Consumer Reports suffered a serious setback Wednesday when a New York state judge ruled that a company could advertise that the consumer magazine gave a high rating to its products.
New York State Supreme Court Justice Bruce Wright threw out a $2 million lawsuit by Consumers Union, the magazine's publisher, against Remington Products Inc. of Bridgeport, Conn., which had cited a favorable 1984 Consumer Reports rating in ads for its electric shaver.
Consumers Union, a nonprofit product-testing and research firm based in Mount Vernon, N.Y., charged that Remington had violated the section of New York's general business law that prohibits using the name or symbol of a nonprofit group for advertising or trade purposes without the group's written consent.
"Credibility is vital to us," said CU spokesman David C. Berliner. "Companies could, in the strictest sense of the law, quote us accurately and still be misleading. They might quote us saying that one particular feature is excellent, but leave out our statement that the product's other features are poor."
Berliner said that Consumer Reports articles, in contrast to advertisements, are detailed studies that "explore every facet of a product with the intention of providing all the information a consumer would need."
The suit also named Gimbel's and Macy's department stores because they had used copies of the magazine's rating of the Remington shaver in sales displays. Besides damages, Consumers Union sought an injunction preventing Remington from quoting the ratings.
But Wright said that Remington had "done no more than quote from a newsworthy report already disseminated to the public."
The November 1984 issue of Consumer Reports gave Remington's XLR-3000 Microscreen shaver a top rating over others that it tested. Remington later quoted the rating in newspaper and radio ads and in sales displays.
CU has a policy of forbidding companies to use Consumer Reports' name or ratings. "It's in keeping with our desire for independence," Berliner explained. Berliner said the magazine also buys all the items it tests and does not take any advertising.
The magazine's longstanding policy of fighting any commercialization of its ratings first was jeopardized in 1983, when it lost a similar federal case. CU had tried then to keep the makers of Regina Powerteam vacuum cleaners from broadcasting television commercials that quoted from Consumer Reports.
The 2nd U.S. Circuit Court of Appeals held that the New York law did not apply "to a situation where the nonprofit corporation's business is that of evaluating products and where it widely disseminates the results."
The court said use of the rating did not violate copyright laws, did not distort facts and conveyed useful information protected by the First Amendment. Wright said Wednesday that he was giving "due deference" to the federal ruling.
Berliner said he was "disappointed" by the decision and that Consumers Union would consider an appeal. In New York state, the supreme court is the trial-level court.
Consumer Reports also will continue its practice of noting the companies, including Remington, that don't respect its advertising policy.
Remington, meanwhile, can keep advertising with the Consumer Reports rating, based on the court ruling. "We hope the court decision won't open this up to other companies," Berliner said. "But we aren't naive enough to think that other companies won't want to use our name and ratings if they feel that it's to their benefit."