January/February 2008

Puffery, Literal Falsity and Falsity by Necessary Implication

Holland & Knight Newsletter
Paul F. Kilmer
The U.S. Second Circuit Court of Appeals has found that advertising may be “comparative” even where a competitor’s product or service is not specifically named. The court also determined that an ad may be false by “necessary implication” if the only reasonable interpretation of its contents would lead consumers to an incorrect and/or damaging impression of a competitor’s product.

The court in Time Warner v. DirecTV Inc. concluded that DirecTV was guilty of promoting the picture quality of its transmissions through false advertising in two television spots.

In the first commercial, actress/singer Jessica Simpson states: “You’re just not gonna get the best picture out of some fancy big screen TV without DIRECTV. It’s broadcast in 1080i.” The court found this commercial literally false since the picture quality did not vary between Time Warner’s cable signal and Direct TV’s signal. In instances of literal falsity, such as the Simpson commercial, the court held no evidence of actual consumer deception was required.

In the other, actor William Shatner, in character from the original “Star Trek” television series, declares: “I wish he’d [the Chekov character] just relax and enjoy the amazing picture clarity of the DIRECTV HD we just hooked up ... . Settling for cable would be illogical.” The court considered this ad false by “necessary implication” in that it implies that the competing cable transmission will not produce a picture with the “amazing” clarity of DirecTV and therefore consumers should reject cable television as “illogical.” The false implication was contextual, not explicit, yet the court reasoned that its impact would be the same as the Simpson commercial in portraying DirecTV as providing a superior picture quality to cable. Therefore, the Shatner ad was literally false by necessary implication, and no actual consumer deception was required to demonstrate the harm to Time Warner.

The final promotional work evaluated by the court was an Internet ad in which very blurry and highly pixilated images are contrasted side-by-side with a simulated transmission from DirecTV. The court found that depictions of images so “unwatchably blurry, distorted, and pixilated, [are] nothing like the images a customer would ordinarily see using [plaintiff’s] cable service.” Based on this finding, the court concluded that the DirecTV Web site ad was sufficiently unrealistic that it would not confuse or deceive consumers. The court characterized this form of puffery as falling with the realm of “exaggerated, blustering, and boasting” statements which it had previously concluded no reasonable buyer would rely upon. This holding applied even though the images of a generic competitor’s product were literally false in that no normal cable signal would create such a distorted image.
Finally, on the issue of damage to Time Warner, the court found that where only a limited number of competitors could be the object of the ad (such as where the local cable franchise had been granted to Time Warner), damage may be presumed. The court noted that where a false comparison is made on which consumers will rely, and that false comparison relates to a sufficiently identifiable competitor, the false ad “necessarily” diminishes the value of the plaintiff’s product in the minds of consumers and injury arises without the requirement of specific proof.
The Second Circuit’s decision in Time Warner appears to align its case law with that of the First, Third, Fourth and Ninth Circuits in recognizing the doctrine of “false by necessary implication” in the field of false advertising. Its holding in relation to the “puffery” of the Web site images appears to expand upon the existing law and will likely be the topic of discussion in future opinions.

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