The pitfalls of comparative advertising: what you need to know

Comparative advertising is an area full of legal pitfalls: legal pitfalls in legal minefields. Surrounded by a thick and unforgiving legal quagmire.

And it isn't just the law that complicates matters. Customers typically dislike this sort of spiel:

Aren't ‘Brand [X]’ rubbish? We mean: really quite lavishly rubbish. Our widgets are so much better…

Mentioning competitors also means that a business might be giving aid and succour to the 'enemy'. They may as well say 'Brand [X] does exists and we're really quite worried about them.'

Indeed, if your client inadvertently starts a war with their competitors, tit-for-tat bickering between them can quickly start to damage both brands and product categories. Customers may start to think: 'I’m not going to bother with either of you. A plague on both your houses!'

In brief, a badly executed comparative advertising campaign can backfire spectacularly. Is it any wonder that advertisers see this form of advertising as somewhat taboo?

Now, don't get me wrong, I'm not saying 'don't bother'. Sometimes the battle comes to your client. Last week, for example, Morrisons supermarkets announced a price match guarantee scheme to fight discount supermarkets such as Lidl and Aldi, the market share of which has been increasing in recent years. On the other hand, Morrisons recently reported a fall in half-year profits of more than 30%:

https://twitter.com/BBCBusiness/status/517739195344109568

Lidl, who stand to lose business with this development, responded with this ad (which was very well received on social media):

https://twitter.com/stevemyalleats/status/518327311486439424

Whether it works in practice only time will tell.

So what do you need to know if your client wants, or indeed needs, to launch a comparative advertising campaign.

As a commercial lawyer, you’ll be familiar with the following:

• UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code)
• Directive concerning misleading and comparative advertising 2006 (2006/114/EC)
• Trade Mark Directive (2008/95/EC)
• Trade Marks Act 1994, and
• Business Protection from Misleading Advertising Regulations.

As for the what you will need to know, prepare to ask these sorts of questions (warning: there are quite a few):

• Is the ad comparative? Does it explicitly or by implication identify a competitor or goods or services offered by a competitor? Remember that competitors do not need to be explicitly named in an advertisement for them to be identifiable.
• If it is comparative, does it meet the conditions set out in the Misleading and Comparative Advertising Directive 2006 for it to be acceptable?
• Is the advertising misleading? (eg it is 'any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which by reason of its deceptive nature, is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor'.)
• Does the ad compare goods or services meeting the same needs or intended for the same purposes?
• Does the ad objectively compare one or more material, relevant, verifiable and representative features of those good and services (which can include price)?
• Have you ensured that the ad does not discredit or denigrate the trademarks, trade names, other distinguishing marks, goods, services, activities or other circumstances of any competitor?
• Does the ad include products with ‘designations of origin’? If so, does the ad relate in each case to products with the same designation? Have you ensured that the ad does not take unfair advantage of the ‘designation of origin’ of competing products?
• Have you ensured that the ad does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name?
• Have you considered if the ad creates confusion among traders, between the advertiser and a competitor or between the advertiser's trade names, other distinguishing marks, goods or services and those of a competitor?
• Can consumers verify the comparative claims, including price and general comparisons. Do you hold evidence that relates to the product and the competitor's product. If you cannot gain access to this data, you may not make the comparison.
• Do you understand the meaning of 'honest practices' in relation to ads? Examples of use of trademarks which would not be in accordance with honest practices include:
  • if it is done in a manner that gives the impression that there is a commercial connection between the advertiser and the trade owner
  • if it takes unfair advantage of the distinctive character or repute of the trade mark, or
  • if it discredits or denigrates the trade mark or the third party presents its goods as imitations or replicas of the products bearing the trade marks

That is some list!

What is shows is how complicated and exacting this area is. Throwing together an ad in a fit of pique or creativity simply won’t do.

But if you put the effort in, help you client get it right legally, then you may be onto a winner...

If you have any comments or thoughts, let us know below.