Comparative Advertising

What is Comparative Advertising?

“Advertising” is any form of representation which is made in connection with a trade, business, craft or profession in order to promote the supply or transfer of goods or services.

A “comparative” advertisement is one that explicitly or by implication identifies a competitor or the goods or services offered by a competitor. As a concept, it is exceptionally broad.

Whilst comparative advertising is a good way to ensure that your company’s products and/or services stand out in the marketplace and can prove useful to consumers in helping them decide which products and/or services are best suited to them, it can also generate scrutiny and complaints from competitors, so it is imperative to make sure that your advertisements do not breach the rules.

What are the risks associated with Comparative Advertising?

Advertisements that refer to a competitors’ products and/or services are subject to complex legal controls and there is a substantial amount of case law used to determine whether a particular advertisement is lawful.

If your advertisement contravenes the rules, you will be liable for trade mark infringement and possibly other causes of action, depending on the circumstances.

When is Comparative Advertising lawful?

The current laws regulating this area of advertising include the Comparative Advertising Directive and the UCP Directive. The Comparative Advertising Directive requires EU member states to legislate to enforce compliance with these provisions. If a comparative advertisement does not fall within the rules set out by the Comparative Advertising Directive, this will expose the advertiser to liability

A comparative advertisement is legally permitted, as long as it fulfils the following conditions:

 1) It is not misleading.

• A misleading advertisement is an advertisement which in any way, including in its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor.
• Factors that will be taken into account when assessing whether an advertisement is misleading include the characteristics of the advertised goods and services, how they are delivered, how prices are calculated, and the nature and attributes of the advertiser.

2) It does not constitute a misleading action or omission.

• In this circumstance, misleading is defined as

3) It compares goods and services meeting the same needs or intended for the same purpose.

4) It objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price.

5) It does not discredit or denigrate the competitor or the competitor’s trademarks, trade names, other distinguishing marks, goods, services or activities.

6) For products with designation of origin, ensure that the advertisement relates in each case to products with the same designation.

7) It does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products.

8) It does not present goods or services as imitations or replicas of goods or services bearing a protected trademark or trade name.

9) It does not create confusion among traders, between the advertiser and a competitor or between the advertiser’s trademarks, trade names, other distinguishing marks, goods or services and those of a competitor.

What happens if you do not follow the rules of Comparative Advertising?

If a comparative advertisement does not fall within the rules set out above, this will expose you to liability, in particular, for trademark infringement.

A competitor who feels that your advertisement does not fall within the rules may also be able to obtain relief through an action for trade libel, malicious falsehood, infringement of copyright or passing off.

It is worth noting that, other than by bringing trademark infringement proceedings, individual consumers or businesses cannot take direct action if they have a complaint regarding comparative advertising. Under the provisions of the Comparative Advertising Directive, EU member states were left to decide whether to enable brand-owners to bring proceedings for contravention of its provisions, or whether to appoint an administrative body which would either determine complaints or initiate legal proceedings to determine them. In the UK, the government has legislated to designate various authorities (primarily the Competition and Markets Authority (CMA)) to initiate proceedings on behalf of traders and consumers.

Trading Standards Services (TSS), the CMA and consumer protection organisations can seek court orders preventing the publication of unlawful comparative advertising. However, TSS can first require that all other means of dealing with a complaint (that is, via the Advertising Standards Agency (ASA)) have been used and have failed to prevent continued use of the offending advertising.

Things to remember regarding Trademark Infringement

• A registered trademark is infringed when a third party uses, in the course of trade, a sign which is identical with that trademark in relation to goods or services identical with those for which that trademark is registered.
• A registered trademark is infringed when a third party uses, in the course of trade, a sign where, because of its identity with or similarity to that mark and the identity or similarity of the goods or services covered by the trademark and the sign, there is a likelihood of confusion on the part of the public, which includes a likelihood of association between the sign and the trademark.

Tips for creating a lawful Comparative Advertisement

• Mere comparison will not discredit a competitor.
• Comparison must be objective and verifiable.
• An advertisement will be lawful as long as it is clear, fair and does not take unfair advantage of, or denigrate, the competitor’s trademarks or brand.

When devising an advertising campaign, you should take the following steps to minimise the risk that it might contravene the laws on comparative advertising:

• Consider your words carefully. Confirm the accuracy of data, statistics and sources. If you are claiming to be ‘leading’ or ‘No.1’, you need evidence of the fact before publishing the advertisement.
• Assess what interpretation your target audience will put on the advertisement; consider whether the advertising is unfair or misleading.
• Use objective comparisons, you should ensure that price comparison data is up to date and that the date of the comparison is stated in the advertisement.
• Think carefully about identifying a competitor, or a competitor’s product, without expressly naming them or it. In some circumstances, particularly where the competitor’s brand is better known than your own, using a picture of the competitor’s product or elements of their branding may cause the advertisement to be misleading because it may give the impression that it is for the competitor’s product rather than yours.
• When making comparisons with a competitor, ensure you are making a like-for-like comparison. Do not select things to compare without portraying the whole picture. Ensure that the goods or services being confirmed are used for the same needs or intended purpose.
• Consider other causes of action that might be available to a competitor in respect of the advertisement: for example, copyright infringement if you reproduce their logo or other artwork.
• Take care to ensure the advertisement is not confusing and make sure it is clear that you are the advertiser.
• Make sure the advertisement is supported by verifiable data available to the consumer. An advertisement which features a comparison with an identifiable competitor must include sufficient information to allow a consumer to understand the comparison, and be able to check the claim was accurate, or ask someone suitably qualified to do so.
• Avoid “puffery” or poking fun at a competitor. Make sure that the advertisement is not taking unfair advantage of a competitor’s reputation, trademarks or other distinguishing marks.
• Follow industry codes of practice, although this may not guarantee that the advertising is acceptable.