Law of AdvertisingTushnet

Exam Number: __________________

GEORGETOWN UNIVERSITY LAW CENTEREXAMINATION IN Law of Advertising

TAKE HOME EXAM

Professor Rebecca Tushnet

INSTRUCTIONS:

1. This is an OPEN book exam. You may consult any inanimate object; however, no credit will be given for citations to any materials that were not assigned for this course. You may not discuss the content of this exam with any other person, whether or not that person is enrolled in this class. Although the questions are based on real situations, I have changed the facts in ways subtle and not-so-subtle, so you could really do yourself more harm than good by looking for outside information on the fact patterns.

2. This 8 hour exam must be downloaded and submitted using the Online Exam/Paper Management System. This exam will be available throughout the exam period. You may only work on the exam for 8 hours.

3. Structure: There are 3 questions. Each is worth a stated percentage of your total grade (70% of your grade is based on the final exam). You should allocate your effort accordingly.

4. There is no specific word limit. Thus, please think, organize, and prioritize carefully before you write. Cogent, well-structured answers that devote the most analysis to the most important issues will be graded more highly; poorly-organized, ungrammatical, or chronically misspelled answers will receive lower grades. Please do not waste space by restating the question or the facts of cited cases. If you need additional facts to answer a question, please state the specific facts needed and how they would affect your analysis. Also, please don’t call a person “he” if she’s clearly identified in the facts as female. I reserve the right to deduct points if you do.

5. This exam is final. There will be no clarifications or any changes. If you believe there is an error, inconsistency, or omission in the exam, please state your assumptions about the issue within your discussion of that issue.

6. Citation to relevant materials is required in order to receive full credit. Please indicate why the cited materials are relevant. You do not need to use Bluebook form. For example, simply state: (Wal-Mart) or (§43(a)) or (§1127(a)) – either form for the statutory citation is fine. You can use italics, bold, or whatever you’re most comfortable with to indicate case names.

7. In answering these questions, assume that jurisdiction is proper and that there are no statute of limitations or other general procedural bars.

8. You may not identify yourself in any way to the professor as the author of an exam until the grades are published. Therefore, you must remove personal identifying information from your exam document. Failure to remove any personal identifying information is an exam violation which will be referred to the Ethics Counsel. Instructions on how to remove personal identifying information from your take-home exam are available online at http://www.law.georgetown.edu/campus-services/registrar/exams-papers-grades/exams/index.cfm.

This exam consists of 6 pages, including this cover page. Please be sure your exam is complete.

Please be sure that you use your exam number (not your student ID number or social security number).

BY SUBMITTING THIS EXAM THROUGH THE ONLINE SYSTEM, I AFFIRM ON MY HONOR THAT I AM AWARE OF THE STUDENT DISCIPLINARY CODE, AND I HAVE NOT WORKED MORE THAN 8 HOURS ON THIS EXAM.

Page 1 of 7

Law of AdvertisingTushnet

Page 2 of 7

Law of AdvertisingTushnet

Question 1 (25%): Don Adams

Your client Don Adams submits the following ad to you for review. He explains that the three people at the top of the ad are his three top employees, photoshopped into images from the blockbuster film The Hobbit: An Unexpected Journey, one of the many fine films available via satellite. Below that are actual creatures/characters portrayed in the film. The central figure is holding a ring, as the central character of The Hobbit does in the film. Adams also provides substantiation that he has received eight years of “best of Nevada County” awards from a local publication (the boxes in the bottom right corner).

Page 3 of 7

Law of AdvertisingTushnet

Assume that the relevant state law is identical to the law of New York. Identify the issues with the ad. If further substantiation is needed, explain what would be required. If you think the ad should be revised, explain why and how you might suggest to revise it.

Page 4 of 7

Law of AdvertisingTushnet

Question 2 (25%): Bing It On

Google’s share of the US search market has remained steady at 67% for the past two years. Microsoft’s Bing presently has 18%, with Yahoo at 11% and Ask and AOL making up the remainder. Neither Google nor Bing derive revenue directly from searchers. Search engines make money when searchers click on sponsored links: they are paid on a per-click basis, so if searchers don’t click, advertisers don’t pay. Bing’s agreement with Yahoo means that advertisers can advertise on both networks with one buy. Bing/Yahoo generally has a lower number of advertisers, which translates into a lower cost per click because advertisers aren’t competing against as many alternatives. Most advertisers will allocate a certain percentage of their online pay-per-click ad budget to Google and a certain percentage to Bing/Yahoo, and that amount tends to track the search engines’ market share.

Microsoft’s extensive “Bing It On” TV and web ad campaign, directed at searchers, states: “People preferred Bing web search results nearly 2:1 over Google in blind comparison tests.* Join the 5 million people who’ve visited the Challenge at bingiton.com.” This message is repeated in voiceover in the TV ads, and no other factual claims are made in the ads. The visuals show people comparing search results and expressing surprise when they choose Bing.

The asterisk refers to a disclosure at the bottom of the screen: “*Based on a comparison of web search results pane only; excludes ads, Bing’s Snapshot pane and Google’s Knowledge Graph. The same format has been applied equally to enable a blind comparison of results.”

Microsoft’s claim is based on a study of 1000 representative US consumers who’d used a major search engine in the past month. In Microsoft’s study, participants entered a query of their choosing, got side-by-side results from both Bing and Google but with all branding removed, and picked which one was better for them (or declared it a tie). Each person repeated this test ten times and their votes were totaled to determine an overall preference. In this study, 57.4% chose Bing more often, 30.2% chose Google more often, and the remainder considered them equal. A followup study had 1000 participants chose from a list of five possible queries (drawn randomly from a longer list of queries, all taken from Google’s list of top search terms from the past year). Each person repeated the test ten times, as before, and picked from the unbranded results. In the followup study, 52% of people preferred Bing’s results over Google’s, 36% preferred Google’s, and the remainder considered them equal.

Bingiton presents a simplified version of the interface Microsoft used in its study:

Page 5 of 7

Law of AdvertisingTushnet

At bingiton.com, Microsoft suggests search terms visitors can use for the challenge. Although visitors can “vote” for their favorite result, Microsoft doesn’t actually track the results at bingiton.com, allegedly out of concern for visitors’ privacy. Bingiton also doesn’t use location or social network information, which both Google and Microsoft use heavily when returning actual results.

After news reports expressed some skepticism about this claim—The International Business Times, for example, ran two informal trials of bingiton.com with a total sample size of 286, with Google coming out ahead in both cases, winning 3:2 in the first test and 4:1 in the second—Google decided to run some tests of its own.

Google’s survey firm had 1000 US consumers who routinely use search engines, who were not told the purpose of the study, use bingiton.com. A statistically significant majority of participants preferred Google search results to Bing search results (overall, 53% preferred Google while 41% preferred Bing and the remainder had no preference). Furthermore, participants were significantly less likely to prefer Bing results when randomly assigned to use popular search terms or self-selected search terms instead of the specific search terms Microsoft recommended test-takers employ on its website. When participants used the Microsoft-suggested terms, they preferred Bing 48% of the time and Google 47% of the time (with the remainder having no preference). When they used popular search terms, the numbers were Bing, 39%, Google, 55%, and the remainder no preference. When they used self-selected search terms, the numbers were Bing, 35%, Google, 57%, and the remainder no preference.

Evaluate Google’s Lanham Act false advertising claim against Microsoft.

Page 6 of 7

Law of AdvertisingTushnet

Question 3 (20%): All Natural

SkinnyGirl advertises its margaritas as “100% Natural.” On the back of the bottle, the text states “only slightly sweetened with agave. The margarita you can trust!” Skinnygirl’s website states “Skinnygirl Margarita combines clear tequila, the juice from three lime wedges and a tiny splash of triple sec.”

Ads also say that the product “contains no preservatives.” However, the product contains sodium benzoate, which is widely used as a preservative and is not known as a flavoring or nutritional component. Because alcohol regulations are distinct from most food regulations, there is no required ingredients panel on the bottle.

Sodium benzoate is produced by the neutralization of benzoic acid with sodium hydroxide. Although sodium benzoate can be found in nature, the sodium benzoate in SkinnyGirl was produced by chemical reactions in a lab in order to ensure control over its concentration and purity.

In combination with ascorbic acid (vitamin C, found in limes and other citrus fruit), sodium benzoate forms benzene, a known carcinogen. When tested by the FDA, most beverages that contained both ascorbic acid and benzoate had benzene levels that were below those considered dangerous for consumption by the World Health Organization. SkinnyGirl hasn’t been tested, but the amount of sodium benzoate in the product suggests that its results would also be below the level WHO considers dangerous.

Elena Gilbert, a purchaser and resident of California, sues SkinnyGirl under California’s consumer protection laws (the False Advertising Law, the Unfair Competition Law, and the Consumer Legal Remedies Act, though you need not consider each one separately) on behalf of a California class of purchasers of the product, alleging that the 100%/All Natural and “no preservatives” claims are false and misleading. Identify the key issues and suggest how they should be resolved.

Page 7 of 7