Papa John’s Ordered to Drop Slogan, Pay Rival Pizza Hut

Papa John’s International Inc. must stop using its “Better Ingredients, Better Pizza” slogan in three weeks and pay rival Pizza Hut almost $468,000 in damages, a federal judge ruled.

U.S. Magistrate William Sanderson in Dallas ordered Papa John’s to stop using the slogan in print and broadcast advertisements by Jan. 24, to phase out all other printed items using the claim by March 3 and to remove it from restaurant signs by April 3.

Papa John’s, based in Louisville, Ky., said it is still determining what impact the damage award will have on fourth-quarter earnings. The company said it plans to appeal.

Pizza Hut filed the lawsuit in August 1998 in U.S. District Court in Dallas, claiming Papa John’s falsely implied in ads that it uses fresh ingredients and its rivals don’t.

Pizza Hut, a unit of Tricon Global Restaurants Inc., originally sought as much as $12.5 million in damages. A spokesman for the world’s biggest pizza chain didn’t have an immediate comment.

The ruling comes after the two pizza makers agreed Nov. 29 to allow Sanderson to resolve the dispute. That agreement was reached two weeks after a Dallas jury ruled that both companies made deceptive claims about each other’s products.

At issue in the case is the concept of “puffery,” vague claims of superiority that companies often make to promote their products. Pizza Hut argued that Papa John’s claims weren’t puffery but were specific statements of fact that the company couldn’t support.

Tricon fell $1.31 to close at $37.31 on the New York Stock Exchange, and Papa John’s closed up 69 cents at $26.75 on Nasdaq. The decision was announced after the markets closed.