A significant percentage of a company’s total budget may be spent on advertising and promotion. Commercials, social media campaigns, contests, billboards, print ads, and point-of-sale displays all take time to design, develop, and implement. Imagine the expense, lost investment, and disruption caused by being forced to significantly modify a recently launched campaign or even bring it to a halt.

In one recent (and ongoing) case, MillerCoors has challenged an Anheuser-Busch campaign promoting Bud Light as not using corn syrup, which it contrasts with the use of corn syrup in the process for brewing Miller Lite and Coors Light. MillerCoors sought a preliminary injunction against the Bud Light advertising. The district court granted the preliminary injunction in part, giving Anheuser-Busch a mere 10 days to stop using the following language in its commercials, print advertising and social media:

• Bud Light contains “100% less corn syrup”;
• Bud Light in direct reference to “no corn syrup” without any reference to “brewed with,” “made with” or “uses”;
• Miller Lite and/or Coors Light and “corn syrup” without including any reference to “brewed with,” “made with” or “uses”; and
• Describing “corn syrup” as an ingredient “in” the finished product.ⁱ

Even though MillerCoors won some preliminary relief, it immediately appealed, seeking a broader injunction that prohibits the “brewed with,” “made with,” and “uses” corn syrup references by Anheuser-Busch. MillerCoors asserts that all of these references are misleading because the end product contains no corn syrup. Anheuser-Busch has responded that it is merely advertising accurate information about MillerCoors’s use of corn syrup in the brewing of Miller Lite and Coors Light and that MillerCoors is improperly trying to use the Lanham Act to keep truthful information from consumers. Oral argument is scheduled for September 23, 2019 at the Seventh Circuit Court of Appeals.ⁱⁱ

In the meantime, on September 4, 2019, the district court issued a modified preliminary injunction that expanded the previous injunction to also prohibit Anheuser-Busch from using the statement “no corn syrup” on its packaging.ⁱⁱⁱ The court held that “[v]iewed in context of the full advertising campaign, a reasonable jury could find that the implicit message of the packaging is that other beers contain corn syrup.” Anheuser-Busch may exhaust its inventory of the prohibited packaging that it had on hand as of June 6, 2019, but must do so by March 2, 2020.

The litigation is still in its early stages. Unless settled, the case will proceed in the district court following the appellate court’s decision (which relates only to what statements must be enjoined during the pendency of the case), through discovery, and up to trial on the merits.

While disputes like this play out in the courts, the public and the press take an interest. The ad campaigns and the competitor’s response to the ad campaigns can take on social media-fueled lives of their own. The commercials involved are shown not only during scheduled airings but also on the news and in images posted in blogs and articles. Whether this is beneficial or harmful to either side is often unknown. But there is no doubt it is an expensive distraction. What can be done to minimize the risk of disruption to a campaign and ensure its success?

1. THE LEGAL LANDSCAPE

Start with considering some of the basic principles of false advertising law. “Claims” made in advertising or promotional materials can give rise to allegations of false advertising by a competitor, the government, or even consumers who feel deceived. Advertising and promotional materials can include a wide range of platforms, including television and radio commercials, product labels, press releases, blog posts, tweets, and in some instances even claims made orally to customers or prospects.

Generally, for an advertising “claim” to be actionable, the claim must be:

• factual, i.e., a statement of fact that can be proven to be true or false; and
• material, i.e., important to a customer or prospective customer or would affect a purchasing decision.

NOTE: This excludes statements of opinion or “puffery,” such as claiming to be “great,” which are subjective (rather than objective) statements and not actionable.

A challenged claim can be:

• a freestanding statement about your products/services or those of a competitor (without any express or implied comparison); or
• comparative

o with or without naming a specific competitor;

o with either an express or implied comparison; and

o with either a claim of superiority or a claim of parity.

Advertising claims can be proven false in several ways:

• a claim can be literally false – just flat not true, e.g., “Miller Lite beer contains corn syrup” when in fact there is no corn syrup in the beer;
• a claim can be false by necessary implication – it carries with it an implicit false message, often as the result of a significant omission, and is treated the same as a literally false statement, e.g., “all of our customers surveyed rate our services the highest” if we only surveyed customers who first expressed great satisfaction with our services;
• a claim can be literally true but misleading (in which case the alleged false message must be proven through a consumer survey or some other evidence of consumers being misled); or
• a claim can be an unsubstantiated “tests prove” or “establishment” claim, which purports to rely on survey or test data that does not in fact support the claim or was not conducted using reliable survey or test methods.

If a claim is proved false or misleading, an advertiser can be subject to significant monetary damages (including disgorgement of profits earned through the false advertising), claims for injunctive relief, and even awards of attorneys’ fees. Advertisers are most susceptible to significant damages awards when the plaintiff can show a connection between the false or misleading advertising and either harm to the plaintiff or a benefit to the advertiser.

While there is no “intent” requirement and an advertiser can be held liable even if it thought it was acting properly, intent can play a role. Intentionally false or misleading claims may result in potential presumptions against the advertiser or increased damages. For example, in its appeal to the Seventh Circuit, MillerCoors has argued that Anheuser-Busch’s intent to deceive consumers about corn syrup content should shift the burden to Anheuser-Busch to establish that consumers were not deceived.

2. HOW ADVERTISING CLAIMS MAY BE CHALLENGED

Often those looking most closely at advertising are the advertiser’s competitors – particularly where the advertising claims compare products or services head-to-head. When a competitor believes that an advertising claim has crossed the line, several options are available.

As an initial step, the competitor may consider writing a letter to demand that false advertising stop. This is not required, but it can be an efficient way to resolve some disputes. In recent years, creative and often humorous letters have been used effectively to mitigate disputes – particularly when the two companies involved are not direct competitors or one of the companies is much larger than the other. Such letters – whether intended to be lighthearted or stern – can also take on a life of their own on social media.

If the dispute cannot be resolved directly between the companies, the competitor may file a complaint with an industry group, such as the National Advertising Division (NAD) of the Better Business Bureau. Or the competitor may file a lawsuit – typically in federal court alleging false advertising under the Lanham Act, a federal statute that addresses, among other things, unfair competition and trademark infringement. Disputes are often resolved more quickly and for less money in the NAD than in the courts. On the other hand, participation in the NAD process is voluntary and there is no option for discovery, injunctive relief, or damages.

Competitors are not the only ones watching advertising. Both the federal and state governments may pursue advertisers that they believe are making false or misleading claims to consumers. On the national level, the Federal Trade Commission typically pursues advertising cases, but other agencies, including the Food and Drug Administration and the United States Department of Agriculture, also play a role – particularly in food labeling. On the state level, state attorneys general may bring enforcement actions to address false advertising claims within their states.

Consumers may also bring claims for false advertising, although individual consumer complaints do not fall under the Lanham Act and typically will not spur action from government agencies. When consumers file suit it is typically in the form of a “class action” case that alleges false advertising in violation of state laws. In the food and beverage context, these cases will often challenge false labeling, slack fill, and claims that products are “natural” or healthy.

3. REVIEW ADVERTISING CLAIMS ON THE FRONT END TO MINIMIZE RISKS

To minimize allegations of false advertising, a legal review should be part of each advertising campaign prior to launch. This legal review should include the campaign as a whole to assess the overall impression as well as the individual statements that are included in the advertising.

Some advertising claims tend to get more attention than others and therefore should also be closely scrutinized during the legal review process. These claims include:

• identification of a competitor by name, particularly when conveying a negative message;
• test or survey results, statistics, and most claims that include numbers (whether about your own business or about a competitor’s business);
• absolute statements, such as “always” or “never”;
• superlatives, such as “most” or “fastest”;
• graphics that do not accurately and fairly depict the subject matter;
• endorsements and testimonials; and
• statements that require disclaimers.

Taking the time to evaluate these considerations on the front end can help avoid disputes and keep advertising campaigns on track for their intended goals. That’s something everyone can celebrate with a frosty beverage.

ⁱ MillerCoors, LLC v. Anheuser-Busch Cos., LLC, No. 19-cv-218-wmc (WD Wis. May 24, 2019) (Dkt. 57).

ⁱⁱ MillerCoors, LLC v. Anheuser-Busch Cos., LLC, Appeal No. 19-2200 (7th Cir. 2019).

ⁱⁱⁱ MillerCoors, LLC v. Anheuser-Busch Cos., LLC, No. 19-cv-218-wmc (WD Wis. Sept. 4, 2019) (Dkt. 102).