Seven Principles to Follow When Contemplating Comparative Advertising in Canada

While comparative advertising is common Canada, that does not mean that Canadian laws allow a “free for all” approach. Competitors who feel that their business has been hurt by a comparative advertisement can complain to the appropriate regulator (e.g. the Competition Bureau, Health Canada, the Canadian Food and Inspection Agency), file a trade dispute with Advertising Standards Canada, or initiate a lawsuit in the appropriate Canadian court. The legal and public relations consequences can be significant.

The Canadian case law on comparative advertising is often complex, contradictory and should be examined carefully when reviewing a proposed comparative advertising concept before the advertisement is produced. There are, however, some basic principles that apply to most comparative advertising scenarios. Those principles are outlined below.

1. Do not copy.

• Do not use your competitor’s logo or artwork, otherwise you may be successfully sued for copyright infringement.

• Do not use your competitor’s trademark (registered or unregistered) on your business’ products or packaging, or when advertising your services. Again, you may be successfully sued for an intellectual property violation.

2. Tell the truth, and nothing but the truth.

• All claims in the ad – about both your and your competitor’s products and/or services – must be truthful and not misleading.

• All claims must be substantiated before advertisement. For example, any testing to support claims made in the comparative advertisement must be conducted before the advertisement is published, broadcast or otherwise distributed.

3. Do not confuse opinions with facts.

• Any testimonials should be presented as individual opinions, not facts. Bear in mind that testimonials in Canadian advertising must meed certain requirements.

4. Do not play the name game.

• Just because the ad does not name your competitor(s) does not mean that your business is not liable.

• An unnamed competitor or group of competitors may be able to successfully sue if they are readily identifiable or are targeted by your advertising, the claims in your advertising are false, and there is damage to the competitor’s or competitors’ business(es).

5. Do not badmouth your competitors.

• An unfairly disparaged competitor can sue for trade libel.

• The situation can get even worse when the comparative ad displays a competitor’s trademark(s). In those circumstances, proceedings can be brought under the Canadian Trademarks Act for making false or misleading statements that tend to discredit a competitor. If the trademark is registered, proceedings can also be brought under the Trademarks Act for depreciating the trademark’s goodwill even if false statements are not made.

• Be especially careful with risqué humour and puffery in comparative ads, which can cause offence and backfire.

6. Compare apples to apples.

• Any comparison made between your business’ products/services and that of your competitor’s should be factual, and compare similar products/services, features, benefits, properties etc.

• Do not ignore significant defects in your company’s product/service, or a significant advantage of your competitor’s products/services.

7. Do not kick your competitors when they are down – or about to launch new revenue streams.

• Consider why a comparative ad is being contemplated at this time. If the answer is to disrupt a competitor’s product launch or cause other damage and the competitor initiates legal or other action, the adjudicator will have to decide who could suffer more damage – your business (e.g. by having the ads pulled due to a court order) or your competitor. There is a significant risk that the timing could be used against your business.