Tyson Foods won the first round in its game of chicken with ConAgra, with a second skirmish set for this month.
Springdale, AR-based Tyson won an injunction last month against three senior sales and marketing execs hired by Con-Agra. Tyson charged that four execs brought trade secrets with them after leaving Tyson last summer in a management reorganization and later approaching ConAgra.
The ruling in Chancery Court in Arkansas says ConAgra didn’t steal trade secrets from Tyson, but prohibits two of the execs from marketing poultry products at ConAgra for one year and a third from contacting “certain poultry customers” for a year.
A separate trial to decide the fate of the fourth exec (an operations manager) and to ask for damages is set for Feb. 1. That trial addresses misappropriation of trade secrets, including feed formulations. Tyson didn’t seek damages with the marketing execs because its primary concern was preventing them from using trade secrets, a spokesperson says.
“This is a non-issue for us,” says Con-Agra spokesperson Tim McMahon. “We’ll comply and get back to business as quickly as possible. The guys will move to other units, and we have enough marketing staff to cover it,” including employees at the Seaboard Farms chicken operation that ConAgra bought in January.
ConAgra will appeal the ruling to protect the execs’ reputations, McMahon adds.
HOG WILD
Meanwhile, hog farmers have pushed the USDA to hold a March referendum to discontinue check-off fees that farmers pay for marketing and research.
A group called Campaign for Family Farms argues that the $40 million (45 cents for every $100 in animal value) that they give the National Pork Producers Council hasn’t boosted consumption. The council spent $21 million on “demand enhancement” last year, including promotion and “The Other White Meat” ads from Bozell Worldwide, Chicago. USDA reports `99 pork consumption hit 53.9 lbs. per capita, an increase of 1.3 lbs. and the highest consumption since ’81.
The check-off fee was established in ’86. Members last voted on the amount in ’94, but have never voted on abolishing the fee.
Farmers bore the brunt of a price free fall last year that didn’t hit retailers or processors like Oscar Mayer and Hormel as hard. The council ran an “Other White Sale” fall and winter promo, but didn’t require retailers to cut prices. Farmers “chastised us severely” for letting retailers fatten their margins, says the council’s exec director, Mike Simpson. “But we couldn’t put more pigs through the system, so we couldn’t supply retailers with more anyway.”
The USDA in January found petitions for the referendum were short 2,500 valid names, and said meeting a Jan. 10 deadline would require “a pretty aggressive response from producers,” Simpson says.
Ironically, Agriculture Secretary Dan Glickman in December approved recommendations to clean up promotion board practices, including mandatory producer votes every five years.
Pizza chain Papa John’s must pay rival Pizza Hut $468,000 in damages for false advertising and take the tagline “Better ingredients, better pizza” off its storefronts and packaging, according to a January ruling.
Pizza Hut sued Papa John’s for comparative advertising that called Papa John’s pizza “better.” Some ads in Papa John’s $300 million ad campaign starred Papa John’s franchisee Frank Carney, co-founder of Pizza Hut.
A federal judge forbade Papa John’s from using the word “better” or comparing to Pizza Hut in future marketing. The November jury verdict found two Pizza Hut ads dissing Papa John’s to be false and misleading, but the judge didn’t fine Dallas-based Pizza Hut.
Louisville, KY-based Papa John’s has until March 3 to take the tagline off packaging and April 3 to pull it from store signs. The chain filed for a stay of order to leave packaging and signs as-is until its appeal is processed.
The tagline is puffery – a vague, subjective statement, says Jeffrey Edelstein, the Hall Dickler KentFriedman & Wood lawyer who represented Papa John’s. The Council of Better Business Bureau’s National Advertising Division accepted that defense when competitors challenged Papa John ads four times, Edelstein says.
His advice to marketers: “Make sure any statements that can be interpreted as claims are substantiated. If you use puffery, make sure it’s exaggerated or opinion – not measurable.”
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