March 2010 – Channel Crossing: Legal

Weight-Loss Battles Heat Up
The New Year ushers in the height of the diet season during which marketers of weight-loss programs and products vie aggressively for their share of the marketing pie. This diet season, however, has brought increased challenges for marketers of weight-loss products.
First, the Federal Trade Commission’s (FTC) newly issued testimonial and endorsement guidelines, which took effect in December 2009, have required most marketers of weight-loss products to reevaluate and edit their existing shows for compliance with the new guidelines. Absent clear direction from the Commission, marketers struggled to find creative ways to adapt existing shows to the new guidelines and to then secure clearance from the networks, some of whom have taken a somewhat conservative view of the guidelines’ requirements.
Online marketers of weight loss, business opportunity and other perceived high-risk products and services loss were greeted following the New Year with news that their merchant accounts were being shut down by MasterCard. Many of the impacted sites involved the marketing of products via free trials or other forms of negative option marketing, which are currently subject to intense scrutiny not only by the credit card companies but by the state attorneys general, the FTC and the class action bar. While the state of negative option marketing and card-on-file transactions are outside the scope of this article, it is safe to say that the landscape for these transactions is rapidly evolving and the future of post transaction marketing–at least in the online environment–remains uncertain.
While marketer attention has thus understandably been focused on regulatory and merchant account issues, a recent lawsuit filed by Weight Watchers against Jenny Craig serves as a striking reminder that your own competitors can be a powerful source of potential challenge, as well.
WEIGHT WATCHERS V. JENNY CRAIG
In mid-January, Weight Watchers filed a lawsuit under Section 43a of the Lanham Act against Jenny Craig. The Lanham Act is the section of the trademark law that allows competitors to sue one another over false and misleading advertisements. Remedies under the Lanham Act include injunctive relief and monetary damages, which can include treble damages where the deception is willful. At issue in this lawsuit are claims by Jenny Craig, in print, broadcast and online advertising that clinical studies prove that Jenny Craig’s clients lost over twice as much weight as those on the largest weight-loss program.
Although Weight Watchers is not explicitly named in the advertisements, the reference to the largest weight-loss program is a clear reference to Weight Watchers and there is ample case law supporting the proposition that a competitor does not need to be specifically named in order to bring a claim for false advertising against a competitor.
According to the Weight Watchers complaint, in order to support this claim, Jenny Craig relied on the results of two separate and independent tests–one conducted by Weight Watchers over 10 years ago and another conducted by Jenny Craig. The Weight Watchers study, which was conducted 10 years ago, was a randomized two-year trial that was actually designed to compare the weight-loss and health benefits achieved and maintained through self-help weight loss with a structured program. According to the complaint, the Jenny Craig study was designed to test in a randomized controlled trial whether participation in the Jenny Craig Centre-based program and/or the Jenny Direct program is associated with greater weight loss at six, 12 and 18 months and whether weight loss is maintained over a 24-month period compared to self-help conditions. Thus, neither study was designed to directly measure weight loss achieved on one program as compared to the other.
Weight Watchers has alleged in its complaint that the studies upon which Jenny Craig is relying cannot support the advertising claims at issue. First, according to Weight Watchers, although Jenny Craig’s advertisement compares Jenny Craig’s current weight-loss program to Weight Watchers’ current weight-loss program, the Weight Watchers clinical study was conducted on a program that was in existence over 10 years ago and is at least four generations removed from the current Weight Watchers program. Because the Weight Watchers program has undergone significant changes and modification during this 10-year period, Jenny Craig cannot compare the results of its weight-loss program to the results achieved on a Weight Watchers program that is no longer in effect.
Secondly, and perhaps most significantly, Weight Watchers has alleged that in order to support a comparative claim between Weight Watchers and Jenny Craig, Jenny Craig must conduct a randomized head-to-head test between the current Weight Watchers and current Jenny Craig programs. In essence, Weight Watchers is alleging that the only type of testing that can support a direct comparative claim between the two programs is a direct head-to-head test between the two. If Weight Watchers prevails on this point, this would certainly place at greater risk many current weight-loss advertisements that contain broad and often unqualified superiority claims without any corresponding head-to-head testing.
THE RAMIFICATIONS
This current battle between Weight Watchers and Jenny Craig is the latest in the series of brand wars that dominated the traditional advertising marketplace during the past year. A comparative advertising lawsuit under the Lanham Act can be a very powerful tool through which competitors can attack each other’s advertising. While direct response marketers have not resorted to Lanham Act litigation with the same fervor as traditional marketers, as the economic climate continues to place pressure on marketers and as branded products become more commonplace in direct response, it is possible that the brand wars trend will find its way into the direct response community as well. At the very least, this case between Weight Watchers and Jenny Craig is one that should be closely monitored by the direct response community, as it will certainly establish some important precedent regarding the type of substantiation required for these types of comparative claims.
Linda A. Goldstein is a partner and chair of the advertising, marketing and media division at Manatt Phelps & Phillips LLP in New York. She can be reached at (212) 790-4544.

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Any doubt that DR has caught fire with the general public was dispelled by the palpable excitement that swirled around the “Pitchmen” tryouts at this year’s ERA D2C Convention. Throngs of wannabes crowded the booth in hopes of getting the golden ticket–the ticket that would ensure fame and fortune, but certainly something more: a sense of validation, security for loved ones, the chance to have their voice heard on a broader stage. Such opportunities don’t exist in every business, but in this industry they remain so plentiful you might trip over one; but instead of scraping your knee, take flight.
At the end of the day, the USP is really about positioning, and Cesari Direct’s creative director, Ron Lynch, has a singular perspective on how to approach it: “One of the things we like to do is find a way to create a new category or market for somebody and then have them dominate that new market.” Lynch sites the example of the Hunter Fan Company, which had what the company thought of as an air purifier with two major obstacles: it was the most expensive on the market and had one of the largest footprints. By re-positioning the item and demonstrating it as an air sterilizer with wholly unique properties, Hunter was able to step out of the crowded air purifier category and create a whole new class of product.
Newman approaches testimonials with directions and intentions in mind, but prepares open-ended questions that will allow the testimonial to tell their story. “I avoid directing them, otherwise you make bad actors out of good people,” she says. Further, too much direction can cause people to shut down. And once that happens, according to Newman, “They’re dead. I want them out of control.”
Testing many offers, however, is a different matter. Lynch recommends preparing four or five offers prior to the first airing of the show and going through with the testing process regardless of what the results are. Not a big fan of focus groups, he notes, “Broadcast is where the truth is told. Offers have to be tested in the real world. I convince myself in my mind what the highest possible price could be for an item and then I write with that level of perceived value in mind.”
The way we’ve responded (other than to deliver outstanding product quality) is to create the best websites possible, giving the consumers all the tools they need to learn everything they want to learn about a product–answers to common questions, additional consumer testimonials and ratings, among other content.
The 50 State Quarter Coin Map is one that I look back upon fondly. In 12 weeks after its launch, we had sold millions and millions of units–we just couldn’t make it fast enough. We did, but we had to enlist a number of folks to make it for us. That product stands out for how it exploded right out of the gate. It was very, very exciting.
As for consumers, they are seeing national advertisers come to the DR platform, and are becoming increasingly trusting of the industry–a trend we had already been seeing. The pool of consumers hesitant to purchase a DR product continues to shrink.
But to play in the market for products requiring demonstrations and testimonials–especially those in the health, fitness or beauty categories–the entry-level cost is usually around $250,000. “You just aren’t going to compete against a product like Proactiv with a $50,000 show,” Kunitz says. “So the question really is, how do you cheat the budget? How do you spend $250,000 and walk away with what looks like a $400,000 show?”
The point is self-serving, of course, but no less valid. Joan Renfrow, president of Onyx Productions Direct of Los Angeles, puts it this way: “Quality in DRTV is not about whether you can shoot pretty pictures. DRTV is a tool to make people pick up the phone or go to a website. A lot of companies can shoot commercials, but they don’t have a clue how to script and shoot a show that’s about motivating, demonstrating and encouraging people to buy. They don’t even know how to cut it right. Your product will suffer, and you’ll bring it to me to fix.”
“I recently saw a commercial for nail polish where the models had ugly knuckles–and feet with heavy make-up that didn’t hide the flaws,” she says. If you’re selling nail polish, for heaven’s sake put it on attractive fingers and toes. “Hire hand models and foot models,” Liantonio says. “That’s why they exist.”
Yes, editing time is expensive, the producers admit. But the answer is not to shoot less. The best ways to save editing time, they say, are to use digital cameras that transfer footage directly into the editing bay, keep meticulous records of which shots are where, send edited segments online for client approval–and, Dinsmoor adds, streamline the client-approval process in any way possible to eliminate delays.
But filming people–as opposed to static packages–against a green screen is not for novices. Some esoteric technical issues involving lighting, camera movement and other variables can destroy the illusion that a host or testimonial giver is really out in the snow, for example. Kunitz and Dinsmoor both warn that a show’s quality can suffer when green screens are overused.