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When you evaluate a lawsuit against a competitor, bear in mind its marketing consequences

A case assessment looks at various factors about a law suit filed against the company (cost, likelihood of prevailing, time, internal drain), and a decision to file a lawsuit has a similar set of considerations plus likelihood of obtaining the desired result). Neither situation pays much heed if the other part is a competitor in the market for the company’s goods and services.

“A suit against a competitor may be portrayed unfavorably in the press and lead to a decrease in revenue if perceived negatively by customers,” Betsy Gelb and Darren Bush, MIT Sloan Mgt. Rev., Vol. 47, No. 2, Winter 2006 at 21. They give examples of lawsuits by Pizza Hut and Starbucks (the latter over an alleged name infringement) that may have backfired.

They compare poorly advised lawsuits – such as when a well known, large companies sues a smaller competitor, and the press sides with the little guy – to negative comparative advertising. The bully comes off poorly, because “negative information is assigned a greater weight than is positive information in an individual’s evaluation process.”

Litigators, now you also need to think like marketers!

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One response to “When you evaluate a lawsuit against a competitor, bear in mind its marketing consequences”

  1. How to Sue a Competitor

    The Law Department Management blog points to an article in the MIT Sloan Management Review which details an often overlooked aspect of lawsuits against competitors: public backlash. According to the blog, not only should a business look at: 1) the