Small Businesses and Comparison Advertising Strategies: Is it Worth the Risk?

Authors

  • Karen Russo France West Virginia University
  • Paula Fitzgerald Bone West Virginia University
  • James W. France Buchanan Ingersoll, P.C.

Abstract

Research shows that comparison ads can be particularly effective for businesses with relatively small market shares. However, there are legal risks associated with such strategies. Therefore, in this article we overview constitutional law, common law, and statutory law as they relate to claims made about competitors in comparative advertising. We carefully explore First Amendment rights and then examine the various causes of action in deception suits and Section 43a of the Lanham Act. We conclude with suggestions for the small business owner using comparison advertising to gain market share.

References

Advertising Age (1980). Some Comparative ads work, O&M concedes. (Nov. 3). 6.

( 1982). Burger King's Challenge set for heavy drive. (Sept. 13).

American Express Trayel Related Services Co v. Mastercard lot's, I nc., 776 F. Supp 787 (S.D.N.Y 1991).

American Home Prod, Coro V, Johnson and Jonson, 436 F. Supp 785 (S.D.N.Y. 1977), aff d 577 F.2d 160 (2nd Cir. 1978).

Associated Press v, Walker, 338 U.S. 130 (1967).

Beck-Dud ley,C. & Williams, T. G., (1989). Legal and public policy implications for the future of comparative advertising: A look at U-Hal v. Jartran, Journal of Pub!jc Policy and Marketing. 8. 124-42.

Bixby, M. B. & Lincoln, D. J. (1989). "Legal issues surrounding the use of comparative advertising: What the non-prescriptivedrug industry has taught us. Journal of Public Pol icy and Marketing. 8. 143-60.

Blum, A. ( 1 995). Once shunned surveys gain favor of courts. The National Law Journal. (Monday, October 30, 1995). A l , A l 7.

Boedecker, K. A., F. W., Morgan, F. W. & Wright, L. B. (1995). The evolution of first amendment protection for commercial speech. Journal of Marketing, 59 (I) 38-47.

Bolger y. Youngs Drugs Products Com., 463.S. 60 (1983) atl'g 456 U.S. 970 (1982).

Bose Coro, y, Consumer Union of United States. Inc., 508 F. Supp. 1249, 1270-74 (D. Mass. 1981), rev'd 692 F.2d 189 (1st Cir 1982), atl'd 466 U.S. 485 (1984).

Buchanan, B. ( 1985). Can you pass the com parative ad challenge? Haryard Business Review (July-Aug). I06-13.

& Goldman, D. ( 1989). Us v. Them: The minefield of comparative ads. Harvard Busi ness Review. 67 (3), 38-50.

Castro! Inc, V, Pennzoil Co., 987 F. 2d 939, 941 (3d Cir. 1993).

Central Hudson Gas & Electric Corporation v. Publ ic Service Commission of New York, 447 U.S.557, 100 S.Ct. 2343 (1980).

Coors Brewing Company y. Anheuser-Busch Companies. I nc., 802 F. Supp. 965 (S.D.N.Y. 1992)

Cumberla nd Farms Inc. v. Everett. 600 A.2d 398 (Me. 199!) Some comparative ads work, O&M Concedes. Adyertising Age, November 3, 1980, 6.

Curtis Publishing Co. y. Butts and Associated Press v. Walker, 388 U.S. 130 (1967). Donthu, N. (1992). Com parative advertising i ntensity. Journal of Advertising Research, November/December, 53-58.

Dun & Bradstreet.Inc. v Greenmoss Builders. Inc., 472 U.S. 749 (1985)

Gertz y. Robert Welch Inc., 41 8 U.S. 323 ( 1974)

Gnepa, T. J. (1993). Observations: Com parative advertising in magazines: Nature, frequency and a test of the 'underdog' hypothesis. Journal of Advettising Research, September/October, 70-75.

Harte-Hanks Communications Inc. v, Connaughton, 491 U.S. 657 (1989).

Hayes, J. (1994). Mrs. Winner's battles back with new ad attack. Nation's Restaurant News. October 17. 12.

Hogue, A. D. (1993). First Amendment defenses to trade libel. Practicing Law Institute, (February-March), 806.

Hurwitz,J.D. ( 1985). Abuse of governmental processes, the First Amendment and boundaries of 'Noerr'. Georgetown Law Journal, 74, 65-126.

Johar, G. V. ( 1995). Consumer involvement and deception from implied advertising claims. Journal of Marketing Research, (August), 267-279.

Johnson & Johnson * Merck v. Smithkline Beecham, 960 F.2d 294 (2d Cir. 1992).

Keeton, W. P., Dobbs, D. M., Keeton R. E., & Owen, D. G., (Eds.). (1984). Prosser and Keeton on the law of torts, (5th ed.). St. Paul, MN: West Publishing, Co.

Lanham Act, 1 5 U.S.C. §§ I 125(a)( l 977).

Langvardt, A. W. (1993). Section 43(A), Commercial falsehood, and the First Amendment: A proposed framework. Minnesota Law Review 78, 309-40 l.

Milton, C. E., Wall, B.W. Herbert G. W. , Rubins, J.M., & Strickland J. A. (1994),"Emergi ng publ ication torts," Practicing Law Institute, June-August, 651 .

Muehling, D. D. & Kangun, N. (1985). The Multi-dimensional ityof comparative advertising: Impl ications for the Federal Trade Commission. Journal of Publ ic Policy & Marketi ng. 4 1 12-28.

_, Stem, D. E & Raven, P. (1989). Comparative advertising: Views from advertiser, agencies, med ia and policy makers.Journal of Advertising Research 29, 5 (1989): 38- 48.

National Life I ns Co. v. Phillips Publishing Inc., 793 F. Supp 627, 634-43 (D. Nd. 1992).

New York Times v. Sullivan. 376 U.S. 254 (1964).

Pechmann, C. & Stewart, D. W. (1991 ). How direct comparative ads and market share affect brand choice. Journal of Advertising Research, December, 47-55.

Petty, R. D. (1991). The evol ution of com parative advertising law: Has the Lanham act gone too far? Journal of Public Policy and Marketing, Fall, 161-181.

Pittsburgh Press Co. v. Human Relations Commission, 413 U.S. 376, 385 (1973).

Rogers, J. C. & Williams, T. G. (1989). Comparative advertisi ng effectiveness: practitioners' perceptions versus academic research findi ngs. Journal of Advertising Research, October/November, 22-37.

Rosenbloom v, Metromed ia Inc., 403 U.S. 29, (1971).

Sethi, P. (1977). Advertising and large coroorations, Lexington Mass: Lexington Books.

Shimp, T. A. & Dyer D. C. (1978). The effect of comparative advertising mediated by market position of sponsoring brand. Journal of Advertising, 13-19.

Some comparative ads work, O&M concedes. ( 1980) Ti me. Inc v, Firestone, 424 U.S. 448 (1976).

U.S. Healthcare. Inc. V. Blue Cross of Greater Philadelphia, 898 F. 2d 914, 918 (3d Cir), cert. Denied, 1 1 S. Ct. 58 ( 1990).

Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council. Inc., 425 U.S. 748 (1976).

Warner-Lambert Co. v. Shering-Plough Coro., 1991 U.S. Dist. LEXIS 14620 (S.D.N.Y. October 15, 1991).

Weight Watchers Int's Inc. v. Stouffer Coro., 744 F.Supp 1259 (S.D.N.Y. 1990).

Wilkie, W. L. & Farris, P. W. (1975). Comparison advertising: Problems and potential. Journal of Marketi ng, October, 7-15.

Downloads

Published

1996-01-11

Issue

Vol. 7 No. 1 (1996)

Section

Articles

License

The Journal of Small Business Strategy (the “Publisher”) and the Author(s) agree as follows:
 
1.Author(s) hereby grant to Publisher all right, title, and interest in and to the Work, including copyright to all means of expression by any method now known or hereafter developed, including electronic format. If Publisher does not publish the Work within two (2) years of the Effective Date, copyright shall revert back to the Author. Publisher agrees to always credit Author(s) as the author(s) of the Work.
 
2.Publisher hereby grants Author a royalty-free, limited license for the following purposes, provided the Work is always identified as having first been published by Publisher.
    •The right to make and distribute copies of all or part of the Work for use in teaching;
    •The right to use all or part of the material contained in the Work in a book by the Author(s), or in a collection of the Author(s)’s work;
    •The right to use and distribute the Work internally at the Author(s)’s place of employment, and for promotion and any other non-commercial purposes;
    •The right to use figures and tables from the Work for any purpose;
    •The right to make presentations of material from the Work;
    •The right to use and distribute the Work on the Author(s)’s Web site and on the Author(s)’s university’s institute repository;
Such license shall be effective when the Work is first published in the Journal of Small Business Strategy.
 
3.The Author(s) represents and warrants that the Work: (a) is the Author(s)’s original work and that Author(s) has full power to enter into this agreement; (b) does not infringe the copyright or property right of another; (c) contains no materials which is obscene, libelous, defamatory or violates another’s civil right, right of privacy, or is otherwise unlawful; and (d) has not been previously published, in whole or in part. Author(s) shall indemnify and hold Publisher harmless against loss or expenses arising from breach of any such warranties.

How to Cite

Small Businesses and Comparison Advertising Strategies: Is it Worth the Risk?. (1996). Journal of Small Business Strategy (archive Only), 7(1), 81-98. https://libjournals.mtsu.edu/index.php/jsbs/article/view/331