NAD Finds Oracle Took Necessary Action in Discontinuing Comparative Performance Claims for Exadata; Oracle to Appeal NAD Decision

New York, NY – July 24,  2012 – The National Advertising Division has recommended that Oracle Corporation discontinue certain comparative product-performance claims for the company’s Exadata database machines, following a challenge by International Business Machines Corporation. Oracle said it would voluntarily discontinue the challenged claims, but noted that it would appeal NAD’s decision to the National Advertising Review Board.

The advertising claims at issue appeared in a full-page advertisement in the Wall Street Journal and included the following:
•    “Exadata 20x Faster … Replaces IBM Again”
•    “Giant European Retailer Moves Databases from IBM Power to Exadata … Runs 20 Times Faster”

NAD also considered whether the advertising implied that all Oracle Exadata systems are twenty times faster than all IBM Power systems.

The advertisement featured the image of an Oracle Exadata system, along with the statement: “Giant European Retailer Moves Databases from IBM Power to Exadata Runs 20 Times Faster.” The advertisement also offered a link to the Oracle website: “For more details”

IBM argued that the “20x Faster” claim makes overly broad references to “Exadata” and “IBM Power,” resulting in a misleading claim, which the advertiser’s evidence does not support.  In particular, the challenger argued that by referring to the brand name “IBM Power” without qualification, Oracle was making a broad claim about the entire IBM Power systems line of products.

The advertiser, on the other hand, argued that the advertisement represented a case study, not a line claim, and noted that the sophisticated target audience would understand that the advertisement is based on the experience of one customer – the “Giant European Retailer” referenced in the advertisement.

In a NAD proceeding, the advertiser is obligated to support all reasonable interpretations of its advertising claims, not just the message it intended to convey.   In the absence of reliable consumer perception evidence, NAD uses its experienced judgment to determine what implied messages, if any, are conveyed by an advertisement.   When evaluating the message communicated by an advertising claim, NAD will examine the claims at issue in the context of the entire advertisement in which they appear.

In this case, NAD concluded that while the advertiser may have intended to convey the message that in one case study a particular Exadata system was up to 20 times faster when performing two particular functions than a particular IBM Power system, Oracle’s general references to “Exadata” and “IBM Power,” along with the bold unqualified headline “Exadata 20x Faster Replaces IBM Again,” conveyed a much broader message.

NAD determined that at least one reasonable interpretation of the challenged advertisement is that all – or a vast majority – of Exadata systems consistently perform 20 times faster in all or many respects than all – or a vast majority – of IBM Power systems. NAD found that the message was not supported by the evidence in the record, which consisted of one   particular comparison of one consumer’s specific IBM Power system to a specific Exadata System.

NAD further determined that the disclosure provided on the advertiser’s website was not sufficient to limit the broad message conveyed by the “20x Faster” claim. More importantly, NAD noted that even if Oracle’s website disclosure was acceptable – and had appeared clearly and conspicuously in the challenged advertisement – it would still be insufficient because an advertiser cannot use a disclosure to cure an otherwise false claim.

NAD noted that Oracle’s decision to permanently discontinue the claims at issue was necessary and proper.

Oracle, in its advertiser’s statement, said it was “disappointed with the NAD’s decision in this matter, which it believes is unduly broad and will severely limit the ability to run truthful comparative advertising, not only for Oracle but for others in the commercial hardware and software industry.”

Oracle noted that it would appeal all of NAD’s findings in the matter.