|February 2, 2006|
Previously published on January 24, 2006
Intuit Inc. has agreed to withdraw advertisements claiming that more tax returns were prepared using its TurboTax software last year than at all H&R Block Inc. stores combined.
The agreement marks a cease-fire between the two tax preparation rivals. Block had disputed Intuit's claim and demanded that it pull the ads. When Intuit failed to do so, Block sued the company earlier this month in federal court, which issued a temporary restraining order against Intuit pending an evidentiary hearing on the merits of Block's lawsuit.
Intuit launched its $25 million ad campaign for its TurboTax tax preparation software on January 9, 2006. Some of the ads claimed that "more returns were prepared with TurboTax last year than at all H&R Block stores combined." Block argues that its stores prepared more than 26 million returns last year, compared with 21 million prepared with the assistance of TurboTax.
While agreeing to withdraw the claim about who prepared more returns, Intuit has not agreed to eliminate other language in its ads that Block also deems inaccurate, and Block said it intends to pursue its claims for damages and a permanent injunction against Intuit. For instance, some of the ads state that "TurboTax asks me questions just like H&R Block does." Block contends that language is false and misleading, and represents an unauthorized use of Block's trademarked name. A Block spokeswoman said the company considered the statement inaccurate because Block's tax preparers provide the personal interaction that a programmed online or software product cannot.
The case has been noteworthy for its fast and furious pace of legal activity. No sooner had the judge granted Block's request for a restraining order than Intuit appealed the ruling to the 8th U.S. Circuit Court of Appeals. The appeals court promptly granted Intuit's request to block the order. The next day Block asked the appeals court to vacate its order. With Intuit's agreement on January 18, that issue has become moot.
Significance: The stakes were high for the two companies, as they geared up for tax season. Intuit's agreement to withdraw the claim about who prepared more returns was a win for H&R Block, although the two companies apparently will continue to battle it out over other claims made by Intuit.