Not that long ago, it was considered distasteful to mention a competitor's name or show its trademark in ads. Instead the advertising industry came up with phrases like "Brand X" and "The Leading Brand."
Today, many ads go right for the gut: Hardly a day passes that you can't go a day without seeing bar graphs, taste tests and surveys directly comparing products by name.
The Federal Trade Commission (FTC) doesn't discourage these types of ads. The agency's policy statement on comparative ads says in very clear terms that neither industry self-regulation nor broadcasters should make any effort to restrain the use of truthful comparative ads. The statement goes on to say: "comparative advertising encourages product improvement and innovation, and can lead to lower prices. ... For these reasons, the commission will continue to scrutinize carefully restraints upon its use."
But the FTC's position doesn't mean you should press the pedal to the metal if your company is planning a comparative ad campaign. Speed traps lay ahead if you create, sell or accept ads or advertise via traditional media, the Internet, direct mail or email. Without a thorough understanding of the laws and regulations involving comparative ads — and good legal advice — you run the risk of being slapped with expensive lawsuits and penalties by the FTC.
First, the FTC restricts what you can say. Basically, the ads must be "truthful and nondeceptive," and contain:
But there's more. You must comply with the Lanham Act, a federal law that regulates trade practices and is the basis for most private lawsuits over advertising claims. Primarily, the law bans two kinds of comparative ads: false claims about an advertiser's own product and false or misleading claims about a competitor's product.
To succeed in a claim under the Lanham Act you must show that an offending ad:
Comparative ads can certainly be effective and there is no reason to avoid them. But keep these principles in mind before you launch a campaign:
Comparative advertising can be complicated and you may need legal assistance. With sound advice and precautions, you'll reap the benefits of your advertising — and avoid the prohibitive expense of a lawsuit.
Another issue to deal with in comparative ads is the trademark.It has long been understood that a competitor's trademark can be used in ads. The "fair use" doctrine of the Copyright Act makes some exceptions to a trademark owner's exclusive right to the mark. Even the most prestigious marks can be used in comparative ads and news stories.
However, many states have laws against trademark dilution — treating a trademark in a way that tarnishes it and lessens its distinctive quality.
John Deere won a trademark dilution suit against a maker of pesticide sprayers for its use of green and yellow on its equipment. Deere registered that iconic color scheme as a trademark in 1998 and has been aggressive about enforcing it in court. The complaint alleged trademark dilution as well as federal trademark infringement and unfair competition.
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