Devaluing your competitor’s brand

By J. DeVoy

Trademark law provides brand holders protection from competitors or third parties infringing upon, diluting or tarnishing their business marks, but what happens when the damage comes from the actual market for the brand and the people who consume it?  Every brand has negative connotations; Chevrolet is associated with poor quality and a dysfunctional company that couldn’t exist but for massive government bailouts, Brooks Brothers is perceived to be for old, boring white people, and Ed Hardy is accused to cater to obnoxious douchebags.

Using market forces, these associations can be used to attack and devalue a competitor’s brand without necessarily running afoul of trademark law.  Legally, there is a concept of “tarnishment” within trademark law, which makes it unlawful for a party to cast a trademark in an unflattering light – normally by associating the trademark with unflattering, inferior or unseemly products or services. One example of this is Toys “R” Us v. Akkaoui, 40 U.S.P.Q.2d (BNA) 1836 (N.D. Cal. Oct. 29, 1996), where the Northern District of California held that the defendant’s use of “Adults ‘R’ Us” as an adult website tarnished Toys “R” Us’ trademark by associating it with adult materials inconsistent with the Toys “R” Us brand.  But plenty of harm can be done without direct use of a competitor’s trademark.  Imagine the fallout if Charles Manson were spotted in a Nike tracksuit, or if the Unabomber talked about how cool and refreshing bottled Perrier was when he was living in a woodland shanty.  That kind of damage does not seem to be considered within the ambit of title 15 of the U.S. Code, which governs trademarks.

One recent example involves Snooki, the Jersey Shore cast member who has been arrested, punched in the face, fought with her housemates, and has cried on television more times than I can bother to count.  About a year ago, she stopped toting Coach handbags, largely in favor of Gucci and other purses – because Coach allegedly started sending Snooki the handbags of competitors. (Source.)  Following the adage that your enemy’s enemy is your friend, someone with such a toxic media persona is the enemy of everyone, and can be used to inflict harm upon competitors by associating them – even unwittingly – with competing brands.

The legal academy has also noted and commented on this trend.  Professor Jeremy N. Sheff’s forthcoming article in the Fordham Intellectual Property, Media & Entertainment Law Journal, “The Ethics of Unbranding,” addresses this very issue.  In addition to weighing which ethical system is most appropriate for assessing the ethics of using sabotage to disassociate one’s brand with a controversial figure (e.g., Snooki, Lindsay Lohan) and associate another’s brand with that individual, Sheff offers analysis of this conduct under several ethical systems.  The conclusion: While the practice may be questionable depending on one’s perspective, it is not clearly unethical.

Beyond the scope of federal trademark law, there is the specter of state-promulgated unfair competition statutes.  Even then, though, this kind of conduct should not be problematic.  After all, the brands are not deceiving the public through false claims or unsupportable promises: Brand owners are simply providing a prominent individual with products – though not necessarily their own – that the target can use, or choose not to use, in public.  While there is a calculated effect in this tactic, namely making the competitor’s brand look trashy or too widely accessible to truly be a luxury good, it is ultimately the individual who does the damage by incident of his or her status as a trend-setter, rather than the brand owner engaging in this action and feeding a prominent person a competitor’s goods.

This conduct has some historical precedent.  Substantively, it is no different from Ed Bernays paying attractive young women to walk the streets of Manhattan while smoking in order to implant the idea of women smoking into people’s heads – something unthinkable when Bernays did this in the 1920’s and 1930’s. (Source.)  This worked, in part, to break people’s prior conceptions about women and smoking, and worked to open the tobacco market to women, doubling the potential universe of customers.

Similarly, if I’m a black hat public relations manager for Land Rover, two of my main objectives will be to 1) maintain Land Rover as a luxury brand, and 2) make the competition appear non-elite.  Thus, if someone who will diminish my product’s cachet is using it – and especially if they are using it in a particularly derogatory way, such as driving a 15-year-old Range Rover simply to claim they have one  – it’s my job to shift the blame to someone else.  For example, if Amber from MTV’s Teen Mom, who is awaiting trial for beating her ex-fiance in front of their daughter and on national television, started driving a Land Rover, I’d give her a free Escalade to defuse the potential negative connotations.  Or even if she wasn’t driving a Land Rover, the attention surrounding her and her trial in various magazines and tabloids would justify giving her an Escalade just to take Cadillac down a notch. (A Porsche Cayenne would be too obvious.)  As it’s her choice to drive the Cadillac, the damage done to GM’s luxury brand would be at her hands – even if facilitated by a competitor.

State-by-state analysis of unfair competition laws would be important before running into such a plan at full sprint, but there’s nothing intrinsically unfair or dishonest about giving someone the opportunity to devalue a brand – even if unwittingly.  Moreover, there are no readily apparent problems within the realm of trademark law so long as its the controversial spokesperson’s agency – as opposed to the competitor’s manipulation – that causes the damaging brand association to be made.

H/T: The Last Psychiatrist.

9 Responses to Devaluing your competitor’s brand

  1. Charles Platt says:

    When the federal building was blown up in Kansas City in 1995, the explosives were in a Ryder truck. Ryder became so synonymous with militia terrorism, the company almost went out of business. They had to change their logo and repainted all their vehicles white instead of yellow. So if someone really wanted to give Hertz or U-Haul a bad time, the strategy would be obvious….

  2. ryanmcshane says:

    Very thought-provoking post, Jay.

    I don’t carry the expertise to determine the lawfulness of this practice, but from a public relations perspective, some of the examples provided would be deemed unethical by PRSA’s Code of Ethics.

    The membership manual states that members shall not spread “malicious and unfounded rumors about a competitor in order to alienate the competitor’s clients and employees in a ploy to recruit people and business.[1]” I interpret this principle to be inclusive of an organization gifting as a means of devaluing a competitor brand.

    In today’s age of marketing, both consumers and federal guidelines demand transparency. While not every PR-anchored story contains a disclosure statement, tactics such as these are much more damaging for the source if the truth is revealed.

    Facebook was recently exposed attempting to plant negative stories in the media against Google and its privacy practices[2]. Though many outlets are now looking into the legitimacy of the claim, Facebook (and the cooperating PR agency) have received the brunt of the criticism as a result of being exposed.

    Sources: [1]http://www.prsa.org/AboutPRSA/Ethics/documents/Code%20of%20Ethics.pdf,

    [2]http://mashable.com/2011/05/12/facebook-smear-campaign-google/

    • J DeVoy says:

      Ryan,

      Glad to see you weigh in on this. Especially with what happened between Facebook/GOOG through Burson Marsteller as of late, I imagine people are especially attuned to ethics, though the main problem being that PRSA is a voluntary membership organization, as opposed to the rules of professional conduct established by state bars (not a fault with PRSA – just an issue inherent in any membership organization).

      The problem is that there’s a race to the bottom, especially in current economic conditions, where people who will do what the client says – irrespective of ethical repercussions – win and get paid. Maybe not in every circumstance, but certainly in some of them, if not most. I’m withholding judgment on this, just because I can see both sides, but it does create a problem with respect to consumer confidence.

      The sources you link to are much appreciated, btw.

  3. blueollie says:

    Hmmm, given that I am a slow runner, I wonder if Asics can sue me for wearing their shoes at running races. :)

  4. Hull says:

    Nicely done–and you got me thinking on negative “dress” and things you can do with that. But above all where did MR find you, dude? Dang. With one lasting exception, our younger co-writers at WAC/P have all been “smart” but lazy, uninspired & disappointing Wankers, Droolers and uber-Turds who mailed it in and were proud of it. And you are none of those things. I failed; Marc succeeded. Hope I’m being clear here. Will kill myself now. Gotta go.

  5. […] On a related note: the readers of my blog will note that I have great enthusiasm for endurance sports, but limited accomplishment and ability. I used to joke that I’d offer to pay shoe companies to NOT be seen wearing their running shoes at races! It turns out that there is some law regarding unfair competition by competing brands; for example if an unpopular celebrity is, say, using your brand of purse, you send them other brands of purses (free of charge) and encourage them to use that brand. Ok, it is a bit more complex than I am saying, but surf to the Legal Satyricon to read about it. […]

  6. […] previously wrote about protecting your brand and crapping all over a competitor’s by giving a rival’s products to infamous celebrities and public figures, thus lowering its social […]

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