Comparative advertising can be an effective marketing tool, but it’s important to tread carefully when devising your ad campaign in order to ensure you don’t fall foul of intellectual property law. Check out our guide below for an introduction to comparative advertising and the applicable rules.
What is comparative advertising?
Comparative advertising is a form of advertising that compares the products or services of a business to those of a competitor, either explicitly or by implication.
What is an example of comparative advertising?
“Basket of goods” advertisements are a good example of comparative advertising. These types of adverts, commonly used by supermarkets, feature a basket of items available from the advertiser’s store and show them costing less than a basket of the same items available from a competitor.
Is comparative advertising legal?
Yes, comparative advertising is legal. However, complex rules apply regarding what comparisons may be drawn. This is an area that has been subject to a lot of intellectual property disputes, so care must be taken to ensure that advertisements comply with applicable law.
What is the Comparative Advertising Directive?
The Comparative Advertising Directive is an EU directive, introduced to harmonise the laws on misleading and comparative advertising throughout Europe. The aim of the directive is to protect traders and consumers against misleading advertising and its consequences.
The Comparative Advertising Directive was implemented in the UK by the Business Protections from Misleading Marketing Regulations 2008 (the BPRs). The BPRs reproduced certain provisions of the Comparative Advertising Directive and also introduced some additional provisions (see below for further details).
The Unfair Commercial Practices Directive (UCP Directive) is also relevant to comparative advertising. The UCP Directive governs unfair business-to-consumer commercial practices, including advertising, and was implemented in the UK by the Consumer Protection from Unfair Trading Regulations 2008 (CPUT).
What are the main risks associated with comparative advertising?
Given the nature of comparative advertising, it is likely that advertising businesses will face pushback from the competitors they feature in their ads and there are several ways in which businesses (or consumers) may seek redress, including actions for:
- Breach of the BPRs
- IP infringement (trade mark and copyright)
- Trade libel
- Malicious falsehood
- Passing off
Businesses and consumers may complain to the Advertising Standards Authority (ASA) if they suspect that an advertisement breaches the UK Code on non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code).
Businesses and consumers may seek to enforce the BPRs or CPUT Regulations in the courts; however, in the UK, such complainants cannot themselves take direct action in the courts. Trading Standards Services (TSS), the Competition and Markets Authority (CMA) or other consumer protection agencies may initiate proceedings on behalf of businesses and consumers, for example by seeking an injunction prohibiting the publication of unlawful comparative advertising.
Trading Standards Services (TSS) may require that all other options for dealing with the complaint have been exhausted before they are willing to pursue the issue in the courts, including via the ASA. However, this can be a ‘chicken and egg’ scenario, as the ASA will not investigate any complaint that has or will be the subject of legal scrutiny. If an advertisement is found to breach the CAP Code, the advertiser may be asked to withdraw or change it, which can be costly and result in adverse publicity. If the ASA is not satisfied with the steps the advertiser takes to comply, it may also refer the matter to TSS or the Office of Fair Trading (OFT).
There are a number of sanctions that businesses may face if a comparative advertisement is found to breach the rules and the consequences can be severe.
Injunctions may be granted in trade mark proceedings, though the courts appear reluctant to enforce these and it is more likely complainants will achieve success through the enforcement of the BPRs or CPUT Regulations.
Under the BPRs:
- An individual trader who engages in misleading advertising may face a fine, a sentence of up to 2 years in prison, or both.
- A corporate body will be guilty of an offence if it can be proved that the offence was committed with the consent or connivance of an officer or that the offence was due to the officer’s neglect. The corporate body may be fined, and the officer may face a fine, a sentence of up to 2 years in prison, or both.
What comparative advertising guideline should your business follow?
The Comparative Advertising Directive sets out a number of conditions under which comparative advertising is permitted. Comparative advertising is permitted when the following conditions are met:
- It is not misleading within the meanings set out in the Directive and the UCP Directive.
- It compares goods or services meeting the same needs or intended for the same purpose.
- It objectively compares one or more material, relevant, verifiable, and representative features of those goods and services, which may include price.
- It does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities or circumstances of a competitor.
- For products with designation of origin, it relates in each case to products with the same designation.
- It does 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 does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name.
- It does not create confusion among traders, between the advertiser and a competitor or between the advertiser’s trade marks, trade names, other distinguishing marks, goods or services and those of a competitor.
As mentioned above, the CAP Code applies to comparative advertising, and Rule 3 of the CAP Code sets out certain rules around misleading advertising that should also be considered when creating a comparative advertising campaign.