Protect Market Share and Avoid Pitfalls through Comparative Advertising Protect Market Share and Avoid Pitfalls through Comparative Advertising

Protect Market Share and Avoid Pitfalls through Comparative Advertising

Can you legally say that your agribusiness product is “better” than the competition? What if you have a study comparing the growth rates of your treated seeds versus the competition’s treated seeds? Can you publish the study in an advertisement? If so, do you need to include any facts or disclaimers in the advertisement?
 
The business of agriculture is in a state of innovation. Producers need to protect their market share from encroachment by competitors. Consumers are increasingly placing value on the source and quality of their food. Producers who use practices or contribute to value-added products that speak to the values of consumers may have a competitive advantage in telling their story. However, producers should exercise caution when comparative statements are involved.
 
Apart from protecting the farm’s intellectual property, agribusiness today is highly competitive and demands highly competitive marketing plans. In fields such as plant genetics, seed treatments, and food products, to name just a few, communicating a competitive advantage can mean the difference between a successful year and a financial failure. Such comparative advertising can be very effective to draw market share away from the competition, but it is risky to undertake if you do not have good advice concerning where the legal line is drawn on its use.
 
How to Avoid Pitfalls in Comparative Language
 
The variations on comparative advertising are many, but trouble can usually be avoided by considering the following elements each time an advertisement is developed:
 
  • Is the statement factual (objective)? If so, ensuring that the facts are presented in a straightforward way will usually avoid problems. A producer must avoid deceiving or misleading the public about a fact that the public is likely to use as the basis for deciding whether or not to purchase a product.
  • If the statement is not factual (subjective), then it is usually not a problem so long as the majority of people viewing the statement understand it to be exaggeration or boasting and would not rely on the statement to make a purchasing decision.
  • Examples of such subjective opinions include “better seed than the competition” and “our milk is the best.” Care must be taken to keep the statement general. If it is capable of being proven false, it may be a problem.
Placing these recommendations in context, in order to prove the elements of a false advertising claim under federal law (the Lanham Act § 43(a)), a competitor must show that:
 
  1. Your agribusiness either made a false statement of fact in a commercial advertisement placed in interstate commerce about its own or another’s product or service or that the offending party made a representation or omission in a commercial advertisement placed in interstate commerce about its own or another’s product or service that is likely to deceive the viewer;
  2. the statement actually deceived or had the tendency to deceive a substantial (usually defined to mean more than 20 percent) segment of the viewing audience;
  3. the deception is likely to influence consumers’ purchasing decisions;
  4. and the competitor has been or is likely to be injured as a result of the false statement. Such injury can be a loss of sales, but it may also be a decrease in the goodwill enjoyed by the competitor’s trademarks.
General Guidelines for Agribusiness Advertising
 
  • Advertising that contains true statements that are not misleading or deceptive is fair and permissible to publish.
  • Advertising that contains false statements is not allowed.
  • Advertising that contains statements that are not capable of being proven either true or false (matters of opinion) but that tend to mislead or deceive at least 20 percent of the consumers who view the statements, which consumers then use that information to make a decision whether or not to purchase the good or service, is not allowed.
  • Advertising that contains statements that are not capable of being proven either true or false and that no one would rely on to make a purchasing decision is fair and permissible to publish.
Consumers must not be deceived by the planned advertising campaign. Agribusiness advertising campaigns should always be checked for compliance with this mandate, whether the message to the consumer is stated or implied.

 
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances. 
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