Subway And Quiznos Settle Dispute Over User-Generated Ads; Liability Questions Remain For Next Lawsuit

from the truth-in-advertising dept

Back in 2008, we wrote about a lawsuit between rival sandwich shop chains Subway and Quiznos over a viral ad campaign. Quiznos had set up a contest to get fans to create and upload commercials for its stores, and Subway claimed that many of the ads made false claims about Subway. To Subway, this made Quiznos guilty of false advertising. Quiznos used Section 230 to claim that it wasn't responsible for the content of the ads, since it hadn't actually created them. However, with Subway saying that Quiznos was actively involved in some aspects of the ad creation, the judge wouldn't grant a summary judgment on Section 230, and wanted the case brought to a jury to consider. Not surprisingly, at this point, Quiznos folded faster than one of its toasted sandwiches, and the two sides settled the case.

While you can understand why this happened, it still leaves us without a ruling -- meaning that there will likely be more lawsuits of this nature coming down the road. With so many "user-generated content" contests out there, the question of liability for the content could become a pretty big issue... and I'd guess that most companies trying out these contests haven't given it much thought at all.

Filed Under: liability, section 230, truth in advertising, user generated content
Companies: quiznos, subway

Does Truth In Advertising Still Apply To User Generated Ads?

from the legal-permutations dept

From a purely academic standpoint, it really is fun to see how modern technology is making life difficult for those who rely on old and potentially obsolete laws. However, the decisions made concerning these laws may have a pretty wide impact. We've discussed in the past the pitfalls of asking fans to create "user-generated" ads, but a new lawsuit raises a very interesting legal question. If you ask people to make their own ads for your product, how do truth in advertising laws apply? It's probably not much of an issue if fans are simply going out and creating an ad for fun on their own -- but what if you encourage it? Plenty of big name brands have been setting up contests, getting people to create commercials for them. Yet, when sub shop chain Quiznos did that, competitor Subway sued them, claiming that many of the ads made exaggerated in false claims about Subway's sandwiches. Quiznos, for its part, claims that thanks to the safe harbors of the Communications Decency Act, it's not liable for the content created by the participants in the contest. Subway, on the other hand, argues that by encouraging such actions with a contest, Quiznos has overstepped the boundary, and violated its trademarks. While you can see the reasoning behind Subway's argument, it's hard not to side with Quiznos on this one. No one is going to take most of the user-generated ads seriously -- knowing that they're designed to poke fun at Subway. Also, any attempt to expand "truth in advertising" type rules to fan-created ads is going to cause all sorts of unnecessary problems. Still, when politicians were first writing up trademark laws and truth-in-advertising laws, I'd imagine the possibility of user-generated advertisements never even crossed their minds.

Filed Under: advertising, safe harbors, truth in advertising, user generated content
Companies: quiznos, subway