Comparative advertising

Comparative advertising can be defined as “an advertisement in which a particular product or service, specifically mentions a competitor by name for the express purpose of showing why the competitor is inferior to the product naming it.” Thus it can be said that comparative advertising highlights the advantages of the goods or services offered by one proprietor over those of another proprietor.

Ultimately, comparative advertising should be used in order to objectively demonstrate the features of the proprietor’s products. Some of the advantages would be that it would encourage a healthy form of competition between various products on the market. If handled correctly, the consumer would be the one to benefit the most out of the comparative advertising due to competition. Proprietors would be forced to ensure that their goods and services are of better quality and perhaps even less expensive than their major competitors, as well as the fact that the comparative advertising would improve the quality of information available to consumers, enabling them to make better informed choices.

A disadvantage of comparative advertising would be that proprietors become open to misleading information and slating of their products all together. Further, the consumers run the risk of being completely mislead and duped into buying a product not because they believe it to be a better product per se, but because the competition was so badly slated.

It is mostly for the reasons mentioned above that comparative advertising is generally speaking prohibited in South Africa, as it has been viewed to be trade mark infringement. In the Verimark vs. BMW case, the court heard how the fact that Verimark had made use of selling car polish and using a BMW vehicle as a model amounted to trade mark infringement. The court held that there can only be trade mark infringement if the registered trade mark is being used as a “trade mark” and as a result, if the use creates the impression to a consumer that there is a material link between the product and the trade mark proprietor, then it would amount to infringement. The court further held that a consumer would consider the presence of the logo on the car to be incidental and not a guarantee on the effectiveness of the product.

As a result of the above mentioned case, comparative advertising is no longer viewed as trade mark infringement unless the trade mark proprietor can show that his trade mark is being used as a “trade mark”, and that that use creates the impression of a material link between the product and the trade mark proprietor. If that can be proven, then infringement will have occurred.

The ASA (Advertising Standards Authority) has created various guidelines in order to ensure that if proprietors wish to use comparative advertising, they stay within in these guidelines in order to keep their campaigns free of the threat of infringement proceedings. These guidelines include inter alia that “all legal requirements be adhered to, that the Trade marks Act be adhered to, only facts capable of substantiation be used, the claims are not misleading or confusing and most importantly that all comparisons and promotions of a product shall be based on a products own merits and not the demerits of competitive products.

In the case of 02 Holdings Ltd and another vs. Hutchison 3G UK Ltd, the claimants (02) who provide mobile telephone services, used bubble images to advertise their services, the images being registered. The defendant (3G) also a mobile telephone provider used the name 02 in conjunction with a bubble image followed by a 3 image to state that their services were cheaper than those of the claimants. 02 brought proceeding against 3G but did accept that the price comparison in the advertisement was rue and that the advertisement was not on the whole misleading and in no way suggested a trade connection between the companies.

The Attorney General ruled that “the proprietor of a trade mark was not entitled to prevent the use by a competitor of a sign identical or similar to his mark in a comparative advertisement, provided, inter alia, that there was no risk of confusion on the part of the public between the proprietor and the competitor or between their respective goods or services.”.

The case then went on appeal, and the court of appeal decided to stay the proceedings and refer the case to the Justice of European Communities (ECJ) in order to have certain questions answered.

The ECJ found that contrary to the Attorney General’s opinion, trade mark law would be applicable in cases where there was a comparative advertising dispute. Thus, use by an advertiser of a similar or identical mark may constitute a trade mark within the meaning of the Act, but if the advertiser can prove that his use of such trade mark can satisfy the conditions set out by the Comparative Advertising Directive (CAD), such proof will act as a defence against an action brought by the competitor against such use of his mark. Some of the conditions set by CAD are that the comparative advertising is not misleading, does not create confusion in the market place between the advertiser and a competitor, or between trade marks, it does not discredit a trade mark, and it does not take unfair advantage of the trade mark. If the use of the trade mark can be shown not to comply with these conditions, then the rights holder will be entitled to use trade mark law to prevent the use of a mark similar to his mark. In the above mentioned case the ECJ ruled that it did not consider the use of the bubble imagery to cause a likelihood of confusion, and thus a case for trade mark infringement would not be successful.

In conclusion, the above case has changed the way the United Kingdom views comparative advertising. The ECJ ruling means that trade mark proprietors will now be able to bring cases of comparative advertising before the courts in terms of trade mark law, provided they can show a likelihood of confusion.

Emmie de Kock from De Kock Attorneys can be contacted at info@dekock.co.za, or www.dekock.co.za.

 

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