Association of National
Advertisers
The Legal Landscape
of Comparative Claims in
Global Advertising
Felix Hofer – Italy
Brinsley Dresden – United Kingdom
Peter LeGuay -- Australia
Valdir Rocha – Brazil
Moderator: Douglas Wood – United States
The United States
Model
United States
Lanham Act §43(a)
… any … false or misleading
representation of fact which …
misrepresents the nature,
characteristics, qualities … of his
or her or another person’s goods
... shall be liable in a civil action
…”
U.S. Exception:
Comparative Advertising
• Section 43(c)(4) provides
an exception for:
– “Fair use of a famous mark by
another person in comparative
commercial advertising or
promotion to identify the
competing goods or services of
the owner of the famous mark.”
The Australian
Model
What is misleading and deceptive
conduct?
• Section 52 (1)
“a corporation shall not, in trade
or commerce, engage in conduct
that is misleading or deceptive or
is likely to mislead or deceive”
False or misleading representations
under Section 53
• Section 53 sets forth specific types of
prohibited conduct that are subject to
prosecution by the ACCC as a criminal offence:
• Falsely represent that goods are of particular
standard, quality, value, grade, composition, style
or model or have had a particular history or
particular previous use;
• Falsely represent that goods are new;
• Represent that goods or services have
sponsorship, approval, performance,
characteristics, accessories, uses or benefits
they do not have; or
• Make a false or misleading representation with
respect to the price of goods or services.
Personal Liability for Violations of
the Trade Practices Act
If a person (including employees or directors
of a corporation) is found to:
• aid, abet, counsel or procure a
contravention;
• induce a contravention;
• be in any way directly or indirectly
knowingly concerned in a contravention;
• be a party to a contravention; or
• conspire to effect a contravention,
then that person can potentially be
personally liable for civil or criminal
liability.
Consequences of a Breach of the
Trade Practices Act
• Interlocutory injunction to stop campaign;
• Final injunction proceedings including damages and
legal costs;
• Adverse publicity, disrupted production
timetables, lost media bookings, lost clients;
• Strict compliance programs, corrective
advertising, ACCC always aware; and
• For s53 civil damages and risk of criminal
penalties:
• Corporation – up to $1.1 million;
• Individuals –up to $220,000.
Case Study
Energizer Australia v Gillette
Australia
• In November 2001 Gillette aired
the “Bunny” commercial,
representing Duracell alkaline
batteries outstripping the
performance of 3 other bunnies
representing Eveready Super Heavy
Duty Carbon Zinc batteries
(Eveready SHD batteries).
Energizer Australia Pty Ltd v Gillette Australia
Energizer Australia v Gillette Australia
• Energiser sought an injunction, claiming
that the comparison was unfair because (1)
it suggested that the Eveready SHD
batteries were the best batteries
Energiser had to offer, (2) failed to
mention the substantial price difference
between Duracell alkaline batteries and
Eveready SHD batteries and (3) failed to
disclose that the Eveready SHD batteries
are only the fifth most powerful battery
in Energiser’s range.
Energizer Australia v Gillette
Australia
• Gillette providing 3 modified
versions of the “bunny” ad
during the course of the
proceedings without admitting
fault
Energizer Australia Pty Ltd v Gillette Australia
Energizer Australia v Gillette Australia
• The primary judge held that the “bunny”
ad contravened the Trade Practices Act
because:
• the Eveready SHD battery was only the
fifth most powerful battery in
Energizer’s range;
• the ad did not reveal there was a
substantial price difference between
Duracell alkaline batteries and
Eveready SHD batteries; and
• the ad did not adequately identify the
brand of battery to which Duracell
batteries were being compared.
Energizer Australia v Gillette Australia
• On appeal, the Full Court of the Federal Court held
in relation to the third modified version of the
“bunny” ad:
• the Eveready SHD batteries are a competitor
of the Duracell alkaline batteries and the
comparison was between the Duracell alkaline
batteries and the Eveready SHD batteries;
• there is no basis under the Trade Practices Act
to regard comparative advertising as an
inherently disreputable form of commercial
conduct, to be view with suspicion by the
Courts;
Energizer Australia v Gillette Australia
• provided the factual assertions are not untrue,
or misleading half-truths, an advertiser can
lawfully compare a particular aspect of its
product or service favourably with the same
aspect of a competitor’s product or service; and
• the ad was not misleading in failing to disclose
that Energiser has a comparable battery to
that of Gillette or other criteria by reference
to which the batteries might be compared.
Target
The Brazilian
Model
Brazilian Self-Regulating
Advertising Code
“Article 32 - In view of the modern
international trends and in compliance with
the applicable rules of the Industrial
Property Code (Law no. 5772, of December
21, 1971), comparative advertising shall be
accepted, provided that it conforms to
the following principles and limits:
a) its primary purpose shall be the
clarification or consumer’s protection;
Brazilian Self-Regulating
Advertising Code
b) it shall have as basic principle the
objectiveness of the comparison since
subjective data, psychological or
emotionally-based data does not
constitute a valid comparison basis for
consumers;
c) the purported or implemented
comparison shall be capable of being
supported by evidence;
Brazilian Self-Regulating
Advertising Code
d) there shall be no confusion between the
products and competitor’s brands;
e) there shall be no unfair competition,
denigration of the product’s image or
another company’s product;
Brazilian Self-Regulating
Advertising Code
f) there shall be no unreasonable use of
the corporate image or goodwill of third
parties;
g) whenever the comparison is made
between products with different prices
such circumstance shall be clearly
indicated in the advertisement.
The Brazilian Switch
The Brazilian Switch
The Brazilian Switch
The Brazilian Switch
The European
Model
Defining Comparative Advertising
Directive No. 97/55
“…any advertising, which
explicitly or by implication
identifies a competitor or goods
or services offered by a
competitor".
Directive 97/55
Explicitly allows comparative
advertising provided it:
– is not misleading,
– compares goods or services
meeting the same needs or
intended for the same purpose,
– objectively compares relevant,
verifiable and representative
features of goods or services
(included price),
Directive 97/55
Explicitly allows comparative
advertising provided it:
– for products with designation of
origin, relates to products with
the same designation,
– does not take unfair advantage
of the trademark or other
distinguishing signs of a
competitor,
Directive 97/55
Explicitly allows comparative
advertising provided it:
– does not present goods or
services as imitations or replicas
of goods or services bearing a
protected trademark or trade
name.
Directive 97/55
Explicitly allows comparative
advertising provided it:
– does not create confusion in the
marketplace,
– does not discredit or denigrate
the trademarks, trade names or
other distinguishing signs of a
competitor,
Sunday Mirror
3
vs.
British Airways vs. Ryanair – 2000
Round One
• The Advertising
Standards
Authority, UK’s
self-regulatory
body, later
upheld a
complaint by
the public
against the
advertisement
British Airways vs. Ryanair – 2000
Round Two
• BA accused
Ryanair of
malicious
falsehood
• High Court:
‘Honest
comparative
advertising’
• BA had to pay
£60,000 to
Ryanair to cover
50% of their legal
expenses
Sabena vs. Ryanair – April 2001
• “Welcome Ryanair and its rock
bottom prices. Bye-Bye Sabena and
its exorbitant fares”.
• President of Commercial Court
found Ryanair campaign to be
misleading and disparaging.
• Cease and desist order was granted
with a penalty of 4,000,000 BEF for
future violations.
• Notice about the order was required
to be published in four national
newspapers and on Ryanair’s
website.
Lufthansa vs. Ryanair - March 2002
• Lufthansa obtained a temporary injunction
against Ryanair’s campaign through a First
Instance Court
• Campaign advertised low cost flights from
Frankfurt – Hahn and compared with
Lufthansa's flights from Frankfurt – Main
• Court found ads misleading since Hahn is
120KM from Frankfurt.
• In 2003, a Hamburg Appeals Court
overturned the decision saying that all the
carrier must do is clearly indicate the
location of the airport.
Alitalia vs. Ryanair – Spring 2003
• “Alitalia pretends to offer low fares in
Europe! Don’t make me laugh !!!”
• “Pay at least 97% less than Alitalia’s socalled low fares.”
• “Goodbye Alitalia” was depicted outside
on Ryanair planes
• Alitalia filed a complaint with the
Institute for Advertising Self-Regulation
saying:
– illicit comparison
– denigrating, incorrect and misleading
– non-homogenous elements were compared
Alitalia vs. Ryanair – Spring 2003
• Jury findings:
– Ryanair failed to provide evidence that
publishing house contracts did not
contain the standard clause biding
Ryanair to advertising self-regulation
codes.
– No jurisdiction could be invoked,
however, with respect to the messages
depicted outside on Ryanair’s planes
because they fell outside the selfregulation system.
Alitalia vs. Ryanair – Spring 2003
• Jury findings:
– Comparison between low-cost
tickets and business class fares,
i.e., “pay at least 97% less”,
deemed misleading.
– Statement “Don’t make me laugh”
considered deceptive in context.
– Cease and desist order issued.
– Ryanair also ordered to announce
ruling in leading national
newspapers.
Pepsi
Punching at Coca-Cola
Coca-Cola v. Pepsi Cola
(Illegitimate Basis of Comparison)
Coca-Cola v. Pepsi Cola
(Illegitimate Basis of Comparison)
Resources
gala-marketlaw.com
Questions
Political
Correctness
Malaysia
China
United States
(Happy Cows)
United Kingdom