clinical tests show" — for example that cleaner X cleans better than cleaner Y — the advertiser can be liable for false comparative advertising in one of two ways. The challenger can show that the claim is false, i.e. that cleaner X is not better than Y, or, without having to prove that the claim is false, that the tests conducted by the advertiser do not actually prove what they claim to prove, i.e. that the tests are not reliable, valid or that the results are not statistically significant.

A comparative advertisement need not compare the advertiser’s product to a specific competitor’s product to avoid liability. A comparison to an image or representation of a competitor’s product provides standing for that competitor to sue; the competitor need not be specifically named or identified. In fact, a comparison to all similar products, i.e. "our paper towels absorb more than any other paper towels," exposes the advertiser to a challenge from any competitor. Before making such a claim, it is a good idea to test your claims against your competitors’ products. While it may be cost prohibitive to test all competitors’ products, at a minimum you should test against those competitors with significant market share or those considered the leaders in the particular attribute you claim your product is the best at.

In some jurisdictions, an advertiser with no substantiation of its claims prior to launching a comparative advertising campaign is per se liable. The type of substantiation required before launching depends in large part upon the type of claim made. For claims that are objectively verifiable, the underlying tests must meet industry standards, and the results must be statistically significant. For claims that are subjective but can be measured, such as taste tests, consumer surveys are the best method of substantiation. In either case, it is imperative that the tests or surveys be conducted by professionals with an understanding of the rigorous standards required by the courts.

Comparative product demonstrations are an effective way to show how your product outperforms your competitor’s product. When conducting a demonstration there are four key questions to ask. First, is the demonstration accurate? When repeated, are the results the same as in the advertisement? Second, is the demonstration done in a manner consistent with the manufacturer’s instructions for use of the product and under conditions that make sense given the product? If the manufacturer’s instructions suggest leaving a cleaning solution on for one minute to remove stains, the demonstration should compare stain remover A left on for one minute to stain remover B after one minute, not 10 minutes. Third, are both products tested in the same way? In the previous example, are both products left on for the same length of time or is each one used as instructed on the label? Finally, is the demonstration relevant to the consumer? For example, if the goal is to demonstrate the efficacy of whitening toothpaste for natural teeth, a demonstration that toothpaste A whitens dentures better than toothpaste B may not be relevant, unless there is proof that the whitening effect of the products on dentures is an accurate representation of how they work on natural teeth.

A competitor may choose to launch a comparative advertising campaign knowing that it may not withstand a challenge. In some instances, a competitor will make a business decision to launch a false advertising campaign and then voluntarily pull it after only a short period of time in the hope that the campaign will provide a competitive advantage without providing adequate time for you to initiate a challenge. If you are able to sue, bad faith or willfulness in making false claims is a factor that may be considered by the adjudicating entity.

There are a number of ways in which a competitor can challenge your comparative advertisement: (i) a challenge in the National Advertising Division of the Council of Better Business Bureaus; (ii) litigation in state or federal court; (iii) notifying the Federal Trade Commission to induce it to take action; and (iv) a challenge to the standards and compliance group of a major network where the ads appear. Each jurisdiction subscribes to its own set of rules and accordingly has its own set of requirements for extending liability to false comparative advertisers. Anyone seeking to launch a comparative advertising campaign should familiarize themselves with the unique requirements of the different jurisdictions.

Before any comparative advertising campaign is launched, it is good practice to determine all claims made in the advertisement, whether express or implied, to establish the veracity of the claims, and to make sure that the substantiation of the claims is reliable and was generated within the relevant forensic standards.

Goodwin Procter LLP is one of the nation's leading law firms, with a team of 650 attorneys and offices in Boston, New York and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.

This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. (c) 2005 Goodwin Procter LLP. All rights reserved.