Restaurant Group to Yank Ad, Apologize : Courts: Altered version of Red Lobster logo was used in attack by rival Coco’s. Resulting suit cited trademark violation.

Restaurant Enterprises Group Inc. agreed Thursday to apologize to food giant General Mills Inc., pay unspecified compensation and yank TV ads claiming that fish served at REG’s Coco’s restaurants tastes better than that of Red Lobster, a General Mills subsidiary.

The ads end with a view of the Red Lobster logo in which the letters b and t are dropped, leaving “Red Loser.” In a lawsuit filed in U.S. District Court in Los Angeles, Red Lobster alleged that Coco’s taste-test research was faulty and that the alteration of the logo was unfair competition and trademark violation, said Barry Krantz, president of REG, at its Irvine headquarters.

The judge rejected all the claims except the one about use of the Red Lobster logo, Krantz said. “Had we written the name on a chalkboard and erased two letters, we would have been just fine.”

The ads were created by Santa Barbara ad agency Evans, Hardy & Young. Coco’s ran a similar ad campaign earlier this year in which it claimed to have better pie than Marie Callender’s Restaurants & Bakeries. Krantz said the pie commercials enhanced the business of both chains as customers conducted their own taste tests.

Advertising professionals are divided on whether such campaigns are cheap shots--or simply good advertising.

“There’s a legal issue and a creative issue, and I think the Red Lobster ad fails in both,” said Greg Smith, president of the Orange County AdClub. “There’s undoubtedly a defamation problem. Beyond that, people who see the ad are going to wonder whether (Red Loser) is a reasonable position to take, whether it’s true. It might backfire.”

John Vrba, senior vice president of Western International Media in Newport Beach, said that, beyond the ethical question, such ads may not draw new business.

“I wonder how effective they are,” he said. “I’d be very concerned about taking time from my advertising message to talk about the other guy.”

After looking at the potential legal cost of pursuing the matter, Krantz said, REG decided to agree to Red Lobster’s demand that it apologize and stop airing the ads. But “we certainly don’t apologize for the claim” of having better fish, he said.

General Mills, based in Minneapolis, is a conglomerate that also operates the Olive Garden restaurant chain and sells a wide variety of cereals, cake and cookie mixes, frozen fish, seafood and potato products.

REG operates 557 restaurants, which include not only Coco’s but also the Carrows, Bob’s Big Boy, Charlie Brown’s and El Torito chains.