Yes, the world battery behemoths are still slugging it out, this time in the Sydney Court. Our Australian correspondent Jonathon West of law firm Clayton Utz brings us a report of the latest case.
Topic: Comparative Advertising
Who: Duracell (Gillette Australia Pty Limited) and Eveready (Energiser Australia Pty Limited)
When: July 2002
Where: The Australian Full Federal Court
What happened:
The facts of this case and the lessons to be drawn from it have been provided to us by our colleague Jonathon West at Sydney law firm Clayton Utz. As ever, this must come with the general "health warning" that it is an Australian case based on Australian law, but in particular, it is interesting to look at the approach adopted by the court in this case on one point, namely that it was not essential to compare "like with like" in comparative advertising. Compare this with the legal requirement in the UK and the rest of Europe following the bringing into force of the Comparative Advertising Directive. This does require that comparative advertising compares products "meeting the same needs".
So does this mean that a similar case on similar facts would end in a different result in the UK? One would like to think that in the interests of consumer information and commercial free speech, it ought to be possible, so long as the message is not misleading, to compare two products in the same overall product category, despite the fact that, as in this case, one is a top of the range ultra-long lasting battery and the other is a midrange medium-lasting battery.
Our suspicion is that in the UK a TV commercial of this kind would be unlikely to pass the eagle eye of the "Broadcast Advertising Clearance Centre", bound as it is to apply the comparative advertising directive by way of the ITC TV Advertising Standards Code. If on the other hand the advertising in question were in print, we suspect that a UK Chancery Court faced with a trademark infringement or malicious falsehood claim would be likely to take a more robust view on past form. The approach they might take would be that in broad terms these products were meeting the same purpose and that since the consumer was not being seriously misled, the advertising should be permitted. In other words, the same conclusion as that reached by the Australian court, by a similar route, but on different law.
Comparative advertising: The Bunny Race Case [1]
A carefully scripted and structured comparative advertisement can be very effective in demonstrating the superior qualities of one product over another.
However, comparative advertisements are probably more likely to result in legal action by a competitor (or the ACCC) under the Trade Practices Act than any other form of advertising. Comparative advertising is "high risk" for a number of reasons, including:
You can be sure that a comparative advertisement will be very closely scrutinised by the competitor whose products are being unfavourably compared. If the competitor has legal avenues available to prevent the unfavourable comparison, it will invariably seek to use them.
An advertiser making general claims of superiority (including as to price) must ensure that the claims remain accurate for the life of the advertisement.
The more actual comparisons that are used, the more potential there is for error.
Traditionally, it has been argued that to avoid being misleading, a comparison in an advertisement had to be a "fair comparison", meaning a comparison of two "like" products. However, a recent decision of the Full Federal Court concerning one of Duracell's (Gillette Australia Pty Limited's) "bunny race" advertisements has broadened the scope of permissible comparisons.
An unfair race?
Duracell's cartoon advertisement features two bunnies racing; one with a Duracell battery visible on its back, the other bunny with a black battery with no brand. Throughout the advertisement the non-Duracell bunny is exhausted and replaced by a similarly garbed runner, with a voice-over stating that Duracell alkaline batteries last up to 3 times longer than Eveready Super Heavy Duty batteries. At the end of the commercial, the Duracell bunny wins the race, running strongly in front of the last of the non-Duracell bunnies.
The supplier of the Eveready batteries (Energiser Australia Pty Limited) sued Duracell for misleading and deceptive conduct in contravention of the Trade Practices Act. Energiser argued that a comparison of Duracell alkaline batteries with Eveready Super Heavy Duty non-alkaline batteries was neither fair nor meaningful, because the Eveready battery used in the comparison was only the fifth most powerful in Eveready's range (which includes the more powerful alkaline "Energiser" batteries). The two batteries used different technologies, sold in different price brackets, and were targeted for use in different devices.
What did the Court find?
On appeal, the Full Federal Court held that the advertisement was not misleading or deceptive. It was found that:
the advertisement was factually accurate, and there were no misleading half truths which might have rendered the advertisement misleading or deceptive;
it was evident to viewers that the advertisement was making a comparison between a Duracell battery which is based on superior "alkaline" technology, and an Eveready Super Heavy Duty battery of the same size, based on a cheaper and inferior "non-alkaline" technology;
given that Eveready and Duracell are competitors in the battery market, Duracell was entitled to point out truthfully to consumers a feature of its product which was superior to a that of a rival product, and was under no legal or ethical obligation to draw attention to the availability of the top of the range Energizer batteries in the advertisement.
Importantly, the court rejected any general requirement for a comparison to be "fair" and only compare "like" products – provided the factual assertions in an advertisement are not untrue, or misleading half truths, an advertiser can lawfully compare a particular aspect of its product or service favourably with the same aspect of a competitor's product or service.
The court recognised that there could be a number of factors which would influence a consumer's decision to purchase one battery over another, including price and power. In these circumstances, an advertiser can legitimately compare power only, without examining all the differences between the batteries.
What is the message for advertisers?
The decision makes it clear that at least in some cases businesses can publish comparative advertisements which compare one factor alone, such as power, without reference to other factors which may be relevant, such as price, popularity or technology. This decision also suggests that the rigorous “like with like” comparisons need not be made in every case, and that there may be other justifications for a comparison in an advertisement, so long as the nature of the comparison is made clear.
However, the decision must be seen in the context of its particular facts. The court held that Duracell was not required to mention that the makers of Eveready batteries also sold the more powerful alkaline "Energiser" batteries (which were not the basis of the comparison), in order to avoid a 'misleading half – truth'. In other circumstances though, a similar advertisement may still be misleading. For example, if the competitor's products have a similar appearance or name across the entire product range (unlike Eveready and Energiser batteries, which have quite distinct packaging), an advertisement that does not adequately identify which particular product in that range is being compared may still be misleading, as the nature of the comparison is potentially unclear. There is also a significant risk involved in omitting from a comparison facts about a competitor's product which might be considered relevant to the comparison.
The 'bunny race case' can be said to broaden the scope for comparative advertising. However advertisers should continue to take extreme care to ensure comparative advertisements are accurate and up to date, as comparative advertising is likely to remain a high risk area.
Practice Tip – The Trouble with Trade Names
It is commonly believed that the owner of the registered business or company name has the exclusive right to use that business or company name, and can prevent others from using that name. This is not correct. In some cases, where there is an extensive reputation associated with a business or company name, it may be possible to prevent others from using that name to take advantage of the reputation. However, in most cases, the exclusive right to use a name or mark in relation to particular goods or services can only be achieved by registration of a trade mark.
A trade mark can only be registered in Australia if its registration will not cause confusion, and therefore a search for conflicting prior trade mark registrations or applications is essential. This should be done at the earliest possible stage in the development of a new brand (and certainly before any public launch). Even if there are no conflicting trade mark registrations or applications, investigate the relevant market carefully, assess the risk of a challenge by anyone else who may be using the proposed name, and who may have a substantial reputation in Australia. These checks, and the application to the Trade Marks Office for the relevant trade mark, should be completed before a new logo or name is launched, to help avoid the cost and potential embarrassment caused by having to change the name at a later date.
By Chris McLeod, Partner, Clayton Utz, and Deborah Polites, Senior Solicitor, Clayton Utz.For more information contact Chris McLeod on (03) 9286 6214 or cmcleod@claytonutz.com
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[1] Gillette Australia Pty Ltd v Energiser Australia Pty Ltd FCAFC 223 (unreported, 26 July 2002)
