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Comparative Advertising





March 3, 1998

Sponsoring Committee: Comparative Advertising Subcommittee of the Issues and Policy Committee


Resolution

WHEREAS, there are a number of countries which do not permit comparative advertising of products or services;

WHEREAS, the availability of comparative advertising encourages owners to innovate and improve products and services, which increases competition in the marketplace;

WHEREAS, comparative advertising which is truthful, not misleading, consistent with principles of fair competition, and not harmful or damaging to the marks of competitors can provide consumers with useful information which assists with their purchasing decisions;

WHEREAS, legal controls can be implemented to prevent false or misleading advertisements or other acts of unfair competition, and to prevent advertisements which harm and/or damage the marks of competitors;

BE IT RESOLVED, that the International Trademark Association endorses permitting comparative advertising of goods and services so long as such advertising exists within a framework which:

(a) prevents comparative advertisements that are explicitly or implicitly false or misleading; or cause a likelihood of confusion or association with the marks or trade names of competitors, or otherwise violate principles of fair competition;

(b) provides effective enforcement mechanisms including preliminary and permanent injunctions, corrective advertising and damages; and

(c) encourages self-regulatory mechanisms if possible.


Background

For the past three years the Subcommittee on Comparative Advertising has been studying the current state of the law of comparative advertising in the United States, Canada, Central and South America, Western Europe, the Middle East and selected Pacific Rim countries. The Subcommittee has determined that there are substantial differences in the laws, ranging from countries where no comparative advertising is permitted, to the United States, where comparative advertising is permitted within a framework of legal controls to prevent harm to business identifiers, false and misleading claims, and other acts of unfair competition.

There is a gradual movement in favor of allowing comparative advertising so long as there are controls against infringement of business identifiers and acts of unfair competition. In the European Union, a Harmonization Directive was approved in September 1997 which requires the Member States to permit comparative advertising under strict controls. Some countries of Central and South America and the Pacific Rim have adopted provisions which appear to be modeled on the Harmonization Directive, indicating movement toward liberalization of the laws concerning comparative advertising. The Comparative Advertising Subcommittee believes that a Resolution to encourage the adoption of laws which permit comparative advertising under regulations which prevent damage to the intellectual property interests of competitors and prevent false and misleading statements could be useful to countries considering revisions to their statutes and would be beneficial to trademark owners and the consuming public.

The INTA has taken no position on comparative advertising other than its support for the amendments to the Lanham Act §43(a) which restrict false and misleading claims as to competitors’ goods or services, and comments provided to the EU on various drafts of the European Directive which incorporated some or all of the Subcommittee’s suggestions.

During the study period the Subcommittee members have been divided in their opinions as to the advantages and disadvantages of comparative advertising reflecting the law of their countries. A number of the Committee members come from countries that do not permit comparative advertising. Those members believe that use of another’s trademark without permission of the trademark owner, even if used to identify the product or service of the trademark owner, constitutes a taking of property of the trademark owner and is, therefore, illegal. Some members also believe that advertising statements that characteristics or qualities of products or services are superior to those of competitors, or claims by owners of lesser known trademarks that their products or services are comparable with those of famous marks, constitute an unfair trading on the reputation and goodwill of the trademark owner. Even if the claims are truthful and not misleading, they believe such comparative advertisements should be barred.

Subcommittee members from the United States and some other countries believe that comparative advertising which is not false or misleading and does not harm the business identifiers of competitors encourages innovation and improvements to products and services and other forms of healthy competition which increases the options available to consumers. In addition, they believe that such advertising can assist consumers with purchasing decisions in the marketplace. Furthermore, in the United States and other countries, there is evidence that comparative advertising can occur without harm to competitors’ intellectual property rights or business so long as controls exist to prevent unfair competition and harm to the intellectual property rights of competitors. Comparative Advertising has been well received in the United States by trademark owners and consumers.

The Subcommittee has reached agreement on a compromise position embodied in the proposed Resolution which encourages countries to allow comparative advertising so long as it is allowed within a framework which contains controls against violation of the rights of other enterprises. The Subcommittee is unanimous in supporting the Board Resolution which it proposes.

The Subcommittee also believes that the successful control of comparative advertising depends upon the availability of swift and effective remedies against offending advertisements and believes that this can be accomplished by both legal and self-regulatory mechanisms. As to legal remedies, it is important to have the possibility of securing both temporary and permanent injunctions to stop offending advertisements. Additional remedies, such as requiring withdrawal or correction of an advertisement, publicity for a decision against a competitor who sponsors an offending advertising campaign, and damages and legal fees under appropriate circumstances can also serve as effective enforcement mechanisms. In addition to legal remedies, the Subcommittee believes that the promotion of self-regulation by trade groups or advertising organization should be encouraged if possible.

A detailed summary of the law of comparative advertising in the United States, Western Europe and Canada is available in the INTA publication International Comparative Advertising [This title is no longer in print]. The Subcommittee strongly encourages adoption of the Resolution.