Below is an excerpt from John McKeown's September 2015 Mailer.
This month I would like to continue the discussion concerning comparative advertising and in particular rights under the Trademarks and Copyright Acts.
The Trademarks Act
Two sections of the Act are potentially available to a brand owner asserting claims relating to a comparative advertisement: subsection 7(a) and section 22. Subsection 7(a) provides that no person shall make a false or misleading statement tending to discredit the business, wares or services of the competitor.
The impugned statement need only be misleading without being false and neither malice nor knowledge of the falsity of the statement needs to be shown. All that needs to be proved is that the statement complained of has been made by a competitor, that it is false or misleading, that it tends to discredit the business, wares or services of the plaintiff and damage has been suffered as result of the making of the statement.
The subsection has been found to be constitutionally valid federal legislation in the context of false or misleading statements relating to matters constitutionally assigned to the Federal government. There is substantial doubt as to its constitutionality outside of the context of patents, trademarks, copyright and industrial designs. In addition, it is unclear how closely the statement needs to be linked to the trademark in issue. If the reference is not direct but by way of inference, such as a reference to the leading brand, this may not be sufficient.
Section 22 provides that no person shall use a trademark registered by any person in a manner likely to have the effect of depreciating the value of the goodwill attaching thereto.
It has been held that the verb "use" in section 22 is to be interpreted by reference to the definition of the noun "use" in section 2 and 4. The effect of this is to confine the application and therefore the prohibition of section 22 to a use which any person may make, in association with goods or services within the meaning of section 4 of another's registered trademark in such a manner as to depreciate the value of the goodwill attaching thereto. In the leading case the mark in issue was registered for use in association with wares only. As a result it was found that the presence of the plaintiff's trademarks on the defendant's packages was "use" within the meaning of section 22 but that their presence on the defendant's brochures was not within it.
This interpretation leads to an unexpected situation. If the mark in issue is registered for use in association with wares only, the result of this case applies and the plaintiff can restrain the defendant's use of its mark which comes within the definition set out in the Act for wares. Under this definition a trade mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of such wares, in the normal course of trade,it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred. However, if the mark in issue is registered for use in association with services the broader definition of "use" for services applies and the plaintiff can restrain the defendant's use of its mark in advertising.
Much has been written about the section by commentators but the approach of the leadingcase continues to be applied although the section has not been definitively interpreted by an appellate court.
The Copyright Act
If a comparative advertisement reproduces a substantial part of a work in which copyright subsists a brand owner may have a claim for copyright infringement. For example, where the publisher of a newspaper television listing supplement reproduced the front cover of a competitor's television listing magazine in a comparative advertisement the magazine owner successfully sued for infringement.
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