As the fight for customers grows ever fiercer comparative advertising is being increasingly deployed by businesses in order to steal a march on their competitors. But get it wrong and you may find yourself in more trouble than you might imagine.
A recent case involving the advertising of "fire safe" insulating boards and panels used in the construction industry highlights how businesses can get their fingers burnt if the advertising for their products makes unfair comparisons with those of their competitors.
In Kingspan Group Plc v Rockwool Ltd the claimant, Kingspan, took umbrage at the nature of the comparative advertising carried out by Rockwool, and threw everything bar the kitchen sink at them.
Rockwool was a producer of a product known as "stone wool" which is used as the insulating core of panels sold by a number of companies. Rockwool undertook a series of road shows in which they intended to show the difference between and the relative fire performance of panels produced using stone wool, which were inherently incombustible "fire safe" products and panels made with plastic foam which, whilst lawfully marketed as "fire safe" in accordance with the relevant regulations, were in fact combustible.
Some of the presentations undertaken by Rockwool compared the fire performance of two of its products against various Kingspan products. The products were subjected to a small scale fire test, which were then followed by a video of full scale fire tests being undertaken in accordance with an International Standard. The videos featured references to Kingspan's trade marks in the voice-over.
Kingspan complained that Rockwool had represented its products as being a fire hazard. It issued proceedings for trade mark infringement arguing that the use of its trade marks in the comparative advertising carried out by Rockwool was not in accordance with the Council Directive 2006/114/EC on Misleading and Comparative Advertising (MCA Directive) and was therefore infringing. It also alleged malicious falsehood.
By way of background, using a competitor's trade mark in comparative advertising which complies with the conditions laid down in the MCA Directive renders that trade mark use legitimate and prevents the trade mark owner from being able to sue for infringement. However, if those conditions are not met it is very likely that the use will infringe. One of the conditions set out in the MCA Directive is that the comparison undertaken must objectively compare one or more material, relevant, verifiable and representative features of the products concerned.
The court held that some of the tests and videos shown by Rockwool were indeed misleading and failed objectively to compare the features of the Kingspan and Rockwool products. As an example, Rockwool represented that the fire tests evaluated the performance of a Kingspan product in the event of a real fire and therefore illustrated the real risks of installing their products in buildings. However the Kingspan products were not in fact installed as they would be in real life and therefore this representation was false. Further Rockwool had falsely represented that Kingspan's products when installed were not safe; presented a real fire danger; and had dramatic implications regarding escape times and structural damage. In view of this finding Rockwool could not rely on the MCA Directive and therefore its use of Kingspan's trade mark registrations amounted to infringement.
For good measure that court also held that the use by Rockwool of Kingspan's trade marks amounted to activity which took unfair advantage of and caused detriment to the repute of Kingspan's trade marks within Article 5(2) of the Trade Marks Directive (89/104/EEC; now 2008/95/EC) and Regulation 9(1)(c) of the Community Trade Mark Regulation (40/94/EC; now 207/2009/EC).
In order to establish a claim for malicious falsehood the claimant must establish three elements: the statements made must be false; they must be calculated to cause pecuniary damage; and they must have been published maliciously. Whilst the first two elements were present the court did not accept that Rockwool had acted out of malice and therefore the claim in relation to malicious falsehood failed. The court pointed out that Rockwool did not believe that its campaign was misleading nor were they indifferent as to whether it was misleading. In its view Rockwool had acted throughout in good faith.
This case illustrates the risks of carrying out comparative advertising without taking care to ensure scrupulous compliance with the provisions of the MCA Directive. Failure to do so can lead to serious consequences which include not only the likelihood of having to withdraw the offending advertising but also paying damages for trade mark infringement. When you add to that the risk of criminal action being taken by the Office of Fair Trading under either of the Consumer Protection from Unfair Trading Regulations 2008 or the Business Protection from Misleading Marketing Regulations 2008 it is clear that any business wishing to embark on a comparative advertising campaign would be well advised to take the time to ensure that their advertising is "fire safe".