Using a competitor's trade marks in comparative advertising

The Trade Marks Act 2002 makes it clear that the use of a competitor's trade mark in comparative advertising is allowable in certain circumstances - although advertisers should take care not to overstep the mark.

The proper extent to which the rights of a trade mark proprietor should be enforceable against a competitor who has used a registered trade mark in comparative advertising has been the subject of debate for some time, and has now been addressed by an amendment to the trade marks legislation to permit such use within limits.

The Trade Marks Act gives the registered proprietor of a trade mark the “exclusive” right to use the mark in relation to the goods for which it is registered. This means that there has historically always been a basis for a trader to contend that any comparative advertising by a competitor which used the trader's trade mark infringed that mark.

Because use must be “in a trade mark sense” for there to be infringement, the comparative advertiser would generally claim in response not to have been using the mark as a trade mark, but rather using it “descriptively”, i.e. simply to identify the relevant product. This is often a fine or illusory distinction; and presented particularly difficult issues given that the only real way of describing some products is to use a registered trade mark (e.g. a “Big Mac”).

The ability of trade mark proprietors to sue for trade mark infringement by otherwise unobjectionable and accurate comparative advertisements came to be seen as an undesirable restriction on the freedom of traders to inform the public of the respective merits of products. Even where trade mark infringement was established, the Court became reluctant to grant injunctive relief to stop the comparative advertising, and treated damages as being an adequate remedy for the infringement.

Now that section 94 of the Trade Marks Act 2002 has come into force, some of these issues have been addressed. Section 94 provides:

94. No infringement for comparative advertising of registered trade mark— A registered trade mark is not infringed by the use of the registered trade mark for the purposes of comparative advertising, but any such use otherwise than in accordance with honest practices in industrial or commercial matters must be treated as infringing the registered trade mark if the use, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

This change means that a competitor's registered trade mark can now be used in comparative advertising without infringing the mark, provided the use does not fall foul of the balance of the section. That part of the section introduces new issues, i.e. whether the use:

1. is otherwise than in accordance with honest practices in industrial or commercial matters;
   
   
2. without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

This appears to leave significant scope for arguments of trade mark infringement to continue to arise; particularly in cases where there are issues about the accuracy of the comparisons being made, or where the comparisons are to some degree derogatory rather than purely factual.

There are various decisions of the English Courts on the similarly worded section in the UK legislation which will be relevant to the scope of the proviso to section 94 in New Zealand.

While now permitting the use of a competitor's trade marks in comparative advertising, section 94 of the Trade Marks Act 2002 does not therefore give carte blanche to comparative advertisers, and they must continue to take care not to overstep the mark.

Enquiries and information

For more information on the use of a competitor's trade marks in a comparative advertisement, please email or call Alan Ringwood on 64 9 916 8925.