In-house counsel lessons from a Netflix docuseries

Netflix recently rolled out an original docuseries that is leaving binge viewers talking and in-house counsel groaning.

Pepsi, Where’s My Jet? is a four-part documentary, directed by Andrew Renzi, which tells the story of the Leonard v. PepsiCo., Inc. court case. We won’t provide any spoilers in this blog post, but it revolves around a television commercial that PepsiCo aired in the mid-1990s that was designed to promote the launch of the “Pepsi Points” loyalty program. The idea was that purchasing Pepsi products would allow consumers to rack up points that could then be used to order prizes from Pepsi, such as t-shirts or sunglasses.

The television commercial that kicked off the program was a tongue-in-cheek spot that ended with a computer-generated Harrier jet and a line on the screen about the number of Pepsi Points needed to claim this Pepsi-branded fighter jet as a prize. Unfortunately, the commercial aired without a disclaimer to make it clear the jet offer was just a joke.

What happened next is pretty much an in-house counsel’s nightmare. An excited 21 year-old business student wants the jet, a bemused and well-heeled investor is willing to back him, and a young Michael Avenatti even makes an appearance to pressure Pepsi to make good on the non-existent prize. Litigation ensues.

The peculiar circumstances around the PepsiCo case may be unique, but the series should provide a sober reminder to in-house counsel that there is no room for oversights — however innocuous they may seem — when it comes to claims made in your advertising and marketing materials. And although the issue at stake in the PepsiCo case revolved around the absence of a disclaimer, it’s important for in-house counsel to make sure their advertising is truthful.

The Lexis Practical Guidance team has published an important practice note, Advertising and Marketing Claims, which discusses the major types of claims made in advertising and marketing. The article also provides some practical insights for in-house counsel regarding claim substantiation, the heart of advertising and marketing law.

When determining whether an advertising claim is false, misleading or deceptive, a company must be able to substantiate the claim with evidence. What constitutes sufficient proof for a claim may differ under different laws and regulations, but the following steps are common across claim substantiation requirements:

Gather your evidence

You should assess and gather evidence for substantiating a claim prior to including that claim in any advertising. While you can continue to gather evidence for claim substantiation after using it in advertising, you should have sufficient evidence to support the claim before you start running the ads.

Use objective evidence

Your substantiating evidence should be objective, it cannot be simply unsupported, anecdotal opinions. Depending on the context and the type of claim made, you may not need a rigorous scientific study conducted by a third-party research firm or lab, but you should at least consider how reliable your evidence is. Common measures for ensuring objectivity include using surveys, blind testing and certified professionals in the field who conduct analysis using generally accepted techniques.

Substantiate all claims

Advertisers must substantiate their claims, regardless of whether the claim is expressed or implied. It is generally easy to determine what proof must be obtained to support an express claim, but implied claims can be more difficult because the scope of the claim is less clear and may be subject to multiple interpretations. At a minimum, advertising law generally requires that you provide claim substantiation to support any and all interpretations that a reasonable consumer may have when viewing the claim.

Provide the same level of substantiation that the claim asserts

Your claim substantiation must support the claim to the same degree that the claim either states or implies that it is supported by the evidence. For example, if an advertisement for a dental product claims that “two out of three dentists recommend it,” then it’s not good enough to have proof that a majority of dentists recommend it — you must have evidence that at least 66% of dentists recommend your product.

Lexis Practical Guidance offers a number of information resources to help in-house counsel better understand their legal and regulatory compliance obligations when it comes to corporate advertising and reduce their risk of making an unwanted appearance in a Netflix docuseries. Check out the Advertising and Marketing Agreements Resource Kit for guidance on negotiating and drafting important agreements with service providers and media organizations.

Other helpful resources include:

• Advertising and Promotion Fundamentals
• Federal Regulation of Advertising
• Sweepstakes, Contests, and Prize Promotions Fundamentals

All of these Lexis Practical Guidance resources are accessible from Lexis .

Lexis General Counsel Suite is an all-in-one information resource designed for the modern GC that provides in-house counsel with a vast collection of legal resources, breaking business and legal news, and practical guidance content. Click here to sign up for a free trial and make sure that your advertising complies with all relevant legal requirements.

This article was originally published on the LexisNexis Insights blog.