By Philip Elmer-DeWitt
December 5, 2008

We’re not the first to spot this — credit goes to Brian X. Chen at Wired‘s Gadget Lab — but a site that endeavors to present news from outside Steve Jobs’ reality distortion field couldn’t let Apple’s unusual legal argument in Gillis, et al. v. Apple, Inc. et al. pass without comment.

The case was originally filed last August in a California Superior Court by William Gillis, a 70-year-old San Diego resident who claims that Apple (AAPL) and AT&T (T) “misrepresented to the public the speed, strength and performance of the 3G network when using either of Apple’s 3G iPhones.”

At the time, Apple was running TV and print ads that described the iPhone 3G as “Twice as fast. Half the price.” (The tag line now includes a footnote that reads, in part, “Actual speeds vary by site conditions.”)

Gillis, who had purchased a black iPhone 3G, claims that the phone did not deliver the speeds promised in Apple’s ads. He says that he – and a whole class of fellow iPhone users – were regularly bounced from fast 3G networks to the slower EDGE networks because the infrastructure of AT&T’s 3G network was “insufficient” to handle the crush of users – something he claims Apple and AT&T failed to disclose. In fact, Apple continued to promote its 3G iPhones as “twice as fast” even though, Gillis claims, they often weren’t.

Apple, in a response filed on Sept. 5, denied each and every allegation made by “Plaintiff” (i.e. Gillis) and then went on to mount 32 affirmative defenses, some stronger than others. The ones that caught our eye were the fifth and sixteenth:

Fifth Affirmative Defense

5. Any statements made by Apple were truthful and accurate and were not misleading or deceptive or likely to mislead or deceive Plaintiff or the purported class, and could not have been reasonably understood by Plaintiff or any member of the purported class in a manner that was misleading or deceptive or likely to mislead or deceive.

Sixteenth Affirmative Defense

16. Plaintiff’s claims, and those of the purported class, are barred by the fact that the alleged deceptive statements were such that no reasonable person in Plaintiff’s position could have reasonably relied on or misunderstood Apple’s statements as claims of fact.

Or, as Chen puts it, “our ads don’t lie, and you’re a fool if you believe them.” (link)

Apple’s sixteenth defense, explains Barry Adler, professor of law at New York University, is based on the legal concept of “puffing,” a defense well established in case law by the famous Leonard v. Pepsi precedent.

In general, Adler explains, ads can be excused from precise accuracy if what they say can be considered “in jest.”

In the Pepsi case, a Seattle man named John Leonard took literally an offer in a Pepsi TV ad offering a T-shirt for 75 “Pepsi Points,” a leather jacket for 1,450 and (drumroll) a Harrier Jet for 7,000,000. When Mr. Leonard tried to buy the jet for 15 Pepsi Points and a check for $700,008.50 to cover the rest, Pepsi refused to sell him a jet. Leonard sued. The judge in the case ruled that no reasonable person would think that the offer to sell a $23 million aircraft for Pepsi Points was anything but a joke.

So was “Twice as fast” a jest?

“In the eye of this beholder, no,” says Adler. “It’s not particularly funny, and it seems to me there’s no other reason to say it except to make a product claim.”

An American jury might disagree.

But not the British Advertising Standards Agency. The ASA has already made clear – by banning two different iPhone ads – that it takes a dim view of puffing, huffing and hyperbole in Apple’s advertising copy. See This iPhone ad was banned in Britain.

Gillis v. Apple has been moved to a U.S. District Court in the Southern District of California. No trial date has been set.

The court documents are available as a pdf here.

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