Tackling misleading ads
What to do when a competitor’s advertising contains false and harmful information
John and Paul run a successful lawn maintenance business, Simple Green, servicing thousands of customers across the New England states. Their main competitor, Evergreen, is flooding the market with print and radio ads describing Evergreen’s service as environmentally friendly. Evergreen’s ads represent that nine out of 10 environmentalists support Evergreen’s lawn treatment as the most environmentally friendly available.
Worse yet from Simple Green’s perspective, some of Evergreen’s print ads have a split screen with “competitor” written on the right-hand side of the ad and underneath a lawn featuring dead grass and a dead bird.
Of course, the other side of the page, labeled “Evergreen,” depicts a mother and her ducklings walking across a lush green lawn with a “just treated” sign in the middle. John and Paul know Evergreen is using the same chemicals they are and the word on the street is that the “environmentalists” Evergreen supposedly consulted consist of Evergreen’s owners’ aunts, uncles and other assorted affiliates.
In the two weeks Evergreen’s ad has run, there has been a precipitous drop in the number of customers signing on for Simple Green’s service for the coming year.
Paul calls for an appointment with the company’s lawyer. The lawyer tells him that state and federal law requires advertisers to tell the truth about their and their competitors’ products. The federal law, mimicked by most state laws, provides that any person who, in the sale of any goods and services, makes a “false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which … in commercial advertising or promotion, misrepresents the nature, characteristics, qualities or geographic origin of his or her for another person’s goods, services or commercial activities … Shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”
The question, therefore, is whether Evergreen’s ads are false or misleading.
Simple Green’s easier attack is likely against the claim of “environmentalists’” supposed approval of Evergreen’s services. This representation is likely facially false and misleading because, if the rumors are true, then contrary to the legitimate expectation of the reader, the “environmentalists” who approve of Evergreen’s service are not scientists whose interest is in preserving the environment, but instead are Evergreen’s friends and family. Those Evergreen affiliates endorse its service without any serious analysis of the environmental impact.
The staged pictures are another example of a false depiction that makes Evergreen liable under the false advertising law.
Evergreen’s claim about its superior environmental qualities is more difficult.
Here, Simple Green would need to show that Evergreen’s product line was damaging to the environment – not an ideal assertion for Simple Green to be making. Moreover, Evergreen might argue that claims about being environmentally sound are statements of opinion and therefore not actionable. While, as a proposition of law, that is possibly true, the likely successful counter to categorizing environmental friendliness as an opinion is to show that it is really a fact susceptible of being objectively proven or disproven.
Upon proving its case, Simple Green will have a range of relief open to it. Preliminarily, Simple Green can ask the court to enjoin Evergreen from further publishing its misleading ads. In addition, it can seek to have Evergreen disgorge the profits it garnered by its false ads, and to recover the losses it suffered because of those ads.
Proving profits wrongly gained or lost requires a sophisticated analysis of the two businesses to discern the income and profits they could have expected to receive in the absence of the ads. Simple Green might also find an expert to determine the value of the harm to its reputation caused by the ads, also a recoverable sum.
Finally, Simple Green may need to
conduct an ad campaign of its own to
rectify the harm done by Evergreen’s actions – a cost that is also recoverable upon proof the Evergreen ads are false or misleading.
Scott Harris, a director in the Litigation Department of McLane Middleton, can be reached at 603-628-1459 or firstname.lastname@example.org.