Avoid the Pitfalls of Comparative Advertising!

Comparative Advertising

The introduction of the European Comparative Advertising Directive 2006 and its implementation into UK law has allowed for companies to advertise their goods alongside those belonging to a third party as long as certain conditions are met. The potential for a successful claim against a company using comparative advertising has been reduced, but it remains a complex area for which a substantial amount of case law has accumulated and which revolves around three particular issues: intellectual property, pricing and the product itself.

What does it mean?

A comparative advertisement is one which explicitly or by implication identifies a competitor or goods or services offered by a competitor.

When is it lawful?

The following conditions must be fulfilled:

The advert must not be misleading. That is, it must not provide false information about the company or the nature of the product, nor should it create an overall impression that is likely to deceive an audience. Likewise, an omission could be misleading if hiding or disguising any information results in a change in consumer behaviour
It must be clear as to whose trademarks are being used to avoid potential confusion. Third party trademarks can be used freely for comparative purposes as long as it is clear who the mark belongs to
It should be an objective comparison of one or more features of the goods which is relevant, verifiable and representative. The compared goods must also meet the same need or be intended for the same purpose (although they do not need to be identical). If comparing pricing for instance, the advertisement must identify the goods sufficiently to enable a consumer to check the accuracy of the prices shown.
It must not discredit, denigrate or take unfair advantage of the reputation of the trademarks, trade names or other distinguishing marks of the third party, not can it be presented as an imitation or replica of a third party’s goods.

Enforcement in the UK

Healthy competition is encouraged within the UK and the EU and this has often resulted in the activities of comparative advertisers being accommodated. Possible fines, injunctions and/or awards of compensation could be made if a government body such as the Competition and Markets Authority or Trading Standards becomes involved. However, claims by a third party can extend to trademark infringement, passing off or possibly copyright infringement.

How can you avoid a claim?

The following points provide an outline of the main issues to consider prior to undertaking any comparative advertising campaign and may make the difference between a lawful or unlawful campaign:

Check with the Intellectual Property Office to ensure you know whether or not you are using a registered trade mark
Consider passing off – does the third party have an unregistered trademark/reputation that you could be accused of passing off?
Consider copyright – will you be using a third party’s logo or artwork?
Thoroughly research all aspects concerning pricing to ensure accuracy and clarity
Consider whether the advertising is unfair or misleading
Think carefully about identifying a third party or their product without expressly naming them or it - In some circumstances, particularly where the competitor’s brand is better known than your own, using their product may be misleading in that it may give the impression that the advertisement is for their product rather than your own
Confirm the accuracy of the data and statistics relating to the products and state sources
Ensure that all industry codes of practice in relation to the advertising are complied with

Finally, it is worth remembering that where a company undertakes comparative advertising in any form it is usually viewed as a provocative gesture by the named competitor and therefore can never be guaranteed to avoid litigation, no matter how lawful the campaign. Indeed it might invite litigation and you should, therefore, prepare for that eventuality as part of your consideration for the proposed campaign.

If you are thinking about running a campaign of this type and require legal advice why not speak to one of our team today!