Comparative advertisement – Fair Practice or Foul?

By Ayan Chowdhury & Maitland Kalton

Summary

The decision of the Court of Appeal in Boehringer Ingelheim Limited & Ors v Vetplus Limited [2007] EWCA Civ. 583 deals with the contentious are of comparative advertising and fixes a threshold for deciding the need for restraining order in cases of trademark infringement in comparative advertisements from the freedom of expression perspective based on the strength of the claims about the products.  

The case

The case of Boehringer Ingelheim Limited & Ors v Vetplus Limited [2007] EWCA Civ. 583 as decided by the Court of Appeal relates to a comparative advertisement of a dog food. The product of the claimants, Boehringer, is called Seraquin and the defendant’s is known as Synoquin. Both claims to contain a chemical substance called Chondroitin which is beneficial for dogs’ joints. The defendant, Vetplus, conducted a test on the claimant’s product to ascertain the claimed content of chondroitin on its label but found that claimant’s product does not contain chondroitin as claimed on its label. Vetplus, threatened to publish a comparative advertisement in this regard. The claimant’s present appeal is against the decision of Justice Pumpfrey who refused the interim injunction against the advertisement.

The advertisement, whilst naming no manufacturer in particular, pointed towards the product of the claimants. The claimant did not base their case on defamation law as the decisions in Bonnard v Perryman [1891] 2 Ch 269 and Bestobell v Bigg [1975] FSR 421 allows publication of a defamatory statement in the interests of freedom of speech as long as it is justified during the trial and is not obviously untruthful. The defendant’s position meets these two requirements. Although, the strength of the claim of the defendant is a matter of evidence, Lord Justice Jacob said that the claimant’s product did not meet the label claim.

The next argument for granting an interim injunction was based on trademark infringement of the words ‘Seraquin’ and ‘Boehringer’, both of which are registered as UK and EU trade marks for dog food supplements, and were used in the advertisement. The claimants supported their argument on the basis that since Bonnard rule does not apply to trademark infringement, normal rule as held in American Cyanamid v Ethicon [1975] AC 396 should be applied which allows granting of interim injunction in case of damaging advertisement.

Vetplus argued that Bonnard and not Cyanamid applied to trademark infringement, and also that s.12(3) of the Human Rights Act 1998 as decided by the House of Lords in Cream Holdings v Banerjee [2005] 1 AC 253 should apply to such cases.

Justice Jacob, held in favour of the claimant on the point of trade mark infringement based on the decision in O2 Holdings Limited v Hutchison 3G [2006] EWCA Civ.1656 and his own decision in Reed Executive v Reed Business Information [2004] EWCA Civ 159, [2004] RPC 767. He also held that irrespective of whether the defendant’s statement and conduct was ‘honest’ trade practice, if the truthfulness of the statement is doubtful and if the statement is misleading according to the Art 3a of Misleading Advertising Directive (84/450/EC), such conduct may still amount to infringement. He also clarified that the Bonnard rule did not apply to trademark infringement and effectively interim injunction may be granted if defendant’s statement is likely to damage goodwill unless he can justify his statement with credible material.

Lastly, Justice Jocob turned to s.12(3) of the Human Rights Act and the decision of House of Lords in Cream v Banerjee which imposed a threshold test to be satisfied before granting of interim injunctive relief restraining freedom of expression. Such threshold as held in Cream is a higher probability of success at the trial. This holds true even in trade mark infringement in a comparative advertisement case, and unless the claimant can show that the advertisement of the competitor is wrong and misleading, the competitor both for commercial interest as well as public interest should have the freedom of expression with regard to his advertisement.

According to Justice Jacob, the likelihood of success to meet this threshold rests on the strength of the claims about the products. The chances for getting a restraining order to stop trade rivals from making disparaging statements will depend on such strengths of claims about the products. Moreover, it was held that a balance has to be struck between the need for restraining order against the statements and the graveness of the statements. It was decided that ‘damage to reputation’ was not grave enough a reason, particularly in the present case, to merit interim injunction against the advertisement.

The case looks at the trademark infringement in a comparative advertisement case from the perspective of freedom of expression and creates the threshold for such cases based on the veracity of the claims about the products; the stronger the foundation of the claims about the products, the greater the chances of restraining order against adverse statements in comparative advertisements about the products and the weaker the foundations of the claims, the lesser the chances of such injunctive relief.

Comment

Comparative advertising is a very contentious area. Companies dislike being “attacked” by competitors in this way and it takes a strong and well-funded company to consider such a route. On the other hand, if a rival is putting itself at unfair competitive advantage, as seems to have been the case here, it is only fair to let the rival who suffers as a result to defend itself, although this assumes that there is a finite market where one company steals potential from another. There is an argument for saying that one can expand the marketplace if ones focus is not on the limits of it. The way forward is to be clear about the goals and vision for the business rather than allowing itself to be sidetracked, looking over its shoulder to what competitors are doing.

For further information on comparative advertising, contact Ayan Chowdhury, and for further information on expansive business practices, contact Maitland Kalton – each on 020 7278 1817.

Kaltons Solicitors, Suite 302, Spitfire Studios, 63-71 Collier Street, London, N1 9BE. Telephone +44 (0)20 7278 1817

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