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Comparative Advertising - Getting It Right
September 2008 | Intellectual Property & Technology | IP Edge

Comparative advertising is advertising that compares one trader's product favourably against the products of other traders. Comparative advertisements usually make claims that the trader's product is cheaper, faster, stronger, safer, more value for money or otherwise more superior than others. Such advertisements deliver a strong message to consumers to choose the advertised product over the competition.

Despite the apparent power of comparative advertisements on consumers' minds, such advertisements are still rarely seen in Singapore. One reason for the scarcity of such advertisements could be the difficulty of navigating the many different types of applicable laws. If improperly planned or executed, a comparative advertisement may fall foul of a number of laws, including consumer protection law, trade mark law, the law of passing-off, and even trade libel law.

The first challenge is to get the facts right. The Consumer Protection (Trade Descriptions and Safety Requirements) Act makes it a criminal offence to make false or misleading trade descriptions about goods or the supply of goods. Trade descriptions include statements about the qualities or features of goods. The Consumer Protection (Fair Trading) Act allows consumers to sue a trader for making false or misleading claims about goods.

The next challenge stems from the use of competitors' names and logos in comparative advertising. A trader that launches a comparative advertisement may face claims of trade mark infringement by its competitors for using their trade marks without permission. The good news is that the Trade Marks Act now permits fair use of competing trade marks for comparative advertising. However, the bad news is that the "fair use” concept is still new and not clearly defined. Some guidance may be found in an older version of the law, which permitted the use of competing marks according to honest practices in industrial and commercial matters, unless such use – without due cause – took unfair advantage of or was detrimental to the distinctiveness or reputation of the competitor's trade mark. This version of the law was based on provisions of United Kingdom law. Under the UK provisions, the UK court in Vodafone Group plc v Orange Personal Communications Services Ltd [1997] EMLR 84 ruled that the use of a competitor's trade mark in a comparative advertisement would be objectionable if it was "objectively misleading to a substantial proportion of the reasonable audience.” In that case, the slogan "On average, Orange users save £20 every month” was acceptable.

There is also a risk that instead of setting the trader's goods apart from the competition, a comparative advertisement may have the opposite effect of confusing consumers into thinking that the product being advertised is in fact the competitor's product or connected to the competitor. The competitor may then have a case against the trader for passing-off. In the English case of McDonald's Hamburgers Ltd v Burgerking (UK) Ltd [1987] FSR 112, McDonald's sued Burger King over an advertisement that included the statement, "It's Not Just Big, Mac.” The UK court decided that the advertisement conveyed the impression that the burger being advertised was an improved version of the McDonald's Big Mac burger, and that the prominence of the Burger King logo led consumers to believe the Big Mac burger was associated with Burger King. On this basis, McDonald's was granted an injunction to stop Burger King from using the advertisement.

A trader also risks trade libel if he makes a false statement without an honest belief in its truth and the statement is likely to cause financial loss to the competitor. However, such damaging statements are to be contrasted with mere puffery. In the case of De Beers Abrasive Products Limited v International General Electric Company of New York Ltd [1975] 2 All ER 599, the court made it clear that a trader is entitled to "puff” his goods. By that reasoning, it is permissible to claim that one's goods are "the best in the world” or "the best in Singapore”. However, it is not permissible to denigrate a rival's goods by making untrue claims that reasonable persons would take seriously. In the De Beers case, the defendant issued a document that appeared to be a report on a scientific test carried out by an "Application Laboratory”. The court found that such a report was dressed up as something to be taken seriously and could not therefore be dismissed as mere puffery.

The advertising industry is also mindful of the pitfalls of comparative advertising. The Singapore Code of Advertising Practice, drawn up by the Advertising Standards Authority of Singapore (ASAS), requires all comparative advertisements to be clear, fair and not misleading to consumers. The basis of comparison should be the same for the products being compared and the list of items used in the comparison should not be so chosen to provide an unfair advantage to the product advertised. A trader who falls foul of this code may suffer the indignity of being required to withdraw the advertisement.

There is always some form of risk exposure in running comparative advertising campaigns since comparisons between competing products are inherently contentious. As a starting point, traders should avoid false or misleading representations, malicious or defamatory statements. But apart from a sound understanding of the legal principles of comparative advertising, traders would better manage their risk by conducting advertising campaigns with maturity and sensitivity to consumers and competitors alike.