GE's Product Misplacement

Do you know why, when watching certain television talk shows, you often see mysterious "grayed-out" blurs over, for example, the logo on a character's T-shirt? NBC does.

By now, several years into the age of TiVo (NASDAQ:TIVO), we're all very familiar with the term "product placement." Briefly stymied by the trend of television viewers fast-forwarding through their commercials, companies have chosen to insert their products right into the fabric of prime-time programming proper. In recent years, I've highlighted such examples as Cisco's technical support of the War on Terror on Fox's 24. And Apple's (NASDAQ:AAPL) supporting role in Big Love. And of course, who could forget Toyota's (NYSE:TM) wholesale takeover of an entire episode of The West Wing back in 2004?

The graying out of certain products illustrates the flip side of paying a network to feature your product -- call it "product masking" as opposed to product placement. On Monday, we saw an example of what happens when a network fails to "mask" the product of one of its sponsors' competitors -- it opens itself up to charges of trademark infringement and unfair competition. In particular, Emerson Electric (NYSE:EMR) filed suit in federal court against NBC parent General Electric (NYSE:GE). Emerson was upset that, in an episode of NBC's new comic-book drama Heroes, a character inserted her hand into an active Emerson "In-Sink-Erator" brand garbage disposal -- with predictably messy results.

Alleging everything from trademark infringement to "irreparably tarnishing" the In-Sink-Erator's reputation by casting it "in an unsavory light," Emerson demanded that NBC be barred from rebroadcasting the episode -- a demand that could disrupt the network's plans to run the series in syndication and summer reruns. Emerson also demanded that NBC stop using its trademarks and destroy all materials in which they are used.

Why all the fuss, you ask? Don't networks depict trademarked products all the time, and not always after seeking permission to do so? Sure. Because U.S. intellectual property law does permit the "fair use" of trademarked materials. The problem here is that Emerson thinks GE's use was unfair. And I can't blame Emerson for thinking so.

In contrast with peer broadcasters like CBS (NYSE:CBS) or ABC parent Disney (NYSE:DIS), both of which can generally be described as "entertainment" businesses, the GE conglomerate owns numerous non-entertainment businesses. Crudely put, these other businesses "make stuff." That stuff competes with other companies' stuff, and so when GE depicts its competitors' stuff in a negative light, it leaves itself wide open to lawsuits for unfair competition.

Which is exactly what it got.

Read all about the lighter side of product placement in:

• Jack Bauer's New Sugar Daddy
• And Now, a Plot Line From Your Sponsor
• In Case of Emergency, Break Rules
• Toyota for President

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Fool contributor Rich Smith does not own shares of any company named above. The Fool's disclosure policy is brought to you by the principles of fairness and honesty.