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Contact Information

Leslie Bonacum
847-267-7153
mediahelp@cch.com
Neil Allen
847-267-2179
neil.allen@wolterskluwer.com

CCH Annual Review Captures Significant, Outrageous Trends In Advertising Law

(RIVERWOODS, ILL., June 20, 2000) – A hog isn’t necessarily a Harley, but once a Playmate, always a Playmate – those are two of the decisions handed down last year and noted in Advertising Law: 1999 Year In Review, published by CCH INCORPORATED (CCH), a leading provider of business and trade law information, software and services. While the annually issued book chronicles major developments in areas such as consumer privacy, the Internet, sweepstakes, corrective advertising and telemarketing, it also records cases that involve the odder and more outrageous aspects of advertising. (245 pages, $85. To order, call 1-800-248-3248 or visit the new CCH online store at http://onlinestore.cch.com.)

"This area of the law deals with companies and products that everyone knows, and also with some dubious practices that almost everyone has encountered at one time or another," said John W. Arden, publisher of the CCH Trade Regulation Group and co-author of Advertising Law.

Major 1999 Developments

In 1999, the Federal Trade Commission capped a decade of activism by requiring Doan’s Pills to run $8 million worth of advertising correcting false impressions left by previous Doan’s claims about its special effectiveness at treating back pain. It was the first corrective advertising order in nearly 25 years. Significant developments also took place in the regulation of sweepstakes and in tobacco and cigarette advertising.

The Internet was at the center of several developments and controversies in 1999, including attempts to regulate unsolicited electronic mail ("Spam"), privacy issues involving children and intellectual property, including the practice of "cybersquatting."

The past year also saw major developments in the law regarding telemarketing – so much so that a new chapter devoted to that subject has been added to the Advertising Law Review for the year.

But while 1999 was full of developments in the niceties of the Lanham Act that engage the serious attention of corporate counsels for advertisers and their agencies, other cases involved issues, companies and personalities that enjoy widespread identification. Five cases are especially striking.

Fact from Fiction

A federal judge ruled that, especially when it comes to advertising, you aren’t supposed to believe everything you see.

Like many other young people, John Leonard watched a Pepsi commercial targeting teenagers that showed merchandise available for collecting "Pepsi points" – a T-shirt for 75 Pepsi points, sunglasses for 175 Pepsi points… and a Harrier fighter jet for 7,000,000 Pepsi points. Unlike anyone else, Leonard proceeded as if the Harrier part of the commercial were serious. He rounded up investors for the $700,000 in cash it took to equal 7,000,000 Pepsi points and sent in an order to Pepsi for the $23 million military jet – even though the plane was conspicuously absent from the official order form. When Pepsi repeatedly refused to fulfill the order, Leonard sued.

The court ruled against him, noting that advertisements are not ordinarily seen as offers to sell in the eyes of the law. The judge also found that no reasonable person would take the "offer" in the commercial seriously. It was presented as a fantasy, the reactions of the teenaged characters in the commercial were exaggerated and the basic premise of obtaining a $23 million fighter for the equivalent of $700,000 was "too good to be true."

Free Speech or Deceptive Advertising? It’s Where You Say It That Counts

"The Beardstown Ladies" was an investment club that touted what it thought were impressive returns in the stock market in a series of books and videotapes. Unfortunately, it turned out that the ladies’ estimate of their gains had been inflated by faulty mathematics.

A California court of appeals found that the contents of the publications were protected by the free speech provisions of the Constitution, no matter how flawed the arithmetic. The ladies crossed a line, though, when the overly rosy results appeared in blurbs on the covers of the books and tapes, the court ruled. The court came to what it described as the "common sense conclusion" that the covers were "designed with a single purpose in mind, to sell the books." Judged as commercial speech, the blurbs were demonstrably false and lacked constitutional protection. Thus, the publisher of the books and tapes was subject to a suit alleging false advertising and deceptive practices under California law.

It May Be a Blast, But It Lacked a Certain Something

The National Advertising Division (NAD) of the Council of Better Business Bureaus, a self-regulatory industry-sponsored group, ruled that the "buttery taste" of International Home Food’s "Crunch ‘n’ Munch Butter Toffee Popcorn with Peanuts" came mainly from the real butter it contained, rather than a small amount of artificial butter. On the other hand, American Popcorn Co. voluntarily agreed to disclose the presence of artificial flavor in its "Blast O Butter Microwave Popcorn" before the NAD could rule on a complaint. The product contained no butter at all.

With or Without Playboy, She’s Still a Playmate

Teri Wells, a former Playboy Playmate of the Year, should be allowed to identify herself as such on her website, a district court in Southern California ruled, finding that she was entitled to a "fair use" defense against claims of trademark infringement by Playboy Enterprises. It would be "impractical as well as ineffectual" for her to describe herself as the "nude model selected by Mr. Hefner’s magazine as the number-one prototypical woman for the year 1981," the court reasoned.

"Hog" is Fair Game, But Logo is Protected

A motorcycle repair shop can call itself "The Hog Farm" in advertising without infringing Harley-Davidson’s trademark because "hog" had become a generic term for a large motorcycle before Harley-Davidson registered the mark. But the court enjoined the shop from using a "parody" of the manufacturer’s bar-and-shield logo.

About the Authors

James D. Arden is a partner in the New York office of Sidley & Austin, where he concentrates his practice in complex commercial litigation. He has defended and prosecuted cases involving false advertising, securities fraud, antitrust, intellectual property and other commercial issues.

John W. Arden is publisher for Trade Regulation in the CCH Business and Finance group. He has written and edited legal publications for nearly twenty years in the fields of franchising and distribution law, advertising, copyright and the North American Free Trade Agreement.

Availability and Pricing

For more information or to purchase the 245-page Advertising Law: 1999 Year In Review, call 1-800-248-3248 or visit the CCH online store at http://onlinestore.cch.com. Single copy price is $85 plus applicable tax, shipping and handling. Quantity discounts are available.

About CCH INCORPORATED

CCH has served more than four generations of business professionals and their clients, covering a wide range of legal and compliance topics including securities, insurance, banking, telecommunications, trade regulations and government contracting. CCH is a wholly owned subsidiary of Wolters Kluwer. The CCH web site can be accessed at www.cch.com. The Business and Finance Group web site can be accessed at http://business.cch.com.

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Editor's Note: Complimentary editorial review copies of CCH Advertising Law: 1999 Year in Review are available to members of the press. Contact: Leslie Bonacum at 847-267-7153 or bonacuml@cch.com.

       


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