In court Monday, Procter & Gamble presented an audio tape to back up its claims against Amway.
An attorney for direct marketer Amway denied the charges and said Procter & Gamble had sued because Amway was taking away sales in Asia.
The lawsuit, filed in federal court, says Amway engaged in unethical competition by fomenting a belief prevalent in some religious circles that Procter & Gamble's trademark incorporated Satanic symbols such as the numbers "666" and devil's horns.
Procter & Gamble, based in Cincinnati, Ohio, strenuously denies the rumors, but has been battling them unsuccessfully since the 1970s.
The trademark, which dates back to the 1850s, shows a bearded "man in the moon" looking over 13 stars, one for each of the original 13 American colonies.
In 1985, it was removed from Procter & Gamble's more than 300 products, which include such well-known brands as Tide laundry detergent, Crest toothpaste, Ivory soap, Pampers disposable diapers, and Folgers coffee.
The rumor campaign was a "well-engineered" attempt by Amway to take away sales by tarnishing Procter & Gamble's reputation with lies, attorneys said.
"They (Amway) know full well the malignant, cancerous effect of associating someone with a Satanic cult," said Procter & Gamble attorney Mike Gallagher. "It incorporates everything that is bad and nothing that's good."
In an audio tape played in court on Monday, an Amway distributor said in an April 1995 voice mail to other distributors that Procter & Gamble's president had admitted on the Phil Donahue television show that a percentage of the company's profits went to the Church of Satan.
But Amway attorney Charles Babcock, who successfully defended talk show hostess Oprah Winfrey in a 1998 lawsuit by Texas livestock producers who said she defamed beef, said the company did not approve of the distributor's message and quickly ordered him to send out a retraction.
"We've bent over backwards to help Procter & Gamble stop this rumor," he said.
Babcock said the Satanism rumors emanated from the unhappiness of several religious groups with Procter & Gamble's sponsorship of controversial television programs and charged that the company had handled the problem badly from the beginning.
He showed a videotape of comedian David Letterman joking about the rumors on his nightly television show to make the point that the firm's botched public relations efforts had spread the Satanism rumors far and wide.
"They're not mad at us. They're mad at themselves and they're trying to blame us," Babcock said.
The real reason for the lawsuit, Babcock argued, was Procter & Gamble's concern that Amway is growing rapidly in Asia because of its direct-sales strategy. The company sells its products through three million distributors worldwide.
"We are a flyspeck on them in the United States, but we're hurting them in Asia," he said. "They're trying to win in the courthouse what they can't in the marketplace."
Procter & Gamble had sales of $37 billion in 1998, versus $5.6 billion for the Ada, Michigan-based Amway, which is privately owned in the United States but has two publicly owned units in Asia.
Procter & Gamble attorney Stan Chesley said the company was seeking $595 million for lost sales between 1995 and 1997, plus whatever the jury felt was appropriate for a damaged corporate reputation.
Babcock said the company had never claimed rumor-related losses in official filings with the Securities Exchange Commission.
The trial, being held in U.S. District Judge Vanessa Gilmore's court, is expected to last two weeks. A Procter & Gamble spokeswoman said the lawsuit was filed in Houston because a number of Amway's distributors listed as defendants reside there.
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