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The 5th U.S. Circuit Court of Appeals has reversed a lower court’s decision in a false advertising/Lanham Act dispute between two of the nation’s pizza giants — Pizza Hut and Papa Johns. The case, Pizza Hut Inc. v. Papa Johns International Inc. (00-10071), centered around the Papa Johns ad slogan, aimed at Pizza Hut, that read: “Better Ingredients. Better Pizza.” Upset with the futility of a formal complaint filed with the National Advertising Division of the Better Business Bureau in 1997, Pizza Hut brought a 1998 civil action lawsuit before the U.S. District Court for the Northern District of Texas, Dallas. The suit charged Papa Johns with false advertising under Section 43(a) of the Lanham Act, which addresses misrepresentation in commercial advertising of either a company’s own or a competitor’s goods or services. Under the act, false advertising can be identified two ways. First, an ad can simply make a literally false statement. Second, an advertisement, even though containing true statements, can be deemed likely to mislead or confuse consumers into altering their purchase patterns. FRESHER AIN’T ALWAYS BETTER At trial, the district court agreed with Pizza Hut’s claims that Papa Johns slogan, when taken in the context of earlier ad campaigns of the same nature, did not constitute statements of literal fact. In other words, the district court agreed with Pizza Hut’s argument that “fresher ingredients” do not necessarily account for a “better” pizza. (Interestingly, Papa Johns did indeed prove in court that it uses fresher ingredients.) Having identified the first, most basic type of false advertising — literally false statements — the district court stopped its analysis and denied Papa Johns motion for judgment as a matter of law. “When the ‘Better Ingredients. Better Pizza.’ slogan is considered in light of the entirety of Papa Johns post-May 1997 advertising which violated provisions of the Lanham Act and in the context in which it was juxtaposed with the false and misleading statements contained in Papa Johns print and broadcast media advertising, the slogan itself became tainted to the extent that its continued use should be enjoined,” the district court wrote. A CASE OF ‘PUFFERY’ PIZZA? On appeal, the 5th Circuit extended the analysis of the case in two ways: to examine the concept of advertising “puffery” and to determine whether there was actual material evidence of adverse impact from the ad. The court explained its two-tiered analysis: “In making this determination, we will first consider the slogan ‘Better Ingredients. Better Pizza.’ standing alone to determine if it is a statement of fact capable of deceiving a substantial segment of the consuming public to which it was directed. Second, we will determine whether the evidence supports the district court’s conclusion that after May 1997, the slogan was tainted, and therefore actionable, as a result of its use in a series of ads comparing specific ingredients used by Papa Johns with the ingredients used by its ‘competitors.’ “ In advertising, puffery is something so blustery and obviously showy that no one could reasonably rely on it or think it was actually true. In describing the concept, the 5th Circuit quotes the book “Prosser and Keeton on Torts” as defining “puffing” as “a seller’s privilege to lie his head off, so long as he says nothing specific, on the theory that no reasonable man would believe him, or that no reasonable man would be influenced by such talk. Ultimately, while the 5th Circuit agreed with the district court that the slogan “Better Ingredients. Better Pizza.” may be misleading, it concluded that the ad amounts only to “typical puffery.” Next, the 5th Circuit was left to consider whether the ad materially impacted Pizza Hut. That is, the court wanted to see evidence that the ad affected the purchasing choices of consumers. In this analysis, the court found that Pizza Hut was unable to produce any evidence of that nature. “Pizza Hut has failed to adduce any evidence demonstrating that the facts conveyed by the slogan were material to the purchasing decisions of the consumers to which the slogan was directed,” the court wrote. After considering the aspect of Papa Johns puffery and Pizza Hut’s lack of materiality, the court concluded: “[T]he district court erred in denying Papa Johns motion for judgment as a matter of law. We therefore reverse the judgment of the district court denying Papa Johns motion for judgment as a matter of law, vacate its final judgment, and remand the case to the district court for entry of judgment for Papa Johns.” Attorney Thomas Morrison of the New York law firm Patterson, Belknap, Webb & Tyler represented Pizza Hut. It was his opinion that the 5th Circuit ignored several valid examples of material evidence elucidating how consumers’ purchasing patterns were affected by the Papa Johns ad. “We did produce what they were looking for,” he said. “We had consumer surveys, testimony from marketing experts and admissions from Papa Johns executives. For whatever reason, the evidence wasn’t considered. That part of the decision was truly bizarre.” “This was a case where the advertiser denigrated the quality of their competitor’s product to the point were the consumer’s choice was affected,” he said. “To have that evidence, and not consider it is beyond me. You’ll have to ask the 5th Circuit about that one.” Attorney Phillip Whittmann of Stone & Pigman Law Offices in New Orleans represented Papa Johns. He attributes his client’s victory to the lack of material evidence that could likely have been presented by Morrison, but wasn’t. “They failed the materiality test because the ad was not shown to have an effect on consumer purchasing decisions,” he said. “There was consumer evidence that was raised in the district court trial, but it wasn’t admitted at the appeal.” For the record, Whittmann is not denying the existence of such evidence. “They have research firms that [compile that kind of evidence] all the time. These firms conduct studies, take polls, and do all sorts of consumer-related inquiries,” he said. “It just wasn’t included in this case.”

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