Samsung Electronics Australia Pty Limited v LG Electronics Australia Pty Limited  FCA 227
Samsung issued proceedings against LG for misleading or deceptive conduct and the tort of injurious falsehood in relation to six television commercials and associated marketing materials produced for LG's range of 3D televisions. In a decision handed down on 16 March 2015, Justice Nicholas held that LG had engaged in misleading or deceptive conduct in relation to one of the commercials and a set of retailer instructions, but dismissed Samsung's other claims. Justice Nicholas ruled that the survey evidence adduced by both Samsung and LG be given no weight.
The LG and Samsung 3D TVs
Samsung was the first company to release a 3D television in Australia, in around April 2010. The Samsung 3D television and other 3D televisions that entered the market prior to April 2011 used a form of 3D technology known as "active shutter" technology. With active shutter technology, images are rapidly displayed one image after another and the viewer uses battery-operated glasses which are designed to lighten and darken ("shutter") imperceptibly about 60 times per second.
In April 2011, LG launched its new range of 3D televisions which used different technology known as "passive" technology. With passive technology, two full images are displayed on the screen at the same time and the viewer uses 3D glasses which do not shutter or require a power source.
LG found to have engaged in misleading and deceptive conduct through their advertisement and instructions
Samsung alleged that the six LG television commercials and associated marketing materials contained a number of representations which were misleading or deceptive and/or false.
Justice Nicholas found that one of the LG commercials amounted to misleading or deceptive conduct. The commercial represented that the shuttering effect of active shutter technology caused discomfort and interfered with the viewing experience. His Honour noted that a representation may be misleading or deceptive if it conveys a "half truth", meaning a statement which could literally be true but is likely to mislead or deceive if not suitably qualified. In this case his Honour was satisfied that active shutter glasses would only cause perceptible "flickering" if used under fluorescent light or in direct sunlight which were not ordinary viewing conditions. His Honour also found that although a small proportion of people with some pre-existing vision disorder could experience dizziness when wearing active shutter glasses, those people were likely to have the same symptoms using the LG glasses.
His Honour found the same misleading representation regarding "flickering" in a set of LG retailer instructions, together with a further misleading representation that if viewers lay down to watch conventional 3D TV, the screen would darken. His Honour found that this was misleading because a person could lie flat while keeping their head at an appropriate angle to avoid the screen darkening using conventional 3D TV.
Other claims relating to LG’s commercials dismissed
His Honour dismissed the other claims in relation to the LG commercials on the basis that the commercials did not make the alleged representations, or the evidence did not establish that the representations were false.
When considering the LG commercials, it was relevant that they used humour or parody to convey information about the features of the televisions. His Honour took into account that ordinary and reasonable viewers would make significant allowances for what was readily discernible as exaggeration and parody aimed at making the commercials entertaining.
Injurious falsehood claim against LG also dismissed
Justice Nicholas set out the elements of the tort of injurious falsehood as follows:
- a false statement of or concerning the plaintiff's goods or business;
- publication of that statement by the defendant to a third person;
- malice on the part of the defendant; and
- proof by the plaintiff of actual damage suffered as a result of the statement: Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388.
His Honour rejected LG's submission that the commercials did not name Samsung and therefore did not contain a false statement about Samsung's goods. His Honour stated that Samsung was clearly a manufacturer with whom many viewers would be likely to have associated the disparaged technology.
His Honour rejected Samsung's claim of injurious falsehood on the basis that although the representation regarding "flickering" was misleading, it was not a false statement. This was because the statement was literally true, although it was misleading without appropriate qualification. His Honour also noted that Samsung had failed to prove that a loss of market share was caused by the alleged false statement as opposed to being caused by the introduction of new and superior product on the market.
Survey evidence given no weight
Both Samsung and LG relied upon survey evidence in the proceeding. Justice Nicholas admitted the survey evidence as an exception to hearsay under the Evidence Act and then considered what weight it should be given. His Honour referred to relevant considerations including the methods of data collection and analysis, the selection of participants and whether responses were elicited, recorded and analysed in an accurate, reliable and unbiased manner.
His Honour concluded that the Roy Morgan survey relied upon by Samsung should be given no weight due to concerns regarding how questions were posed and how responses were coded and analysed. His Honour also gave no weight to the survey evidence relied upon by LG based on Samsung's criticisms of the data as statistically unreliable.
Lessons regarding comparative advertisements
This case is useful in setting out the Court's approach to assessing the overall meaning and effect of an advertisement, particularly where the advertisement uses humour when comparing products. The Court will carefully assess whether the representation made in the advertisement is likely to be taken literally by the ordinary or reasonable consumer, and whether any information has been omitted which would make the comparison fair. The decision also shows the difficulty in relying upon survey evidence to show the effect of an alleged representation on the consumer audience. The Court will not give the survey evidence any probative value where there are concerns regarding the survey methodology or the analysis of the results.