August 10th, 2007
Appeals Court OKs 'Puffery Defense'
By Larry Neumeister
Agreeing with what it called the “puffery defense,” a federal appeals court ruled Thursday that DirecTV was within its rights to grossly understate the quality of a competitor’s product.
The 2nd U.S. Circuit Court of Appeals in Manhattan also upheld Judge Laura Taylor Swain’s decision to block DirecTV from running ads in which Jessica Simpson and William Shatner say DirecTV’s high definition service is better than Time Warner Cable’s.
But it reversed her decision to block Internet ads, finding that they were acceptable because they so distorted what a basic cable image would look like that no viewer could think it was an accurate depiction.
“It’s broadcast in 1080i,” Simpson says in her DirecTV ad, referring to a quality standard for high-definition TV broadcasts. “I totally don’t know what that means, but I want it.”
The ruling carried little significance for the deceptive trade practices lawsuit brought by Time Warner Cable Inc. last December because it has since been settled under terms that were not disclosed, both companies said in statements.
But the written decision may have wider implications for other companies deciding how to portray competitors in their advertising.
The appeals court said it wanted to use the case to let companies know that an advertisement can be considered false even if it does not explicitly make a false assertion if the words or images collectively imply a false message.
It said it also wanted to clarify that “puffery” can include visual depictions that while factually inaccurate “are so grossly exaggerated that no reasonable consumer would rely on them in navigating the marketplace.”
In the legal context, puffery is exaggerated advertising, blustering and boasting upon which no reasonable buyer would rely, the court said.
In the case, it said the Internet ads including one featuring an image of New York Giants quarterback Eli Manning were “not just inaccurate; they are not even remotely realistic.”
The appeals court said the Internet ads were acceptable because they so distorted what a basic cable image would look like that no viewer could think it was an accurate depiction.
“It is difficult to imagine that any consumer, whatever the level of sophistication, would actually be fooled by the Internet advertisements into thinking that cable’s picture quality is so poor that the image is nearly entirely obscured,” the appeals court said.
The appeals court said it agreed with DirecTV’s so-called “puffery defense,” but it sided with Time Warner on the television ads.
In the Simpson ad, the singer-actress plays Daisy Duke from “The Dukes of Hazzard,” kicking down a restaurant patron who slaps her and telling him:
“Hey, 253 straight days at the gym to get this body and you’re not going to watch me on DirecTV HD? You’re just not going to get the best picture out of some fancy big screen TV without DirecTV. It’s broadcast in 1080i. I totally don’t know what that means, but I want it.”
In the Shatner ad, the actor plays Capt. James T. Kirk from the “Star Trek” TV series when he says: “I wish he’d just relax and enjoy the amazing picture clarity of the DirecTV HD we just hooked up. With what Starfleet just ponied up for this big screen TV, settling for cable would be illogical.”
Time Warner said in a statement that both sides were pleased they had settled the case, though the terms of their deal remained private.
In its own statement, DirecTV Group Inc. said the ruling has no relevance in the case because both sides had struck a deal.