Claims at Issue Challenged by LG Electronics

New York, NY – April 5, 2012 – The National Advertising Division of the Council of Better Business Bureaus has recommended that Samsung Electronics, Inc., discontinue certain advertising claims for the company’s 3D televisions.

The express and implied claims at issue were challenged before NAD, the advertising industry’s self-regulatory forum, by LG Electronics, Inc.

NAD examined express claims that included:

• “There are many differences between ACTIVE 3D and PASSIVE 3D technology, but the primary variance is the quality of the home 3D experience.  PASSIVE 3D technology uses glasses that effectively cut 1080p resolution in half (540p) to each eye.  Samsung ACTIVE 3D glasses deliver the Full 1080p HD experience to both eyes.”
• “Passive 3D TV’s, with patterned film on the screen, will not be able to deliver the detail.”
• Active Full HD (1080P Full HD) is “2 Times Better!” than Passive (540P No Full HD)
• “Active 3D.  A clear winner with two times the resolution.”
• “Jagged Lines!” (in reference to 2D picture quality produced by passive 3D televisions)
• Samsung’s active 3D televisions are “40% Brighter” and require “Less Energy Consumption” than passive 3D televisions.
• “Blurry & Dark” (in reference to 2D picture quality produced by passive 3D televisions).
• “20% viewing angle” (in reference to the vertical viewing angle of passive 3D televisions).

NAD also reviewed the following implied claims:

• Samsung active 3D televisions provide a superior viewing experience over all passive 3D televisions.
• Passive 3D televisions, under normal viewing conditions, will produce distracting horizontal black lines on the television screen in both 2D and 3D modes.
• Samsung’s active 3D televisions provide a superior range of horizontal viewing angles in comparison to passive 3D televisions.

In reaching its decisions in comparative advertising cases, NAD must balance the right of advertisers to promote the benefits of their products against a competitor’s right not to have its product falsely disparaged. While NAD recognizes an advertiser’s right to make literally truthful and accurate advertising claims – sometimes at the expense of its competitors – NAD strives to ensure that denigrating claims are truthful, accurate, narrowly drawn and that they do not falsely disparage a competitor’s product.

In this case, NAD noted in its decision, the evidence in the record demonstrated that consumers receive full 3D imaging and may enjoy the 3D television experience with both parties’ technologies.

As a preliminary matter, Samsung stated that a YouTube video containing the claims that Samsung’s active 3D televisions are “40% Brighter” and require “Less Energy Consumption” than passive 3D televisions, as well as claims that passive 3D technology offers “Blurry & Dark 2D” images, had been permanently discontinued.

Although Samsung asserted that the remaining advertising claims at issue, included in a point of purchase video and in materials at the advertiser’s website, did not convey a message about ultimate picture quality, NAD determined otherwise.

Further, while Samsung asserted that its claims are literally true, NAD determined that the claims at issue – even if accepted as technically true – could reasonably be interpreted by consumers as conveying messages of superior overall 3D picture quality.

Following its review of the evidence in the record, NAD concluded that the advertiser’s substantiation was insufficient to provide a reasonable basis for messages conveyed by the claims – that Samsung active 3D televisions provide a superior 3D picture viewing experience to passive 3D televisions, including LG Cinema 3D televisions.

NAD recommended that the advertiser discontinue claims that :

• “[P]assive 3D TVs, with patterned film on the screen, will not be able to deliver the detail”
• “PASSIVE 3D technology … effectively cut 1080p resolution in half (540p) to each eye… ”

NAD further recommended that the advertiser’s unsupported claims that passive 3D televisions deliver “visible jagged lines” when operating in 2D or 3D mode be discontinued and  that the advertiser discontinue the use of “left lens” visuals in its comparative advertisements.

Finally, NAD concluded that the advertiser’s claim that its active 3D television provides a greater vertical range of viewing angle was adequately supported and that consumers would not reasonably interpret the advertiser’s claim as meaning that Samsung’s active 3D televisions also provide a superior horizontal viewing angle to passive 3D televisions.

Samsung, in its advertiser’s statement, said it “strongly disagrees with NAD’s decision.  Samsung’s claims that Active 3D technology is capable of delivering superior resolution compared to Passive 3D are fully supported by technical and scientific evidence.”

Samsung stated that it “respects NAD as a self-regulatory body and will comply with NAD’s recommendations. With the launch of Samsung’s 2012 television models, we already are in the process of transitioning our marketing materials to highlight the new features and advantages available in our Active 3D line up. Samsung will continue to make the customer our top priority and will continue to deliver an incredible 3D experience.”