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Steve Weiss Monthly Column

Subway vs. Quiznos

In 2005, Subway founder Fred DeLuca went on the record with an almost-fond acknowledgment of Quiznos, Subway’s then fast-growing rival. Observing that both outfits were engaged in a share-of-stomach battle versus the burger chains, he acknowledged that there were often menu category benefits when a Quiznos moved into a Subway trade area. “If they never existed,” DeLuca said, “our overall growth probably would be slower.”

Any thoughts that this notion might develop into something downright chummy were obliterated, however, when in the fall of 2006 Quiznos fired the first shot in what quickly became dubbed “the Sandwich War.” To support the launch of its Prime Rib Cheesesteak sandwich, Quiznos created aggressive ads that played up the macho content of its offering juxtaposed against a scrawnier Subway cheesesteak. Basically, the ads showed average people on the street praising Quiznos for its sandwich virility while they figuratively kicked sand into the face of its less popular rival.

Conceivably Subway might have overlooked this high-spirited and reasonably countered affront had it not been for step two in the campaign. Next Quiznos created a competition, with the assistance of online viral video firm iFilm (since purchased by MTV and branded as Spike), in which amateur videographers were invited to create and post their own (not all that surprisingly, exaggerated) versions of the “cheesesteak challenge” commercials. The “Quiznos vs. Subway TV Ad Challenge,” as the contest was officially titled, is on its way to trial, and the implications of the court’s findings for the modern marketing industry might be rather profound.

With apologies to any lawyers who might be reading this and could say this smarter, the Subway suit is invoking the provisions of the Lanham Act that provide for trademark protection and defense against false or misleading advertising claims. Indeed, many of the online entries use the Subway logo, and a number of entries appear to use product, both Quiznos and Subway, that has been manipulated to show bias to the Quiznos brand. The tone of some of the ads could be characterized as defamatory—in one ad, a young man cleverly shouts “Subway sucks” before heaving his sandwich across a parking lot.

Quiznos’ defense is they didn’t make the ads. And as equivocating as this might sound, Quiznos actually has persuasive legal justification for this position. In 1996, Congress passed a landmark piece of legislation called the Communications Decency Act. Section 230 of that act stipulates that an interactive Internet service provider such as iFilm cannot be held liable for the postings of users.

Obviously the lawyers have much to parse here. Section 230 apparently does not apply to intellectual property rights, and there has already been much discussion in preliminary hearings regarding the extent of Quiznos’ participation in the contest. In fact Quiznos’ motion to dismiss the case was rejected by the court, which granted Subway the right of discovery regarding whether Quiznos altered or was creatively involved in the production of any of the contest videos.

One attorney contacted regarding this case privately commented that it would be hard for the court to rule against Quiznos. Even if Congress never intended to provide protection for a defendant in this sort of an instance, freedom from prosecution is specifically what “230” stipulates, and protection from litigation would be “the right decision,” according to this attorney. Should the court happen to find for Subway, however, the devastating implication would be that any company, in our industry or any other, could become liable for solicited content posted on the Internet by anyone.

This last implication might not seem to rock the world, but in a marketing universe that is increasingly beholden to user-generated Web content, this represents a very slippery slope. Once upon a time, it was a put down to say that a piece of marketing collateral looked like an adolescent created it. Today, the online world and its associated demographic realities have made such an assessment almost a compliment if not an outright necessity.

In the face of all that could be at stake in this suit, it is no small irony that both Quiznos and Subway find themselves positioned quite differently today. Quiznos, mired in endlessly reported franchisee problems, cleared executive house in 2007 and under new CEO Greg Brenneman has adopted a different tone and tactic in the marketplace. A softening economy and franchisee complaints about food costs have actually resulted in an emphasis on smaller portion sizes at Quiznos, the exact opposite of the positioning that started the Sandwich War in the first place.

As for Subway, one can reasonably assume there might be a little regret regarding its commitment to the judicial process. One development of the case has been the removal of the offending ad entries from the iFilm site—and their subsequent transfer by owners and viewers to YouTube, where they will be seen by a far greater number of viewers. Plus, the very successful “$5 foot-long” positioning has rendered a lot of the competitive quality issues moot.

I’m no judge, but if both sides would just voluntarily agree to herein censor any footage of their competitor’s product being thrown across parking lots, I think we could all adjourn for a nonlitigious, and industry sustaining, lunch.

Steve Weiss, a CIA graduate and veteran foodservice editor, is director of trends research with Near Bridge Consulting.