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Virtual ad, real suit

The ethical issue raised last New Year's Eve when CBS blotted out billboards to "virtually" substitute its own corporate symbol is now a legal one.

CBS has been sued by the owner of the billboard company, which contends that the network took away the value of the advertising for which its clients paid, and misappropriated the value of those ads, for which the network did not pay.

In a lawsuit filed in federal court in New York City last month, OTS Signs accuses CBS of unfair competition, deceptive trade practices and trespass. OTS says CBS used a computer to eliminate one association and create another, implying an association where there is none, according to lawyers. Simply put, said Matthew Bronfman, general counsel for OTS parent company Jamestown, CBS diminished something OTS had sold and took something OTS sells without paying for it.

Using virtual technology supplied by Princeton Video Image, CBS inserted virtual logos onto the backdrop of Times Square during its millennium coverage in New York City, replacing, among others, an NBC sign with a virtual CBS billboard. According to the suit, ads from Budweiser and Panasonic were also blocked out.

PVI provides virtual insertions for CBS' Early Show and The NFL Today as well as virtual first-down lines for CBS' NFL coverage. None of PVI's domestic customers have used the technology to block an existing sign within their coverage of a sporting event, says Dennis Wilkinson, president and CEO of Princeton Video Image. But European customers have experimented with the modification of signs, such as changing English-language billboards in a British soccer stadium for a telecast in France. That was done with the rightsholders' approval, he points out.

The incident put CBS under ethical scrutiny both within and outside the network.

CBS Television President and CEO Les Moonves and CBS News President Andrew Heyward defended the practice. Heyward said he thought it was "clever," although, he said, he was not surprised that it "put some noses out of joint. " Moonves, sounding even more adamant, said he would use it again to block an NBC logo on a CBS program. But CBS lead anchor Dan Rather said publicly that the virtual substitution was "a mistake," suggesting that it compromised the network's ethical responsibility to viewers.

CBS is expected to respond in court later this month. A statement from the network said simply: "We do not believe that the plaintiffs will prevail in this case. We were perfectly within our rights, and we will defend this lawsuit vigorously."

But laying down a virtual first-down marker at a football game may be different, legally, from substituting the logo of one network for another or an unpaid image for a paid one.

Baltimore lawyer James Astrachan, who specializes in advertising issues, found the case "fascinating. If there is TV coverage of New Year's Eve in Times Square every year, " he said, "the pricing of billboards will be set to account for that exposure." Diminishing the value of a billboard rental that was priced to reflect that exposure could be an illegal taking, he said.

"Palming off your goods as my goods," as CBS is accused of doing when it substituted its logo for NBC's, is a typical example of unfair competition, Astrachan said, and the fact that CBS is also in the business of selling advertising would not help in an unfair-practices claim.

The plaintiffs do not suggest CBS' ownership of Outdoor Systems Inc., the nation's largest billboard company, had anything to do with its decision to alter OTS' billboards.

PVI's Wilkinson called the lawsuit "the most ludicrous thing I've ever seen in my life. It's CBS' air, and I don't think the people suing them have a stone's chance to win."