Comparative advertising is a popular marketing strategy used to secure a greater market share by highlighting the superiority of a product or service in comparison to its rivals.
Companies frequently use this approach to directly challenge their competitors by contrasting elements such as size, quality, price, efficacy or range. For example, where one trader says
“Hey, Product B, your size is so small it needs a magnifying glass! My Product A is cheaper, three times the size and tastes 200% better!”
While comparative advertising aids consumers in navigating choices among similar offerings, the manner in which a competitor’s trade mark is utilised in such advertisements requires careful consideration.
Trade Marks Act
Trade mark law in Australia is governed by the Trade Marks Act of 1995 (Cth). Section 122(1)(d) of this Act explicitly states that when a trade mark is used for the purpose of comparative advertising, it does not constitute an infringement. So far, so good.
However, difficulties arise in comparative advertisements when they present inaccurate, false or misleading information, and subsequently breach the Australian Consumer Law (ACL).
Australian Consumer Law
All advertisements, including comparative ones, must adhere to the ACL to be deemed lawful. The ACL says that any statements representing products or services must be accurate, truthful and substantiated.
In short, when you are comparing products / services, you must ensure that the comparison is:
- Not misleading or deceptive
- Based on fact
Advertisers must be careful to ensure that comparative advertisements maintain an accurate depiction of a competitor’s product or service throughout the entire duration of the advertisement’s lifecycle. In other words, if a competitor alters their comparative offering during the advertising period, the comparative advertisement needs to be promptly updated.
When considering if a comparative ad breaches the ACL, it is important to look at the overall impression conveyed by the advertisement to ensure that it avoids any hint of ambiguity, falsehood or deception.
Nurofen vs. Panadol
An illustrative example of what not to do can be found in the case of GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser (Australia) Pty Limited.
The plaintiff, GlaxoSmithKline, markets Panadol and the defendant, Reckitt Benckiser, markets Nurofen.
From August to December 2015, the defendant carried out a comparative advertising campaign across Australia, comparing the active ingredient of Nurofen with that of Panadol. The campaign asserted that Nurofen was more effective in providing pain relief for common headaches. It further contended that scientific evidence supported these claims.
The plaintiffs took issue with this and commenced proceedings. They argued that the defendant’s campaign lacked any scientific basis for its claims.
On further investigation, it was discovered that the defendant’s campaign was founded on a single clinical study indicating that Nurofen outperformed Panadol in pain relief for common headaches. However, two identical studies existing concurrently did not replicate these results – those studies suggested there was no distinction in the speed and efficacy between the two products.
The Federal Court concluded that the defendant had engaged in misleading or deceptive conduct in their campaign, given that only one clinical study endorsed their assertions, while the prevailing scientific knowledge did not support the claims. The defendant was ordered to pay $6 million. Now that’s enough to give you a headache!
If you dare to wield a competitor’s trade mark in your ad, do it with the grace of a ballerina.
Keep the comparison honest and don’t fall into the trap of making outrageous, marketing-friendly claims about your product -v- those of your competitors!
Ensure all comparisons are accurate, truthful and are supported by studies, surveys, facts, tests, research or the like.
Give us a call.
Our marketing and business lawyers can review your marketing and advertising material, and help you navigate your obligations under the ACL.