At its best advertising is an essential ingredient of a free market economy allowing as it does informed consumer choice. At its worst it allows corporate giants, with fat advertising wallets, to unfairly gain market share. Nowhere is the tension between these two views more acute than in the case of comparative advertising - i.e. advertising which favourably compares the goods or services of the advertiser with those of its competitors.
The question of exactly when comparative advertising has gone too far has been the subject of numerous recent court battles. Indeed the whole area has become something of a growth industry of late for the lawyers with household names such as Electrolux and Dyson (vacuum cleaners), Vodafone and Orange (mobile phones), Proctor & Gamble and Unilever (washing powder) and Barclays and RBS Advanta (credit cards) fighting it out in the Courts in recent years.
In English law, there is at present no civil remedy aimed specifically at comparative advertising: an aggrieved business will have to rely on the general law of trade mark infringement and passing-off, injurious falsehood and defamation.
It is an infringement of a competitor's registered trade mark to use it in comparative advertising in a way which is not "in accordance with honest practices in industrial or commercial matters" if such use takes unfair advantage of the registered trade mark or is detrimental to its reputation.
The courts however have not allowed trade mark law to be used to impose puritanical standards on advertisers. The courts will allow a certain amount of rough and tumble and expect the general public to treat advertisements with a certain degree of circumspection.
What matters is whether or not the advertisement read as a whole is significantly misleading. The more precise the claim made the more likely it is to be construed as being a serious factual representation rather than mere puffery, in relation to which no complaint can be made. The golden rule is clear: go into detail with care and only if the claim can be objectively justified. Whereas a manufacturer should be able to get away with saying that his washing machine is "better value" than those made by his rivals, the claim that it spin dries better should only be made if it can be objectively justified.
The omission of certain facts may not be in accordance with honest practices if the resulting advertisement is rendered significantly misleading - a rule which has particular application when comparing the cost of goods or services. Favourably comparing the cherry-picked aspects of one’s own charges or tariffs against those of a competitor is dangerous if the effect of other less favourable charges is not disclosed.
Even if a competitor's trade mark is not registered it should still be used with care. Passing-off is concerned to prevent one trader making misrepresentations regarding origin which damage the goodwill of another trader. It is not necessary to show that the misrepresentation was intentional or negligent. In one case, McDonalds v Burger King, McDonalds established a case of passing-off in relation to Burger King's promotion of its whopper burger under the slogan "It's not just Big, Mac". McDonalds were able to produce survey evidence that a significant number of people thought the advertisement was for Big Mac hamburgers and that they could be obtained at Burger King.
Even where the competitor's mark is not registered and there is no prospect of confusion the common law tort of injurious falsehood should still be borne in mind. Injurious falsehood occurs where false statements are published maliciously and are calculated to cause damage to the competiter. Malice is established if, for example, the advertiser knowingly made a false comparison. No intention to harm is required unless the advertiser believed the comparison to be true. Again the courts are not concerned to prevent mere "puffing": in one case a claim that one manufacturer's baby food was "far more nutritious and healthful than any other preparation" was held to be mere puffery. Again detailed claims should only be used where they can be objectively justified.
An advertisement which criticises a competitor's goods or services in such a way as to attack the honesty or the integrity of the competitor may constitute defamation.
The criminal law (in the form of Trade Descriptions Act 1968 and the Consumer Protection Act 1987), although theoretically relevant, has little application in practice because of the high burden of proof required, the unfamiliarity of most commercial lawyers with criminal law and the non-availability of interim injunctions.
There is a European harmonisation directive on comparative advertising in the pipeline. It is due to be implemented by 23 April 2000: at present the DTI is still in the consultation phase so that the precise effect on domestic law of the directive is still unclear.
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.
For further information please contact Larry Cohen, Intellectual Property.