Some of the most memorable advertising campaigns in history involve the comparative use of competing trademarks.
Coke vs. Pepsi; Burger King vs. McDonald’s; Bud Lite vs. Miller Lite… The list could go on and on.
If you are a major consumer brand, chances are you have thought about how to create your own consumer identity by comparison to or distinction from your competition.
But proceed with caution. A thoughtless ad campaign that carelessly namedrops another company’s trademark could land you in court.
The Quick and Dirty
In general, it is not illegal to compare yourself to your competitor in the advertising context, so long it is not untruthful, disparaging, misleading, or confusing to the public. Additionally, the use of a competitor’s trademark cannot lead the public to believe that the company is endorsing you.
But what do those generic rules look like in practical application?
What You Can Say
1. Consumer Comparison Survey
Courts have held that it is legally defensible to conduct actual consumer comparison surveys and truthfully report the results. In short, anything you say about a competitor must be substantiated.
Remember the Pepsi Challenge? In its never-ending war against Coca Cola, Pepsi sought to prove its claimed superiority with an actual consumer taste test. At malls and other public locations, a Pepsi representative poured Pepsi and Coke into two blank cups and asked consumers what soda they preferred. Pepsi was lawfully entitled to publish its results, which it claimed showed that American consumers preferred Pepsi. But the takeaway is that anything you say about your competition that could be construed as “factual” (rather than obvious opinion-like statements that no consumer would take seriously) must be substantiated.
2. Brand References
Although a fine line should be recognized here between acceptable references and inappropriate endorsements, courts have held that the use of a trademark where there is no attempt to capitalize on consumer confusion or the commercial cache of a certain brand would be acceptable. For example, a court found permissible AOL’s effort to market to AARP membership with the following advertisement: “If you danced to the Beatles, cruised in a Thunderbird, or tuned into Dick Clark, you have earned . . . 100 hours free [Internet service on AOL].” Clark and Olive Enterprises, Inc. v. America Online Inc., 2000 WL 33535712 (C.D. Cal. 2000).
3. Compatibility Assurances
If your product serves as an accessory to another company’s product, you can advertise that compatibility. For example, compatibility advertising is frequently seen with i-Phone accessories – it is permissible for a company that makes i-Phone protective cases to mention Apple and its product the i-Phone in an advertisement about a protective case.
But caution should be taken here to ensure that compatibility advertising does not create an impression of endorsement or an affiliation between the two companies. For example, in a case between Stouffers and Weight Watchers, the Court found the following language likely to create consumer confusion: “Stouffers presents Weight Watchers exchanges for all 28 Stouffer’s Lean Cuisine entrees.” According to the Court, the use of the word “presents” between the marks “Stouffer’s” and “Weight Watchers” “creates the impression either that Stouffer owns Weight Watchers, or more likely that Stouffer is presenting these exchanges for Weight Watchers – in other words, that Weight Watchers gave Stouffer the exchanges to publish in the ad.” Weight Watchers Int’l, Inc. v. Stouffer Corp., 744 F.Supp. 1259 (S.D.N.Y. 1990).
With common sense and a good understanding of the legal parameters, companies can acceptably reference a competitor’s brand in an advertising campaign. But, given the heightened scrutiny trademark owners will give to the unauthorized uses of their market, caution should be taken to ensure that an advertisement avoids ambiguous language, which could cause consumers to be confused as to source, identity or sponsorship of the product or service. Anything even arguably deceptive or misleading must be avoided, and all direct factual comparisons must be substantiated.
If you are interested in more detail related to your situation it is best to speak with an attorney.
Megan K. Johnson is a business lawyer with over 7 years of experience. She helped champion securities crowdfunding at the local level and worked with the first company to successfully close an equity crowdfunding involving everyday investors. She is a partner at Founders Legal and can be reached at [email protected]
Source: Smartup Legal