Last August, as part of a rebrand, Cogeco renamed its Internet packages "UltraFibre" and implemented a new homepage for its website, which included the tagline "Enjoy unlimited entertainment with the best Internet experience in your neighbourhood." Both the package name and tagline were recently challenged by Bell Canada who was seeking injunctive relief against Cogeco on the basis of several causes of action, including under a criminal provision of the Competition Act. "UltraFibre" withstood the challenge, but the "best ... experience" claim did not.
The case is noteworthy for a number of reasons. In no particular order (as the authors have changed their minds on the relative importance of each point below).
To set the stage, Section 52 of the Competition Act makes it a criminal office to knowingly or recklessly make a false or materially misleading representation to the public. Section 36 of the Act provides a "special remedy", namely a private right of action to anyone who suffered loss or damage as a result of a violation of the criminal provision. (There is no private right of action for violations of the parallel civil prohibition against misleading representations.) Section 36 does not expressly provide for an injunction (unlike other "special remedies" in the Act). Nonetheless, the misleading advertising cause of action was among the reasoned bases for awarding the injunction.
First, the injunction was granted applying what appeared to be a relatively soft application of the 3-part test for issuing interlocutory injunctions. Trademark claims also were at issue, and in trademark proceedings, interlocutory injunctions are notoriously difficult to obtain, with the need to prove "irreparable" harm being the biggest hurdle. In this case, the Court was satisfied that Bell had established that there would be irreparable harm that could not be compensated for in damages, stating that: "It would be difficult, if not impossible, to determine with any certainty which potential or existing customers were misled by the claim that Cogeco is the best, and which customers or potential customers made their choices for reasons unrelated to this advertising claim".
Second, the court raises an interesting issue as to what constitutes a single advertisement on a website. The court considered whether it constituted the entire homepage, which can include several pages of text, graphics and links, etc. Without expressly ruling on the issue, the court reasoned that minimally an online advertisement should be defined as what a consumer would see on a single screen of the homepage. This issue could have significant consequences for advertisers, particularly when presenting information on mobile devices where "a single screen" is so small, and will no doubt be fodder for further litigation.
Third, the court provided insight on the substantiation necessary when using a word popular among advertisers: "best". Cogeco argued that the "best Internet experience in your neighbourhood" is a qualitative claim that is subjective to the consumer and based on many factors such as customer service and not just speed and performance. Bell argued that it is a quantitative claim requiring evidence of best speed and performance in every neighborhood, and Cogeco did not have the best speed and performance in every neighbourhood – a fact conceded by Cogeco.
The Court found the claim needs to be qualified based on all factors relevant to the consumer's experience, including speed and performance. The court was not convinced that claiming "best internet experience" was qualitativeexempt Cogeco from providing substantiation that included Internet speed and performance. This is a reminder that even if your claim is substantiated for one possible impression it may leave with consumers, your claim may well be false and misleading if you don't have substantiation for other impressions.
Also, as noted, violation of the criminal provision requires a mens rea component namely, an advertiser must knowingly or recklessly make the misleading representation. Even though Cogeco had a coherent argument on the interpretations of its "best" claim, the court nevertheless concluded there was a serious question to be tried regarding whether Cogeco's misrepresentation was made knowingly or recklessly. There was evidence that Cogeco knew and approved of a report by the CRTC which compared different internet technologies and found that FTTH technology outperformed other existing technologies (cable or DSL) in terms of speed and performance, but Cogeco offered that superior technology in only a limited number of neighbourhoods.
Fourth, in assessing whether a claim is false or materially misleading, courts must look at the general impression as well as the literal meaning of the claim to the relevant average consumer. In Richard v. Time Inc. [2012] 1 S.C.R. 265, the Supreme Court clarified that the average consumer is someone who is "credulous and inexperienced" and not particularly experienced at detecting the falsehood or subtleties found in commercial representations. In this case, the court held that the relevant consumer was a credulous and technologically inexperienced consumer of Internet services. This is a reminder that when advertising, you must presume your audience is naïve. This could have a significant impact when advertising technology or technology based services, where delivering information in an easy-to-understand and readily digestible way to the average "dummy" may be impossible.
Fifth, among advertising lawyers there is often a debate over what constitutes a claim requiring substantiation and what is hyperbole or puffery. The court found that the use of "ULTRA" in this context was likely a "puff". Canadian law has only a handful (if that) of cases addressing the concept of when a claim is likely to be considered a "puff", so this finding should be noted.
Sixth, it is significant that the court intervened at all. Historically, Canadian courts have been reluctant to intervene in advertising cases. Despite the court's general reluctance to intervene in a very competitive marketplace, it did so since Cogeco had altered that marketplace by claiming to be the "best". The public interest appears to have played a factor in the court stepping in.
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