Joint Swedish-Vietnamese
Master’s Programme
MASTER’S THESIS
NGUYEN MAI HAN
A COMPARATIVE STUDY OF
COMPARATIVE ADVERTISING IN
VIETNAMESE AND
ENGLISH LAW
SUPERVISORS:
Dr. Do Van Dai
LLM.Ulrika Wennersten
Dr. Christoffer Wong
Preface and Acknowledgements
The idea for this thesis comes to me when I made a report on a Business Law subject
in the Joint Swedish - Vietnamese Master Programme. Based on materials on U.K
and EU Advertising laws, I realized that there are many differences in points of view
and law between Vietnam and these countries regarding Comparative advertising.
While Vietnamese legislators are still suspicious of the benefits brought by
Comparative Advertising, it is encouraged in E.U as it can can provide useful
information for consumer and enhance fair competition between undertakings. From
various standpoints, it is easy to understand why the law related to Comparative
advertising is set up in different ways. In the internationalized context, when the
promotion of goods and services is not restricted to a single nation, how to establish
legal rules compatible with a common tendency based on the harmonization of the
interest of undertakings and those of consumers is an issue worth concerning.
For helping me complete this thesis, I extend my deepest thanks to my professors,
my friends and my colleagues for their support, help and love. I would like to express
my heartfelt gratitude to my supervisors, Dr.DoVan Dai and Ms.Ulrika Wennersten,
who supported and gave me valuable comments and suggestions during my work. I
am grateful to Dr. Christoffer Wong for his guidance and help throughout the course.
I would also like to express my special thanks to the professors in the Law faculty
of Lund University and the professors of Ho Chi Minh Law University for sharing
their precious knowledge with me. Finally, I would like to thank my friends and my
colleagues for supporting and encouraging me throughout my study.
Although I tried my best, many deficiencies and shortcomings are still to be found
in my thesis. I am grateful for any comments and suggestions.
Ho Chi Minh city, December 2008
Nguyen Mai Han
1
Table of Contents
Preface and Acknowledgements .................................................................................. 1
Table of Content ........................................................................................................... 2
Abbreviations ............................................................................................................... 4
Executive Summary ..................................................................................................... 5
1.
Introduction .................................................................................................... 6
1.1
1.2
1.3
1.4
Rationale ........................................................................................................ 6
Purpose........................................................................................................... 6
Methods.......................................................................................................... 7
Delimitation ................................................................................................... 8
2.
The definition of comparative advertising ..................................................... 8
2.1
2.1.1
2.1.2
2.1.3
The general definition of advertising ............................................................. 8
The definition of advertising in English law ............................................. 9
The definition of advertising in Vietnamese law .................................... 12
Comparative remarks .............................................................................. 15
2.2
The definition of Comparative Advertising ................................................. 16
2.2.1
The definition of comparative advertising in English laws..................... 17
2.2.1.1
Definition and classification .............................................................. 17
2.2.1.2
Analysing the definition of Comparative Advertising ....................... 19
2.2.2
2.2.3
3.
The definition of Comparative Advertising in Vietnamese law ............. 22
Comparative remarks .............................................................................. 24
Lawful comparative advertising .................................................................. 25
3.1
Lawful comparative advertising in English law .......................................... 25
3.1.1
Conditions for comparative advertising to be lawful in English law ...... 25
3.1.1.1
Negative conditions ............................................................................ 27
3.1.1.2
Positive conditions ............................................................................. 36
3.1.2
General remarks ...................................................................................... 40
3.2
3.2.1
Lawful comparative advertising in Vietnamese law .................................... 41
Conditions for comparative advertising to be lawful under Vietnamese
law ........................................................................................................... 41
3.2.1.1
General conditions ............................................................................. 42
3.2.1.2
Special conditions .............................................................................. 44
3.2.2
General remarks ...................................................................................... 46
3.3
Comparative remarks ................................................................................... 46
4.
Sanctions applied for unlawful comparative advertising ............................. 48
4.1
4.1.1
Sanctions applied for unlawful comparative advertising in English law ..... 48
The enforcement authorities in English law and practice ....................... 48
2
4.1.2
4.1.2.1
4.1.2.2
4.1.2.3
Sanctions applied to unlawful comparative advertising .......................... 49
Disciplinary Sanctions ....................................................................... 49
Administrative Sanctions ................................................................... 50
Civil sanctions .................................................................................... 50
4.2
Sanctions applied to unlawful comparative advertising in Vietnamese law 52
4.2.1
Enforcement authority ............................................................................. 52
4.2.2
Sanctions ................................................................................................. 53
4.2.2.1
Administrative sanctions .................................................................... 53
4.2.2.2
4.3
Civil sanctions .................................................................................... 53
Comparative remarks ................................................................................... 54
5.
Conclusion ................................................................................................... 55
Table of Statutes and other Legal Instruments ........................................................... 57
Table of Cases ............................................................................................................ 60
Bibliography............................................................................................................... 61
3
Abbreviations
ASA
BCAP
BPRs
CAP
CPRs
ECJ
EU
MCAD
Ofcom
OFT
Radio Code
The CAP code
The CMRs
TMA
TSS
TV code
UK
Advertising Standards Authority in the UK
Broadcasting Committee of Advertising Practice in the UK
Busines Protection from Misleading Advertising
Regulations 2008 of the UK, SI 2008/1276
Committee of Advertising Practice in the UK
Consumer Protection from Unfair Trading Regulations
2008 of the UK, SI 2008/1277
Court of Justice of the European Communities
European Union
Misleading Comparative Advertising Directive
Office of Communications in the UK
Office of Fair Trading in the UK
Radio Advertising Standards Code of the UK
The British Code of Advertising, Sales Promotion and
Direct Marketing 11th edition, March 4th 2003
The Control of Misleading Advertisements Regulations
1988 (amended 2000, 2003)
Trade mark Act 1994 of the UK
Trading Standards Service
Television Advertising Standards Code of the UK
United Kingdom
4
Executive Summary
Comparative advertising is a sales promotion method that compares one’s own goods
or services with those of another trader to emphasize price, value, durability or quality.1 In the UK, comparative advertising is regulated in three ways: self–regulation;
the common law and statute law.2 Accordingly, comparative advertising is lawful if
it complies with some fairly obvious conditions e.g. it is not misleading, does not
denigrate the competition, objectively compares material, relevant and verifiable
features of the competitor’s products. In Vietnam, comparative advertising is regulated by the Law on commerce, the Law on competition and the Ordinance on Advertising. Nevertheless, the legal provisions on comparative advertising in Vietnam
are unclear and hard to apply in practice. Thus, this leads advertisers as well as the
competent authority into difficulties when determining whether an advertisement is a
comparative one or not and in drawing the line between lawful and unlawful comparative advertising.
The first part of this thesis contains some general issues concerning the rationale,
purpose, delimitation, and methodology of the thesis. The second part introduces,
analyses and compares the definitions of advertising and comparative advertising in
Vietnamese and English law. The third part discusses the conditions for lawful advertising in each of the two countries. Legislation, case law and practice are analysed
to produced a clear picture. Sanctions applied to unlawful comparative advertising
will be presented and analysed in part four. Based on the method of comparison, remarks at the end of each part will point out the similarities and differences between
the issues in the laws of the two countries and suggest some improvements related to
comparative advertising in Vietnamese law. Finally, part five will be a summary of
the previous parts.
1
L.Bently and B. Sherman, Intellectual property,2nd ed.,Oxford University Press 2004, p.916.
2
Ansgar Ohly and Michael Spence, The law of Comparative Advertising:Directive 97/55/EC
in the United Kingdom and Germany, Hart Publishing 2000, p.5.
5
1.
Introduction
1.1
Rationale
Advertising plays a very important role in the competitive strategy of many undertakings3 since advertising not only notifies customers of goods and services but also
encourages, attracts and orients them in their purchases. Comparative advertising, as
a special form of advertising, is also a sales promotion device that compares the
products or services of one undertaking with those of competitors.4 It can be a useful
source of information to the consumer, as well as an important tool in promoting
competition.5 Thus, most countries have permitted comparative advertising. The UK
was one of the first countries in the EU to permit comparative advertising if it complies with some provided conditions.
In Vietnam the current legal provisions on comparative advertising are vague and
incomplete. In fact, a definition of comparative advertising as well as the way of distinguishing between direct and indirect comparative advertising - which is very important for determining the legality of comparative advertising - have not yet been
provided by the law. It is in fact necessary to set up some specific legal provisions
concerning comparative advertising in Vietnamese Law. Based on these legal provisions, undertakings will be able to determine the boundary between lawful and unlawful comparative advertising and adjust their advertising activities appropriately.
This would enhance fair and equal competition between undertakings. From these
reasons along with my own interest in it, I have chosen the topic “A comparative
study of comparative advertising in Vietnamese and English law” for my thesis.
1.2
Purpose
By researching comparative advertising in Vietnamese and English law, this thesis
will analyse and compare the definitions of advertising and of comparative advertis3
Julian Petley, Advertising:Technology,People,Process, BlackRabbit Books publishing, 2004
p.5.
athttp://books.google.com.vn/books?id=aREzFOQ9jsC&printsec=frontcover&dq=%22+advertisi
ng%22&sig=ACfU3U2oAabErVdot9cOWmtSWD_MZs8GoQ#PPA3,M1.
4
As the BPRs states "Comparative Advertising means advertising which in any way, either
explicitly or by implication, identifies a competitor or product offered by a competitor."
Theo Bodewig, “The regulation of Comparative Advertising in the European Union”, 9
Tulane European & Civil Law Forum, 1994, 179-214, at p.185. Also see Samia M. Kirmani,“Cross- boder Comparative Advertising in the European Union, 19 Boston College International & Comparative Law Review, No.1, 1996, 201-215, at p.201.
5
6
Introduction
ing and point out the similarities and differences in the definitions in two countries.
Moreover, this thesis will present and analyse the conditions of lawful comparative
advertising in both Vietnamese and English law through legislation, case law and
practice to review the similarities and differences in the rules of legal comparative
advertising under Vietnamese and English law. In addition, it will evaluates and
compare the sanctions applied to unlawful comparative advertising. Finally, the thesis will suggest some ways of improving the provisions on comparative advertising
in Vietnamese law.
1.3
Methods
In the process of writing this thesis, several methods such as description, synthesis,
analysis, interpretation and especially comparison were used. The descriptive and
synthetic methods6 were used to collect all materials on comparative advertising and
to give the main contents of the provisions on comparative advertising in Vietnamese
and English law. In addition, based on the analytic method, fundamental concepts
and conditions concerning the legality of comparative advertising in Vietnamese and
English law will be examined. The comparative method, a study of the relationship
between the laws of more than one country, is not limited to comparing legal rules
but requires comparing the relevant non- legal (political, economic, ethical, religious, ect.) aspects of the two countries as well7. It can lead to a better understanding
of Vietnamese laws on comparative advertising. In addition, the comparative method
can help us to find out the similarities and differences in the laws related to comparative advertising and explain why these differences or similarities exist. Moreover,
after having compared how to Vietnamese and English law deal with the laws of
comparative advertising, we can evaluate the solution used in Vietnamese and English law in order to determine which of them is the best one.8 Finally, based on comparative method, the good legal rules of comparative advertising developed in English law can be implemented to Vietnamese law.9
6
The descriptive method is a way of presenting and explaining provisions and cases, and the
synthetic method is a process by which we collect materials and combine them together resulting
in the formation of something new.
7
Michael Bogdan, On the value and method of rule- comparison in comparative law, in
Heinz – Peter Mansel, Thomas Pfeiffer, Herbert Kronke, Christian Kohler, Rainer Hausmann,
Festschrift fur Erik Jayme, Sellier. European Law Publishing 2004, p.1239.
8
Ibid. p.1240.
9
Although I am aware that other factors can be used in comparing two legal systems, in this
thesis I do not have enough time to examine geography, climate and racial development or, reli-
7
A Comparative Study of Comparative Advertising in Vietnamese and English law
1.4
Delimitation
My research is limited to English law and Vietnamese law. Further, the UK law is
based on EU Directives, therefore, this thesis also will examine these Directives related to comparative advertising as well as cases from the ECJ interpreting of the
Directives. Moreover, special rules applicable to comparative advertising related to
certain goods or service such as medicinal products or solicitors are beyond the scope
of this thesis. In addition, it does not mention criminal sanctions but concentrates on
civil and administrative sanctions.
2.
The definition of comparative advertising
2.1
The general definition of advertising
Advertising originated from the word “adverture” in Latin language means attractiveness, charm and allurement.10 According to the Vietnamese dictionary, Advertising means “propagandize, introduce goods, services or undertakings to consumers in
many way with the purpose of persuading them to buy these goods or services and
thus promote the goods and services”.11 According to the Oxford dictionary, advertising is drawing attention to or describing favourably (goods or services) in a public
medium to promote sales or making them generally or publicly known, or seeking by
public notice to make them so known.12 Advertising is a paid form of a nonpersonal
message communicated by business firms, non-profit organizations, or individuals
and is transmitted to a target audience through mass media such as television, radio,
newspapers, magazines, direct mail, outdoor displays or mass - transit vehicles13 The
gion. I focus on the statutory, case law and preparatory and secondary sources such as articles
and books.
10
Truong Dai Hoc Luat Ha Noi, Giao trinh Luat Thuong Mai Viet Nam tap 2 (Text book on
Vietnamese Commercial Law volume 2 by the Law College of Hanoi), Cong An Nhan Dan Publishing 2006, p.151. Also see Nguyen Thi Dung, “Khai niem quang cao trong phap luat Viet Nam
và anh huong của no đen viec hoan thien phap luat ve quang cao” (The definition of advertising
in Vietnamese law and its influences on improving law on advertising), 12 State and Law Journal (2005), pp.33- 37, at p.33.
Nguyen Nhu Y, Đai Tu Dien Tieng Viet (Great Vietnamese Dictionary),Van Hoa Thong
Tin Publishing 1998, p.1365.
11
12
Oxford Dictionary of current English, Oxford University Press 1993, at p.12.
13
http://www.answers.com/topic/advertising.
8
The definition of comparative advertising
main objectives of advertising is14 informing and persuading consumers to purchase
specific brands offered by the advertisers, thereby getting profits.15 However, advertising is also used to inform, educate and motivate the public about non-commercial
issues, such as AIDS, political ideology, energy conservation, religious recruitment,
deforestation and charity.16 Thus, as far as language alone is concerned, the notion of
advertising not only covers the giving of information about goods and services to
promote sales but also its use to inform, propagandize and motivate the public regarding social and cultural life.
2.1.1
The definition of advertising in English law
In the UK, advertising is regulated through self-regulation, case law and statutes.
Self-regulation which has a long tradition in U.K commerce,17 plays an essential role
in advertising.18 The most important element of this self-regulation is the code of
advertising, the CAP code.19 It lays down standards for non-broadcast advertisements, sales promotions and direct marketing communications. This code reflects the
principles of the International Code of Advertising and Practice issued by the International Chamber of Commerce20 The code is monitored by The Committee of Advertising Practice (CAP). Although the code does not provide a definition of advertising, it does lay down the scope of the regulation of advertising activities. Pursuant
to this code, statutory, public, police and other official notices/information, produced
by public authorities and the like as opposed to marketing communications, are outside its scope.21
14
Armand Dayan, Le marketing (translated into Vietnamese by Do Duc Bao), Ho Chi Minh
City publishing 2001 p. 8 (Originally publishing by Presses Universitaires de France 1985).
15
Monle Lee, Carla Johnson, Principles of Advertising: A Global Perspective, The Haworth
Press Publishing 2005, p. 3.
16
http://en.wikipedia.org/wiki/Advertising.
17
The first voluntary codes were introduced to regulate some professions at the end of the 19th
century: see L. Brandmair, Die Freiwillige Selbstkontrolle der Werbung, Carl Heymanns publishing 1978, p. 35.
18
G. Miracle and T.R. Nevett, Voluntary Regulation of Advertising, D.C Heath and Company
publishing 1987, p.1.
19
British Code of Advertising, Sales Promotion and Direct Marketing 11th version 2003.
20
Ohly & Spence, supra note 2, p.6.
21
British Code of Advertising, Supra note 19, Art 1.2 (f).
9
A Comparative Study of Comparative Advertising in Vietnamese and English law
In relation to broadcasting advertising, the BCAP TV Code22 and The Radio
Code23 set out the rules that govern advertisements on television and radio respectively. According to TV Code, advertising means “any publicity by advertisers in
breaks during or between programmes. This is irrespective of whether payment is
made.”24 From this definition as well as from the regulations in the code, we can
conclude that it regulates not only advertising related to commerce but also advertising concerning religion, faith, philosophies, beliefs25 and charity.26 The code applies
to undertakings which use advertising to promote their business as well as to any
other relevant organisation or individual. The Radio Code states “Advertising refers
to any items, including spot advertisements and promotions with advertisers, which
are broadcast in return for payment or other valuable consideration to a licensee or
which seek to sell to listeners any products or services.27 This definition seems narrower than the one in TV Code as it is restricted to paid broadcasting advertising for
the purpose of selling goods and services to listeners. Yet, the regulations of this
code state that advertising is not only used to promote the commercial activities of
undertakings but also to solicit donations by organisations28 and related to religion,
systems of belief or philosophies of life.29
According to the Town and Country Planning Act (Control of Advertisements)
Regulations 1992 and the Town and Country Planning Act 1990, “advertisement
means any word, letter, model, sign, placard, board, notice, awning, blind, device or
representation, whether illuminated or not, in the nature of, and employed wholly or
partly for the purposes of, advertisement, announcement or direction.”30
The UK is a member of the EU. Thus, advertising activity is also regulated by the
regulations which is enacted to implement the EU Directive regulating advertising
into national law. With the purpose of unifying the European common market, har-
22
Television Advertising Standards Code November 2004 (The Code is an updated edition of
the 2002 ITC Advertising Standards Code.)
23 Radio Advertising Standards Code November 2004 (The Code is an updated edition of the
former Radio Authority’s advertising and Sponsorship Code).
24
Television Code, supra note 22 , Introduction (g).
25
Ibid Article 10.1.
26
Ibid Article 11.3.
27
Radio Code, supra note 23, section 1.
28
Ibid, section 3, rule 2.
29
Ibid section 3, rule 3.
30
The Town and Country Planning Act 1990, section 336(1).
10
The definition of comparative advertising
monising the laws of its Member States and protecting the economic welfare of consumers by acting against unfair competition, the EU has adopted many directives
concerning advertising e.g. Directive 89/552/EEC concerning the pursuit of television broadcasting activities31, Directive 97/36/EC32 amending Directive 89/552/EEC,
Council Directive 84/450/EEC concerning misleading advertising (Directive
84/450/EEC),33 Directive 97/55/EC of European Parliament amending Directive
84/450/EEC concerning misleading advertising so as to include comparative advertising (Directive 97/55/EC)34 and Directive 2006/114/EC of the European Parliament
and the Council concerning misleading and comparative advertising (Directive
2006/114/EC).35According to Directive 84/450/EEC “advertising” means the making
of a representation in any form in connection with a trade, business, craft or profession in order to promote the supply of goods or services, including immovable property, rights and obligations36. Directive 2006/114/EC, which repeals Directive
84/450/EEC, also provides the same definition of advertising at article 2(a). Thus, the
advertising regulated in these directives is mainly that used by undertakings to promote their business.
The UK has enacted The CMARs 1988 (amended 2000, 2003)37to transpose Directive 84/450/EEC into its national law and enacted The BPRs38 to implement Directive 2006/114/EC. Pursuant to the BPRs, “advertising” means any form of representation which is made in connection with a trade, business, craft or profession in
order to promote the supply or transfer of a product.”39 “Product” in BPRs means any
goods or services and includes immovable property, rights and obligation.40 so the
definition of advertising in BPRs is the same as that in Directive 2006/114.
31
O.J No. L 298, 17/10/1989, p.23.
32
O.J No. L 202, 30/07/1997, p.60.
33
O.J No. L 250 , 19/9/1984, p. 17 – 20.
34
O.J No. L290, 23/2/1997, p.18- 23.
35
O.J No L376, 27/12/2006, p.21- 27.
36
Dir 84/450, Supra note 33, Article 2.
37
The Control of Misleading Advertisements Regulations 1998 (amended 2000,2003), SI
1988/915. This regulations regulated business to business relations and business to consumers
relations in misleading and comparative advertising but it is now invalid.
38
The Busines Protection from Misleading Advertising Regulations 2008, SI 2008/1276.
39
Ibid Part 1.2 (1).
40
Ibid.
11
A Comparative Study of Comparative Advertising in Vietnamese and English law
The definition of advertising is also covered in the case Richard Butler v Derby
City Council.41 The claimant displayed a banner in the front elevation of his property
with the phrase “Save Five Lamps” in red capital letters and below this appeared the
logo, telephone number and website of the “Derby Heart” organisation. The judge
held that a banner is an advertisement if it is “in the nature of and employed, wholly
or partly for the purpose of, advertisement, announcement or direction..”. The Derby
Heart logo and the blue lower- case lettering giving its telephone number and website
were advertising the existence of Derby Heart. It matters not whether, when combined with the words “Save Five Lamps”, the logo and lettering are regarded as being in the nature of (and for the purpose of) an advertisement for Derby Heart and
one of its aims, or as an announcement of its existence and one of its aims, or as a
direction to those who might wish to support one of its aims.42 The court affirmed
that the banner fell within the extended definition of advertisement in section
336(1).43 According to this, the definition of advertisement is clearly intended to
have a wide meaning, covering not only materials which promote a product or service but also an announcement or direction publicizing the activities of a noncommercial organization.
In short, in English law, definitions of advertising can be found in regulations,
statutes and case law. Based on the purpose and the applicable entities of each code,
regulation or statute, advertising can be understood in a broad or narrow sense. In the
narrow sense, advertising is the making of a representation in connection with trade
to promote the supply of goods or services. In its broader sense, it covers not only the
making of representations about goods or service in public to promote sales but also
any announcement or direction about the activities of non-commercial organisations
such as charities or religious organisations.
2.1.2
The definition of advertising in Vietnamese law
In Vietnam, advertising has been prominent for some time.44 In the years of implementing the Centrally Planned Economy, advertising was not a concern of business
41
Case Richard Butler v. Derby City Council [2005] EWHC 2835 (Admin).
42
Ibid paragraph 29 of the judgement.
43
Ibid paragraph 30 of the judgement.
In the book “Thương hoc phương cham”(Guideline on commercial studies) in 1928 by Luong Van Can, it states that if a trader would like to increase the number of his consumers, to develop business, advertising should take place as it has much power. Thus, to make advertisements, it should not be regretted that it costs much money. Also see, Le Tai Trien, Luat Thuong
Mai Viet Nam dien giai (Interpretation on Vietnamese Commercial law) Vo.1, Kim Lai Publishing 1976, p. 32.
44
12
The definition of comparative advertising
entities because at that time the need to promote goods and services as well as competition between undertakings seem nonexistent. When Vietnam changed the country
from one having a Centrally Planned economy to one with a market economy with a
Socialist Orientation45, advertising become a vital promotional tool frequently used
by business entities. From 1990 on, legal documents regulating advertising have been
enacted.46 One of the important of these is Decree No.194 /CP on the 31st of December, 1994 of the government on advertising activities on Vietnamese territory.47 According to this Decree, advertising activities comprise the presentation of announcements regarding businesses, commodities, services, trade-marks, names and logos as
required by the activities of the production-business-service establishments.48 It is
also affirmed that the information activities of the agencies of the Party and State
aimed at disseminating and popularizing their policies, undertakings and laws are not
covered by this Decree. The definition of advertising in this Decree is thus a narrow
one. The advertising only aims to cover businesses, commodities, services, trademarks, names and logos. Information in the form of announcements, messages or
classified advertisements is not considered as advertising.
Advertising activities are currently regulated by two main groups of legal norms.
The first is legal documents drafted or enacted by the Ministry of Culture and Information49 which include the Ordinance on Advertising 2001 of the Standing Committee of National Assembly and these guiding documents such as Decrees or Circular
which also regulate advertising. The second is legal documents promulgated by the
Ministry of Trading50which regulate commercial advertising. Pursuant to the Ordinance on Advertising 2001, advertising is interpreted in a broad sense, and means
introducing business activities and goods and services to consumers, including services both with and without a profit-making objective.51 Advertising of profitVietnam launched its Open Door policy called “Doi Moi” (renovation) in 1986. See the
sixth Party Congress Document.
45
See (a) Circular No.738/VP on August 10th,1990 of Ministry of Culture Information –
Sports and Tourism on Advertising management, (b) Joint Circular No.1191- TT/ LB on June
29th 1991 regulating on “label administration and product advertising“, (c)Decision No.3248/QĐUB on December 12nd on regulations of panel advertising in Hanoi.
46
47
This Decree is now invalid.
48
See Decree No.194/ND- CP on December 31st, 1994, Article 1.
49
Now, It is changed into the Ministry of Culture, Sports and Tourism.
50
Now, It is changed into the Ministry of Trading and Industry.
51
See Ordinance on Advertising No.39/2001/PL-UBTVQH 10 of 16 November 2001, Article
4(1).
13
A Comparative Study of Comparative Advertising in Vietnamese and English law
making services means advertising economic and social services, aiming to generate
profits for service-providing organizations or individuals while advertisement of nonprofit services means advertising services for realizing social policies and providing
information in the form of announcements, messages or classified advertisements52.
These regulations provide that advertising with a non-profit making objective should
still be regulated to ensure the unified treatment, truthfulness and exactness of advertising; to protect the welfares of advertisers as well as the receiver; and to improve
morality, lifestyles and ethnic culture.53 Decree No.24/2003 expressly stipulates that
political information is not subject to regulation by the Advertisement Ordinance or
this Decree.54
The Law on Commerce does not define advertising but it does give a definition of
commercial advertising: “activities of commercial enhancement conducted by a
business entity aimed at introducing customers to the business activities in goods and
services of such business entity.”55 In practice, the case between Kymdan and Van
Thanh,Uu Viet56 illustrates how this definition works. The case arose from the fact
that, in 2001, KimDan Mattress Company placed a notice in some newspapers57 with
the following content “KymDan has the honour to inform our honourable consumers
that in a spring mattress, the force supporting the body is irregularly distributed and,
in addition, its quality will decreased over time due to inferior raw material. If the
elastic level of the springs is low, the mattress will become flat after being used for a
long time. Conversely, if the elastic level of spring is high, springs can easily be broken and this causes danger for users. In poly-urethane foam mattresses, the plasticity
is very high. This kind of mattress is inelastic and as a result of this, it will quickly
fatten. For these reasons, KymDan does not produce spring mattress or poly-urethane
foam mattresses. All of KimDan’s products are made of 100% natural rubber has
52
See Decree No. 24/2003/ND-CP of March 13, 2003 detailing the implementation of the ordinance on advertising, Article 2.
53
Ministry of Culture and Information, Introduce some explainations on Ordiance on Advertising on December 5th 2001.
54
See Decree No.24, supra note 52, Article 1.
55
Law on Commerce No. 36/2005/QH, Article 102.
56
Case Kim Dan v Van Thanh,Uu Viet, Quyet dinh giam doc tham cua Hoi dong tham phan
Toa an nhan dan Toi cao (the review judgements of the council of judges of the Supreme Peope
Court No.20/2003/ DS – GDT, June 23rd 2003 ) 2003- 2004, Vo.1, pp. 119-124.
57
The newspapers include Sai Gon giai phong (Sai Gon Liberation newspaper), phu nu (
Woman Newspaper), Tuoi Tre Newspaper, Nguoi lao dong (The Labour newspaper), Sai Gon
Tiep Thi (SaiGon Marketing Newspaper).
14
The definition of comparative advertising
high durability and do not become flat over time…” The Council of Judges of the
Supreme People Court affirmed that this notice is an advertisement of Kymdan.
From this, it can be concluded that an announcement in the public media made by a
company to introduce its goods will be an advertisement. Although Vietnamese law
makes a distinction between advertising and commercial advertising and commercial
advertising seems to be just a part of advertising, in practice, there is no distinction
between the terms. In a word, pursuant to Vietnamese law, advertising involves introducing business activities and goods and services to consumers, including services
both with and without a profit-making objective.
2.1.3
Comparative remarks
Both English and Vietnamese law have defined advertising and regulated advertising
activities doubtless because of the important role of advertising in the economy and
society. Both laws defined advertising to cover the making of representations by undertakings about goods or services to promote sales and the announcements made by
individuals or non-profit organizations giving information about their activities.
Nevertheless, in Vietnamese law, the subjects subject to regulation as advertising
have been restricted due to the use of the term “consumers” in the definition of advertising. This means that advertising is only directed toward consumers while the
subjects of advertising could be any audiences e.g. the watchers, listeners or readers
of these advertisements in general. On the other hand, English law does not mention
the person whom advertising is directed towards. It might be better to replace the
term “consumers” in the definition of advertising in Vietnamese law by the term
“audience” or “public”. This is reflected in the draft of the Law on Advertising.58
Accordingly, advertising means introducing business activities and goods and services to the public, including services both with and without a profit-making objective.
English law only uses the one term “advertising” for advertising made by undertakings with a view to profit and advertising made by non-profit organisations or
individuals. Contrariwise, Vietnamese law use two terms “advertising” and “commercial advertising” to refer to different kinds of advertising though there are few
regulations relating to the advertising of non-profit services. Most of the provisions
related to advertising are in the Ordinance on Advertising 2001 and the Commercial
Law 2005, which is used to regulate commercial advertising. This creates an unnecessary redundancy in advertising law. In the draft Law on Advertising, there are still
58
See the 4th Draft of Law on Advertising, Article 1.1, available at
http://www.vibonline.com.vn/vi-VN/Drafts/Details.aspx?DraftID=310&Version=4.
15
A Comparative Study of Comparative Advertising in Vietnamese and English law
no provisions related to the advertising of non-profit services.59By contrast, English
law has special regulations covering special kinds of such as appeals for charitable
donation or advertising related to religious or belief issues.60 Any future Law on Advertising in Vietnam should contain more provisions related to the advertising of
non-profit making purposes.
2.2
The definition of Comparative Advertising
Comparative Advertising is a special form of advertising61, a sales promotion device
that compares the products or services of one undertaking with those of another, or
several competitors.62Comparative Advertising persuades consumers of the superiority of one brand in a product category by comparing it implicitly or explicitly to
another brand in the category63. It is also a useful source of information to the consumer, as well as an effective promotional tool for the advertiser64. Comparative advertising has been widely used in the United States65 with 80% of all television advertisements66 and 30% to 40% of all advertisements, containing comparative
claims.67 Nevertheless, before the adoption of the EU directives related to comparative advertising, in some Member States, comparative advertising used to be considered “bad” and unnecessarily harmful to competitors68. Thus, in order to enhance
59
Ibid.
60
See TV code, supra note 22, rule 10 and Radio Code, supra note 23, section 3, rule 2, rule
3.
Péter Miskolczi- Bodnár, “Definition of Comparative Advertising”, 3 European Integration
Studies (2004), pp. 25- 44, at p. 25.
61
62
Ibid at p.25, also see Opion on the Amended Proposal for a Council Directive concerning
Comperative Advertising and Amending Directive 84/450 concerning Misleading Advertising,
1992 OJ.(C49) 35, p.35.
63
http://www.answers.com/%22%20comparative%20advertising%22.
64
See Opion on Amended Proposal supra note 62.
Charlotte J. Romano, “Comparative Advertising in the United States and in France”, 25
Northwestern Journal of International Law and Business (2005), pp.371- 413, at p.371
65
66
Ibid.
Naveen Donthu, “A Cross-Country Investigation of Recall of and Attitude Toward Comparative Advertising”, 27 J. Advert.(2008), pp.111- 128 , at p.111.
67
Paul Spink and Ross Petty, “Comparative advertising in the European Union”, 47 International and Comparative Law Quarterly (1998), pp. 855- 876, at p. 855. The explicit identification
of competitors is banned in Belgium, Italy and Luxembourg and generally prohibited as unfair
68
16
The definition of comparative advertising
market transparency, provide information for customers, promote competitiveness
between suppliers and create conditions for the free movement of goods and services69, the EU has enacted many directives to regulate comparative advertising 70. In
these directives, “comparative advertising” means any advertising which explicitly or
by implication identifies a competitor or goods or services offered by a competitor.71
2.2.1
2.2.1.1
The definition of comparative advertising in English
laws
Definition and classification
Comparative advertising is fairly popular in the UK. It has been calculated that more
than 30 per cent of advertising there is comparative to some degree.72 Even before
the EU promulgated Directive 97/55 regulating comparative advertising, a definition
of comparative advertising has already appeared in English case law. In the case
Bismag Ltd v. Amblins (Chemists) Ltd,73 Amblins issued an advertising pamphlet in
which they claimed that most patent medicines were sold at too high a price by comparing its product formula and prices with those of well known proprietary medicines, including Bismag’ product, to highlight its own lower prices. In this case, the
court held that although the defendant had only used the plaintiffs' trade mark as a
convenient method of describing the merits of their own goods, they had infringed
the exclusive right of the plaintiffs.74In Compaq Computer Corporation and Another
v. Dell Computer Corporation Limited and Another,75 Dell Ltd placed two advertisements which used the plaintiffs' trade mark COMPAQ in respect of the plaintiffs'
personal computers to compare the plaintiffs' computer system with the defendant’s.
In this case, the court also held that there was a clear case of infringement of the reg-
competition in Germany and France. It is permitted in Spain and the Netherlands but only in very
limited circumstances.
69
Dir 97/55 supra note 34, recital 1, 2, 3, 5 and Dir 2006/114, supra note 35 recital 3, 4, 5, 6 ,
70
Dir 84/450/EEC, Dir. 97/55/EC and Dir 2006/114/EC.
71
Dir 2006/114, supra note 35, Article 2c.
20.
Hazel Carty, “Registered Trade Marks and Permissible Comparative Advertising”[2002] E.
I. P.R, pp. 294- 300, at p. 294.
72
73
Case Bismag Ltd v. Amblins (Chemists) Ltd [1940] EWCA, Ch.D 667.
74
It is noted that at that time the Trade Mark Act 1938 is valid.
75
Case Compaq Computer Corporation and Another v. Dell Computer Corporation Limited
and Another [1992] EWHC Ch.D.
17
A Comparative Study of Comparative Advertising in Vietnamese and English law
istered trade mark. From these cases, it could be concluded that comparative advertising is a form of advertising in which a trader refers to the trade marks of other
traders (usually its competitors) to compare its products or prices with those of the
other traders to highlight its products. In statutes, comparative advertising was first
defined in the Control of Misleading Advertisement Regulations(amendment) 2000
now in the BPRs. The definition of comparative advertising in BPRs is similar to that
in CMRs. According to rule 2(1) of BPRs “comparative advertising means advertising which in any way, either explicitly or by implication, identifies a competitor or a
product offered by a competitor.”76
The term “comparative advertising” may cover different forms of advertising
claims.77 For Theo Bodewig, comparative advertising consists of single product
comparative advertising, system comparative advertising or personal comparative
advertising, depending on the nature of the object of comparisons 78. Usually the objects of the comparison are the product or service offered by the advertiser and those
of his competitors. The claim may be, for example, that X has as many features as Y
but X costs less. In that case, a product or service is directly addressed and its producer is identified. However, the object of the comparison may not be a single product of an identified or identifiable competitor, but a whole range or category of products with certain properties. This kind of comparison is most often found in advertisements of trade or industry associations promoting the products of their members,
and comparing them to near substitute products of other branches of the industry.
The association of producers of glass bottles may, for instance, place an advertisement alleging that glass bottles are better for the environment than plastic bottles.
This kind of advertising is “systems comparisons” in which reference is made not to
one brand or producer but to a whole class of products and a whole branch of industry. A third category of comparative advertising does not directly compare the products or services of a competitor, but is instead directed to the competitors themselves
and their personal characteristics. This category includes, for instance, reference to
race, gender, religion, nationality, professional conduct and experience.
Apart from the object of comparison, other criteria for distinguishing different
kinds of comparative advertising can be used. One such criterion is the degree of
explicitness of the comparison. Comparative advertising may consist of direct comparative advertising and indirect comparative advertising. The reference to the competitor may be explicit when the competitor is expressly mentioned in the advertis-
76
The BPRs, supra note 38, regulation 2(1)
77
Bodewig, supra note 5, at p.182.
78
Ibid.
18
The definition of comparative advertising
ing. On the other hand, the reference may be more subtle and the competitor not
mentioned expressly but the circumstances and the design or wording of the advertising make it clear to the consumer whose products are being compared with those of
the advertiser.
In addition, comparative advertising may divide into positive comparative advertising and negative comparative advertising79. Positive comparative advertising aims
to take advantage of the reputation of a competitor’s product by identifying one
product with the other. The advertiser claims that its product is “as good as” the
competitor’s product, or that it is made the same way. A negative comparative advertisement, on the other hand, aims to alert the consumer to differences between the
two products in a way which casts a bad light on the competitor’s product. The advertiser often claims that its product or service is better than its competitor’s and
thereby at least implicitly criticizes it. Advertisers can combine negative and positive
comparison in its claims like “as good as ….but cheaper”
2.2.1.2
Analysing the definition of Comparative Advertising
In order to engage in comparative advertising under English law, an advertisement
must identify “a competitor or products offered by a competitor.” In addition, based
on case law, the ECJ also stated that the test for the comparative nature of advertising
is whether this advertising could identify, explicitly or by implication, a competitor
or goods or services offered by a competitor.80 The identification of a competitor or
of the product of a competitor plays an important role in determining whether an
advertisement is a comparative one or not. Hence, an advertisement that only looks
as the advertiser’s own products, for example comparing the present price of a product with the old price or an earlier model with its new product, are not considered as
comparative advertising.81 This is correct because this type of comparison does not
refer to an identifiable competitor or its product. Also, advertising comparing the
advertiser’s own products to each other does not involve the conflicts of interest/infringement issues caused by normal Comparative advertising. Further, if an
79
Ardi Kolah, Essential Law for Marketers, Butterworth - Heinemann Publishing 2002, at p.
183.
http://books.google.com.vn/books?id=5_TzRGogOhsC&pg=PA184&dq=%22comparative+adve
rtising%22&lr=&sig=ACfU3U3btGdcUSSwcgltG9baW82CHNGzUg#PPA183,M1; see Ulf
Doepner and Frank – Erich hufnagel, “German Courts Implement The EU Directive 97/55/EC –
A Fundamental shift in the law on Comparative Advertising?” 88 Trademark Reporter(1998) ,
pp. 537-540, at p. 541.
80
See Case C-112/99 Toshiba Europe [2001] ECR I- 7945, paragraph 29.
81
Miskolczi- Bodnár, Supra note 61, at p. 33.
19
A Comparative Study of Comparative Advertising in Vietnamese and English law
advertiser uses the legally protected word “Champagne” in an advertisement for
computers, or indeed mineral water, this does not fall within its scope either even
though comparison are made, because wine is not sold in competition with computers.82As mentioned above, the main element in determining a comparative advertising is that there is a reference to a competitor or products of a competitor. Unless the
undertakings or their products referred to in advertising compete with the advertiser,
there is no comparative advertising. Whether there is a competitive relationship between undertakings depended on the finding that the goods that they offer have a
certain degree of substitutability for one another. Products which are, to a certain
extent, capable of meeting identical needs may be substitutable for one another.83 So,
in order to determine whether there is a competitive relationship between the advertiser and the undertaking identified in the advertisement, it is necessary to consider
(a) the current state of the market and consumer habits and how they might evolve;
(b) the part of the Community territory in which the advertising was disseminated,
without, however, excluding, where appropriate, the effects which the evolution of
consumer habits seen in other Member States might have on the national market at
issue, and (c) the particular characteristics of the product which the advertiser sought
to promote and the image which it wished to impart to it. For the purpose of measuring the possible degree of substitution, it is impossible to restrict oneself to consumer
habits in a Member State or in a given region.84
An advertisement which explicitly or by implication identifies a competitor or
products of a competitor will, as noted, fall under the definition of comparative advertising. Direct comparative advertising is present when the name, or brand of the
competitor or the product of the competitor is expressly mentioned in the comparison. Indirect identification exists if there is a reference to the competitor, the business
circumstances of the competitor or a direct or indirect group designation85. Nevertheless, if advertising only refers to a type of product but does not refer to a specific
undertaking or product, it raises the question whether it is still comparative advertising. A recent judgement of the ECJ86 affirms that a reference in an advertisement to a
type of product and not to a specific undertaking or product can be considered to be
82
Jeremy Phillips, Trade mark Law - A Practical Anatomy, Oxford University Press 2003,
p.249.
83
Case 170/78 Commision v United Kingdom [1980] ECR 417, paragraph 14 and Case
356/85 Commission v Belgium [1987] ECR 3299, paragraph 10.
84
Case C-112/99, supra note 80, at paragraph 42 of the judgement.
85
Miskolczi- Bodnár supra note 61, p.10.
86
Case C- 381/05 Delandtsheer Emmanuel SA [2007] ECR I- 08501.
20
The definition of comparative advertising
comparative advertising where it is possible to regard that undertaking or the goods
that it offers as actually referred to by the advertisement.87 According to case law, the
definition is broad and covers all forms of comparative advertising, so it is sufficient
for there to be a statement referring even by implication to a competitor or to the
goods or services which he offers.88 If an undertaking solely refers to a type or product, this does not mean that the advertisement in principle falls outside the scope of
the directive. In practice, where there is only one competitor in the particular market,
it is not difficult for an undertaking to affirm an implied reference when the advertiser claims his product’s superiority without naming the competing product.89
A literal interpretation of the definition of comparative advertising which required
a single competitor of the advertiser, or the goods or services of a single competitor,
to be identified would be incompatible with the broad definition of comparative advertising and, accordingly, contrary to the case law of the ECJ. That a number of the
advertiser’s competitors or the goods or services that they offer may be identified as
being referred to by the advertisement is of no relevance for the purpose of recognising the comparative nature of the advertising. Thus, it is for the national courts, in
each individual case, to determine whether, having regard to all the relevant elements
of the case, an advertisement enables consumers to identify, explicitly or by implication, one or more specific undertakings or the goods or services that they provide as
actually referred to by the advertising90. The court, when making that assessment,
must take into account the presumed expectations of an average consumer who is
reasonably well informed and reasonably observant and circumspect.91
Note that the definition of comparative advertising does not require that the reference to a competitor or products of a competitor involves an actual comparison. In
particular, it is not the case that advertising must contain claims on its superiority to
its competitor or regarding the products of the advertiser and those of competitors.
87
Ibid, paragraph 24.
88
Ibid paragraph 16, also see Case C-112/99 supra note ,81 paragraphs 30 and 31, and Case
C-44/01 Pippig Augenoptik [2003] ECR I-3095, paragraph 35.
89
Munuel Morasch, Comparative Advertising: A comparative study of trade mark laws and
competition laws in Canada and the European Union, p.48, available at
http://papers.ssrn.com/sol3/results.cfm?RequestTimeout=50000000; also see Ohly & Spence
supra note 2, p. 46.
90 Case - 381/05 supra note 86, paragraph 22.
91
Ibid, paragraph 23. Also see Case C-44/01 Pippig Augenoptik [2003]ECRI- 3094, paragraph 55, and Case C-356/04 Lidl Belgium [2006] ECR I-8501, paragraph 78.
21
A Comparative Study of Comparative Advertising in Vietnamese and English law
This is confirmed by the eighth recital of the preamble to Directive 2006/114.92 Case
law also shows that in order for there to be comparative advertising within the meaning of the definition, it is sufficient for a representation to be made in any form which
refers, even by implication, to a competitor or to the goods or services which he offers. There is no need for a comparison between the goods and services offered by
the advertiser and those of a competitor.93 In Toshiba v Katun (Case C-112/99), that
Katun in its catalogue refers to the Toshiba machines with which its spare parts can
be used, and that in the list of available parts identifies the corresponding Toshiba
part under the heading OEM product number could be considered as a reference to
Toshiba. Though there is no claim containing a comparison saying, for instance, that
Katun’s product is better than Toshiba’s, there is a competitive relationship and there
is a reference to a competitor or product of competitor. This reference is enough to
constitute comparative advertising.94
2.2.2 The definition of Comparative Advertising in Vietnamese law
There are a few regulations on comparative advertising in Vietnamese law, but it
seems that Vietnamese legislators do not pay much attention to this field. Before the
Law on Competition was adopted, comparative advertising was in the list of prohibited advertising regulated by Commercial Law.95 The Ordinance on Advertising 2001
does not list comparative advertising as a prohibited advertising activity. Yet, it is
still prohibited in the Decree guiding this Ordinance.96 At present, comparative advertising is regulated by Commercial Law 200597 and Law on Competition 2004.98
Nevertheless, these laws as well as the draft Law on Advertising99 do not have a definition of comparative advertising and also do not mention any elements which may
indicate its presence. In practice, advertisements like, for example “Detergent X is
the best”, “Conditioner Y is more fragrant” or “Bank Z is the best foreign bank in
Vietnam”. commonly appear in broadcasting and non broadcasting media. These
92
See the eighth recital of the preamble to Dir 2006/114, supra note 35.
93
Case C-112/99 Supra note 80, paragraph 31.
94
Ibid , paragraph 40.
95
See Law on Commerce No.05/1997/QH 9 of 10 May 1997, Article 192(2).
96
See Ordinance on Advertising, supra note 51, Article 5, also see Decree No. 24/2003 supra
note 52, Article 3(7).
97
Law on Commerce 2005, supra note 55, Article 109(6).
98
See Law on Competition No.27/2004/QH 11 of 03 December 2004, Article 39 (6).
99
See draft 4th of Law on Advertising, supra note 58.
22
The definition of comparative advertising
raises the question whether such advertisements constitute comparative advertising.
It is hard to answer this question in the absence of a definition. Normally, where law
does not provide a definition, we can reason that the term should be understood in
the common or usual way.100 So what is the common understanding of comparative
advertising ? According to the Vietnamese dictionary, “comparison” means considering or examining one thing and another with a view to recognizing similarities and
differences between the things compared or their relative superiority or inferiority.101
Based on the definition of the terms “comparison” and “advertising”, we can say that
comparative advertising means activities of commercial enhancement conducted by
business entities aimed at introducing customers to the goods and services of such
business entity by claiming similarities, differences or relative superiority between
the goods or services of the advertiser and those of the competitor. Accordingly,
comparative advertising may consist of advertisements claiming equality, advertisements claiming superiority and advertisements claiming superlative or unique quality.102
An advertisement claiming equality is a kind of advertising which exploits the
reputation of the advertiser’s own products or service by advertising them as being
equivalent to those of the competitor. Advertisements claiming superiority claim that
the products of the advertiser have a quality or style superior to those of the competitor. Superlative comparative advertising claims that the products of the advertiser are
the best on the market, that its quality, design, service.. is the best or that none of the
other products on the market have the same standards as its products. Depending on
the degree of comparison and the truthfulness of the information, the likelihood of
harm to the consumer will vary. Yet, it seems that this definition we have suggested
is both too broad and too narrow. For example, advertising which does not present a
comparison but merely refers to the products of competitors would not be seen as
comparative advertising. On the other hand, advertising which compares its product
with products of another undertaking which is not its competitor would be seen as
comparative advertising. In the KymDan case,103 Kymdan mentioned the quality of
Phan Huy Hong, “Quang cao so sanh trong phap luat canh tranh - Mot nghien cuu so sanh
Luat” (Comparative advertising in Competition Law- A comparative legal study), State and Law
Journal No.1 (2007), pp. 43-51, at p.44.
100
101
Nguyen Nhu Y, Dai Tu Dien Viet Nam (Great Vietnamese Dictionary), Minister of Education and Vietnamese Culture & Language central publishing 2000, p.1448.
102
Le Danh Vinh, Hoang Xuan Bac, Nguyen Ngoc Son, Phap luat canh tranh tai Viet Nam
(Competition laws in Vietnam), Judicial Publishing 2006, p. 165.
103
Case Kim Dan v Van Thanh,Uu Viet, supra note 56, pp.119-124.
23
A Comparative Study of Comparative Advertising in Vietnamese and English law
various kinds of mattress in its advertisement. It pointed out the disadvantages of
kinds of mattress that it did not produce. On the other hand, it highlighted the benefits of the rubber mattress it did produce. The Supreme People Court affirmed that
Kymdan had used an advertisement which compared its goods with those of other
undertakings (including Van Thanh and Uu Viet). From this case, it could be assumed that comparative advertising is advertising in which the advertiser compares
its goods with those of other competitors with or without mentioning their names.
However, settled cases and the general understanding are not enough to enable one to
affirm whether an advertising is a comparative one because neither is regarded as a
legal source.
2.2.3
Comparative remarks
Like Vietnamese law, before the enactment of Directive 97/55, English statutes did
not contain a definition of comparative advertising though comparative advertising
was permitted. After Directive 97/55 was adopted, the UK amended the CMRs 1988
to implement this directive. As a result, a definition of comparative advertising provided in what is now regulation 2(1) of BPRs. On the other hand, there is no official
definition on comparative advertising in Vietnamese law at all even though the nature of comparative advertising is different from that of general advertising. Determining whether an advertisement is a comparative one is an important step prior to
examining whether it is permitted or prohibited.
The definition of comparative advertising in English law has also been examined
by case law and the ECJ. According to case law, comparative advertising is to be
understood in a broad sense. All advertising which can explicitly or by implication
identify a competitor or product offered by a competitor will constitute comparative
advertising. Advertisements which only compare the advertiser’s own product
among themselves or which do not identify a competitor or the products of a competitor are outside its scope. Unlike English law, Vietnamese law does not accept case
law or the judgement of courts as sources of law. Thus, the judgement of the court in
KymDan case only has value as a reference and is not a rule for determining whether
advertising is comparative. Therefore, it is necessary to provide a definition of Comparative advertising in Vietnamese law as this will help traders draw a line between
advertising and comparative advertising. In addition, this would allow traders to be
more flexible in their promotional activities and would create a fair competitive environment between undertakings. The definition of comparative advertising in English
law could be used as a starting point for Vietnamese law. It should be supplemented
by a definition of comparative advertising in the law of advertising. Comparative
advertising would then mean advertising which explicitly or by implication identifies
a competitor or a product offered by a competitor.
24
Lawful comparative advertising
3.
Lawful comparative advertising
3.1
Lawful comparative advertising in English law
The UK is one of the Member States of the EU, which regarded comparative advertising as legal before the EU Directives regulating misleading and comparative advertising were adopted.104 Comparative advertising can provide consumers with useful information, encourage fair competition and suppliers and enhance market efficiency.105 Comparative advertising, if conducted in an unlawful way which presents
inadequate or overly subjective information on competing goods and services may
denigrate competitors and derive unfair advantages from such inaccurate comparisons.106 It would be desirable to set up conditions to ascertain the legality of comparative advertising.
3.1.1
Conditions for comparative advertising to be lawful in
English law
The 1994 TMA permitted the use of a sign or trade mark of another business where
the use of a mark in advertising is "for the purpose of identifying goods or services as
those of the proprietor or a licensee” is not contrary to honest practices in industrial
or commercial matters; and does not take unfair advantage of, or is not detrimental
to, the distinctive character or repute of the trade mark.107 BPRs, which was enacted
to transpose directive 2006/114 into national law is considered as the main statutory
provision regulating comparative advertising in the UK. This regulation has set out
criteria to verify the legality of comparative advertising.108 Further, at common law,
comparative advertising is only permissible if it does not amount to passing off109,
Brunhildesteckler Steckler and Frank Bachmann, “Comparative Advertising in Germany
with Regard to European Community Law”, 10 E.I.P.R (1997), pp.578-586, at p.578.
104
105
See Preamble of Directive 97/55 supra note 34 and Preamble of Directive 2006/114 supra
note 35. Besides, World Federation of Advertisers (WFA) at http://www.wfanet.org and European Association of Commercial Communications Agencies (EACA) at http://www.eaca.be affirm
that “comparative advertising, when correctly done is a desirable means of product communication.”
106
107
108
Miskolczi- Bodnár, supra note 61, at p.26.
Section 10(6) Trade Marks Act 1994.
See Dir 2006/114, supra note 35, Article 4. These conditions will be analysed below.
109
Passing off is a common law tort which can be used to enforce unregistered trademark
rights. Passing off is designed to prevent trader from misrepresenting his goods or services as
being the goods and services of the plaintiff, and also prevents one person from holding out his
25
A Comparative Study of Comparative Advertising in Vietnamese and English law
injurious falsehood110, or defamation.111 112 The CAP code is built upon four general
principles: (i) that all advertisement should be legal, decent, honest and truthful, (ii)
that all advertisements should be prepared with a sense of responsibility to consumers and to society, (iii) that all advertisements should respect the principles of fair
competition accepted in business and (iv) that no advertisement should bring advertising into disrepute.113 There are several specific rules of BCAP that directly impact
on comparative advertising. Under rule 18.1 comparisons with identified competitors
and/ or their product are allowed “in the interests of vigorous competition and public
information. They should neither mislead nor be likely to mislead”. 114 The other
conditions e.g. comparing products meeting the same needs or intended for the same
purpose, objectively comparing one or more material, relevant, verifiable and representative features of those products…115 are the same as the conditions provided for
lawful comparative advertising in BPRs. Finally, the TV Code and the Radio Code
require that advertising be “legal, decent, honest and truthful.”116 Both of these codes
also contain specific rules regulating comparative advertising that are equivalent to
those in the BPRs and the CAP code.117 The conditions for verifying the legality of
Comparative advertising can be divided into two kinds: negative and positive.118
goods or services as having some association or connection with the plaintiff when this is not
true.
110
Injurious falsehood is a false statement made maliciously that causes damage to the claimant’s business, goods or services.
111
Defamation is the statement which might tend to harm the reputation of the competitor so
as to lower him or her in the estimation of the community or to defer third parties from associating or dealing with him or her.
Paul Stephenson, “Comparative Advertising and Intellectual Property Rights”, [2006]
E.I.P.R, pp. 182 – 191, at p.182. Also see Ohly & Spence, supra note 2, p. 8.
112
113
The CAP code, supra note 19, p.6.
114
Ibid rule 18.1.
115
Ibid rule 18.2, 18.3, 18.4, 20.1, 20.2.
116
See Television Code, supra note 22, p.6 and see Radio Code, supra note 23, p.1.
117
Ibid, rule 5.4.6, p. 23, and see Radio Code, supra note 23 rule 6, pp.11- 12.
118
See Miskolczi- Bodnár ,supra note 61, p.6.
26
Lawful comparative advertising
3.1.1.1
Negative conditions
The negative conditions are that comparative advertising is not misleading;119 does
not create confusion among traders,120 does not discredit or denigrate the trade
marks, trade names, other distinguishing marks, products, activities, or circumstances
of a competitor.121 It must not take unfair advantage of the reputation of a trade mark,
trade name or other distinguishing marks of a competitor or of the designation of
origin of competing products.122 Finally, it should not present products as imitations
or replicas of products bearing a protected trade mark or trade name.123
a.
Comparative advertising is not misleading
The prohibition of misleading comparative advertising is easy to justify.124 Misleading advertising provides untrue and deceptive information which can give rise to
erroneous consumer decisions, thereby distorting the market. As misleading advertising is incapable of assisting rational consumer choice, it also affects the competitor’s
goodwill to a disproportionate extent. Pursuant to regulation 4 of BPRs, comparative
advertising shall be permitted only when it is not misleading under regulation 3 of
BPRs and under regulation 5 of the CPRs125 or a misleading omission under regulation 6 of CPRs. According to regulation 3 paragraph 2 of BPRs, advertising is misleading which (a) in any way, including its presentation, deceives or is likely to deceive the traders to whom it is addressed or whom it reaches; and by reason of its
deceptive nature, is likely to affect their economic behaviour; or (b) for those reasons, injures or is likely to injure a competitor. According to regulation 5, a mislead-
119
The BPRs, supra note 38, Part 1 regulation 4a,b (replicates Article 4a of Directive
2006/114).
120
Ibid regulation 4e (replicates Article 4h of Directive 2006/114).
121
Ibid regulation 4f (replicates Article 4d of Directive 2006/114).
122
Ibid regulation 4h (replicates Article 4f of Directive 2006/114).
123
Ibid regulation 4i (replicates with Article 4g of Directive 2006/114).
124
Ohly & Spence, supra note 2, p.59.
125
Consumer Protection from Unfair Trading Regulations 2008 implements Directive
2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair
business to consumer commercial practice in the internal market and amending Council Directive
84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of
the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council
O.J L- 149, 11/06/2005.
27
A Comparative Study of Comparative Advertising in Vietnamese and English law
ing action can include false product information or deceptive presentation.126 Misleading actions also cover any marketing of a product (including comparative advertising) which creates confusion with any products, trade marks, trade names or other
distinguishing marks of a competitor; or involve any failure by a trader to comply
with a commitment contained in a code of conduct which the trader has undertaken
to comply with.127 According to regulation 6, misleading omissions include omitting128 or hiding material information;129 or providing material information in a manner which is unclear, unintelligible, ambiguous130or failure to identify commercial
intent.131
Nevertheless, to verify whether a comparative advertisement is misleading is not
always easy. Some questions concerning the interpretation of the provisions related
to misleading have arisen. In particular, it has been asked whether a comparison that
does not list all relevant aspects is misleading for that reason alone. According to
some commentators, as a matter of principle, it is not misleading for a comparison
not to list all relevant aspects132. Regulation 4d of BPRs133 indicates that the characteristics compared must be representative, so only in exceptional cases can the selection of characteristics be so arbitrary that the overall impression is misleading. So,
there is no obligation to be complete. The question has also been discussed by the
ECJ in Pippig v. Hartlauer.134 This case arose after Hartlauer ran an advertising campaign in which leaflets directly compared Pippig’s prices for frames with Zeiss
lenses with Hartlauer’s prices in respect of the same brand of frames but with Optimed lenses. In addition to leaflets, Harlauer also advertised on television and in
126
CPRs 2008, SI 2008/1277, Regulation 5, paragraph 2.
127
Ibid, Regulation 5, paragraph 3.
128
Ibid, Regulation 6.1(a).
Ibid, Regulation 6.1(b) “Material information” means: (a) the information which the average consumer needs, according to the context, to take an informed transactional decision; and (b)
any information requirement which applies in relation to a commercial communication as a result
of a Community obligation.
129
130
Ibid, Regulation 5.1(c)
131
Ibid, Regulation 5.1(d)
132
Frauke Henning- Bodewig, Unfair Competition Law, Kluwer Law International Publishing
2006, p.43.
133
Replicates Article 4c Dir. 2006/114. This regulation stipulates that comparative advertising
must compares one or more material, relevent, verifiable and representative features of those
products, which may include price.
134
Case C-44/01 Pippig Augenoptik [2003] ECR I-3095.
28
Lawful comparative advertising
radio broadcasts. These advertisements featured the same price comparison but did
not state that the lenses were different brands and (on television) showed a Pippig
shop front and the company logo. This also raised the question whether the comparison of the price of a brand-name product with the price of a no-name product of
equivalent quality is permitted where the name of the manufacturer is not indicated.
The ECJ stated that in the context of comparative advertising, where there is compliance with the conditions set out in Article 3a(1) of Directive 84/450 on misleading
and comparative advertising, as amended by Directive 97/55135, an advertiser is able
to use the trade mark of a competitor's products.136 However, the ECJ also noted that
the omission of a better known brand name could, in certain circumstances, be misleading. This occurs when the brand name of the products may significantly affect
the buyer’s choice, the comparison concerns rival products and the extent to which
the respective brand names are known differs significantly137. Nevertheless, the ECJ
did not state that the comparative advertisement in this case violated the required
conditions . It was up to the national court having regard to all the relevant factors of
the case which is brought before it, to decide whether the conditions for lawful comparative advertising are met, taking into account the presumed expectations of an
average consumer who is reasonably well informed and reasonably observant and
circumspect.138
In addition, an advertisement which compares the general price level based on a
basket of consumables selected from goods sold by various competitors can be considered misleading. The case of Lidl Belgium GmbH & Co KG v Etablissementen
Franz Colruyt NV139 has provided some clarification of this issue. In this case, Lidl
and Colruyt each operated a chain of stores that sold basic consumables. Colruyt
launched an advertising campaign based on a comparison of his prices with those of
his competitors using two separate types of comparative advertising. In the first type,
he sent his customers a leaflet in which he compared the general level of the prices
charged by him and his competitors in respect of a wide range of products. He used
the comparison to estimate the amount of money that consumers could save annually
135
Now, it is Directive 2006/114, Article 4.
136
Case C-44/01 supra note 134, paragraph 49.
137
Ibid, paragraph 53.
138
Ibid paragraph 55. The Austrian Court has claimed that the comparative advertising in this
case is misleading and thus illegal since lenses plays an important role in buying eyeglasses.
Therefore, a comparison which does not point out that the glasses have different lenses is misleading.
139
Case C-365/04 Lidl [2006] E.C.R.I- 8501.
29
A Comparative Study of Comparative Advertising in Vietnamese and English law
by making all their purchases from him. The comparison related to both branded and
unbranded products and the competitors were divided into two general groups, namely supermarkets and hard discount stores. The leaflet did not specify the general level
of prices charged by each competitor. It only contained a collective reference to a
range of amounts that could be saved by shopping at the advertiser rather than at any
other supermarket and hard discount store. Secondly, he announced he had recently
launched a line of basic consumables which were cheaper than any other comparable
product sold on the market. These products were properly labelled so that consumers
could identify them easily and distinguish them from all other similar goods sold by
the advertiser.
To decide whether the advertisement was misleading, it is essential to take into
account the information contained in the advertisement and all its relevant features.
An omission may make an advertisement misleading, especially when it seeks to
conceal a fact that would have deterred a significant number of consumers from making a purchase.140 Thus, comparative advertising related to a general level of prices
may be misleading in any one of three ways. First, if it leads consumers to believe
that the comparison relates to all products sold by the advertiser rather than just the
sample of them selected. Secondly, if the advertisement fails to identify the precise
details of the comparison thereby creating the impression that all the products sold by
the advertiser are cheaper than those of his competitors. Finally, if the advertisement
contains a collective reference to a range of amounts that may be saved by consumers making their purchases from the advertiser without specifying individually the
general level of the prices charged by each of his competitors.141 In short, the first
and most important condition for a comparative advertisement to be lawful is that it
is not misleading.
b
It does not create confusion among traders
Regulation 4(e) of BPRs prohibits any comparison that “creates confusion among
trader, between the advertiser and a competitor or between the trade marks, trade
names or other distinguishing marks or products of the advertiser and those of a
competitor.” This condition was also specified in CMRs. However, some commentators wonder whether this regulation is really necessary since it seems similar to the
previous condition.142 In fact, both misleading advertising and advertising that creates confusion are almost identical with regard to protecting both consumers and
140
Ibid at paragraph 80-82.
Ibid At paragraph 83 – 85.
142 Ohly & Spence supra note 2, p. 65.
141
30
Lawful comparative advertising
competitors. Both of them can lead to wrong purchase decisions and can unfairly
damage a competitor’s goodwill.143
Based on the language of Regulation 4e of BPRs, this condition refers only to
comparisons creating confusion and not to comparisons that run the risk of creating
such confusion. Pursuant to EU Trade mark Directives144 and TMA 1994 of UK, a
mere risk of confusion is sufficient to establish trade mark infringement145. Bodewig
reasoned that, as the ECJ held in the Toshiba decision,146 the rules on comparative
advertising are to be construed in such a way that they take account of the purpose of
trademark law (and vice versa). It is generally assumed that terms that are used identically in both directive - for instance the likelihood of confusion - are to be interpreted in the same way. The abstract likelihood of confusion is sufficient and there is no
need for there to have been actual confusion147.
This has also been clearly explained in the O2 case.148 Hutchison 3G (“H3G”) ran
a series of television advertisements comparing H3G’s mobile telephone “pay as you
go” services with those of its major UK competitors, including O2. The advertisement in question made a price comparison between O2’s and H3G’s services. In doing so, the advertisement featured bubbles similar to those registered as trade marks
by O2. In its judgement, the ECJ confirmed that it was apparent from Article
3a(1)(d) of Directive 84/450 that comparative advertising is not permitted if there is a
likelihood of confusion between the advertiser and a competitor or between the advertiser’s trade marks, goods or services and those of a competitor 149. In order to
determine whether the use of a sign identical or similar to a registered mark creates a
likelihood of confusion, it is necessary to consider the following four conditions150.
Firstly, that use must be in the course of trade. Secondly, it must be without the consent of the proprietor of the mark. Thirdly, it must be in respect of goods or services
143
Article 6(2) a of the Directive 2005/29/EC, O.J L- 149, 11/06/2005.
144
Directive 89/104/EEC of 21.12.1988 approximate the laws of the Member States relating
to trade-marks, (OJ L 40, 11.2.1989, at 1), Directive as last amended by Decision 92/10/EEC (OJ
L 6, 11.1.1992, at 35) and Directive 2008/95/EC of 22.10.2008 repeals Directive 89/104/EEC.
145
See article 5(1)(b) of The Trademarks Directive implemented as s.10(2) of the Trademark
Act 1994.
146
Case C- 112/99 Toshiba supra note 80.
147
Henning- Bodewig, supra note 132, p.47.
148
Case C-533/06 O2 Holdings Limited v.Hutchison 3G UK Limited [2008] not yet reported.
149
Ibid, paragraph 55 of the judgement.
150
Ibid, paragraph 57 of the judgement.
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A Comparative Study of Comparative Advertising in Vietnamese and English law
which are identical with, or similar to, those for which the mark is registered. Finally,
it must affect or be liable to affect the essential function of the trade mark by reason
of a likelihood of confusion on the part of the public. The fact that there was a risk
that the public might believe that the goods or services in question come from the
same undertaking or from economically-linked undertakings constitutes a likelihood
of confusion. In this case, the use of bubble images similar to the bubble trade marks
did not give rise to a likelihood of confusion on the part of consumers. The advertisement, as a whole, was not misleading and, in particular, did not suggest that there
was any form of commercial link between O2 and O2 (UK) on the one hand, and
H3G, on the other151. Generally, only if a comparative advertisement gives rise to a
risk of confusion will it be considered unlawful.
c.
It does not discredit or denigrate the trade marks, trade names, other
distinguishing marks, products, activities or circumstances of a competitor
Discrediting is a milder form of denigration and since both are covered there is no
need for further distinctions. Nevertheless, not all of comparative advertising which
discredit the trade marks or trade names of a competitor always constitutes discrediting within the meaning of this provision since any critical comparative advertising
involves a certain discrediting of the competitor or his products. 152 If this were entirely prohibited, the intended liberalisation of comparative advertising would not be
achieved. Therefore, only in cases where advertising unnecessarily discredits or denigrates the trade marks, trade names, products or activities of a competitor, should it
be considered unlawful. In particular, if comparative advertising emphasises the benefits of its own goods or service and reasonably shows the disadvantages of rival
product, this advertising is always permissible153. On the other hand, that comparative advertising only focuses on negative aspects of the competitor or his product is
not acceptable. Discrediting can also result from an inappropriate and aggressive
tone, an unobjective representation or valuation or even a unspecific, global rejection.
Turning back to Pippig Augenoptik v Haurlter,154 we should consider whether a
price comparison in which the products are chosen in such a way as to obtain a price
difference greater than the average price difference and/or the comparisons are fre151
Ibid, paragraph 63 of the judgement.
152Henning-Bodewig,
supra note 132, p.47, also see at
http://www.asa.org.uk/cap/advice_online/advice_online_database/Show+Entry.htm?advice_onlin
e_id=62.
153
Ibid.
154
Case C-44/01 Pippig Augenoptik, supra note 134.
32
Lawful comparative advertising
quently repeated, creating the impression that the competitor's prices are excessive
entails discrediting the competitor. The ECJ stated that comparing rival offers, particularly regarding price, is of the very nature of comparative advertising. Comparing
prices cannot in itself entail the discrediting or denigration of a competitor who
charges higher prices.155 The ECJ also stated that the number of times the comparison is made falls within the exercise of the advertiser’s economic freedom and that
any obligation to restrict each price comparison to the average prices of the products
offered by the advertiser and those of rival products would be contrary to the objectives of the Community legislation.156 It also referred to the second recital in the preamble of Directive 97/55 which states that comparative advertising must help
demonstrate objectively the merits of the various comparable products. Such objectivity implies that the persons to whom the advertising is addressed are capable of
knowing the actual price differences between the products compared and not merely
the average difference between the advertiser's prices and those of its competitors.157
In short, discrediting or denigrating the trade marks, trade names, other distinguishing marks, products, activities or circumstances of a competitor is still prohibited in
an otherwise permissible comparative advertisement. The meaning of discredit is
clarified by putting it in the context of the comparative advertising directive, in particular the public’s interest in information.
d
It does not take unfair advantages of the reputation of a trade mark,
trade name or other distinguishing marks of a competitor or of the designation
of origin of competing products
The provision seems to be tailored to prevent advertisers from establishing an unfair
connection between the advertiser’s own (less famous or less highly-regarded) product and a competing product known by consumers under a prestigious trade-mark.
However, not all advertising of inexpensive (“no name”) products which expressly or
implicitly claim to be equivalent to a prestigious or well-known branded product is
considered as unfair exploitation of the reputation of this famous trade mark or trade
name158. In positive comparative advertising, referring to another’s reputation such
as “X is just as good as Y” is common. In the L’Oreal case,159 Lord Justice Jacob160
stated that “Clearly the comparison list takes advantage of the reputation of the origi155
Ibid paragraph 80.
156
Ibid paragraph 81.
157
Ibid paragraph 82.
158
Henning - Bodewig, supra note 132, p.48.
159
160
Case L'Oreal SA and Others v. Bellure NV and Others [2007] EWCA Civ, paragraph 64.
He is a Lord justice of the Court of Appeal, Civil Division in England and Wales.
33
A Comparative Study of Comparative Advertising in Vietnamese and English law
nal fine fragrances. But does it take "unfair advantage” of the reputation of the original?” Virtually any comparison by a merchant of his product with a well-known
product on the market will to some degree take advantage of the reputation of that
product. The wording of this provision makes this clear in that the advantage must be
“unfair”. Thus, the reference must be accompanied by “particular circumstances” for
the transfer of the reputation of a sign to another to be regarded as unfair, for instance
an excessive emphasis of the well-known rival product.161 According to Ohly &
Spence, this provision may be operative in a factual comparison between products in
a context where consumer choice is usually based upon image associations rather
than objective, verifiable and material criteria. In particular, the provision may prohibit claims concerning the equivalence of generic and luxury goods. It seems to be
written, indeed, with the very particular situation of luxury goods in mind.162
The case of L’Oréal v Bellure is an illustration of this. This case arose from the
fact that a Dubai perfume company named Bellure sold low-value fragrances that it
claimed smelled similar to L'Oreal perfumes and marketed the products on this basis,
using packaging that 'winked at' the relevant L'Oreal designs, and published comparison charts that listed particular L'Oreal perfumes. L'Oreal sued for infringement of
its trademarks and “passing off”, claiming that Bellure's marketing and packaging of
“smile-alike” perfumes in this way took unfair advantage of its own product names,
packaging and brand image.
The High Court163 found that the defendants' use of similar bottles and packaging
did take unfair advantage of the character and reputation of the packaging marks because the extent of the similarity was deliberate; the L'Oréal fragrances chosen as
comparators were well-promoted brands that were extensively advertised, and would
not have been chosen if they were not good sellers164. The degree of similarity in
packaging enabled the defendants to charge more for their perfume range than for
other smell-alike perfumes165. There was evidence that the smell-alike perfumes benefited from the advertising of L'Oréal's premium brands, and sold because of the reputation of the originals. So the court held that the packaging for the perfume made
and sold by the defendants was sufficiently similar to L'Oreal's established brands to
create an association in the mind of the average consumer which affected their economic behaviour and that the comparison lists also constituted trade mark infringe161
Henning- Bodewig, supra note 132, p.48.
162
Ohly & Spence, supra note 2, p.85.
163
Case L'Oreal SA and Others v. Bellure NV and Others [2006] EWHC 2355 (Ch).
164
Ibid, paragraph 151(ii).
165
Ibid, paragraph 151(iii, iv).
34
Lawful comparative advertising
ment and could not benefit from the honest practices’ defence under the TMA
1994166. The defendants' signs and the comparison table took unfair advantage of the
character or reputation of L’Oreal’s registered trade marks.
What then happens if a comparative advertiser does not use a registered trade
mark but does use a system of order numbers for its product which is already well
known in trade circles. Is he taking unfair advantage of the reputation of that distinguishing mark within the meaning of this provision? This happened in the case Siemens v VIPA.167 VIPA used an identification system virtually identical to that used
by Siemens in advertising its products, the only difference being a replacement of the
first non-essential group of characters with the acronym "VIPA". For example, a
Siemens product carrying the order number 6ES5 928-3UB21 would become VIPA
928-3UB21. In addition, in their catalogue, VIPA expressly stated that their order
numbers corresponded to those of Siemens.
In order to determine whether VIPA was taking unfair advantage of the reputation of Siemens’ distinguishing mark, the benefit of comparative advertising to consumers and the benefit an advertiser derives from comparative advertising must necessarily be taken into account.168 By adopting the core element of the Siemens order
number system, VIPA was informing the public that the two products in question had
equivalent technical features. There was, therefore, a lawful comparison of the material, relevant, verifiable and representative features of the goods within the meaning
of this provision.169 It was necessary, however, to determine whether by adopting
that element VIPA could cause the public, at whom their advertising was directed, to
associate the reputation of that manufacturer's products with the products distributed
by that supplier. In this respect, the court noted that the public in the market for these
products would be specialist consumers, and therefore more likely to pay close attention to the product they were purchasing and much less likely to associate the reputation of the VIPA products with that of products distributed by Siemens.170 Additionally, the fact that consumers needed the core element of the product code to utilise
the control system at all meant that if VIPA didn't include this core element in its
own product code, the consumer would be required to undertake an onerous crossreferencing task with each VIPA product purchased, which would clearly be disad166
Ibid, paragraph 149.
167
Case C-59/05 Siemens AG v VIPA Gesellschaft für Visualisierung und Prozeßautomatisierung mbH [2006] ECR I- 02147.
168
Ibid, paragraph 24.
169
Ibid, paragraph 17
170
Ibid, paragraph 19.
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A Comparative Study of Comparative Advertising in Vietnamese and English law
vantageous to the consumer. On this basis, and in these circumstances, by using in its
catalogues the core element of a manufacturer's distinguishing mark which was
known in specialist circles, the competing supplier did not take unfair advantage of
the reputation of the distinguishing mark171.
e
it does not present goods or services as imitations or replicas of goods or
services bearing a protected trademark or trade name
This provision provides a certain degree of protection against comparison to the
manufacturers of the original goods (e.g. pharmaceutical products, perfumes) who,
often cannot take action against imitations after the expiry of relevant industrial
property rights. Thus, for instance, a pharmaceutical product may not be described as
being identical with an original pharmaceutical product. Pursuant to this provision,
promoting generic pharmaceutical products might be regarded as presenting the
products as imitations or replicas of the branded drugs once their patent has
lapsed.172 An example of this would be a statement that claims the product to be “the
same” as the original product.
Turning back to the case involving L’Oreal and Bellure173, did the message conveyed in the context of the comparisons that the defendants' product smells like the
well-known fragrance presents the defendants' goods as being an "imitation or replica” of the “original” fragrance? The defendant submitted that this condition was confined to products like counterfeit Rolex watches on the grounds that "present goods
or services as imitations or replicas” is a composite phrase indicating just that sort of
thing and no more. The claimant submitted that saying a perfume smells like a wellknown brand is indeed "presenting it” as an imitation of it. This may be right, but if
so "presenting goods as an "imitation” will have a very wide, possibly overprotective, meaning. Does then this expression cover the case where, without in any way
causing confusion or deception, a party truthfully says that his product has a major
characteristic (smell) like that of a well-known product which is protected by a trade
mark? This issue will only be resolved interpreted when the ECJ gives its judgement
in the case.
3.1.1.2
Positive conditions
In addition to these negative conditions, Comparative advertising must meet some
positive requirements. These positive requirements are that the comparison is of
171
Ibid, paragraph 27.
172
Morasch, supra note 89, p.57.
173
Case C-487/07 L'Oreal SA and Others v. Bellure NV and Others (This case has not been
judged by the ECJ)
36
Lawful comparative advertising
product for the same needs or purposes174, objectively compares one or more material, relevant, verifiable and representative features175, and compares products with a
designation of origin to products with the same designation176.
a.
It compares product meeting the same needs or intended for the same
purpose
Comparative Advertising is only permitted if it compares goods or services meeting
the same needs or intended for the same purpose177. This does not require that the
goods or service be identical. Accordingly, the products compared should display a
sufficient degree of interchangeability for the consumer178. In the case of Lidl Belgium v Colruyt,179 the comparative advertising related collectively to selections of
basic consumables sold by competing chains of stores and this would be permitted
provided that they consisted of individual products which satisfied the requirement of
interchangeability when viewed in pairs.180 Indeed, the choice as to the number of
comparisons which the advertiser wishes to make between the products that he is
offering and those offered by his competitors falls within the exercise of economic
freedom.181 This freedom also extends to the ability to make a comparison relating to
the comparable product ranges sold by the advertiser and his competitors.182 In the
mass distribution sector, comparative information relating to the general level of
prices charged by competing chains of stores is liable to prove more useful to consumers than comparative information limited to the prices of individual products.183
174
The BPRs, supra note 38, regulation 4 (c)
175
Ibid.
176
Ibid regulation 4d.
177
Ibid regulation 4c.
178
“Substitutable product” from the viewpoint of the consumer. The definition equals the
definition of the relevant product market under Article 85 EC (although the purposes of the two
provisions are different) and this market is defined in accordance with the “reasonable interchangeability test”. The relevant product market will encompass all products that are substitutable in demand and supply, and the current sales of those products will be aggregated so as to give
the total value or volume of the market, see Commission Notice on the definition of relevant
market for the purposes of Community Competition Law, OJ. C372/5.
179
Case C- 365/04 Lidl, supra note 139.
180
Ibid, paragraph 36- 39.
181
Ibid, paragraph 29, also see Case C-44/01 Pippig supra note 134 paragraph 81.
182
Ibid, pararaph 29-30.
183
Ibid, at paragraph 35.
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A Comparative Study of Comparative Advertising in Vietnamese and English law
Nevertheless, it should be remembered that the criteria for establishing the existence of a competitive relationship are not identical to those for determining whether
a comparison fulfils this provision. This provision requires an individual and specific
assessment of the products which are specifically the subject of the comparison and a
decision whether there is a real possibility of substitution.184In general, this provision
does not require that the products or services subject to comparison should be identical or similar in nature or that they should belong to the same commodity group, but
does require that from the perspective of consumers the goods are interchangeable.
b.
It objectively compares one or more material, relevent, verifiable and
representative features of those products, which may include price
This condition lays down two types of requirement relating to the objectivity of the
comparison. Firstly, it requires that the feature of the product in respect of which the
comparison was made is material, relevant, verifiable and representative and this
helps ensure that the comparison is objective. Secondly, the feature has to be compared objectively. The objectivity criterion is to preclude comparisons that result
from subjective assessments rather than from objective findings. In particular, a
comparison of purely subjective preference such as “I prefer X to Y” is prohibited
because such a comparison is neither objective nor verifiable185. However, some
commentators state that interpreting the prohibition this way would lead to the result
that a Directive which aims at the liberalisation of comparative advertising, would be
stricter than the prior national law of almost all the member states. In addition the
provision requires that the comparison must concern features of goods or services (or
their price). According to this, personal comparisons such as “X is a foreigner I am
not” are prohibited. But the term “features of goods or services”, if construed literally, would preclude comparing company related details such as turnover, the product’s fame or the media’s audience penetration. Possibly, their inclusion could be
justified by way of the broad interpretation of the concept of comparative advertising
in the Toshiba case186 and the information needs of the addressee, to whom such advertising is indeed presenting alternatives. Returning to the case involving Lidl and
Coruyt187, the objectivity criterion was satisfied without any need to list the goods
compared and their respective prices if the claimed difference in the general price
level was indeed based on actual price differences between comparable products. 188
184
Case C-381/05 Delandtsheer, supra note 86, paragraph 47.
185
Henning - Bodewig, supra note 132, p.47.
186
Case C-112/99 Toshiba, supra note 80, paragraph 28.
187
Case C-365/04 Lidl, supra note 139.
188
Ibid, paragraph 50 - 54.
38
Lawful comparative advertising
In addition, the features compared must also be “material, relevant and representative.” This ultimately amounts to the same thing, the aim being to prevent the creation of a distorted overall impression by selecting irrelevant secondary features that
are as a rule of no relevance for the purchaser. To decide what is a material feature
depends strongly on the type of product. While, for instance, the packaging of most
products is of secondary importance, for certain products (perfume, sweets) it may
well be a material, relevant or representative feature.
Closely related to the requirement of objectivity is the need for verifiability. Verifiability means first of all that the comparison involves allegations of fact, since only
these can be checked for objective justification. The decisive factor is that the addressee could check the features compared without having to make an unreasonable
effort. In the Lidl Belgium case the comparison of the general price level could satisfy the verifiability requirement189 provided that the goods compared were capable of
being individually and specifically identified - and then priced - on the basis of the
information contained in the advertisement.
Another issue is whether verifiability requires that consumers should in fact be in
a position to determine for themselves the accuracy of the statements made in a comparative advertising. It is hard to answer this based on the strict language of the provision. It should then be interpreted in the light of the objective of consumer protection. Seen from this perspective, it is not enough that consumers can obtain proof of
the factual accuracy of the claim from the advertiser in the course of administrative
and judicial proceedings The advertisement should indicate where and how they may
get access to the details underlying the comparison with a view to verifying it.190 In
case the verification would require exceptional skills, it suffices that consumers are
given enough information to allows them to have it carried out by a third party.191
c. For products with a designation of origin, it relates in each case to products
with the same designation
The provision targets comparisons between products carrying a designation of
origin, stating that if products with a designation of origin are compared, the comparison must relate to products with the same designation192. It seems that this provision’s scope goes well beyond the requirements which asks for a comparison between substitutable items. It suggests that products with a designation of origin are
189
Ibid, paragraph 24.
190
Ibid, paragraph 27.
191
Ibid, paragraph 28.
192
The BPRs, supra note 38, regulation 4g.
39
A Comparative Study of Comparative Advertising in Vietnamese and English law
practically excluded from being the object of a comparative advertisement which
seems to assign an illegitimate privilege to a selected group of producers. To take the
example of the winegrowing industry why should a producer from the Spanish Rioja
region not be entitled to compare his product to his French rival from Bordeaux193
even though the comparison might have provided consumers with useful information
and assist rational consumer choice. Moreover, regulation 4d of BPRs would have
been sufficient to ensure that the comparison does not take unfair advantage of a
competitor’s reputation. This privilege afforded to a certain group of producers
seems incompatible with the other provisions we have been reviewing.194
The provision was finally interpreted in a manner linked to the other provisions
thanks to the judgement of the ECJ in the case De Landtsheer v. Comité Interprofessionnel du Vin de Champagne.195 The ECJ affirmed that for products without a designation of origin, a comparison relating to products with a designation of origin is
permitted if this comparative advertising satisfies all the other conditions. For example it must not take unfair advantage of the reputation of a trade mark, trade name or
other distinguishing marks of a competitor or of the designation of origin of competing products. It would be unwarranted and unjustified if protection of designations of
origin would have the effect of prohibiting comparisons between products with and
without a designation of origin.
3.1.2
General remarks
As analyzed above, Comparative Advertising in English law is mainly regulated
by BPRs but is also covered by the 1994 TMA when advertisers refer to the trademarks of competitor. In addition, the law of passing off and injurious falsehood may
be applied in cases satisfying certain particular conditions. Although BPRs is considered as the most important law on comparative advertising, most of the recent cases
related to claims of malicious falsehood and trade mark infringement. In fact, the use
of a competitor’s trade marks or copyrights to identify him or his product is almost
inevitable. If BPRs was intended to render particular types of comparative advertising lawful, the relationship between trade marks, copyright and the advertising regulation ought to have been addressed more squarely.
193
Morasch, supra note 89, p.54.
194
Ohly & Spence, supra note 2, p.69.
195
Case 381/05 Delandtsheer, supra note 86.
40
Lawful comparative advertising
In the O2 case,196 although the ECJ has not yet given its judgement, both the Advocate General in his opinion and Lord Justice Jacob in his referral to the ECJ, were
clear in their view that trade mark law should not have any role in the assessment of
the legitimacy of comparative advertising, an area separately and specifically provided for by Community law. If this were upheld, the rights owners would only be able
to rely on the OFT and TSS to take action in such circumstances. Fortunately, the
ECJ does not follow the Advocate General’s opinion to the problem of the interrelationship of the Trade Marks Directive and the Comparative Advertising Directive.
The proprietor of a registered trade mark is not entitled to prevent the use by a third
party of a sign identical with, or similar to, his mark, in a comparative advertisement
which satisfies all the conditions laid down in Article 3a(1) of Directive 84/450. But
where the conditions197of Article 5(1)(b) of Directive 89/104 preventing the use of a
sign identical with, or similar to, a registered trade mark are met, no comparative
advertising can satisfy the condition laid down in directive 84/450198. That said, the
proprietor of a registered trade mark is still not entitled to prevent the use by a third
party, in a comparative advertisement, of a sign similar to that mark in relation to
goods or services identical with, or similar to, those for which that mark was registered where such use does not give rise to a likelihood of confusion on the part of the
public, and that is so irrespective of whether or not the comparative advertisement
satisfies all the conditions laid down in Article 3a of Directive.199
3.2
Lawful comparative advertising in Vietnamese law
3.2.1
Conditions for comparative advertising to be lawful under
Vietnamese law
Comparative advertising is also a type of advertising. Thus, it must be in conformity
with the conditions governing the legitimacy of advertising in general.
196
Case C-533/06 O2, supra note 148.
197
According to Article 5(1)(b) of Directive 89/104, the proprietor shall be entitled to prevent
all third parties not having his consent from using in the course of trade any sign where, because
of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or
services covered by the trade mark and the sign, there exists a likelihood of confusion on the part
of the public, which includes the likelihood of association between the sign and the trade mark.
198
Case C- 533/06 O2, supra note 148, operative part of the judgment, paragraph 1.
199
Ibid, paragraph 2.
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A Comparative Study of Comparative Advertising in Vietnamese and English law
3.2.1.1
General conditions
There are already prohibitions on advertisements disclosing State secrets and advertisements of goods and services where the State prohibits or restricts their use or prohibits their advertising.200 But to be lawful, advertising must satisfy the further conditions below.
a. It is not false or misleading
Pursuant to the Law on Competition as well as the Law on Commerce, advertising
should not provide false or misleading information to customers about one of the
following matters : price, quantity, quality, usage, design, type, packaging, date of
manufacture, use expiry, origin of goods, manufacturer, place of manufacture, processor or place of processing; manner of use, method of service, warranty period; or
other false or misleading information.201 In addition, the Ordinance on Advertising
also prohibits misleading advertising.202 Decree 24 also prohibits making advertisements which defame, compare or cause confusion about other product, business or
service-providing establishments.203
Information about price, quantity, quality, usage and design plays an important
role in customer’s choices since if information about these is incorrect, consumer
choice will be adversely affected. In practice, advertising that misleads customers
occurs regularly. For example, the Xuan Loc Tho Company stated that “American
goods are not as expensive as you thought.” Any customer reading this advertisement
would think the products were made in the United States and had a reasonable price.
However, when the consumers bought the products referred to, they find out they
were not made in America. Consumers complained and the company tried to claim
that the word they used in their advertisement did not refer to the origin of the products.204 This advertising had thus provided misleading information about the origin
of products. In the KymDan case205, the defendants claimed that the KymDan advertisement mislead customers about the quality of their mattress products. The Su200
See Law on Commerce 2005, supra note 55, Article 109(1), (2), (3).
201
Ibid, Article 109(7), also see Law on Competition, supra note 98, Article 45(3).
202
See Ordinance on Advertising, supra note 51, Article 5(4).
203
See Decree No.24, supra note 52, Article 3(7).
204
http://tintuc.ethitruong.vn/Home/thitruong/msvcg/2007/10/16684.aspx. The whole sen-
tence in Vietnamese is “Hang My khong dat nhu ban nghi”. The word “My” in Vietnamese can
be understood in different ways. It can refer to the United States, on the other, it can combine
with another word to form another meaning. In this case the company has explained that “My”
they use in this advertising is “My thuat” (Art) not referring to the United States.
205 Case Kymdan v Van Thanh, Uu Viet, supra note 56.
42
Lawful comparative advertising
preme People Court agreed that the advertising which provided inappropriate information misled consumers about the quality, features and usage of spring and polyurethane foam mattresses. In advertising, the information provided by traders must
be clear and truthful. Misleading advertising which leads customers to erroneous or
false notions adversely affecting their choices is unlawful.
b. It does not imitate another advertising product in order to mislead
customers
The Law on Competition has prohibited imitating another advertising product in order to mislead customers.206 Advertising contains information in the form of images,
actions, sounds, spoken or written languages, symbols, colours and lighting containing advertising details.207 Imitating an advertising product may be interpreted as using images, sounds, colours, symbols etc that are similar to those in the advertisements of other undertakings thus creating confusion about the products or about the
relationship between the traders. Nevertheless, the law does not specify the degree of
imitation. The relevant authorities will have to determine this based on the case, the
market and the specific circumstances.
c. It does not denigrate or defame other traders
The Ordinance on advertising prohibits advertising which offend the honour and reputation of, or infringes the lawful rights and interests of organizations and individuals.208 In addition, the Law on Competition provides that enterprises shall be prohibited from defaming another enterprise by any direct or indirect act of providing untruthful information which adversely impacts on the reputation, financial position or
business activities of such other enterprise.209
The denigration or defamation of other traders usually contains certain basic features.210 The essence of the infringement is providing false information which then
denigrates or defames other traders. The information may be related to the quality,
prestige, status, personal characteristics or business activities of traders; it must also
be untruthful. Such advertising results in adverse influence on the prestige, activities
and image of traders. The bad influences can be demonstrated statistically. For example, it might be possible to show an extraordinary decrease in turnover after the
206
Law on Competition, supra note 98, Article 45(2).
207
Law on Commerce, supra note 55, Article 105.
208
Ordinance on Advertising, supra note 51, Article 5(6).
209
Law on Competition, supra note 98, Article 43.
210
Le Danh Vinh, Hoang Xuan Bac, Nguyen Ngoc Son, supra note 102, p.152.
43
A Comparative Study of Comparative Advertising in Vietnamese and English law
advertising was published. Advertising which denigrates or defames traders must be
prohibited precisely because of its negative effects.
3.2.1.2
Special conditions
Besides these above mentioned conditions, the Law on Competition stipulates that
advertisers must not directly compare their own goods and services with those of the
same type of another business entity.211 The Law on commerce also prohibits advertisements which use the method of direct comparison of the production and business
operations of the entity being advertised with the production and business operations
of another business entity.212 These provisions state that only such direct comparative
advertising, not all kinds of comparative advertising, is prohibited. Under the prior
provisions on advertising, comparative advertising was indeed prohibited.213 In the
fourteenth draft of the Law on Competition, Comparative advertising was still prohibited.214 However, in its fifteenth draft and the Law on Competition, only direct
comparative advertising was banned.215 Based on the use of the new term “direct
comparative advertising” and comparing this to the previous law, it was concluded
that “indirect comparative advertising” is no longer prohibited.216 Thus, in addition to
the general conditions, advertisers need only not directly compare their goods or services with those of competitors. There is no legal definition of direct comparative
advertising and the term can be interpreted in different ways. It could be an advertisement in which the name or brand name of a competitor or its products are clearly
stated. If interpreted in this way, advertisements which uses general comparative
information and, say, compares the bleaching power of Tide with normal detergent
or the smell of Downy with that of other silk fragrant water but does not specify the
name of the competitor or its products are legal. In addition, an advertisement is a
direct comparative one if customers are able to recognize the competitor or the products referred to in it even though neither their name nor that of the products are mentioned.
211
The Law on Competition 2004, supra note 98, Article 45(1).
212
The Law on Commerce 2005, supra note 55, Article 109(6).
213
The Law on Commerce 1997, supra note 95, Article 192(2), also see Ordinance on Advertising, supra note 51, Article 5 and Decree No. 24 supra note 52 Article 3(7).
214
See the fourteenth draft of Competition law, Article 32(2).
215
The Law on Competition, supra note 98, Article 45(1).
216
See Phan Huy Hong, supra note 100, at p.44.
44
Lawful comparative advertising
In the KymDan case, the Council of Judges of the Supreme People Court found
that KymDan did not produce spring or poly-urethane foam mattresses but compared
the quality of its products with these products. Although it did not specify the name
of any competitors, its action violated the laws of advertising217. In its judgement, the
Court did not say whether KymDan’s advertisement was direct or indirect since all
comparative advertising was prohibited in the Commercial law 1997, which governed the case.
Some consider that direct comparative advertising is advertising in which images,
sign or words are used and this leads consumers to recognize the competing products
and producers which the advertised products are being compared to.218 These are
advertisements in which the advertisers claim the superiority of their product in
comparison with other products but do not specify which other products are the basis
of the comparison. But consider if it is claimed, in a detergent advertising that “Tide
bleaches whiter”. There are no images of other detergents and no words mention to
Omo or Viso or any other detergent. So, consumers could hardly say a comparison
was being made between Tide and other kinds of detergent.219Yet, consumers may
think that the other detergent on the market do not bleach clothes as white as Tide.
Thus consumers effectively understand that is comparing Tide to all kinds of detergent in the market. Lacking a legal definition, it is difficult to determine whether this
advertising is direct or indirect.
In order to support the prohibition of direct comparative advertisement, Commercial Law has a provision which prohibit advertisements of the business operation of
the entity being advertised by using an advertising product which breaches intellectual property rights; or using the image of another organization or individual in an
advertisement without the prior approval of such organization or individual.220.
217
This violated Article 192(3) and (5) of Law on Commerce 1997.
218
The ideas of Ms Dinh Thi My Loan, The head of the Competition Administration Department, answer the question of the criteria business entities should use on to know whether their
advertising violates the law. http://www.vnexpress.net/GL/Kinh-doanh/2005/06/3B9DF902/
219
Nguyen Thi Tram, Ap dung cac quy dinh cua Luat canh tranh ve quang cao so sanh, va
mot so van de phat sinh trong thuc tien (Application of Competitive Law provision on comparative advertising, and some practical issue, Tap chi kiem sat (Prosecution Journal) No.9 ( 05/2007)
pp. 48.
220
See Law on Commerce supra note 55, Article 109(8).
45
A Comparative Study of Comparative Advertising in Vietnamese and English law
3.2.2
General remarks
In practice, advertisements claiming the superiority of their product - for example
Omo saying it completely bleaches out all lubricant oil spots that other detergents
can not - are commonplace without any interference from the state authorities. Perhaps, the authorities assume that they are indirect comparative advertisements.
Moreover, Vietnamese undertakings seem unfamiliar with starting proceedings regarding violative advertising even if their name or brand name is being used. For
example, in an advertisement in Bac Kan and Binh Thuan’s newspapers, Viettel
compared its telephone costs with those of the VNPT for the purpose of highlight its
low cost. VNPT considered that Viettel had violated the rules on comparative advertising but it did not lay a complaint or start proceedings. Based on the current advertising laws and the actual practice of advertising, it is seen that Vietnamese law lacks
rules to define direct comparative advertising. In addition, the conditions legitimising
some comparative advertising are unclear and illogical. This can all have a bad affect
on the competitive environment between undertakings.
3.3
Comparative remarks
Together with a definition of Comparative advertising, English law also provides
conditions for determining whether a comparative advertisement is lawful or not.
Unlike English law, Vietnamese law does not present any special conditions for
comparative advertising except for the one rule that prohibits directly comparing the
advertisers’ own goods and services with those of the same type of another enterprise. Nevertheless, it is recognized that the general conditions for legal advertising
in Vietnamese law are fairly similar to the negative conditions for lawful comparative advertising under English law. For example, both English law and Vietnamese
law demand that comparative advertising not be false; should not mislead customers
or traders; does not denigrate or defame competitors or the trade marks or trade
names of a competitor. Nevertheless, some striking differences are found between
the laws of the two countries. In English law, the definition of misleading advertising
was defined in Regulation 3(2) of BPRs while it is not defined in Vietnamese law at
all. According to English law, misleading advertising includes not only misleading
acts or statements but also misleading omissions including omitting or hiding material information; or providing material information in a manner which is unclear, unintelligible or ambiguous; in Vietnamese law, misleading omissions are not mentioned.
In addition, an advertisement which breaches intellectual property rights; or uses the
image of another organization without the prior approval of such organization or
46
Lawful comparative advertising
individual is prohibited221 is prohibited in Vietnam. In English law, such use is permitted provided it satisfies the conditions that all comparative advertising must meet.
However, the most remarkable difference between English and Vietnamese law is
the difference in the positive conditions and the special conditions applied to comparative advertising. Vietnamese law stipulates that advertising which directly compares an advertiser’s goods and services with those of competitors is prohibited. This
means that Vietnamese law just looks at the comparative reference to determine
whether comparative advertising is lawful; if there is one, it is not. By contrast, English law provides particular conditions, inter alia, that an advertisement must objectively compare one or more material, relevant, verifiable and representative features
of the products compared, which may include price; meeting the same needs or being
intended for the same purpose. English law has no need to make any distinction between advertising which directly identifies competitors or the products of competitors and advertising which does this by implication only as this distinction is unnecessary. On the other hand, although Vietnamese law looks at the mode of the comparative reference to determine the legality of any comparative advertising, it does
not define the terms “direct” and “indirect” comparative advertising even though it is
necessary to do so to draw the boundary between lawful and unlawful comparative
advertising.
However, if a comparative advertisement is direct but it objectively compares one
or more material, relevant, verifiable and representative features of the products
compared, it can help consumers to more product information and also enhance
competition between the undertakings. So, the issue of comparative reference should
not determine the legitimacy of comparative advertising. Comparative advertising is
the right of a trader which originated in the right of freedom of speech and the right
to do business. Thus, the Vietnamese legislator could refer to the kinds of specific
conditions used by English law once adjusted to fit Vietnamese conditions and circumstances. What Vietnamese law needs to do is to build up a legal framework for
comparative advertising which is not based on the unhelpful issue of comparative
reference but on these principles: accuracy, truthfulness, objectiveness, and verifiability.
221
Ibid
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A Comparative Study of Comparative Advertising in Vietnamese and English law
4.
Sanctions applied for unlawful comparative
advertising
4.1
Sanctions applied for unlawful comparative advertising in English law
Comparative advertising which is lawful may enhance fair competition between undertakings and provide useful information to consumers. Yet, if comparative advertising does not satisfy the legal conditions and is, in other words, unlawful, it may
mislead traders and consumers, damage the reputation of competitors and affect consumer choice. Thus, it is necessary to set up sanctions to be applied to unlawful comparative advertising.
4.1.1
The enforcement authorities in English law and practice
The main means of dealing with comparative advertising disputes in the United
Kingdom is through industry self-regulation222. The various industry codes form an
extensive regulatory framework which complements the law in important respects.
Under the CAP Code and the BCAP,223 ASA is the body that supervises and regulates advertisements in broadcast and non-broadcast media (for example print, posters, cinema, direct marketing and online, such as banner and pop-ups ads). ASA’s
chief tasks are to promote and enforce high standards in marketing communications,
to investigate complaints, to identify and resolve problems through its own research,
to ensure that the system operates in the public interest and to act as the channel for
communications with those who have an interest in marketing communication standards. So, a trader or any other person can send his complaint on advertising to ASA,
ASA will consider whether the advertising is compatible with the regulatory codes. If
the complaint is upheld, ASA administers a range of sanctions against the offending
advertiser.
Darren Fitzgerald, “Comparative Advertising in the United Kingdom”, 19 E.I.P.R. (1997),
pp.709-714, at 709.
222
223
According to the Communication Act 2003, Ofcom has a duty to handle and resolve complaints about advertising content on radio and television, so from 2004, Ofcom has contracted out
the regulation of broadcast advertising content to a self-regulatory system under the banner of the
Advertising Standards Authority (ASA). Ofcom has passed all complaints it receives about
broadcast advertising directly to ASA(B). Also see Memorandum of Understanding between
Office of Communications (Ofcom) and the Advertising Standards Authority (Broadcast Limited) “ASA”B, May 2004.
48
Sanctions applied for unlawful comparative advertising
In addition to the self–regulation system regulated by ASA, the BPRs also provides specific rules on comparative advertising. These regulations are specifically
aimed at protecting a business that is a victim of certain types of unfair commercial
practices. According to BPRs, the OFT and TSS224 have a duty to proceed against
advertisers who violate these regulations. In exercising their powers, the enforcement
authority shall have regard to all the interests involved, in particular the public interest and the desirability of encouraging the control, by self-regulatory bodies, of advertisements225. The enforcement authority powers are used in practice only when
ASA has been unable to deal adequately with a complaint under their self-regulatory
systems.
Furthermore, the courts also have the power to give adjudications if OFT or TSS
decides to bring the case to the High Court. In addition, as mentioned in part 1 and
part 2, before the adoption of BPRs, comparative advertising was also regulated under the Trademark Act and tort law. So, where traders use the trademarks or trade
names or other marks of a competitor in a comparative advertisement which is contrary to honest practices in industrial or commercial matters; and without due cause
takes unfair advantage of, or is detrimental to, the distinctive character or repute of
the trade mark, the aggrieved party can make a claim in court. In addition to claiming
trademark infringement, the plaintiff can base his case in passing off, injurious falsehood or defamation.
Generally, ASA is the enforcement authority under the self–regulatory system
while the court and the OFT or TSS will be the enforcers under statute law.
4.1.2
4.1.2.1
Sanctions applied to unlawful comparative advertising
Disciplinary Sanctions226
ASA will consider whether an advertisement is compatible with the regulatory code.
If the complaint is upheld, ASA administers a range of sanctions against the offending advertiser. As a first step, the advertiser is asked to withdraw the advertisement
or to amend it. If the advertiser refuses to comply, further sanctions can be applied.
Firstly, ASA will publicize the name of offending advertiser on its website. Secondly, the violation is brought to the attention of the relevant media associations, which,
as a rule, will refuse to publish the disputed advertisement. Thirdly, the violator will
lose the trading privileges available through membership of advertising bodies and,
224
The BPRs, supra note 38, regulation 2 and regulation 13(2).
225
Ibid, regulation 13(4).
226
Sanctions applied to offending acts violating the self-regulation system are temporarily
called “disciplinary sanctions”.
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A Comparative Study of Comparative Advertising in Vietnamese and English law
in exceptional cases, can be expelled from them. Fourthly, pre-publication vetting by
ASA of all advertisements can be applied to an offender. This means that the ASA
may require persistent offenders to have some or all of their marketing communications vetted by the CAP Copy Advice team until the ASA and CAP are satisfied that
future communications will comply with the Code. Finally, ASA can refer the offender to the OFT who can then apply for an injunction.
4.1.2.2
Administrative Sanctions227
Where an enforcement authority considers that there has been or is likely to be a
breach of the criteria for a lawful comparative advertisement, it can seek an undertaking that the marketing will be stopped from anyone responsible for commissioning, preparing or disseminating it. If that is not given or is not honoured, the OFT can
seek an injunction from the Court to prevent its further appearance. The court, in
particular, the High Court may, on an application by the enforcement authority,,
grant an injunction on such terms as it may think fit to secure compliance with the
regulations. However, before granting an injunction the court shall have regard to all
the interests involved and in particular the public interest. The court may also require
any person against whom an injunction is granted to publish in such form and manner and to such extent as the court thinks appropriate for the purpose of eliminating
any continuing effects of the advertising (a) the terms of the injunction; and (b) a
corrective statement
4.1.2.3
Civil sanctions
The TMA 1994 prohibits the use of a mark in advertising which is identical to a registered mark.228 Section 10 (6) provides an exception for comparative advertising
where such use is ""for the purpose of identifying goods or services as those of the
proprietor or a licensee". However, liability will still be imposed if anything done is
contrary to honest practices in industrial or commercial matters; and without due
cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark. Trademark law also provides some sanctions against the infringer.229 The most common remedy is injunctive relief230. Injunctive relief is usual-
227
Sanctions applied to the advertiser violated the BPRs.
228
ss.10(1), 10(4) (d), TMA 1994. This is the category of infringement which will most likely
apply where comparisons are being made: W.R. Cornish, Intellectual Property (1996), p. 625.
229 TMA 1994 s.14(2) The remedies available to a registered trade mark owner for trade mark
infringement are: (i) an injunction; (ii) the delivery up for destruction or the erasure of the mark
from offending material229; and (iii) at the claimant’s option, damages or an account of profits.
230 Trademark Act s.14(2).
50
Sanctions applied for unlawful comparative advertising
ly granted at the discretion of the court, which will weigh up all the factors which are
relevant to the case before making an order. Relevant considerations may include the
conduct of the successful claimant and the infringing defendant both before and after
the infringement and whether the defendant is still trading at the time the order is
made. Sometimes an injunction will be coupled with other relief, such as damages in
respect of infringing acts which have already been performed. But an aggrieved party
have to prove how he was damaged by, for example, giving evidence about his profits and the defendant’s profits. The actual damages which the aggrieved party has
suffered, such as the sales it lost or the harm the infringing mark has caused to its
reputation and goodwill, are often difficult to prove because the aggrieved party must
show that it would not have suffered these losses but for the infringing action. Thus,
rather than seeking actual damages, people often claim against the profits made by
the other party as a result of its use of the infringing mark. Finally, the aggrieved
party can also request that the court order the other party to destroy its infringing
materials or deliver them to him.
In cases claiming in respect of passing off, injurious falsehood or defamation, the
remedies applicable are (i) damages; (ii) an injunction; and (iii) a declaratory judgment. However, to prove a case in passing off is not an easy task, a plaintiff must
show that (i) the products or services the plaintiff supplies to the public enjoy a particular “goodwill” in that they are recognised in the market to be distinctively associated with him, (ii) a misrepresentation which, it is reasonably foreseeable, will damage that goodwill, classically the misrepresentation that the defendant’s goods or
services are those of the plaintiff and (iii) actual damage to the plaintiff. In practice,
comparative advertising will not normally run the risk of passing off because the aim
of such advertising is precisely to distinguish the goods or services of the advertiser
from those of his competitor. Nevertheless, it is possible that a comparative advertisement might fail adequately to do so. One case in which this did happen was
McDonald’s Hamburgers Ltd v. Burger King Ltd.231 In this case Burger King had
advertised one of its hamburgers with the slogan, “it’s not just Big, Mac”. In this
case, the court concluded that a majority of those at whom the advertisement was
directed would assume that the “Big Mac” was available at Burger King as well. On
this basis Burger King were found to have passed off their product as produced by
McDonald’s.
In practice, the plaintiff in most cases related to comparative advertising usually
claims for trademark infringement or malicious falsehood. However, in order to con-
231
Ohly and Spence, supra note 2, p.8.
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A Comparative Study of Comparative Advertising in Vietnamese and English law
stitute malicious falsehood, three requirements must be satisfied.232 These are (i) that
there has been a falsehood. The defendant must have published words about the
plaintiff which were false, (ii) that it was made maliciously, and (iii) that the plaintiff
has suffered special damage which must have followed as the direct and natural result of the publication of those words. In order to establish special damage, it is sufficient to show that the published words were calculated to cause pecuniary damage to
the plaintiff in the objective sense of pecuniary damage being a likely result of the
publication. The court also affirms that to establish malice, it would be sufficient to
show that the defendant knew when he published the words that they were false, or
was reckless as to whether they were false or not, in the sense of not caring whether
the information conveyed was true or false. If malice is not established, it will not be
considered necessary to consider the issue of damages.
These sanctions can also apply to a comparative advertisement if it constitutes
defamation. In order for an action in defamation to lie a comparative advertisement
would have to contain a statement which might tend to harm the reputation of the
competitor so as to lower him or her in the estimation of the community or to deter
third parties from associating or dealing with him or her.
4.2
Sanctions applied to unlawful comparative advertising
in Vietnamese law
4.2.1
Enforcement authority
Pursuant to the Law on competition, a comparative advertisement in which an advertiser directly compares its goods or services with those of competitors is unlawful.
This is an unfair competitive practice and the Competition Administration Department has the right to deal with and impose fines in respect of this action233. The
Competition Administration Department (VCAD) is an organization under the Ministry of Trade and has the function of assisting the Minister of Trade in undertaking
the administration of fair competition.234
In addition, if comparative advertising is unlawful and cause damage, the aggrieved party can claim for civil damages in court proceedings.
232
Ibid, p.11.
233
Law on Competition, supra note 98.
234
Ibid, Article 2.4(b), also see Decree No.06/2006/ND-CP of January 9th on Functions, Duties, Powers and Organizational Structure of Competition Administration Department.
52
Sanctions applied for unlawful comparative advertising
4.2.2
4.2.2.1
Sanctions
Administrative sanctions
The main sanction which is imposed for an advertisement directly comparing the
goods and services of an enterprise with those of the same type of another enterprise
is a fine.235 A fine can range from fifteen million (15,000,000) VND up to twenty
five million (25,000,000) VND.236 A fine of from thirty million (30,000,000) to fifty
million (50,000,000) VND shall apply for this violation when the goods and services
in question are foodstuffs, food products, medical apparatus, preventive and treatment medicine for humans, veterinary drugs, fertilizer, animal feed, plant protection
agents, seeds or domestic animals, medical services or healthcare services237 or the
scale of the advertisement encompasses two or more provinces or cities under central
authority.238 In addition to fines, the violating enterprise can be obliged to issue a
public retraction.239
4.2.2.2
Civil sanctions
Pursuant to civil law, civil sanctions consist of (i) compelling termination of the infringement; (ii) compelling public rectification and apology; and (iii) compensation
for damages in a case where the aggrieved party sues for civil damages. The liability
to pay compensation for lost profits may be applied to the offending party if it is
proved that the unlawful comparative advertising harming the reputation, property or
other interest of the aggrieve party. This give rise to a liability to pay compensation
for non-contractual damages.240
This liability to pay compensation only arises if four conditions are satisfied. First,
there is actual damage to the plaintiff. Damage is the important factor when examining liability for compensation since if there is no damage, there can be no liability
and compensation will not be forthcoming. The damages consists of material and
mental damages. The material damages are the decreasing or declining turnover, loss
of income, profits and business chances and reasonable expenses needed to prevent,
235
Decree No.120/2005/ND- CP on Dealing with breaches in Competition section, Article 4.2
and Article 35.
236
Ibid, Article 35(1).
237
Ibid, Article 35(2a) and Article 10(2a).
238
Ibid, Article 35 (2b).
239
Ibid, Article 35(3) and Article 30(3).
240
Civil Code No. 33/2005/QH11 of 14 June 2005, Article 307, Article 604(1). This is similar
to the common law of torts.
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A Comparative Study of Comparative Advertising in Vietnamese and English law
restrict and repair damages. The mental damages are damages caused by harm to
honour, dignity or reputation. Damage thus essentially consist of the reasonable costs
of mitigating and remedying the damage; and compensation for loss of or reduction
in actual income.241 Secondly, there is an infringement. This infringing action in this
case is the unlawful comparative advertisement. Thirdly, there is a fault of the offending party. Fault here includes both intentional and unintentional fault. Finally,
there is a causal relationship between infringement and damages.
4.3
Comparative remarks
In English law, apart from the “discipline” sanctions applied by the ASA to advertising which violates the codes of advertising , the main sanctions applied to comparative advertising are administrative, civil and criminal sanctions in which civil sanctions play an important role. Unlike English law, Vietnam does not have a selfregulation system in respect of advertising and the main sanction applied to a violating action is an administrative one. Vietnamese law consider direct comparative advertising is an action that infringes economic order and the state needs to interfere in
and stop this infringement. A civil sanction is only involved when the aggrieved party claims compensation.
In English law, traders may choose any one or more of a range of measures to
protect their rights. They can complain to the ASA about unlawful advertising or
send their complaint to the OFT or TSS. In addition, based on TMA, they can take
civil proceedings against undertakings which unlawfully use their signs in comparative advertising. Furthermore, they can request compensation under tort law. By contrast, it seems that the aggrieved party does not have so many choices in Vietnamese
law. Advertising in which an advertiser directly compares its goods or services with
those of a competitor is classed as unfair competitive action. This action is regulated
by the Law on Competition which obviously provides for administrative sanctions.
Civil liability, particularly compensation for loss only arises in cases where the aggrieved party claims damages. Article 6 of decree 120 states that payment of compensation for loss shall be implemented in accordance with the civil law.242 It is unclear whether VCAD has the right to decide the amount of compensation to be paid
by the offending party, the determination of the amount of compensation being based
on civil law or whether it can only apply administrative sanctions which consist of a
fine and public retraction. If the latter, the aggrieved party would have to apply for
compensation in civil court. Pursuant to civil law, civil sanctions include compensa241
Ibid Article 611.
242
Decree No.120, supra note 235, Article 6.
54
Conclusion
tion, ordering termination of the infringement and ordering a public rectification and
apology. Nevertheless, the applicable provisions suggest that VCAD has the priority.243 When there unfair comparative advertising takes place, traders must first complain to VCAD. Based on Vietnamese current law, it is not clear that a request for
termination of the infringement can be taken to civil court. Nevertheless, pursuant to
the law in force before the enactment of the Law on Competition, an aggrieved party
could ask the civil court to apply civil remedies to the advertiser who infringed the
law on advertising. KymDan case is an illustration of this as the plaintiffs claimed
against the violation in civil court. The court judged that the advertising of KymDan
was unlawful and KimDan had to make a public apology to the plaintiffs for its misleading advertising and to rectify the contents of the advertisement.
5.
Conclusion
Comparative advertising, when truthful and non-misleading, is a useful source of
information to consumers, helps them in making rational purchase decisions and enhances market transparency. In addition, It is also an effective promotional tool for
the advertiser. Both Vietnamese and English law provide legal frameworks to regulate comparative advertising. They provide the conditions for legitimate comparative
advertising as well as the sanctions applied to the illegitimate.
On the conditions of lawful comparative advertising, Vietnamese and English law
shares some common features in both general and negative conditions. They are that
the advertising is not misleading, does not create any confusion, does not denigrate
or defame traders or the products of traders. On the specific conditions, English law
permits comparative advertising irrespective of whether it direct or indirect provided
that it satisfies certain conditions. On the other hand, Vietnamese law merely prohibits direct comparative advertising. English law with its laws, self-regulation system
and case law has provided a better framework for advertisers than does Vietnamese
law. It has realized that to prohibit comparative advertising is contrary to the right to
do business and freedom of speech and would deny the advantages provided by
comparative advertising. Vietnamese law, too, should not prohibit direct comparative
advertising. What it should do is, like English law, say that comparative advertising
243
Article 5 of Law on Competition provides that Where there is any difference between the
provisions of this Law and the provisions of another law with respect to a practice in restraint of
competition or unfair competitive practice, the provisions of this Law shall apply.
55
A Comparative Study of Comparative Advertising in Vietnamese and English law
is permitted if it satisfies certain conditions. If this were done, Vietnamese law would
also need to supplement the current provisions relating to comparative advertising.
First, it should give a definition of comparative advertising. Comparative advertising
means basically advertising which whether explicitly or by implication identifies a
competitor or a product offered by a competitor. In addition to general conditions, it
needs to add that such advertising should only compare products meeting the same
needs or intended for the same purpose and objectively focus on one or more material, relevant, verifiable and representative features of the products, which may include
price.
As to the sanctions imposed for unlawful comparative advertising, there are many
choices both as to enforcement authority and remedies for the aggrieved party in
English law while the choice in Vietnamese law is much more restricted. Vietnamese
law should clarify the respective roles of VCAD and the court when judging infringements of comparative advertising law. The law should give undertakings the
right to choose whether to complain to VCAD or start civil proceedings in the civil
court.
To sum up, it is necessary to permit comparative advertising due to its advantages.
However, a legal framework for such advertising should be erected on the basis of
balancing the benefits between trader and consumers to ensure a fair competitive
environment and market transparency.
56
Table of Statutes and other Legal Instruments
European Community Directives
1. Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States
concerning misleading advertising O.J No. L 250, 19/09/1984 p.17 – 20.
2. Directive 97/55/EC of European Parliament and of the Council of 6 October 1997
amending Directive 84/450/EEC concerning misleading advertising so as to
include comparative advertising O.J No. L290, 23/20/1997, p.18- 23.
3. Directive 2006/114/EC of the European Parliament and the Council of 12
December 2006 concerning misleading and comparative advertising O.J No L376,
27/12/2006.
4. Directive 2005/29/EC of the European Parliament and of the Council of 11 May
2005 concerning unfair business- to – consumer commercial practices in the
internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC,
98/27/EC and 2002/65/EC of the European Parliament and of the Council and
Regulation (EC) No 2006/2004 of the European Parliament and of the Council
(“Unfair Commercial Practices Directive”).
5. First Council Directive 89/104/EEC of 21 December 1988 to approximate the
laws of the Member States relating to trade-marks, (OJ L40,11.2.1989, at
1).Directive as last amended by Decision 92/10/EEC (OJ L 6, 11.1.1992, at 35).
6. Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks
(Codified version) (OJ L 299, 8.11.2008, p. 25–33).
7. Directive 97/7/EC of the European Parliament and of the council of 20 May 1997
on the protection of consumers in respect of distance contracts.
8. Commission Notice on the definition of relevant market for the purposes of Community Competition Law, (OJ. C372/5).
9. Directive 89/552/EEC concerning the pursuit of television broadcasting activities
(O.J No. L 298, 17/10/1989, p.23).
10. Directive 97/36/EC amending Directive 89/552/EEC (O.J No.L 202, 30/07/1997,
p.60).
57
National Legislations
England
Town and Planning Act 1990
Trademark Acts 1994
Broadcasting Acts 1996
Enterprise Acts 2002
Communications Act 2003
The Control of Misleading Advertisements Regulations 1998 (amended 2000, 2003)
The Busines Protection from Misleading Advertising Regulations 2008
The Consumer Protection from Unfair Trading Regulations 2008
British Code of Advertising, Sales Promotion and Direct Marketing 11th edn 2003
Television Advertising Standards Code November 2004
Radio Advertising Standards Code November 2004
Vietnam
Constitution (1992) of the Socialist Republic of Vietnam
Civil Code (No. 33/2005/QH11 of 14 June 2005)
Civil Procudure Code (No.24/2004/QH 11 of 15 June 2004)
Commercial Law (No.05/1997/QH 9 of 10 May 1997) (has been repealed)
Law on Competition (No.27/2004/QH 11 of 03 December 2004)
Commercial Law (No.36/2005/QH 11of 27 June 2005)
Intellectual Property Law (No.50/2005/QH 11 of 29 November 2005)
Ordinance on Advertising (No.39/2001/PL-UBTVQH 10 of 16 November 2001)
Decree No.194/ND- CP on advertising activities on Vietnamese Territory of 31
December 1994.
Decree No.24/2003/ND-CP of the Government dated 13 March 2003 providing
detailed regulations for implementation of the Ordinance on Advertising.
Decree No.175/2004/ND-CP of the Government dated 10 October, 2004 on
Sanctioning Administrative violations in Trade domain.
Decree No.116/2005/ND-CP on Competition providing detailed regulations for
implementation of a number of articles of the Law on Competition(No.116/2005/ND
CP of 15 September 2005).
Decree No.120/2005/ND-CP on Dealing with breaches in Competition section
(Decree No. 120/2005/ND/CP of 30 September 2005).
Decree No.06/2006/ND- CP on functions, duties, powers and organizational
structure of Competition Administration Department (Decree No.06/2006/ND- CP of
9 January 2006).
58
Decree No. 37/2006/ND – CP of the Government providing detailed regulations for
implementation of Commercial Law with respect to comercial enhencement
activities (No. 37/2006/ND – CP of 4 April 2006).
Circular No.79/2005/TT- BVHTT of the Ministry of Culture and Information
amending and adding to Circular 43/2003/ TT – BVHTT) guiding implementation of
Decree 24/2003/ND-CP dated 13 March 2003 (No.79/TT/- BVHTT of 8 December
2005).
Circular No.43/2003/TT- BVHTT on Advertising providing guidelines for
implementation of Decree 24/2003/ND-CP of the Government dated 13 March 2003
providing detailed regulations for implementation of the Ordinance on Advertising
(No. 43/2003/TT- BVHTT, of 16 July 2003).
59
Table of Cases
Court of Justice of the European Communities
Case Case C-112/99 Toshiba Europe GmbH v Katun Germany GmbH, [2001] ECR
I-07945 (“Toshiba”Case).
Case C-44/01 Pippig Augenoptik GmbH & Co. KG v Hartlauer Handelsgesellschaft
mbH and Verlassenschaft nach dem verstorbenen Franz Josef Hartlauer [2003]
ECR I-3095 (“Pippig Augenoptik”Case).
Case C-356/04. Lidl Belgium GmbH & Co. KG v Etablissementen Franz Colruyt
NV.[2006] ECR I-08501 (“Lidl/Colruyt”Case).
Case C-59/05 Siemens AG v VIPA Gesellschaft für Visualisierung und Prozeßautomatisierung mbH [2006] ECR I- 02147 (“Siemens”Case).
Case C-381/05 De Landtsheer Emmanuel SA v Comité Interprofessionnel du Vin de
Champagne and Veuve Clicquot Ponsardin SA. [2007] ECR I-3115 (“Champagne”
Case).
Case C-533/06 O2 Holdings Limited and O2 (UK) Limited v Hutchison 3G UK
Limited, [2008] not yet reported (“O2 Holdings”Case).
English Case
Bismag Ltd v. Amblins (Chemists) Ltd [1940] EWCA, Ch.D 667.
Compaq Computer Corporation and Another v. Dell Computer Corporation Limited
and Another [1992] EWHC Ch.D.
Barclays Bank Plc v RBS Advanta Times [1996 ](Ch D).
Richard Butler v. Derby City Council [2005] EWHC 2835 (Admin).
O2 Holdings Limited, O2 (UK) Limited v. Hutchison 3G Limited [2006] EWHC 534
(Ch).
L'Oreal SA and Others v. Bellure NV and Others [2006] EWHC 2355 (Ch).
L'Oreal SA and Others v. Bellure NV and Others [2007] EWCA Civ 968.
Vietnamese Case
Case Kim Dan v Van Thanh,Uu Viet, Quyet dinh giam doc tham cua Hoi dong tham
phan Toa an nhan dan Toi cao (the review judgements of the council of judges of the
Supreme Peope Court No.20/2003/DS - GDT, June 23rd 2003 ) 2003- 2004.
60
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