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A combination of settlement and court opinion Thursday ended the dispute pitting Verizon Directories Corp., a subsidiary of Verizon Communications, against Yellow Book USA, a leading competitor in the $15 billion phone book directory market. The case centered on an advertising campaign Yellow Book initiated on radio, TV and billboard advertising. Verizon argued the campaign was built around the false claim that Yellow Book’s directories were more frequently used than Verizon’s. After battling through months of discovery and nearly a monthlong trial this summer, the parties ended their dispute through a settlement. While they declined to reveal the terms of the agreement, Eastern District of New York Judge Jack Weinstein issued a ruling on the outstanding issues. The bench trial, Verizon Directories Corp. v. Yellow Book USA, 04-CV-0251, was the first in a two-stage process. Weinstein initially had to decide whether an injunction was suitable against Yellow Book. If he had ruled that Yellow Book acted wrongly, then the trial would have entered a second phase before a jury set to determine damages. That stage was to begin Dec. 13. Although Judge Weinstein found that Yellow Book violated the Lanham Act by making false claims in its advertising campaign, he ruled that an injunction was unnecessary. In defending its practice, Long Island, N.Y.-based Yellow Book maintained that Verizon consistently lost market share in the “yellow pages” wars to smaller, more nimble competitors and was exploiting the judicial system to resist competition. Its campaign, it said during the trial, was aimed at raising brand awareness rather than falsely depicting the relative popularity of the competing directories. Judge Weinstein found that Yellow Book “violated the Lanham Act by falsely claiming, as to national and some specific geographic areas, that the usage of Yellow Book’s yellow pages was substantially greater than it actually was, as compared to the usage of Verizon’s SuperPages.” Verizon’s directories were used more heavily than Yellow Book’s, Weinstein found. Despite the finding, however, the judge took a no-harm, no-foul approach. “It is possible that Verizon suffered some harm as a result of Yellow Book’s false claims,” the judge said, but added that “[t]he actual damage shown to date is slight, bordering on the miniscule.” Weinstein said it would be difficult for Verizon to prove damages and offered two reasons. The directory business is in decline, he noted, making Verizon’s revenue losses difficult to link to Yellow Book’s campaign. And Yellow Book had gained significant market share even before it launched the campaign at issue. “In light of the evidence thus far presented it is unlikely that a jury would find substantial damage to Verizon,” he concluded. Through a stipulation, Yellow Book’s CEO Joseph Walsh promised to never issue similar ads and remove all existing ads and sales materials making the false claims. Judge Weinstein found this stipulation compelling and added that an injunction would be difficult to enforce. He held that it would be unnecessary in this case. Both parties claimed victory in press announcements released Thursday.

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