Competitor’s Web Site is Commercial Advertisment

Wexford Health Services, a company that offers medical services to prisons, lost out to its competitor Corizon, Inc. on a contract with the state of Maryland. Apparently a sore loser, Wexford retained a public relations firm to create a Web site.  Wexford’s CEO and its president authored the content on the site. And that’s where the trouble began. Wexford wrote the content to make it look like a Corizon insider drafted it.  The post blasted Corizon for its terrible service and its lack of concern for its customer, the state of Maryland. 

Corizon filed a lawsuit, alleging among other things, a violation of the federal Lanham Act. The Lanham Act prohibits false and deceptive statements in commercial advertisements.  And that raised an interesting question – was the Web site a commercial advertisement? According to the court it was.  Corizon had to establish three elements to make its case – the communication was an advertisement, it referred to a specific product or service and Wexford had an economic motive for posting the content. 

To be a commercial advertisement, the statements had to be “disseminated to the relevant purchasing public within the industry.” Wexford said it failed on that test,  because less than two dozen people saw the Web site. But according to the court, the issue isn’t who sees the content, it’s the speaker’s intent. The question is whether the statements are part of an organized campaign to penetrate the relevant market.  If so, element one is satisfied, even if the campaign is a dismal failure. In this case, the court found that Wexford intended wide dissemination because it posted the content on the Internet.  Round one to Corizon.

The court also found the content referred to a specific service – providing health care services.  The fact that the statement focused on Corizon’s failings did not change the general topic, which was Corizon’s services. Round two to Corizon.

As to the economic motivation, Wexford claimed there was none – it was simply trying to assist with the transition to a new provider.  But the court wasn’t buying that story.  In its view the circumstantial evidence – consisting of the content itself and Corizon’s status as a competitor – proved Wexford’s economic motivation. 

As the concept of “content marketing” becomes increasingly popular, the lines between “editorial” and “advertising” may blur.  The point is, just because you call it a Web site, as opposed to an advertisement doesn’t necessarily make it so!  As Abraham Lincoln said:  “How many legs does a dog have if you call the tail a leg? Four.  Calling a tail a leg doesn’t make it a leg.”