Case #4874 (07/02/08) EASTMAN KODAK COMPANY Kodak EasyShare Printers Advertising Agency: In House Challenger: Canon U.S.A. - It is well-established that in an NAD proceeding, the advertiser has the initial burden of providing a reasonable basis for its claims. If NAD finds that, an advertiser has provided a reasonable basis for its claim, the burden shifts to the challenger to show either that the advertiser’s evidence is fatally flawed or that the challenger possesses stronger, more persuasive evidence reaching a different result, Basis of Inquiry: Claims made in print and Internet advertisements and on product packaging by Eastman Kodak Company for its line of Kodak EasyShare Printers were challenged by Canon, U.S.A., manufacturer of competitive inkjet printers. Specifically, the challenger took issue with the advertiser’ s claim “Save Up to 50% on Everything You Print.” Challengers Position: According to the challenger, the advertiser touts the alleged superiority of its printers and related products over similar products produced by the challenger and other competitors by claiming that consumers will save dramatically more money ~ “Up to 50% on Everything You Print” ~ if they purchase the advertiser’ products because they will spend less money on ink than they would if they purchased competitive printers including those sold by the challenger In particular, the challenger took issue with the alleged factual basis for the claim that consumers, will “Save Up to 50% on Everything You Print’ (a claim based upon the advertiser's Quality Logic Test Report to be discussed) as depicted in a three-column graphic display in the various advertisements, In this graphic, the first column depicts the comparative savings on Black Text Documents, the second Color Graphics and Text Documents and the third depicts 4"x6" Color photos. According to the challenger, the advertiser’s claims are unsupported and premised on a series of false and/or misleading statements that unfairly tout the advertiser's printers and related products at the expense of the challenger and other relevant competitors. 1 The Challenger’s Position that the Underlying Testing Fails to Substantiate the Advertiser’ s Cost-Savings Cla As for the Quality Logic testing underlying the advertiser's savings claims with respect to color photo printing, the challenger asserted that this testing is fatally flawed and insufficiently reliable to substantiate this claim, Specifically, the challenger urged that the methodology adopted by the advertiser's testing firm for color-photo printing deviated significantly from the internationally approved standard employed to test black and color-ink printing on plain paper by overriding the default mode for the challenger’s printers but using a “Normal” print quality setting for the advertiser's printer in testing. Thus, the challenger argued, its printers were tested under conditions that are not reflective of how those printers are supplied by the challenger nor used by consumers, whereas the advertiser's printer was tested under “Normal” operating conditions.EASTMAN KODAK COMPANY Kodak EasyShare Printers Page: 2 ‘The challenger pointed out that, in the Quality Logic Report relied upon by the advertiser in support of ‘its savings claims on color-photo printing, the printer driver setting used for this component of the test was “the highest print quality mode readily available in the driver.” This is different from the driver settings used in the color and monochromatic portions of Quality Logic’s testing, which used the “factory pre-set configuration for the printer and default installed condition for the driver,” as ISO/IEC Standard 24711 prescribes. Indeed, the challenger noted that Quality Logic’s general testing methodology, released in January 2007, states that “For all photo yield testing, Quality Logic has made the assumption that the user expectation of yield is ‘based on the default photo mode drivers setting.” Neither the advertiser nor the testing facility explains this deviation from ISO/IEC Standard 24711. For example, the “Print Quality” driver setting used for Kodak Printer Model 5300 when color photos were printed was “Normal,” whereas the “Print Quality” driver setting used for the four Canon models used in color-photo printing was “High.” Naturally, the challenger pointed out, a “Print Quality” driver setting of “High” results in more ink being consumed than a “Normal” setting such that the testing on its printers was configured so that more would be used than “Normal.” Then the advertiser used these results as the basis for extravagant claims of co: savings. The testing, therefore, was misleading in the manner in which it was conducted with regard to color photo printing. Thus, the challenger urged, the advertised test results were achieved through use of a methodology that: (1) is very different from that employed to generate the results in the first two columns; and (2) is not representative of the way consumers receive their printers from manufacturers. As such, the challenger maintained, the calculations referenced in the depicted graph are the product of unreliable testing procedures, as applied to the printing of color photographs on photographic paper. Accordingly, the advertiser should be required to withdraw immediately all claims made in the graph displays as well as claim as that the advertiser’s printers generate substantial cost savings in connection with the printing of color photographs. To the extent that the advertiser asserts that its color-photo testing is reliable because it closely follows the ISO/IEC standards for testing ink cartridge yield with respect to black-and-white and color printing, deviating only by using the “best” print driver setting available, rather than the “normal” print mode, the challenger countered that is it this precise deviation that makes the methodology unreliable and is at odds with industry standards, The challenger further rejected, as unsupported, the advertiser's explanation that it used the “best” print driver setting because consumers generally print color photos in the best print mode available. ‘The challenger pointed out that not only is there no evidence offered to support this, position, but this assertion is contradicted by the manner in which ink yield is generally tested in the context of color photographs. The challenger noted that both it and Hewlett Packard use the default printer setting when testing the printing of color photographs. ‘The challenger explained that they do this because the “normal” or “default” settings, as their names imply, are those used by the majority of consumers when printing color photos. ‘The advertiser further noted that PC Magazine has reached the same conclusion, as shown by an article submitted to NAD noting that, printer testing conducted in 2000 used the default settings in most cases because those are what the majority of “typical consumers are expected to use.” Further, although there is currently noEASTMAN KODAK COMPANY Kodak EasyShare Printers Page:3 ISOMEC standard for testing the ink yield of color photos, the first draft of such a standard, released on March 3, 2008, states that “All image and print quality modifiers shall be at their factory pre-set configuration for the printer and default installed condition for the driver.” ‘The challenger also noted that the testing facility’s own methodology notes that “[t]he default or best photo mode will be selected by the driver,” meaning that even the facility accepts the propriety of using the default driver setting in testing the ink yield of printing color photos, at least in certain circumstances. Indeed, the methodology explicitly states that ‘{f]or all photo yield testing, Quality Logic has made the assumption that the user expectation of yield is based on the default photo mode drivers settings.” ‘The challenger alleged that the reason for using the “best” driver setting in the underlying tests is due to the manner in which the advertiser's printers print color photos when its proprietary photographic paper is used. ‘The challenger explained that the advertiser's paper is embossed such that, when read by the advertiser's printer, the printer automatically adjusts the driver to a setting that is deemed by the advertiser as most suitable for that paper. Thus, because test facility tested the printers using the advertiser's brand of Ultra Premium Photo Paper, the advertiser's printers automatically adjusted their driver settings to “best” quality mode, whereas the challengers’ printers do not have such a feature, meaning that the brand of paper a consumer uses has no effect on the driver setting; the setting will remain on “default” unless it is manually adjusted. Because color photos printed using the “best” driver setting consume more ink, the advertiser's printers are at a disadvantage if they are tested in that mode whereas Canon’s printers tested in “default” mode more accurately reflects what actually takes place in reakworld use, assuming consumers are printing with the advertiser's brand of Ultra Premium Photo Paper. In order to solve this problem and give the appearance of leveling the playing field (while actually testing skewing the results), the testing facility made the decision to switch the challenger’s printers to “best” quality mode and thereby generate results more favorable to Kodak. Indeed, the challenger argued, with respect to its own printers, consumers need not alter the “default” setting, as shown by sets of identical photos submitted to NAD, printed, respectivel from one of the advertiser's printer models set to the “best” quality mode (because Kodak’ highest quality paper was used) and one of the challenger’s printers left in its “default” mode, These photos, the challenger asserted, plainly demonstrate that the users of its printers have no need to adjust their printers off the “default” mode in order to print photos that are at least equivalent in quality to those of the advertiser. Finally, the challenger conducted its own research among its customers and concluded that the majority of users of its printers — 60% — do not adjust their driver settings when printing color photos. Thus, because the advertiser's testing is premised upon an artificial, biased construct of how consumers print color photos, it is unreliable and insufficient to support the claimed cost savings. i The Challenger's Position that the Testing did not include Truly Comparable Printers: " Citing ISOMEC ITCI SC 28, 1008-08-01; ISOMIEC WD 29102 Ver. | at See.4.1," up