Showdown Settled: Weight Watchers, Jenny Craig Reach Agreement

VIDEO: Weight Watchers sues Jenny Craig, alleging false advertising.

Diet giant Jenny Craig agreed to stop an ad campaign that rival Weight Watchers alleged in a lawsuit was misleading, according to a settlement between the two companies.

The multi-platform ad in question claimed Jenny Craig's weight-loss program is more than twice as effective as its main rival.

"Jenny's delicious cuisine and the support of your personal consultant make all the difference," Valerie Bertinelli, who lost 49 pounds on Jenny Craig, says in the television ad. "Jenny Craig clients lost, on average, over twice as much weight as those on the largest weight-loss program."

According to the settlement, Jenny Craig has "permanently ceased and shall permanently refrain from broadcasting, publishing or disseminating" the ad in any form.

Lawyers for the rival companies reached the agreement last night, Weight Watchers president and chief executive officer David Kirchhoff told ABC News.

Kirchhoff called the ad campaign "completely and legally unsustainable" and said it was "way out of bounds, inaccurate and inappropriate" because it compared results from a recent Jenny Craig clinical trial to an older one by Weight Watchers.

"They compared a study they did this year, for one purpose, to a study we did 10 years ago," Kirchhoff told ABC News last month.

Patti Larchet, Jenny Craig chief executive officer, said today that under the terms of the settlement, her company admits no wrongdoing and agrees not to compare its clinical trial results to past Weight Watcher trials.

"Jenny Craig has such faith in its program and feels so confident about its performance in clinical trials that we challenge Weight Watchers to compete directly with us in a head-to-head clinical trial," Larchet, said in an e-mailed statement.

The settlement did not grant Weight Watchers' request that Jenny Craig launch a corrective advertising campaign, but Kirchhoff said given the speed of the resolution he does not think Weight Watchers suffered any harm.

"The good news is that [the settlement] happened fast," Kirchhoff said.

There are no punitive measures taken against Jenny Craig, Kirchhoff said, and each company has agreed to pay its own legal fees.

A statement released by Weight Watchers today claimed the settlement was "in the public's interest."

"We are pleased that Jenny Craig will no longer be allowed to continue using this false and misleading advertising, now and in the future, and to put this situation behind us," Kirchhoff said in the statement.

Weight Loss $40 Billion Industry in U.S.

Diet ads are just about everywhere you look these days, featuring thin celebrities like Bertinelli, Marie Osmond and Jenny McCarthy pitching skinny bodies.

Weight loss is a $40 billion industry in the U.S., and the Jenny Craig ad had the two weight-loss giants squaring off.

Two weeks ago a federal judge issued a temporary restraining order halting Jenny Craig from showing the ad until the lawsuit was settled, a fairly unusual development in a commercial libel suit.

The ad never mentioned Weight Watchers by name, but Kirchhoff told ABC News last month that "everybody knew. You say the world's leading weight loss company; everybody knows who you are talking about."

ABC News' Rich McHugh contributed to this report.

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