Lies, damn lies, and misleading advertising: the role of consumer surveys in the wake of Mead Johnson v. Abbott Labs.

• Author: Edman, Thomas W.

"There are three kinds of lies: lies, damn lies, and statistics." (1) Just as Benjamin Disraeli noted, statistics yield results that one can skew in a variety of ways. If Disraeli was around to observe American society in the second half of the twentieth century, he might have included another category in his list of lies: advertising. Advertising, like statistics, is recognized commonly as a medium where facts can be interpreted, twisted, and emphasized according to the advertiser's needs. When business judgment and professional ethics fail to enforce reasonable standards, the courts may have to decide if advertisers have twisted the facts too far. This Note examines how courts determine what constitutes misleading advertising and applauds the shift toward a more consistent judicial doctrine signaled by the Court of Appeals for the Seventh Circuit in Mead Johnson & Co. v. Abbott Laboratories. (2)

Advertising plays a significant role in today's economy and its presence in both print and electronic formats is likely to continue. (3) Buoyed by a strong market in 1999, advertisers increased their media expenditures by 10.3 percent over 1998 spending levels up to $87.5 billion from $79.3 billion. (4) With that kind of money in question, advertisers understandably want to get the highest possible return from their investment.

Advertisers want to make their products look as good as possible to as many consumers as possible. In today's market, they frequently attempt the task not just by saying "our product is good," but by saying "our product is better than the other guys'"--which is the basic concept behind comparative advertising. (5) The effectiveness of comparative advertising is shown not only by consumer studies, but by its continuing use by advertisers. Approximately one-third of all advertising in the United States is comparative. (6) A 1994 study of 5000 commercials by Research Systems Corporation (RSC) found that twenty-one percent of comparative ads had "superior" persuasion scores whereas only eighteen percent of the commercials that did not compare the competition received superior scores. (7) Comparative advertisements also lead to greater consumer attention and message recall than noncomparative advertisements. (8)

American consumers typically can recognize when advertisers make thinly veiled attempts to create an artificial advantage. (9) In these instances, exaggerated advertising or boasting upon which no reasonable consumer would rely is not grounds for legal action. (10) The term for this type of representation and manipulation of advertising statistics is "puffing." (11) The advertiser's object in puffing is simple: given a choice of data, pick those that make you look best; if there is no good choice, change the criteria to make the data support your product. (12) One of the more intriguing examples of puffing occurred in the computer industry's market-share calculations. The research firm PC Data tallied each color of Apple's popular iMac computer as a different model, thus ensuring that only the competing Windows/Intel models attained best-seller status. (13)

The effectiveness of an advertisement claiming that a given product is better than its competitors increases when the ad cites a scientific study or test to "establish" the claim. (14) The modern consumer often grants a position of "mystic infallibility" to information labeled as "scientifically proven." (15) Given the effectiveness of claims with scientific support, advertisers will, perhaps understandably, tout the smallest nuances of established superiority to gain a perceived competitive advantage.

When advertisers' claims cross the line from puffing to actual falsity, enforcement of the laws of unfair competition is available to injured parties. (16) There are a variety of legal options, (17) but the predominant legislation for addressing charges of false advertising --and the legal focus of this Note--is Section 43(a) of the Lanham Act. (18)

Determining what constitutes a falsity has proven to be no easy task for the courts. (19) The consumer survey has emerged in recent years as the most important tool for resolving that question. (20) In the view of most courts, the advertiser's targeted audience should determine which advertising claims are misleading. (21) A competitor wanting to contest the misleading nature of an advertising claim rounds up a statistically random sample of "average" Americans and asks them how they interpret the claim in question. (22) If enough consumers cannot properly interpret the claim, it may be deemed misleading. (23) In the last half of the twentieth century the use of consumer survey evidence in false-advertising litigation grew from a suspect element in the larger body of plaintiffs evidence to a required--and in some cases singular--tool. (24) Surveys now provide the evidentiary key to the court's determination of whether an advertising claim that is technically true is cast under the same legal status as a literally false claim.

The Seventh Circuit's ruling in Mead Johnson & Co. v. Abbott Laboratories (25) takes a step back from the prevailing judicial affection for consumer survey evidence. By enforcing a limit on when consumer survey evidence is admissible, the Seventh Circuit took a judicial position that returns some common sense to misleading advertising enforcement under Section 43(a) of the Lanham Act.

This Note analyzes how the role of consumer surveys developed and what Mead Johnson may change. Following this introduction, section two reviews the case law development leading to modern support for the use of consumer surveys in misleading advertising claims. The next section presents some of the ongoing problems with the use of consumer surveys in false-advertising litigation. Section four reviews the facts and holding of Mead Johnson. Finally, section five assesses the potential impact of Mead Johnson on the future use of consumer surveys.

PURPOSE AND ENFORCEMENT OF THE LANHAM ACT

Pre-1946 Unfair Competition

Under the common law, injured competitors found virtually no relief for false advertising. (26) The earliest attempts to legislate against false advertising provided a very limited cause of action against competitors' unfair tactics. (27) The 1920 Trade-Mark Act (28) covered only advertising messages that were promoted with the intent to deceive, and only those doing business in the locality of the advertising were entitled to bring suit. (29) With the focus on the advertiser's intent, consumer survey evidence played virtually no role in early false-advertising litigation.

False Advertising Under the 1946 Lanham Act

In response to the need for a new federal remedy for a variety of unfair competition problems, Congress passed Section 43(a) of the Lanham Trademark Act. (30) The Lanham Act is presently the predominant federal law for false advertising in the United States. (31) Under the Act, only those who can show a competitive injury (32)--thus specifically excluding misled consumers--can directly sue the offending advertiser without going through a government entity to do so for them. (33)

The drafters of Lanham Act Section 43(a), considered it to be a minor section partially codifying the common law, that also eased the restrictive evidentiary requirements of common law false-advertising cases. (34) At common law, claimants had to prove either "palming off"--attempting to make customers believe that one's own product was actually that of a competitor--or disparagement--a false accusation leveled for the purpose of injuring a competitor's business. (35) The Lanham Act eased the plaintiffs burden for proving palming-off and eliminated the intent requirement. (36) Judicial interpretations of the Act eventually expanded the range of allowable claims, but it took a number of years--even into the 1980s in some jurisdictions--for the courts to broaden the scope of the statute beyond the pre-1946 statutory limits. (37)

The groundwork for the expanding scope was laid in 1954 when the Third Circuit first extended the Lanham Act's unfair competition provision to false advertising. In L'Aiglon Apparel, Inc. v. Lana Lobell, Inc., (38) the plaintiff had advertised a dress in a national advertising campaign. The defendant offered an inferior dress at less than half the price, using a picture of the plaintiffs dress in its advertising. (39) The plaintiff accused the defendant of misleading consumers by implying that they could obtain a dress of similar quality to the plaintiffs for less money. (40) The Third Circuit held that the Lanham Act provided the plaintiff a cause of action for unfair competition through false advertising. (41) The court found that Congress, in adopting Section 43(a), created a federal statutory tort similar to the common law tort of unfair competition. (42)

Use of Section 43(a) exploded during the 1970s and 1980s as plaintiffs' attorneys began pushing the courts to apply it to more and different types of false advertising and trademark infringement disputes. (43) Through judicial construction, Section 43(a) gradually developed into the predominant means for asserting unfair competition through false advertising. (44)

The use of, and corresponding judicial reaction to, consumer survey evidence grew with Lanham Act false advertising litigation. The courts' initial reaction to the concept of consumer survey evidence was less than enthusiastic. The Fourth Circuit's opinion in Bristol-Myers Co. v. Federal Trade Commission (45) is representative of the cautious approach to survey evidence during the early years of Lanham Act Section 43(a) litigation:

It may well be that an accurate estimate of public opinion or practice can be obtained by a sampling process or survey, but the record is devoid of information on this subject and in the absence of the proof of the scientific principles, if any, which underlie the practice, we must rely upon the impression which the...