"There is nothing wrong with the aggressive promotion of one’s own goods or services so long as there is no untruthful disparagement of a competitor’s goods or services.  Advertising can be an effective tool in persuading the public to utilize a particular product or service.  By its nature, it is one-sided and usually does not convey a full and balanced analysis.  To do so, of course, might diminish its persuasive power. There must, however, be a reasonable basis for the representation that is made.  So long as that is so, competitors may complain that the ad does not depict the whole picture, but they are just as equipped to tell their side of the story in the commercial marketplace of ideas with emphasis on those matters which they believe to be important.  Courts should be reluctant to intervene in the competitive marketplace unless the advertisements are clearly unfair."

Justice Lederman in Purolator v UPS

PEPSI'S HARRIER JET

Pepsi's television advertisement was spectacular: collect 7-million Pepsi points and get a Harrier fighter jet!

John Leonard of Seattle was paying attention. he obtained a copy of the Pepsi Points catalogue and noticed that the Harrier fighter jet was absent. But the Catalog noted that in the event that a consumer lacked enough Pepsi Points to obtain a desired item, additional Pepsi Points could be purchased for ten cents each; however, at least fifteen original Pepsi Points must accompany each order. Leonard mailed in 15 Pepsi Points and a cheque for $700,000 "expressly for obtaining a new Harrier jet as advertised in your Pepsi Stuff commercial".

Pepsi had a good laugh and returned the check saying: "The Harrier jet in the Pepsi commercial is fanciful and is simply included to create a humorous and entertaining ad."Leonard hired a lawyer who sent a demand letter but again Pepsi insisted the reference to a Harrier jet had been a joke.

Harrier jetLeonard sued but lost with Justice Kimba Wood of the United States District Court siding with Pepsi:

"A reasonable viewer would understand such advertisements as mere puffery, not as statements of fact and refrain from interpreting the promises of the commercial as being literally true.

"[T]he primary mission of a Harrier Jet, according to the United States Marine Corps, is to attack and destroy surface targets.... [D]epiction of such a jet as a way to get to school in the morning is clearly not serious."

HE HITS THE GOAL POST!

In March of 1994, Randy Giunto entered the Coca-Cola/Florida Panthers Sweepstakes. He got past the first hurdle by winning tickets to attend a hockey game at which he would be given an opportunity to show the pocket across the ice surface into a very small goal. Just before he made his attempt, he signed an agreement which included the requirement that the pot had to go "into and through a special small goal"; in hockey parlance, the puck had to completely cross the goal line.

Giunto lined up from 118 feet away for his attempt at winning $1 million. The puck raced straight down the ice and appeared to be a perfect shot when, just as it was crossing the red goal line, the puck nicked the corner of the small goal, rebounded from side to side and coming to rest not completely over the red line. A contest judge declared the shot unsuccessful but the public announcer called it a goal. When it was announced that the puck had not completely passed the goal-line, the crowd chanted bullshit, bullshit.

Giunto sued hoping to raise dust over the wording of the pre-contest agreement. He argued that should have been enough the path to enter the opening of the small goal.

Giunto refused a $6,000 settlement and at first won before a jury. But the Panthers and Coca-Cola appealed.

Justice Cope wrote the decision of the majority of the District Court of Appeal of Florida in dismissing the claim because of the clear wording of the pre-contest agreement. There had been five other winners of the contest in the United States and in each of those cases, the puck had pass completely through the goal.

NOVA SCOTIA COURT, MISLEADING AND UNFAIR ADVERTISING

Maritime Travel was a well-known travel company in Halifax when Go Travel Direct of Ottawa arrived and began an aggressive ad campaign in which it compared, side-by-side what purported to be its price against that of Maritime Travel. Maritime Travel sent a lawyers letter and Go Travel Direct told them to take a hike. Maritime Travel sought an injunction but even the Court told Maritime Travel to take a hike. Go Travel Direct continued with its ad campaign and Maritime Travel was forced to lower its prices to compete.

Hidden inside Canada's Competition Act is a critical component of consumer protection:

"59. No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect."

Justice Suzanne Hood of the Nova Scotia Supreme Court wrote a judgment which can only be described as a brutal surgery of words and letters that must have been written on the Lord's Day, found that while some of Go Travel Direct ads were neither misleading or unfair, some were. In some cases, the price difference, which was at the core of the advertising, was not based on representative samples of each company's travel offers. Go Travel was hit with $216K in damages.

ONTARIO, STUCK STUCKY

David Stucky was doing well, very well. His two direct marketing companies had 120 employees. He got the best legal advice money could buy and proceeded with a massive mail-out of 20 million pieces of mail to consumers outside of Canada. The letters offered consumers the opportunity to invest in syndicates that purchased lottery tickets from Canada, France, Britain, Germany and Spain. The stated purpose of the syndicates was to improve the chances of winning” for each individual. The promoter would acquire a certain number of tickets for each syndicate and the participants would share on a pro-rated basis depending upon the level purchased.

According to the Canadian Competition Bureau:

"The lottery promotion, which sold group shares of Super 7 lottery tickets, gave consumers the misleading impression that they could win tens of millions of dollars. However, in a period of just over a year and a half, consumers actually won an average of 75 cents. Mr. Stucky mailed out approximately 3.1 million copies of the lottery promotion and received approximately $1 million in revenue.

"The sweepstakes look-alike offer gave recipients the false impression that they were to receive a cash prize of about $5,000 or another valuable prize on payment of a modest processing fee. In reality, almost all purchasers received a predetermined prize of an inexpensive piece of costume jewellery."

When Stucky was charged with 16 counts of false or misleading advertising he fought as rare a litigant can afford to fight: thirty two days of pre-trial applications, sixty days of evidence and nine days of argument. In a nutshell, the prosecution held that Stucky's brainchild created an erroneous general impression that the recipients had won or could win a substantial sum of money. The syndicates used names which suggested an association with government or public international agencies: Canadian Lottery Buyers Association, International Lottery Commission, International Monetary Funding and the Canadian Equity Funding.

Justice Gans laid bare, in gory detail, the inner workings of direct marketing, including the exotic lexicon but having no choice but to dismiss all charges because none of the mail-outs had been sent to Canadian households. He held that the words “to the public” in the Competition Act meant “to the Canadian public”.

It seemed that Mr. Stucky had done his due diligence and dodged the judicial bullet but the Crown appealed. In February, 2009 the Ontario Court of Appeal held that those who make false and misleading representations to the public can be prosecuted in Canada, even if the representations were made to only people outside of Canada. In August, 2009, Stucky was convicted and fined $2-million for his deceptive direct mail promotions.

REFERENCES: