Businesses who regularly use comparative advertising to get a leg up on their competitors and who want to avoid being hauled in front of the Federal Court for falling foul of the Competition and Consumer Act 2010 (CCA) would do well to have regard to the simple lessons that can be learned from the Federal Court decision of Samsung Electronics Australia Pty Limited v LG Electronics Australia Pty Limited[1](Samsung v LG).

In Samsung v LG, Nicholas J was required to consider whether certain representations made by LG were misleading or deceptive or false or misleading in contravention of sections 18 and 29(1)(a) of Schedule 2 to the CCA, the Australian Consumer Law (ACL).

The representations that were the subject of the proceedings were made to members of the Australian public in respect of LG’s Cinema 3D television.

LG’s Cinema 3D television range was launched in April 2011 approximately a year after the first 3D televisions were released on to the Australian market. The advertisements the subject of the proceedings were humorous and were a parody of ‘scientific’ tests conducted on the two different forms of technology utilised by, on the one hand, LG and on the other, conventional 3D televisions by other competitors such as Samsung.

Importantly, the Court found the use of parody and humour in the advertisements meant that ordinary and reasonable consumers would not construe the advertisements literally. Accordingly the Court found that the vast majority of representations made by LG were not misleading or deceptive or false or misleading.

For the representations that did fall foul of the CCA, these were found to be misleading or deceptive on the basis that they were unqualified representations as to certain comparative facts between the two different types of technology.

KEY TAKEAWAYS

Businesses who regularly utilise comparative advertising should:

  1. consider the use of humour and parody in the representations they make in order to make a point about differences between their product and that of their competitor in an entertaining and catchy way. Comparative advertising is a powerful tool for businesses who keep in mind the impact that such advertising will have on the ordinary and reasonable viewer;
  2. consider the scope of potential representations that are being made, the audience to whom it is conveyed and the likely impact that the representations will have on the ordinary and reasonable consumer. In considering Samsung’s submissions in relation to a particular type of television commercial, the Court observed that Samsung’s evidence in support was the result of ‘over-analysis’ which identified multiple messages not actually conveyed to the ordinary and reasonable viewer[2]; and
  3. have regard to the accuracy of the representations that are being made including, to the extent that they are only partially correct, the degree to which the draft advertisements can be qualified so as not to be misleading or likely to mislead. Sometimes a “qualification” or footnote can correct any overriding misleading first impression – however, don’t hang your hat on a qualification or footnote to inoculate an otherwise misleading headline statement.

SURVEY EVIDENCE

In any subsequent litigation process, considerations about the use and development of survey evidence may arise. If a party commissions a survey to provide evidence to rebut allegations that representations are misleading or deceptive, it should be done in the knowledge that any pilot surveys and market research undertaken in designing that survey may not be privileged and may have to be shared.

Whilst the Federal Court practice note on survey evidence does not require pilot surveys to be handed over, it is usual practice in the United Kingdom for a party to produce them.

Justice Nicholas noted in passing that, where the form of survey evidence relied upon is in dispute, it seemed appropriate that, as in the United Kingdom, the party wishing to rely on the survey should produce any pilot study that was conducted by the party for the purpose of designing or testing the questionnaire.

Accordingly, businesses who commission pilot surveys should keep in mind that the pilot surveys may be requested and required to be produced to the court for the purpose of testing the veracity of surveys relied upon later and in the course of proceedings for misleading or deceptive conduct.