Our commercial world generally consists of a free market system which is fueled in large part by competition. Rapidly advancing technology has provided businesses with an arsenal of new and powerful advertising tools by which to reach consumers. In an effort to secure market presence and share, businesses are turning with increasing frequency to comparative advertising. This kind of “in your face” advertising is almost always provocative and often controversial. What are the roots of comparative advertising, the general principles that govern its use, and the circumstances under which it may present problems?
Where Are We on Comparative Advertising and How Did We Get Here?
Comparative advertising is advertising that uses a direct comparison with your competitor’s products or services in an effort to promote the sale of your product or service. The advertising can be general in nature, or can focus on one or more characteristics of the compared product or service. To make the point of superiority, comparative advertising often involves the direct use of your competitor’s copyright-protected material or trademark. By doing so, it cuts to the core of the goodwill for which your competitor has invested substantial funds and resources. It, in effect, is the commercial equivalent of “fighting words.”
There was a time when comparative advertising generally was thought to be bad form. This genteel approach gave way to harder-edged competition a long time ago, and current thinking is that, when used properly, comparative advertising is a good thing because it provides potentially useful information to consumers and lowers prices.
What Are the General Rules Governing Permissible Comparative Advertising?
The display of a competitor’s trademark, coupled with a direct factual comparison of the competitive products or services, is the form comparative advertising most often takes. The use of comparative advertising is governed by the body of law pertaining to copyrights, trademarks, and unfair competition. As a general rule, it is not well advised to use a competitor’s copyright-protected material in comparative advertising. Copyright-protected material includes your competitor’s own advertising materials. Therefore, use of such material for a competitive commercial purpose usually is presumed to be a wrongful infringement of your competitor’s copyright.
On the other hand, there is no outright prohibition on your use of your competitor’s trademark in advertising. Indeed, there may be circumstances where the only effective way to make a point in advertising is through a direct comparison that specifically identifies your competitive product or service through use of a trademark. While permissible to some degree, your right to engage in this form of advertising is not without limits.
To be legally permissible, your use of your competitor’s trademark in comparative advertising (1) must not be likely to cause consumer confusion as to the source or sponsorship of the products or services advertised, and (2) must be truthful and accurate. While these criteria are relatively simple to state, they are challenging to apply in a situation where the stage has been set for a dispute.
The mere display of your competitor’s trademark in an advertisement, sometimes referred to as a nominative use, would seem both to be innocuous and to meet the criteria. However, this isn’t necessarily the case. Display, alone, may suggest sponsorship, at least as perceived by your targeted competitor whose trademark is used.
The display of your competitor’s trademark, coupled with comparative statements that are in the nature of “puffing” or opinion, also would seem to be innocuous and to meet the criteria. Again, this isn’t necessarily the case. While consumers are presumed to be capable of seeing through “puffery,” if your statements appear to state objective analysis but are demonstrably false, then the advertising may not be permissible. For example, the use of a Coca-Cola® product in a Pepsi® commercial stating that “9 out of 10 consumers prefer the taste of Pepsi®” may cross the line. Although taste is a matter of opinion, the statement about the number of consumers is objectively measurable and, unless supported by a fair survey, may be demonstrably false. A targeted competitor, such as Coca-Cola® in this example, may be strongly motivated to demonstrate the falsity.
Unless this advertising meets both criteria, it probably is improper and impermissible, and it is likely to draw a strong response from a targeted competitor.
What Considerations Should be Taken into Account When Using Comparative Advertising?
In deciding whether to use comparative advertising, you should consider the following:
- Copyright-protected material of your competitor should not be used.
- Care must be taken to make certain that the facts presented are demonstrably objective, truthful, and accurate. Any falsity or inaccuracy will create a risk of both conflict and liability.
- Care also must be taken to make certain that there is no suggestion that your targeted competitor has sponsored or authorized the advertisement. An affirmative disclaimer of sponsorship or relationship can be an effective means of helping to avoid consumer confusion.
- Your comparative advertisement should be evaluated both on the basis of its literal content and, importantly, the general impression it makes or will make to a consumer. An advertisement that is literally true nonetheless may create a false or confusing impression.
- By making use of your competitor’s trademark, your comparative advertisement is advertising your competitor’s products or services.
- By engaging in comparative advertising, you are inviting a comparison of your goods or services by competitors and others.
Conclusion
Comparative advertising appears to have become a permanent part of the commercial world. Great care, though, must be taken in using it. Targeting your competitor with this kind of a challenge must be spot-on proper, or you will open yourself up to potential liability. As Ralph Waldo Emerson said, “If you shoot at a king, you must kill him.” If your advertising misses the “proper” mark, it almost certainly will produce a “high-stakes,” unpleasant, and costly commercial dispute with an angry competitor.
For further information regarding the issues described above, please contact Donalt J. Eglinton.
