Should Jurors Be Told When Defendants Advertise in Their Town?
TiVo, a champion steer in the local county fair, had no idea what was going on.
He had been purchased for $10,000, then was donated right back. TiVo, the digital recording company, had done it for marketing purposes.
Two weeks later, a local jury awarded the company $74 million in a patent dispute. Wait, can you run that back again?
TiVo's lawyer said the marketing steer had nothing to do with the jury's decision. But don't be fooled; TiVo knew exactly what is was doing.
According to researchers, it happens all the time. Big companies spend big bucks to advertise in cities where they are in litigation.
Lauren Cohen, a Harvard business professor, led a study of lawsuits between 1995 and 2013 to see if there was a connection to local advertising. He and Umit Gurun from the University of Texas cross-referenced advertising by 1,000 top firms in more than 200 markets across the country.
In Buying the Verdict, the authors say advertising increased by an average of 23 percent in an area after a lawsuit was filed there. They followed television advertising, and did not include social media advertising.
"I think what we are seeing is just the tip of the iceberg," Cohen told Harvard's Working Knowledge.
Marshall, a small Texas town and popular venue for patent suits, is an example. TiVo bought a bull there; Samsung built a skating rink and hosted a Christmas celebration -- next to the courthouse.
"We saw the lengths that Samsung was going through to curry favor in Marshall," Cohen said. "It got us wondering what weapons other firms use to sway verdicts in their favor."
The researchers said companies focused on areas where jury trials, rather than bench trials, were pending. Cohen said it wasn't illegal, but suggested judges instruct jurors to help them sort out what is going on around them.
"We want to shine a light on this, and let everyone know, firms are going to be doing this, and so if you see more of these advertisements, try to realize they are not doing this out of their own motivation; they have an acute need to seem like the good guys," he said.
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