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Comparative advertising – the risks

Comparative advertising is a form of advertising where a supplier compares its product favourably against the product of a competitor.  It is not that common as it can be risky because:

  • The comparison has to be absolutely accurate – many examples of comparative advertising that come to Court fail to do this; and
  • Your competitor will absolutely hate your ad and will immediately contact their lawyer demanding that your advertising campaign be stopped. If any aspect of your ad could be construed as being misleading, they are likely to send you a legal letter of demand and may well sue you.

The Australian Consumer Law (ACL) prohibits conduct in trade or commerce that is misleading or deceptive or is likely to mislead or deceive.  The ACL gives persons such as competitors the right to sue for breach of the ACL.  I discuss below three Court cases that involved comparative advertising and conclude with suggestions if you did wish to engage in such advertising.

McDonalds v Hungry Jack’s

Everyone may be familiar with the case of McDonalds v Hungry Jack’s where the Federal Court held that BIG JACK did not infringe McDonald’s trade mark registration for BIG MAC.  Another aspect of the case was comparative advertising in two Hungry Jack’s’ television commercials.  The ads made a clear reference to McDonalds (eg “Someone’s suing Hungry Jacks”) and then said that the BIG JACK burger has “25% more Aussie Beef”. 

The trouble was that 25% referred to the pre-cooked meat patties, whereas once the patties were cooked the difference in weight between them shrank to between 12.5% and 15.3% (yes – expert witnesses had to measure them).  The Judge considered that consumers would understand the ads to mean that the cooked weight of the meat in the hamburgers was 25% greater and held that the ads were misleading in breach of the ACL. 

This is what I mean by “absolutely accurate” – not accurate sometimes or in some circumstances but true as understood by consumers of that product.

Self Care v Allergan

Another recent case involving comparative advertising was Self Care v Allergan which went all the way to the High Court, our highest court.  Allergan is the supplier of Botox – an injectable product used to lessen the appearance of wrinkles.  Self Care produced anti-wrinkle creams called Inhibox which claimed to be an “instant Botox® alternative”. 

The issue was what did “instant Botox® alternative” mean? The trial Judge held that the phrase was not misleading because both products had a similar purpose – to reduce the appearance of wrinkles.  To support this claim, Self Care produced evidence, including scientific studies.  A claim about product benefits that will be shown only once the product is used is about a future matter.  The ACL requires that the supplier must have “reasonable grounds” for making a claim about a future matter if it is to avoid it being held to be misleading. 

However, on appeal, the Full Court held that consumers would have understood “instant Botox® alternative” to mean that Inhibox would have a long term effect that was comparable with Botox – which was not true and therefore misleading.  The High Court overturned this finding, stressing  that the representation had to be interpreted in context.  The context included the facts that Inhibox is a cream purchased directly by the consumer and applied at home, whereas Botox is supplied and injected by health professionals; Botox is more expensive than Inhibox; and the Inhibox packaging said that it would “last for hours” (although it also made statements like “reduces wrinkles long term”). The High Court held that reasonable consumers would not believe that Inhibox would last as long as Botox – this was “too good to be true”. 

The Self Care case is somewhat unusual in that the High Court took a fairly robust view of what consumers would understand and they would not believe an interpretation of a claim that was too good to be true.  The target market for anti-wrinkle treatments was fairly involved and aware of both products.  This may not be true for other comparative advertising campaigns.

Key Logic v Blue Groper

In Key Logic v Blue Groper Blue Groper supplied a document to potential purchasers comparing its solar bollard lights to and criticising the bollards of its competitor Key Logic.  The problem was the document referred to a superseded Key Logic model as their “current bollards” and so was misleading.  In addition, the document contained photos of the earlier Key Logic model that were an infringement of copyright. 

This was a classic case of failure to get the facts right.  It also shows the risks of getting a photo of the competitor’s product. Don’t do this.  Downloading a photo of their product from their website or even photographing the product or its packaging yourself is likely to infringe copyright (copying the design drawings or the wording or graphics on the packaging).

Conclusion

Running an advertising campaign that favourably compares your product to a competitor’s can be powerful if the comparison is correct.  But it is risky as it is easy to get the facts wrong or for an unclear claim to be interpreted in a way you did not expect.  Things to consider are:

  • Are you comparing apples with apples – are they really comparable products?
  • Is the information current and accurate, especially about the other product – unlike Blue Groper’s information?
  • Make sure the basis of the comparison clear and easy to understand – to avoid arguments about what the claim means – eg Hungry Jack’s could have said “25% more Aussie Beef in our raw meat patties”
  • Do your research and, if necessary, gather evidence – eg test results/scientific evidence – to support your claim (and keep this readily accessible if anyone doubts the claim)
  • Show the proposed ad to a variety of staff in your office for a range of perspectives about what it means – the receptionist or IT guy may see it differently to your Marketing Department
  • Contact your lawyer for their advice before releasing the campaign
  • Finally, do you have a sufficient fighting fund to defend the ad if you get sued – and is the ad worth it? If not, you may prefer not to risk it.

 

I can vet draft advertising and packaging for compliance with the Australian Consumer Law.

 

This blog provides general information only, and is not intended as legal advice specific to your circumstances.  Please seek the advice of a legal professional if you have any particular questions.

 

Liability limited by a scheme approved under Professional Standards Legislation

© Margaret Ryan, Melbourne, Australia, 2024

Comparative advertising – the risks