Comparative Advertising Doesn’t Always Work Overseas

With the Internet rapidly breaking down borders and thereby creating a variety of legal implications, it is imperative to review comparative advertising on a worldwide basis.

Under United States Law, comparative advertising is permitted and, in fact, encouraged by the FTC, which allows the practice if the brand comparisons are clearly identified and the assertions made are truthful, non-deceptive, and can be reliably substantiated. This is because the FTC believes that comparative advertising is a source of important information to consumers in making purchase decisions. Generally, U. S. television networks and industry self-regulatory bodies take a similar position.

However, comparative advertising in foreign countries reflects different standards and cultural attitudes toward competition. In the age of Internet advertising, which can automatically reach a worldwide audience, the level of tolerance ranges from those countries like the U.S. that allow truthful advertising to countries that do not allow comparisons at all. Countries with restrictive comparative advertising laws view the use of competitive trademarks as a violation of exclusive use rights. These countries see the practice as a tool for weaker companies to trade on a stronger competitor’s reputation.

Some countries contain more specific restrictions and mandates that may:

Prohibit comparison of prices and characteristics of products and services; Specify how a competitor’s mark can be used in printed material packaging; Require disclosures to competitors before publication of comparative advertising; Allow comparative advertising only as a reactive measure to unlawful comparisons or requests from customers; Prohibit comparative advertising that leads to a reduction in sales of the competitor’s products or services.

The Aussie rules The majority of countries in the world allow some kind of comparative advertising. The requirements in Australia listed below provide a general guideline for the types of restrictions that are out there.

1. Drawing of unfavorable comparisons in general terms between the advertiser’s product and a competitive product is actionable unless: a) the defining characteristics of the products being compared are substantially the same; b) the basis of the comparison is clear; and c) the information presented is correct. 2. The ad must clearly state the basis on which an unfavorable comparison is made. 3. A general claim of superiority is only acceptable if it is accurate on every occasion the advertisement is published or broadcast. 4. An advertisement cannot convey or suggest false or misleading information about the advertiser’s product or the competitive product. 5. An advertisement must provide consumers with the full facts about the products being compared. Telling “half the story” is not acceptable. 6. Advertising facts must be based upon current and verifiable scientific testing and evaluations. The advertiser may have to produce this information if its claims are challenged. 7. The advertisement should cover comparable features or qualities of the products, and should focus on features and qualities that are important to consumers; The products being compared should be the same or similar. 8. If a competitor’s trademark is being used, the advertiser should make sure that the mark is accurately depicted and is clearly associated only with the competitor’s product. Advertisers must avoid using the mark in a way that suggests that the trademark owner endorses or sponsors the advertising product, and should not use someone else’s trademark or name merely because it is well known. 9. Advertisers are advised against using a competitor’s product literature. If such use is required, use only the minimum portion needed to make an accurate and fair comparison, and only use the factual and descriptive portion of the literature. 10. Rules governing comparative advertising apply to both oral and written statements, even if a specific competitor’s product is not mentioned or identified.

Countries with strong restrictions against comparative advertising include: Argentina, China, El Salvador, Germany (Though a recent case suggests liberalization of its policy), Greece, Japan, Italy, and South Africa.

As a matter of practice rather than theory, countries that have unusually strict views of advertising include the Czech Republic, the Philippines (Specific product comparisons are prohibited), Malaysia (Permitted, but the competitor’s product cannot be named), Switzerland (Permitted but strict sanctions exist, and a full picture of competitor’s products must be made).

So if you have a promotion out on the Net that sizes up your product with a competitors, don’t forget that this Web is World Wide.