Tell no lies

04 December 2009
Comparative advertising is the most direct way to promote a business at the expense of another business. In a perfect world, all consumers would know everything about the price, quality, availability and other characteristics of goods or services on offer to them.  And they would make rational buying decisions based on that information.

By telling consumers that your goods or services are superior to those of your competitors, you can help improve consumers’ knowledge, and make it easier for them to choose what is best for them.

Using another business’ trade mark in a comparative advertisement can help educate consumers.  For example, someone might want to say ‘BINGO cereal is twice as nourishing as GOPOP cereal and costs half the price’.  In this example, the owner of the BINGO trade mark enhances his trade mark value and educates the public that products sold under his brand are better that those of an identifiable competitor.  It is likely that the owners of the GOPOP trade mark will be driven to revise their pricing policy or product formulation, or be forced out of business.

This form of advertising benefits the consumer and the owner of the trade mark that has the more desirable of two or more competing products. 

But is comparative advertising legal?

There are many ways in which comparative advertising can be done. Techniques include:

  • Mentioning a competitor by name;
  • Mentioning the trade mark of a competing product;
  • Not mentioning the name of the competitor or his trade mark, but instead referring to the leading brand in the field (when everyone knows what the leading brand is)
  • Signalling that your products are compatible with those of a competitor by issuing a table; in which the serial al numbers of each party are listed.


While comparative advertising is rarely used in New Zealand, there have been three recent examples.

  1. Hyundai Motors New Zealand Limited used results from the 2007 World Solar Challenge to claim that its Hyundai i30 was more fuel efficient and emitted less carbon in comparison to another well-known hybrid car.
  2. Whittaker’s recent television advertisement compared one of its chocolate bars to Cadbury’s chocolate.
  3. Max-Life ran an advertisement comparing the life of its MAX-LIFE AA alkaline batteries against the life of a competitor’s battery, EVEREADY GOLD.


When embarking on a comparative advertising campaign, you need to consider a consumer’s perspective — what information do they need to make an informed buying decision?  You also need to consider a marketer’s perspective — how can they compare their product with a competitor’s? And you also need to consider the competitor’s rights by making sure you do not misuse their trade mark or other intellectual property rights.

Balancing these competing interests and recognising there are risks associated with comparative advertising means it is often assigned to the ‘too hard basket’, especially when deadlines are tight.

But just because something is harder doesn’t mean it shouldn’t be done. Comparative advertising can be extremely effective and is worth considering in proper cases.

If you are thinking about using comparative advertising, here are some things to think about when shaping your advertisement.


Do not mislead people

Don’t tell fibs in your advertisement.  This will inevitably land you in court and lead to a public relations nightmare.

Make sure you don’t say something that is untrue.  Also, don’t omit any facts — you could make the comparison unbalanced.
For example, an advertisement is not balanced if it says your food product is half the price of your competitors’ but leaves out the reason that your product is cheaper is because you do not use the same quality ingredients as your competitor.

Always make sure you’re being honest and that your information is complete — these are the most important considerations for comparative advertising.  Misleading people can be a criminal offence under the Fair Trading Act and can attract a criminal conviction, not to mention fines, legal costs and a consumer backlash. 


Do not degrade your competitors

Under the Advertising Standards Code of Ethics advertising, you should not degrade identifiable products or competitors.

You can make a statement about a feature of your product that your competitor’s does not have, but that message should be delivered in a positive way. You should try to identify the extra feature of your product rather than the lack of that feature in your competitor’s product — it’s all in the delivery of the message.

Avoid making degrading statements about your competitors or their products in general, particularly in small markets where consumers will immediately know who you are talking about.

Do not take unfair advantage of your competitor’s trade mark or damage the distinctiveness of their trade mark

As a general rule, you can only use another person’s registered trade mark with their consent. However, an exception exists for comparative advertising that is fair and treats the other person’s trade mark properly.

It is not fair to use another person’s trade mark in a way that rides on the coat-tails of that trade mark’s reputation to improve consumer opinion of your product. An example of this would be an advertisement for a new car brand favourably comparing the new car to a Rolls Royce. You would need to be very careful not to just refer to Rolls Royce to tap into the idea of quality being associated with that brand.

It is also not fair to change another person’s trade mark to suit your advertisement. Don’t, for example, slowly turn another brand green (with envy) as you explain the reasons your product is better.


Beware of copyright

Copyright can still bite.  Unlike trade mark law, copyright law does not have an exception for comparative advertising.

Brands that include logos or labels can be both registered trade marks and copyright works.  You can, therefore, infringe a person’s copyright by including their logo or label in your advertisement, despite this being allowed under trade mark law.

To avoid copyright infringement, you could use your competitor’s brand in plain font only, as this is unlikely to be a copyright work. Make sure you avoid using any other copyright works that your competitor may own. But this approach is not always desirable — for you or your competitor. The key is to be aware of this issue and weigh up how you want to deal with it in each case. 


The moral of the story

In an era of acute brand awareness, the easiest way to attract the attention to your goods or services is to brand them with an attractive and memorable trade mark.  It is therefore also easy to attract the attention of prospective consumers by using a familiar sound or the eye-catching brand of a competitor.

A slogan like, ‘Three times as many consumers prefer ABC to CDE” is a very powerful message.  So it is easy to understand why marketers are eager to mention the trade marks of their competitors and why trade mark owners are so suspicious of all unauthorised use of their trade marks.

In New Zealand, comparative advertising stands out from other advertising because it is used so rarely. It catches people’s attention and gets them talking. If used correctly and fairly it can be a powerful marketing tool.

It’s a marketing tool you might find useful too.  The key is to be fair and tell the whole truth.

An edited version of this article was published in NZ Retail, December 2009.

  • IPNews