“AT&T did not file this lawsuit because Verizon’s ‘There’s A Map For That advertisements are untrue; AT&T sued because Verizon’s ads are true and the truth hurts.”

– Excerpt from Verizon’s response to AT&T’s complaints about its new ad campaign

Verizon was right. The truth does hurt. And it is especially painful when it’s meted out by a court of law. A U.S. District judge on Wednesday denied AT&T’s request to force Verizon to pull its “There’s A Map For That” and “Island of Misfit Toys” commercials, saying that while the ads might be “sneaky,” they are not deceptive.

“People might misunderstand [Verizon’s commercials],” said U.S. District Judge Timothy Batten, “but that doesn’t mean they’re misleading.”

He gave AT&T (T) another chance to make its case at a Dec. 16 hearing, but given his dim initial view of the company’s complaint, the carrier seems unlikely to prevail.

AT&T plans to press on with the case anyway. “While we are disappointed with the court’s decision on our request for a temporary restraining order, we still feel strongly that Verizon’s ads mislead consumers into thinking that AT&T doesn’t offer wireless service in large portions of the country, which is clearly not the case,” AT&T spokesman Mark Siegel said in an email. “We look forward to presenting our case to the court in the near future.”

In the meantime, AT&T has begun running some attack ads of its own. Sadly, the first effort is not nearly so clever as Verizon’s (VZ) and features far too much Luke Wilson and far too little humor.

PREVIOUSLY:

• Verizon to AT&T: Do Yourself a Favor and Shut Up
• Frosty’s Winter Litigation Wonderland: AT&T Demands Verizon Pull Holiday iPhone Ads [With Full Complaint]
• Verizon Banishes iPhone to Island of Misfit Toys
• Verizon on AT&T Suit: There’s a Word for That. “Junk.”
• Verizon to iPhone Users: “Want Five Times More 3G Coverage? There’s a Map for That.”

“Most stores we contacted reported strong follow-through sales last week and have received ‘re-stocks’ following the initial launch,” says McKechnie. “We had guesstimated ~ 200k Verizon-only ‘sell in’ prior to the launch. We now expect at least another 200k by Black Friday and 150-200k through the remainder of the holiday season, which gets us to our 600k forecast for the quarter. All stores appear ‘well stocked’ with none reporting shortages….Our checks with stores indicate no issues with returns of the Droid.”

Evidently, Verizon’s Droid saturation campaign, with a budget estimated at $100 million, is paying off–despite its impersonal sci-fi positioning.

So begins Verizon’s (VZ) response to AT&T’s (T) complaints about its new ad campaign, and as you can see below, it pulls no punches. For 53 pages–all of them very obviously drafted with publication in mind–the new filing mercilessly thrashes AT&T, proving over and over again that the carrier’s carping over Verizon’s ads has transformed a no-win situation into a horrific PR disaster that only highlights AT&T’s shortcomings.

“In the final analysis, AT&T seeks emergency relief because Verizon’s side-by-side, apples-to-apples comparison of its own 3G coverage with AT&T’s confirms what the marketplace has been saying for months: AT&T failed to invest adequately in the necessary infrastructure to expand its 3G coverage to support its growth in smartphone business and the usefulness of its service to smartphone users has suffered accordingly. AT&T may not like the message that the ads send, but this Court should reject its efforts to silence the messenger.”

Brutal.

As I said earlier this month, if AT&T’s lawsuit over Verizon’s allegedly misleading “there’s a map for that” wasn’t a public relations mistake to begin with, it will be by the time Verizon gets through. And, indeed, the lawsuit already is a mistake. Below, Verizon’s reply in full:

PREVIOUSLY:

• Frosty’s Winter Litigation Wonderland: AT&T Demands Verizon Pull Holiday iPhone Ads [With Full Complaint]
• Verizon Banishes iPhone to Island of Misfit Toys
• Verizon on AT&T Suit: There’s a Word for That. “Junk.”
• Verizon to iPhone Users: “Want Five Times More 3G Coverage? There’s a Map for That.”

verizonresponse –

Under terms of the deal, a mix of new and library content from Univision, TeleFutura and Galavision TV programs will be featured and promoted throughout YouTube.

The deal, which marks the first time any Univision programming is available on the Web outside of its own properties, is part of YouTube’s effort to cater to one of the fastest growing segments of online users: The Hispanic community.

“We’ve seen 6.5 million Hispanic adults visit YouTube in the last year,” Chris Maxcy, head of content partnerships at YouTube, said during a call discussing the announcement. “That’s up 80 percent….To date our focus has mostly been on English language space….The Hispanic audience has been overlooked, yet it’s one of the fastest growing communities online.”

The official release:

UNIVISION BECOMES A PREMIER SPANISH-LANGUAGE CONTENT PARTNER WITH YOUTUBE

Partnership Marks One of the Most Comprehensive Deals of Full-Length Programming for YouTube and Brings YouTube’s Hispanic Community in the U.S. Top Programming from Univision’s Three Major Networks
NEW YORK, NY, November 16, 2009 — Univision Interactive Media, Inc., the digital division of Univision Communications Inc., the leading Spanish-language media company in the United States, today announced that it is partnering with YouTube to make short-length and long-form Univision videos available on the YouTube.com website.

“This is a very exciting milestone, as it represents the first time that any Univision programming is available on the Web outside our own properties in both a long and short form format,” said Kevin Conroy, president of Univision Interactive Media, Inc. “This partnership uniquely extends our reach to our audience and solidifies our position as the leading Spanish-language video provider for U.S. Hispanics with unparalleled programming in all respects.”

“Clearly, Univision has established itself as a premier provider of Spanish-language television content here in the U.S.,” said Chris Maxcy Head of Content Partnerships at YouTube. “This deal is a big win for us and marks one of the most comprehensive partnerships for full-length programming signed to date. There is a huge demand to watch Spanish-language content on YouTube. With this new partnership, our community here in the U.S. can watch and enjoy both short-length and long-form programming from Univision’s three major networks on our platform.”

Univision, TeleFutura and Galavisión television programs will be featured and promoted throughout the YouTube.com website. Content will be updated to include relevant offerings as well as an extensive archive of library programs. In addition to top Univision shows, users will have access to Univision.com videos across key content categories, as well as unique footage from Univision celebrity interviews and special events such as next year’s “Premio Lo Nuestro a la Música Latina” (Lo Nuestro Latin Music Awards). Univision will also be using YouTube’s leading Content ID technology to more effectively track user engagement and monetize Univision content uploaded by YouTube users.

This partnership solidifies Univision Interactive Media’s leadership position as it provides premier advertisers with unique sponsorship opportunities, including new inventory for display ads. This further establishes Univision Interactive Media as the ideal vehicle for advertisers to connect with U.S. Hispanics anytime, anywhere.

Odd to learn that Apple (AAPL) was considering such a move. After all, advertising isn’t exactly one of its core businesses, though it might have become one had it managed to buy AdMob, which is one of the largest sellers of advertisements on the iPhone.

“If a lot of traffic goes through my devices, why can’t I become the middleman that serves ads against that inventory?” said IDC analyst Karsten Weide. “AdMob would have allowed them to do that quickly.”

Indeed. If that’s what Apple wanted. And perhaps the company is interested in expanding into online advertising, as this “Advertising in Operating System” patent seems to suggest.

That said, it’s equally conceivable that Apple met with AdMob hoping to temper Google’s (GOOG) fast-expanding footprint in the mobile space and on the iPhone. With the acquisition of AdMob, the search sovereign is now the Internet’s largest mobile advertising company, with a dominant presence on the iPhone and any handset running its Android OS. Perhaps Apple’s intent was simply to make this a more costly endeavor for Google. But perhaps it was something more.

At $12.34, Palm (PALM) is up well over seven percent as I write this, a nice gain that more than offset the four percent drop the company’s shares suffered last week. Clearly, the market is expecting a lot of the Pixi, and according to some analysts, it may get it. In a note to clients Friday, RBC analysts said they “expect positive consumer reception and healthy sell-through,” for the Pixi.

But not everyone agrees with RBC’s cheery assessment. Ashok Kumar, an analyst at Northeast Securities, has a much dimmer view of Palm’s prospects in the months ahead. He says his sell-through checks show a “substantial decline” in recent Pre sales.

“As a fading brand, carriers are likely to see better returns on their promotional and advertising dollars with other vendors,” Kumar writes. “WebOS has negligible smartphone OS share, 0.2 percent per Gartner estimates, and is unlikely to attract any meaningful third-party application support. Palm has bet the farm on webOS and there is a real possibility that they may not achieve critical mass.”

Perhaps. Perhaps not. We’ll see in the months ahead.

Below, Palm’s (PALM) new Pixi ad and my favorite parody of Palm’s ad for the Pre.

Once again, AT&T (T) argues that coverage maps featured in Verizon’s (VZ) ad are misleading and falsely suggest that AT&T offers no coverage in areas where it actually does service.

“Contrary to the image presented in the Verizon ads, our wireless network is pervasive,” said an AT&T spokesman. “It covers over 300 million people, or 97 percent of the U.S. population. Our fastest, or 3G, network covers approximately 233 million people, or 75 percent of the U.S. population….[Verizon's] use of white space is misleading.”

While AT&T is deadly serious about this accusation, the fact that it must make it by referencing creatures like the Abominable Snow Monster and a pink spotted elephant makes it, well, hysterical.

“The ‘Island of Misfit Toys’ television advertisement is a parody of the ‘Rudolph the Red Nose Reindeer’ television special that depicts an island to which Rudolph travels after escaping an attack from the Abominable Snow Monster,” AT&T argues in its complaint. “The advertisement begins with outdated, discarded toys expressing surprise at the arrival of an Apple iPhone. The red Charlie-in-the-Box says ‘Hey! Check out the new guy!’ The spotted elephant, in a surprised manner, asks the iPhone ‘What are you doing here? You can download apps and browse the web!’ and a Dolly for Sue asserts that ‘Yeah. People will love you [the iPhone].’”

The complaint continues: “In response, a blue AT&T coverage map depicting large swaths of ‘white’ or ‘blank’ space across the United States appears above the iPhone. All the toys exclaim ‘Oh . . .’ in dismay, while the iPhone wilts and its screen turns dark. The toy airplane then assures the iPhone that ‘you’re going to fit right in here!’”

Finally, as AT&T describes it, “AT&T’s and Verizon’s coverage maps then appear and the announcer states, ‘with five times more 3G coverage than AT&T, Verizon Wireless is your destination for great gifts.’ The image of the sad and wilting iPhone on an island of misfit toys falsely communicates that the iPhone is a broken device because it cannot browse the web or download applications when outside of AT&T’s depicted coverage area. Further, the maps in the advertisement deceive consumers into believing that AT&T’s customers have no coverage whatsoever when they are outside of AT&T’s depicted coverage area and thus cannot use their wireless devices in many parts of the United States.”

Verizon’s attorneys are probably doubled over with laughter at this very moment.

Below, AT&T’s amended complaint in its entirety:

VerizonAmendComp _3_ –

Under terms of the agreement, Intel (INTC) will pay AMD (AMD) $1.25 billion (nearly a quarter of AMD’s $4.46 billion market cap) and agree to “abide by a set of business practice provisions” presumably crafted to temper Intel’s allegedly anticompetitive practices. Here are details of the agreement:

Business Practices Provisions Prohibit Intel From:

• Offering inducements to customers in exchange for their agreement to buy all of their microprocessor needs from Intel, whether on a geographic, market segment, or any other basis (Section 2.1.1.a)
• Offering inducements to customers in exchange for their agreement to limit or delay their purchase of microprocessors from AMD, whether on a geographic, market segment, or any other basis (Section 2.1.1.b)
• Offering inducements to customers in exchange for their agreement to limit their engagement with AMD or their promotion or distribution of products containing AMD microprocessors, whether on a geographic, channel, market segment, or any other basis (Section 2.1.2a-b)
• Offering inducements to customers in exchange for their agreement to abstain from or delay their participation in AMD product launches, announcements, advertising, or other promotional activities (Section 2.1.2.b)
• Offering inducements to customers or others to delay or forebear in the development or release of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.2 and 2.1.2)
• Offering inducements to retailers or distributors to limit or delay their purchase or distribution of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.1)
• Withholding any benefit or threatening retaliation against anyone for their refusal to enter into a prohibited arrangement such as the ones listed above.

In return, AMD will drop all its pending litigation against the company and pull out of regulatory complaints worldwide. Finally, the two rivals will enter into a five-year patent cross-licensing agreement.

In a joint statement, the companies said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”

Interesting. Clearly, AMD CEO Dirk Meyer’s earlier comments about the ratification of its complaints about Intel’s business practices and the company’s hope for a future in which AMD’s “ability to succeed as a business is really determined by the quality of our products and customer relationships” was quite prefigurative.

During a call to discuss the settlement, Meyer said the accord marks the beginning of a new era, one that changes the game for AMD. “It is an important milestone for us, for our customers, our partners, and most importantly–for consumers and businesses worldwide,” Meyer said.

“It is the culmination years of litigation and regulatory engagement, and we are optimistic that it will usher a new era for our industry,” the CEO continued, further noting that change may not be immediate. “We recognize that it will take time for people to understand how the operating conditions in processor business have changed–but make no mistake–they have changed….We look forward to healthy competition with the mutual respect one would expect between world-class competitors.”

It is unclear if the settlement will affect the antitrust suit brought against Intel by New York Attorney General Andrew Cuomo last week as Cuomo hasn’t yet commented. But the European Union says it will not change its decision in May to fine Intel a record $1.5 billion for anticompetitive behavior.

“The European Commission takes note that Intel and AMD have settled all their litigation and that Intel is paying AMD compensation of one-and-quarter billion dollars,” said an EC spokesman. “But Intel has an ongoing obligation to comply with the commission’s antitrust decision and with EU competition law. The commission continues to vigorously monitor Intel’s compliance with its obligations under the EU antitrust decision.”

All of the new commercials are Christmas-themed and all feature Apple’s (AAPL) iPhone, though they are careful to leave it unscathed by Verizon’s criticism of AT&T (T). The standout among the three, this re-creation of the “Island of Misfit Toys” scene from the 1964 Rankin/Bass stop-motion animated Christmas television special, “Rudolph the Red-Nosed Reindeer.” Note that the conceit of the ad is that iPhone has been banished to the Island of Misfit Toys not because of its quality but because of of AT&T’s 3G network.

A pretty brilliant escalation of Verizon’s marketing battle with AT&T and one that suggests through its deference to the iPhone that there may be more to these Verizon iPhone rumors than previously thought.

Below, Verizon’s other two ads.