Friday, December 14, 2007

Pentium puffing

Barbara's Sales, Inc. v. Intel Corp., --- N.E.2d ----, 2007 WL 4200855 (Ill.)

Intel engaged in “a massive worldwide advertising campaign touting the high performance of its ‘Pentium 4’ microprocessor.” Plaintiffs, disappointed in the chips’ performance, filed a class action in Illinois. Basically, they argued that Intel’s implicit and explicit representations of superiority over the Pentium III were false. There was substantial debate over the difference between the chips; some analysts argued that the Pentium 4 was a mere marketing move (“marchitecture”), with no actual performance advantages and perhaps some disadvantages (slower at some common office applications on older operating systems; excessive heat and power usage; memory deficiencies). Intel disagreed with these criticisms.

The basic message plaintiffs challenge was at the core of Intel’s billion-dollar marketing campaign: “4 is better than 3.” “Better” and “best” are used repeatedly in the marketing materials; one expert elaborated that Intel positioned the Pentium 4 as its “best,” Pentium 3 as “better,” and Celeron as “good.” The named plaintiffs saw various ads, but don’t remember specifics except that they relied on the idea that Pentium 4 was faster than Pentium III. Intel suggested that people rely on many factors to choose a computer. (Right, but when I paid mumblety-mumble more for my dual 2.0 gig processors on my desktop, that was a pretty discrete decision; the best/better/good spectrum, with attendant price distinctions, makes Intel’s argument unconvincing.)

The state supreme court ruled that Illinois law applied to a class of Illinois consumers – not really a difficult conclusion, it seems to me, but the court reviewed a number of conflict of laws principles and cases to get there.

The court then ruled that class certification was improper, agreeing that the implicit representation that “Pentium 4” was the best and fastest on the market was nothing more than puffery. Comment: Fastest? That’s not puffery; the court then collapses the representation to “best” in order to get where it’s going. Basically, the court summarizes the marketing campaign as conveying the message “best,” and says that summary was puffery. Well, except that there was a whole marketing campaign underlying it, giving reasons for “best” (like, say, “fastest”); every marketing campaign could be summarized that way. But because the plaintiffs can only identify “Pentium 4” as the statement communicated to the entire class, the court ruled, that’s just the same as the puffing “best.”

The court elaborated: No reasonable consumer would rely on “Pentium 4” as the sole basis for a purchase. (As the sole basis for paying more for a computer than one with a Pentium III? As a computer purchaser, I find the latter decision completely plausible. Also, materiality generally doesn’t require sole causation.) Anyway, “4 is better than 3” is just an implicit representation, not an affirmative one, and thus wasn’t made to the class as a whole. Representations about performance and speed aren’t necessarily what “best” meant or implied. “Best” could have just meant cheaper, smaller, more reliable, etc.

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