- May 29, 2012
- Posted by: Seth Heyman
- Categories: Business Law, Marketing & Advertising Law
On April 30th, Penn Racquet sports Inc. filed a false advertising lawsuit against its main rival, ball manufacturer Dunlop International, Inc. The complaint, which was filed in a U.S. District Court in Connecticut, alleges that Dunlop deceived the public by claiming to make the “World’s No. 1 Ball” and having a 70 percent share of the global tennis ball market.
Penn argues that all of Dunlop’s claims of superiority are false, and that, in fact, Dunlop’s balls are not “No. 1” and the company does not have the largest worldwide share. In the Complaint, Penn states that it “has enjoyed over fifty (50) percent market share for the tennis-ball market in the United States for the past 15 years and currently enjoys a sixty (60) percent share of the U.S. tennis-ball market, according to data compiled by the Tennis Industry Association (TIA) – a recognized tennis-industry organization.”
Basically, Penn is calling Dunlop out on its claims. In order to win, Dunlop must present substantiating evidence backing up its bold statements. In the event it is unable to do so, Penn demands a declaratory judgment, in which the Court rules that Dunlop pay an undetermined amount of damages, plaintiff Head is seeking a declaratory judgment that Dunlop’s actions constitute false advertising as a matter of law, and that its rival be Dunlop be permanently enjoined from claiming to have the “World’s No. 1 Ball” and/or a 70 percent global market share. Penn further demands that Dunlop be forced to destroy “all products, signage, advertisements, promotional materials, stationery, forms, and/or any other materials and things that contain or bear the false and misleading statements.” Penn also demands payment of an unspecified amount of monetary damages.
How Far Can You Go? The Penn vs. Dunlop case illustrates the extent to which a company can engage in “puffery,” a term frequently used to denote exaggerations reasonably to be expected of a seller to the degree of quality of his product, the truth or falsity of which cannot be precisely determined. Of course, everyone likes to claim that their business is the “best” in terms of quality, price, or service. The question is, to what extent can a business brag about how great it is before before it winds up in court?
The answer lies in whether it’s actually possible to make an objective determination as to the accuracy of the claim. The Federal Trade Commission states that advertising claims such as “the best coffee in the state” or “quality that can’t be beat,” are so vague and/or exaggerated that consumers generally do not pay attention to them, depending on the context. In contrast, specific claims that are objectively proven or disproven, are not puffery. This means that a car dealer claiming to that it has the largest selection of cars in the country, or a toothpaste manufacturer stating that 9 out of 10 dentists prefer their toothpaste may be subject to a false advertising lawsuit because the accuracy of those statements can be proven.
Whether a restaurant has the best steak is a matter of opinion, but whether it has 5 stars is a matter of fact. In other words, if you’re going to be stating anything specific in your ads, be prepared to put up or shut up.