Businesses will always be seeking ways to gain an advantage over their competitors, and online marketing initiatives are likely to play a vital part in a business’ commercial strategy. At the same time, the registration and enforcement of a business’ intellectual property rights will often be a crucial element of establishing and protecting a brand identity. The worlds of intellectual property rights and competitor marketing will often collide when one business seeks to promote their own product or service by directly comparing it to the product or service of an identified competitor, in what is known as “comparative advertising”.
What is Comparative Advertising?
Quite simply, comparative advertising (as originally defined by the Comparative Advertising Directive) is any marketing strategy in which a business’ product or service is presented in comparison to a competitor’s product or service. It can identify the competitor, or the goods or services offered by the competitor, either explicitly or by implication.
Restrictions on Comparative Advertising
Provided that the relevant conditions are met, comparative advertising is an entirely lawful method for a business to use when advertising its products or services. As you may expect, the main conditions that need to be met are intended to ensure that the advertising in question is not misleading in any way, and does create confusion between the products or services of the advertiser and those of the competitor.
For example, if comparisons are made with a competitor’s product, the advertisement can only objectively compare one or more “material, relevant, verifiable and representative” features of the goods or services (which may include price), and the advertisement can only compare products or services that meet the same needs or are intended for the same purposes.
Trademark and copyright issues
Although many examples of comparative advertising only refer to their competitor by implication (for example, by comparing their product to that of an unnamed ‘leading brand’), some will explicitly refer to their competitor by name.
This type of comparative advertising will very often involve the use of a competitor’s registered trademark in the advertisement, which would normally give rise to a claim for trademark infringement against the advertiser. However, the relevant trademark legislation recognises the legitimate consumer benefits that comparative advertising can offer, and so an exception is provided for the use of a competitor’s trademark in lawful comparative advertising.
That said, there is no express exception in relation to any infringement of a competitor’s copyright, and so the use of a competitor’s logo (or other copyrighted images) is still best avoided in comparative advertising.
Risk of trademark infringement
Even though use of a competitor’s trademark is permitted in lawful comparative marketing, explicitly referring to a competitor by name is almost certain to increase the likelihood of a challenge by the competitor, who may well seek to argue that the comparative advertising exceeds what is allowed.
The risk of using a competitor’s trademark in comparative advertising was recently highlighted in the High Court case of Gibraltar (UK) Ltd v Viovet Ltd, which related to a dispute between veterinary nutraceutical manufacturers and suppliers.
In that case, the claimants owned trademarks for the brand name “VetPlus” in respect of their well-established veterinary nutraceutical products, which are primarily sold through veterinary practices, usually following a consultation and recommendation by a vet. The defendant produced its own-brand veterinary nutraceutical products, which it sells through its website alongside third-party products, including VetPlus products.
Between August 2021 and June 2022, the defendant ran various advertising campaigns on its website that initially offered VetPlus products for sale, but when a customer selected one of the VetPlus products, they were presented with an option which included text stating either “Save £[x] per day”, “Swap and Save £[x]”, or “Try something new”. If the customer selected any of these options, they would be taken to the defendant’s own-brand products instead.
Implied comparisons
The High Court found that the online adverts were comparing more than just the price of the products, and that the option for an alternative product for a cheaper price would be understood by the average customer as meaning that the products were comparable in nature, quality and efficacy.
The High Court concluded that the average consumer would likely be selecting the VetPlus products on the recommendation of a vet following a consultation, and as such, if an advertisement were to pop up following the selection of the VetPlus product saying “swap and save” (or equivalent wording), it would be likely that the consumer would assume that the products were interchangeable.
A risky marketing strategy
In the Gibraltar (UK) Ltd v Viovet Ltd case, the defendant no doubt considered that it was only comparing the prices of their own-brand products with the VetPlus veterinary nutraceutical products, but the case is a cautionary reminder that not only must comparative advertisements only compare products or services that meet the same needs (or are intended for the same purposes), but they must also not impliedly compare other characteristics, such as quality and efficacy, without appropriate supporting evidence.
Ultimately, any competitor may seek to challenge the assertions made in an advertisement if they consider that the advert is misleading to the public, but comparing a product to that of a competitor (especially if that competitor is explicitly named) significantly increases the likelihood of such a challenge.
At the same time, trademark legislation is intended to prevent trademarks from being infringed in ways that take unfair advantage of, or which seek to ride on the coat tails of, successful and established brands. Therefore, when comparative advertising uses a competitor’s trademark it will likely give rise to a claim against the advertising party for trademark infringement, unless all of the express and implied comparisons can be objectively justified and supported.
This latest court decision acts as a reminder to businesses of the importance of carefully considering the legislation and rules that govern comparative advertising when deciding the best marketing strategy for promoting their goods and services, as well as the dangers of getting this wrong.
For more information on this or any other issue relating to intellectual property disputes, please contact Michael Axe by emailing Michael or by calling him on +44 (0)1628 502448.
This article is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this article.