Comparative advertising is where goods and services are promoted by comparing them to a competing product or service. This is an acceptable method of advertising, however, there are certain restrictions around this.

In 2013, the New Zealand Advertising Standards Authority issued a Code for Comparative Advertising (“Code”). The Code provides that comparative advertising must comply in three distinct areas:

It should be accurate and informative;

It should explicitly or by implication make clear what comparison is being made; and

It should not mislead or deceive the consumer, including about other products or services with which comparisons might be made.

It is important to note that an advertisement can be considered under this Code even if the advertisement did not name a specific competitor. A comparison can be made with all competition within an industry.

The Code established two principles. Principle 1 states that comparisons in advertisements should not mislead or deceive, or be likely to mislead or deceive consumers. The guidelines in respect of Principal 1 includes that:

• Comparative elements should be accurate and informative and should offer a product or service on its positive merits.

• Where an advertisement makes a comparison, whether explicitly or implicitly, it should be clear with what the comparison is being made.

• Price comparisons should not mislead by falsely claiming a price advantage.

• Where appropriate, comparative advertising claims should be supported by documentary evidence which is easily understood by the advertisement’s target audience.

Principle 2 states that advertisements that make comparative claims should fairly and properly identify the competitors and not denigrate them or identifiable products. The guidelines in respect of Principal 2 includes that:

• Trade marks or registered brands or makes can be used for honest comparison but cannot be used to upgrade by association or for passing off purposes, or to mislead or otherwise take unfair advantage of the goodwill associated with the trade name, symbol or brand.

• Advertisements should not be so similar to a competitor’s advertisements in general layout, copy, slogans, visual presentation, music, or sound effects as to be likely to mislead or deceive consumers.

• The intent and connotation of advertisements should be to inform and not to denigrate competitors, or competing products or services.

The guidelines provide general recommendation for compliance with the principles of the Code and are not exhaustive of how the principles are to be interpreted and applied.

Section 94 of the Trade Marks Act 2002 (“TMA”) provides that a registered trade mark will not be infringed if it is used for comparative advertising. However, any use other than in accordance with honest practices in industrial or commercial matters will be treated as infringing the registered trade mark if the use, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

However, even though the TMA permits the use of a trade mark for comparative advertising, the Copyright Act 1994 prohibits the reproduction of a logo as an artistic work. As such, there can be copyright infringement where the registered trade mark used in the comparative advertisement is a logo, even if there may not be a trademark infringement.

If you are thinking about using comparative advertising to promote your product, you need to follow the Code and ensure that you do not infringe the TMA or the Copyright Act. In the event of any uncertainty, you should contact your lawyer.

This post was published in the FMCG Business magazine.