Comparative Advertising: Avoiding the Pitfalls

As sales are becoming more and more regular throughout the year amidst fierce market competitions, many businesses are turning to comparative advertising to drive up sales. 
 


Comparative advertising can be an effective tool.  The comparison can be done directly (e.g. my brand is better than yours) or indirectly (e.g. my brand is better than all other leading brands).  However, comparative advertising can be a minefield.  Many readers will be aware that advertisements need to comply with the CAP or BCAP codes.  Very generally, these codes reflect some of the requirements of the Misleading and Comparative Advertising Directive 2006 (“Comparative Advertising Directive”) and the corresponding UK implementing regulations, which provide a list of conditions for a comparative advertisement:

  • it is not misleading
  • it compares like for like
  • it does not discredit or denigrate the other trader’s name, mark, goods or services
  • it does not take unfair advantage of the reputation of the other trader’s name, mark, goods or services
  • it does not present goods or services as imitation or replicas of the genuine goods or services
  • it does not create confusion

Failure to adhere to the CAP/BCAP codes will result in a ruling against the offending advertiser by the Advertising Standards Authority, the independent regulator of advertising across all media in the UK.  Offenders will face “naming and shaming” by the ASA and persistent offenders may be referred to Trading Standards.

It is also important to remember that if an advertisement does not comply with the rules of the Comparative Advertising Directive, the advertiser may also be liable for trade mark infringement, so may face a Court injunction as well as having to pay damages to the aggrieved competitor(s). 

Trade Marks Act 1994 (and the corresponding EU trade mark regulations) provide that the owner of a registered trade mark is entitled to prevent third parties from using in the course of trade in relation to goods and services a sign that is identical or similar to the registered mark.  There are some exceptions to this, including that it is permissible for third parties to use the registered trade mark to identify the goods/services of the registered mark owner, but only if it is in accordance with honest practice and must not, without due course:

  1. take unfair advantage of; or
  2. cause detriment to

the distinctive character or repute of the registered mark.

It is likely that failure to comply with the conditions of the Comparative Advertising Directive will also lead to a failure to fulfil the above exception under the Trade Marks Act 1994, resulting in trade mark infringement.

Depending on the facts, other courses of action may also be available to the aggrieved competitor, such as copyright infringement, passing off and defamation.

In conclusion, comparative advertising can be a great tool to marketing but it is not without its pitfalls.  Advertisers should bear the above in mind when devising its comparative advertising campaign.