NAD Finds Epson Can Support Certain Claims for 3LCD Projector Technology

New York, NY – March 16, 2009 – The National Advertising Division of the Council of Better Business Bureaus has determined that  Epson America can support certain advertising claims made for the company’s 3LCD Projector Technology. NAD recommended, however, that the advertiser modify or discontinue certain claims.

NAD, the advertising industry’s self-regulatory forum, examined claims made in sales literature, trade show materials, training materials, flyers, videos, and on the Internet, following a challenge by Texas Instruments.

Claims at issue included:

“DLP Technology is Harmful, Distracting and Subject to ‘Color Breakup.”
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“3-Chip LCD Projectors are Three Times Better than Single-Chip DLP Projectors.”
“Epson’s 3LCD Panels Are ‘Chips.’”
“LCD Projectors Provide ‘Full-Time Color’ whereas DLP Projectors Provide ‘Part-Time’ Color and ‘Poor Color Performance.’”
Epson utilizes unrepresentative DLP Images to demonstrate the purported Superiority of 3LCD Projected Images.”

“3LCD Projectors Have No Moving Parts.”

“DLP Technology is Less Light Efficient and Runs Noisier and Hotter than 3LCD.”

“Most Electronics, Including Filter-Free DLP Projectors, Will Fail Due to Dust Buildup.”

“DLP Projectors Have Poor Grayscale Performance.”

At the outset, NAD noted that the competing technologies – Liquid Crystal Display (LCD) or Digital Light Processing (DLP) – represent the leaders in front projector technologies and both produce and market high-quality products.

NAD then considered jurisdictional issues.  Certain challenged claims appeared on Websites directed to individuals in foreign countries including Australia, Japan, India and the United Kingdom.  Although it is possible for U.S. consumers to access the foreign Websites, the advertiser explained that significant steps are taken to keep the Websites for each country separate and distinct.

NAD has found that claims made on foreign Websites are not considered national advertising where there is a good faith effort to control traffic to limit the content to foreign consumers.  NAD determined that the claims which appeared on Websites operated by Epson’s foreign subsidiaries and are directed to foreign markets were not subject to NAD’s review.  NAD noted however, that to the extent iterations of the same claims appear in media directed to U.S. consumers (or to the global homepage), NAD’s review would be appropriate and its recommendations applicable.

NAD also considered advertiser’s contention that the marketing materials challenged did not constitute national advertising within the meaning of NAD Procedures. The fact that the marketing material is not targeted to consumers directly does not necessarily remove it from the purview of national advertising.  The materials challenged by TI were directed to both internal sales staff and third-party distributors and resellers of the products and, as such, intended to provide those parties with information for informing consumers about those products and, ultimately, for selling Epson projectors.  NAD therefore determined that the materials were national advertising and appropriately the subject of self-regulatory review.

Following its review of the evidence, NAD determined that, within the context of its marketing materials communicating information on underlying technology to third-parties and salespersons, the advertiser provided a reasonable basis for its claims about color break-up and single-chip DLP technology.  NAD recommended, however, that the advertiser discontinue the claim that color breakup in DLP projectors “can be very distracting to some viewers.”

NAD found that the advertiser provided a reasonable basis for claims that characterize its 3LCD panels as “chips.” NAD recommended, however, that the advertiser modify its advertising to avoid unqualified claims that the benefits of 3LCD technology are due to the greater number of chips or that the 3LCD and DLP products share the same design.

NAD determined that the advertiser provided a reasonable basis for certain color performance claims including its description of its own technology as “full time color.”  However, to avoid a misleading comparison or a falsely disparaging message, NAD recommended that the advertiser discontinue its claim that single-chip DLP delivers only “part time color.”

Finally, to avoid confusion in any depiction of side-by-side images, NAD recommended certain modifications to more clearly disclose that such images are intended to depict particular features of the technology, and not the comparative performance of the projectors, generally.

NAD determined that the advertiser adequately substantiated its claim that the optical engine in 3LCD projectors contains no moving parts and can be referred to as “solid state.”

NAD did not agree with the challenger that the advertiser’s grayscale claims can only be supported by means of survey evidence of consumer perception and found that the advertiser provided a reasonable basis for its depictions and descriptions of the technical differences in grayscale performance between DLP and 3LCD-based projectors.

However, NAD noted that the evidence in the record did not support the disparaging claim that DLP projectors have “poor Grayscale performance.”  NAD therefore recommended that the advertiser discontinue that claim.

Epson, in its advertiser’s statement said it “believes consumers are best served when all competitors are held to the rigorous standards employed by NAD and appreciates the opportunity to participate in the self-regulatory process.”