Association of National Advertisers The Legal Landscape of Comparative Claims in Global Advertising Felix Hofer – Italy Brinsley Dresden – United Kingdom

Association of National Advertisers

The Legal Landscapeof Comparative Claims in

Global Advertising

Felix Hofer – ItalyBrinsley Dresden – United Kingdom

Peter LeGuay -- AustraliaValdir Rocha – Brazil

Moderator: Douglas Wood – United States

The United StatesModel

United StatesLanham Act §43(a)

… any … false or misleading representation of fact which …

misrepresents the nature, characteristics, qualities … of

his or her or another person’s goods ... shall be

liable in a civil action …”

U.S. Exception: Comparative Advertising

•Section 43(c)(4) provides an exception for:– “Fair use of a famous mark by

another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark.”

The Australian

Model

What is misleading and deceptive conduct?

• Section 52 (1)

“a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”

False or misleading representations under Section 53

• Section 53 sets forth specific types of prohibited conduct that are subject to prosecution by the ACCC as a criminal offence:

• Falsely represent that goods are of particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;

• Falsely represent that goods are new;• Represent that goods or services have

sponsorship, approval, performance, characteristics, accessories, uses or benefits they do not have; or

• Make a false or misleading representation with respect to the price of goods or services.

Personal Liability for Violations of the Trade Practices ActIf a person (including employees or directors

of a corporation) is found to:• aid, abet, counsel or procure a

contravention;• induce a contravention;• be in any way directly or indirectly

knowingly concerned in a contravention; • be a party to a contravention; or• conspire to effect a contravention,then that person can potentially be

personally liable for civil or criminal liability.

Consequences of a Breach of the Trade Practices Act

• Interlocutory injunction to stop campaign;• Final injunction proceedings including damages

and legal costs;• Adverse publicity, disrupted production

timetables, lost media bookings, lost clients;• Strict compliance programs, corrective

advertising, ACCC always aware; and• For s53 civil damages and risk of criminal

penalties:• Corporation – up to $1.1 million;• Individuals –up to $220,000.

Case Study

Energizer Australia v Gillette Australia

• In November 2001 Gillette aired the “Bunny” commercial, representing Duracell alkaline batteries outstripping the performance of 3 other bunnies representing Eveready Super Heavy Duty Carbon Zinc batteries (Eveready SHD batteries).

Energizer Australia Pty Ltd v Gillette Australia


• Energiser sought an injunction, claiming that the comparison was unfair because (1) it suggested that the Eveready SHD batteries were the best batteries Energiser had to offer, (2) failed to mention the substantial price difference between Duracell alkaline batteries and Eveready SHD batteries and (3) failed to disclose that the Eveready SHD batteries are only the fifth most powerful battery in Energiser’s range.


• Gillette providing 3 modified versions of the “bunny” ad during the course of the proceedings without admitting fault

Energizer Australia Pty Ltd v Gillette Australia


• The primary judge held that the “bunny” ad contravened the Trade Practices Act because:

• the Eveready SHD battery was only the fifth most powerful battery in Energizer’s range;

• the ad did not reveal there was a substantial price difference between Duracell alkaline batteries and Eveready SHD batteries; and

• the ad did not adequately identify the brand of battery to which Duracell batteries were being compared.


• On appeal, the Full Court of the Federal Court held in relation to the third modified version of the “bunny” ad:

• the Eveready SHD batteries are a competitor of the Duracell alkaline batteries and the comparison was between the Duracell alkaline batteries and the Eveready SHD batteries;

• there is no basis under the Trade Practices Act to regard comparative advertising as an inherently disreputable form of commercial conduct, to be view with suspicion by the Courts;


• provided the factual assertions are not untrue, or misleading half-truths, an advertiser can lawfully compare a particular aspect of its product or service favourably with the same aspect of a competitor’s product or service; and

• the ad was not misleading in failing to disclose that Energiser has a comparable battery to that of Gillette or other criteria by reference to which the batteries might be compared.

Target

The Brazilian Model

Brazilian Self-Regulating Advertising Code

“Article 32 - In view of the modern international trends and in compliance with the applicable rules of the Industrial Property Code (Law no. 5772, of December 21, 1971), comparative advertising shall be accepted, provided that it conforms to the following principles and limits:

a) its primary purpose shall be the

clarification or consumer’s protection;


b) it shall have as basic principle the objectiveness of the comparison since subjective data, psychological or emotionally-based data does not constitute a valid comparison basis for consumers;

c) the purported or implemented comparison shall be capable of being supported by evidence;


d) there shall be no confusion between the products and competitor’s brands;

e) there shall be no unfair competition, denigration of the product’s image or another company’s product;


f) there shall be no unreasonable use of the corporate image or goodwill of third parties;

g) whenever the comparison is made between products with different prices such circumstance shall be clearly indicated in the advertisement.

The Brazilian Switch




The European Model

Defining Comparative Advertising

Directive No. 97/55

“…any advertising, which explicitly or by implication identifies a competitor or

goods or services offered by a competitor".

Directive 97/55

Explicitly allows comparative advertising provided it:

– is not misleading,– compares goods or services

meeting the same needs or intended for the same purpose,

– objectively compares relevant, verifiable and representative features of goods or services (included price),

Directive 97/55


– for products with designation of origin, relates to products with the same designation,

– does not take unfair advantage of the trademark or other distinguishing signs of a competitor,

Directive 97/55


– does not present goods or services as imitations or replicas of goods or services bearing a protected trademark or trade name.

Directive 97/55


– does not create confusion in the marketplace,

– does not discredit or denigrate the trademarks, trade names or other distinguishing signs of a competitor,

Sunday Mirror

3

vs.

British Airways vs. Ryanair – 2000

Round One• The

Advertising Standards Authority, UK’s self-regulatory body, later upheld a complaint by the public against the advertisement

British Airways vs. Ryanair – 2000

Round Two• BA accused

Ryanair of malicious falsehood

• High Court: ‘Honest comparative advertising’

• BA had to pay £60,000 to Ryanair to cover 50% of their legal expenses

Sabena vs. Ryanair – April 2001

• “Welcome Ryanair and its rock bottom prices. Bye-Bye Sabena and its exorbitant fares”.

• President of Commercial Court found Ryanair campaign to be misleading and disparaging.

• Cease and desist order was granted with a penalty of 4,000,000 BEF for future violations.

• Notice about the order was required to be published in four national newspapers and on Ryanair’s website.

Lufthansa vs. Ryanair - March 2002

• Lufthansa obtained a temporary injunction against Ryanair’s campaign through a First Instance Court

• Campaign advertised low cost flights from Frankfurt – Hahn and compared with Lufthansa's flights from Frankfurt – Main

• Court found ads misleading since Hahn is 120KM from Frankfurt.

• In 2003, a Hamburg Appeals Court overturned the decision saying that all the carrier must do is clearly indicate the location of the airport.

Alitalia vs. Ryanair – Spring 2003

• “Alitalia pretends to offer low fares in Europe! Don’t make me laugh !!!”

• “Pay at least 97% less than Alitalia’s so-called low fares.”

• “Goodbye Alitalia” was depicted outside on Ryanair planes

• Alitalia filed a complaint with the Institute for Advertising Self-Regulation saying:– illicit comparison– denigrating, incorrect and misleading– non-homogenous elements were compared


• Jury findings:– Ryanair failed to provide evidence

that publishing house contracts did not contain the standard clause biding Ryanair to advertising self-regulation codes.

– No jurisdiction could be invoked, however, with respect to the messages depicted outside on Ryanair’s planes because they fell outside the self-regulation system.


• Jury findings:– Comparison between low-cost

tickets and business class fares, i.e., “pay at least 97% less”, deemed misleading.

– Statement “Don’t make me laugh” considered deceptive in context.

– Cease and desist order issued.– Ryanair also ordered to

announce ruling in leading national newspapers.

PepsiPunching at Coca-Cola

Coca-Cola v. Pepsi Cola(Illegitimate Basis of Comparison)

Coca-Cola v. Pepsi Cola(Illegitimate Basis of Comparison)

gala-marketlaw.com

Resources

Questions

PoliticalCorrectness

Malaysia

China

United States(Happy Cows)

United Kingdom

Documents

Association of National Advertisers The Legal Landscape of Comparative Claims in Global Advertising Felix Hofer – Italy Brinsley Dresden – United Kingdom