Use of a competitors trade marks for comparative advertising

Comparative advertising is a popular way to win market share by promoting superiority of a product or a service over a competitor.  Businesses often use comparative advertisement as a direct challenge to a competitor’s product or service by comparing it with the size/volume, quality, price, or range of their own product or service.  Comparative advertising can be useful for consumers in making choices between similar products or services, but how is the use of a competitor’s trade mark in comparative advertising handled under Australian law?

The Trade Marks Act

The Trade Marks Act 1995 (Cth) governs trade mark law in Australia.  Section 122(1)(d) of the Act specifically provides that when a trade mark is used for the purposes of comparative advertising, the trade mark is not infringed.

Comparative advertisements will only run into issue when they depict inaccurate, false, or misleading information and are found to be in breach of the Australian Consumer Law (ACL).

The Australian Consumer Law

Any advertisements made, including comparative advertisements, must comply with the ACL to be deemed legal.  To comply with the ACL, any statements made representing products must be true, accurate, and substantiated.  In comparative advertising, it is important to ensure that the comparison is:

• accurate;
• true;
• reasonable; and
• not misleading or deceptive.

Advertisers should be careful to ensure that all comparative advertisements continue to provide an accurate description of the competitors product or service throughout the entire lifetime of the advertisement – if a competitor changes their product or service, the advertisement will need to be updated immediately.  Advertisers should take a step back and ensure that the overall impression of the advertisement could not be deemed ambiguous, false, misleading, or deceptive.

Nurofen v Panadol

An example of a comparative advertisement which breached the ACL can be found in the recent case of GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser (Australia) Pty Limited (No 2) [2018] FCA 1.  The applicants, GlaxoSmithKline Australia Pty Ltd and GlaxoSmithKline Consumer Healthcare Australia Pty Ltd (Applicants) sell the medication Panadol.  The respondent, Reckitt Benckiser (Australia) Pty Limited (Respondent) sell the medication Nurofen.

From August to December 2015 the Respondent employed a comparative advertising campaign throughout Australia and across different media comparing the active ingredient of Nurofen with the active ingredient of Panadol.  The Respondent made the representations that Nurofen was both more efficient and more effective in delivering pain relief for common headaches.  The Respondent also made the representation that there was suitable scientific knowledge to support their claims.

The Applicants alleged that the Respondent’s campaign had no scientific foundation to base its representations upon.  The Respondent’s campaign relied upon a single clinical study which suggested that Nurofen was more efficient and effective than Panadol for providing pain relief for common headaches.  However, these results were not emulated in two identical studies which also existed at the time of the campaign.  Both other studies suggested that there was no difference between the speed and efficacy of the two products.

The Federal Court held that the Respondent had engaged in misleading or deceptive conduct in their campaign as only one clinical study supported their claims and the balance of scientific knowledge at the time did not support the representations.  The Respondent was penalised $6,000,000.

Penalties for misleading or deceptive conduct

The maximum penalties per breach of the ACL, including misleading or deceptive conduct are as follows.  For Corporations, the greater of:

• $10,000,000;
• three (3) times the value of the benefit received; or
• 10% annual turnover in preceding 12 months, if court cannot determine benefit obtained from the offence.

For individuals:

• $500,000.

Takeaways

Use of a competitor’s trade mark in a comparative advertisement is permitted, so long as the advertisement is very carefully worded.  Any comparisons made must be truthful and not misleading and must remain as such for the complete life of the advertisement.  Those making comparative advertisements should ensure that the representations made are carefully considered.

Links and further references

Legislation

Trade Marks Act 1995 (Cth)

Competition and Consumer Act 2010 (Cth) – Schedule 2

Cases

Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd [2020] FCA 1530

GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser (Australia) Pty Ltd (No 2) [2018] FCA 1

Energizer Australia Pty Limited v Gillette Australia Pty Limited [2002] FCA 321

Stuart Alexander & Co v Blenders (1981) 37 ALR 161

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