a comparative study of comparative advertising in vietnamese and english law

2.1 The definition of comparative advertising The general definition of advertising Advertising originated from the word “adverture” in Latin language means tiveness, charm and alluremen

Master’s Programme

MASTER’S THESIS

A COMPARATIVE STUDY OF COMPARATIVE ADVERTISING IN

VIETNAMESE AND ENGLISH LAW

Dr Do Van Dai LLM.Ulrika Wennersten

Dr Christoffer Wong

The idea for this thesis comes to me when I made a report on a Business Law subject

in the Joint Swedish - Vietnamese Master Programme Based on materials on U.Kand EU Advertising laws, I realized that there are many differences in points of viewand law between Vietnam and these countries regarding Comparative advertising.While Vietnamese legislators are still suspicious of the benefits brought by

Comparative Advertising, it is encouraged in E.U as it can can provide useful

information for consumer and enhance fair competition between undertakings Fromvarious standpoints, it is easy to understand why the law related to Comparativeadvertising is set up in different ways In the internationalized context, when thepromotion of goods and services is not restricted to a single nation, how to establishlegal rules compatible with a common tendency based on the harmonization of theinterest of undertakings and those of consumers is an issue worth concerning

For helping me complete this thesis, I extend my deepest thanks to my professors,

my friends and my colleagues for their support, help and love I would like to express

my heartfelt gratitude to my supervisors, Dr.DoVan Dai and Ms.Ulrika Wennersten,who supported and gave me valuable comments and suggestions during my work I

am grateful to Dr Christoffer Wong for his guidance and help throughout the course

I would also like to express my special thanks to the professors in the Law faculty

of Lund University and the professors of Ho Chi Minh Law University for sharingtheir precious knowledge with me Finally, I would like to thank my friends and mycolleagues for supporting and encouraging me throughout my study

Although I tried my best, many deficiencies and shortcomings are still to be found

in my thesis I am grateful for any comments and suggestions

Ho Chi Minh city, December 2008

Preface and Acknowledgements 1

Table of Contents 2

Abbreviations 4

Executive Summary 5

1 1.1 1.2 1.3 1.4 2 2.1 2.1.1 2.1.2 2.1.3 2.2 2.2.1 2.2.1.1 2.2.1.2 2.2.2 2.2.3 3 3.1 3.1.1 3.1.1.1 3.1.1.2 3.1.2 3.2 3.2.1 3.2.1.1 3.2.1.2 3.2.2 3.3 4 4.1 4.1.1 Introduction 6

Rationale 6

Purpose 6

Methods 7

Delimitation 8

The definition of comparative advertising 8

The general definition of advertising 8

The definition of advertising in English law 9

The definition of advertising in Vietnamese law 12

Comparative remarks 15

The definition of Comparative Advertising 16

The definition of comparative advertising in English laws 17

Definition and classification 17

Analysing the definition of Comparative Advertising 19

The definition of Comparative Advertising in Vietnamese law 22

Comparative remarks 24

Lawful comparative advertising 25

Lawful comparative advertising in English law 25

Conditions for comparative advertising to be lawful in English law 25 Negative conditions 27

Positive conditions 36

General remarks 40

Lawful comparative advertising in Vietnamese law 41

Conditions for comparative advertising to be lawful under Vietnamese law 41

General conditions 42

Special conditions 44

General remarks 46

Comparative remarks 46

Sanctions applied for unlawful comparative advertising 48

Sanctions applied for unlawful comparative advertising in English law 48

The enforcement authorities in English law and practice 48

4.1.2.3

4.2

4.2.1

4.2.2

4.2.2.1

4.2.2.2

4.3

5

Sanctions applied to unlawful comparative advertising 49

Disciplinary Sanctions 49

Administrative Sanctions 50

Civil sanctions 50

Sanctions applied to unlawful comparative advertising in Vietnamese law 52 Enforcement authority 52

Sanctions 53

Administrative sanctions 53

Civil sanctions 53

Comparative remarks 54

Conclusion 55

Table of Statutes and other Legal Instruments 57

European Community Directives 57

1 Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising O.J No L 250, 19/09/1984 p.17 – 20 57

National Legislations 58

England 58 Vietnam 58 Table of Cases 60

Court of Justice of the European Communities 60

English Case 60

Bibliography 61

Official Reports and other Documents 61

Monographs 62

Articles in Journals, Anthologies etc 64

Regulations 2008 of the UK, SI 2008/1276Committee of Advertising Practice in the UKConsumer Protection from Unfair Trading Regulations

2008 of the UK, SI 2008/1277Court of Justice of the European CommunitiesEuropean Union

Misleading Comparative Advertising DirectiveOffice of Communications in the UK

Office of Fair Trading in the UKRadio Advertising Standards Code of the UKThe British Code of Advertising, Sales Promotion andDirect Marketing 11th edition, March 4th 2003

The Control of Misleading Advertisements Regulations

1988 (amended 2000, 2003)Trade mark Act 1994 of the UKTrading Standards ServiceTelevision Advertising Standards Code of the UKUnited Kingdom

Comparative advertising is a sales promotion method that compares one’s own goods

or services with those of another trader to emphasize price, value, durability or

quali-ty.1 In the UK, comparative advertising is regulated in three ways: self–regulation;the common law and statute law.2 Accordingly, comparative advertising is lawful if

it complies with some fairly obvious conditions e.g it is not misleading, does notdenigrate the competition, objectively compares material, relevant and verifiablefeatures of the competitor’s products In Vietnam, comparative advertising is regu-lated by the Law on commerce, the Law on competition and the Ordinance on Ad-vertising Nevertheless, the legal provisions on comparative advertising in Vietnamare unclear and hard to apply in practice Thus, this leads advertisers as well as thecompetent authority into difficulties when determining whether an advertisement is acomparative one or not and in drawing the line between lawful and unlawful com-parative advertising

The first part of this thesis contains some general issues concerning the rationale,purpose, delimitation, and methodology of the thesis The second part introduces,analyses and compares the definitions of advertising and comparative advertising inVietnamese and English law The third part discusses the conditions for lawful ad-vertising in each of the two countries Legislation, case law and practice are analysed

to produced a clear picture Sanctions applied to unlawful comparative advertisingwill be presented and analysed in part four Based on the method of comparison, re-marks at the end of each part will point out the similarities and differences betweenthe issues in the laws of the two countries and suggest some improvements related tocomparative advertising in Vietnamese law Finally, part five will be a summary ofthe previous parts

1

2

L.Bently and B Sherman, Intellectual property,2nd ed.,Oxford University Press 2004, p.916.

Ansgar Ohly and Michael Spence, The law of Comparative Advertising:Directive 97/55/EC

in the United Kingdom and Germany, Hart Publishing 2000, p.5.

under-a speciunder-al form of under-advertising, is under-also under-a sunder-ales promotion device thunder-at compunder-ares theproducts or services of one undertaking with those of competitors.4 It can be a usefulsource of information to the consumer, as well as an important tool in promotingcompetition.5 Thus, most countries have permitted comparative advertising The UKwas one of the first countries in the EU to permit comparative advertising if it com-plies with some provided conditions.

In Vietnam the current legal provisions on comparative advertising are vague andincomplete In fact, a definition of comparative advertising as well as the way of dis-tinguishing between direct and indirect comparative advertising - which is very im-portant for determining the legality of comparative advertising - have not yet beenprovided by the law It is in fact necessary to set up some specific legal provisionsconcerning comparative advertising in Vietnamese Law Based on these legal provi-sions, undertakings will be able to determine the boundary between lawful andunlawful comparative advertising and adjust their advertising activities appropriately.This would enhance fair and equal competition between undertakings From thesereasons along with my own interest in it, I have chosen the topic “A comparativestudy of comparative advertising in Vietnamese and English law” for my thesis

4

As the BPRs states "Comparative Advertising means advertising which in any way, either explicitly or by implication, identifies a competitor or product offered by a competitor."

5

Theo Bodewig, “The regulation of Comparative Advertising in the European Union”, 9

Tu-lane European & Civil Law Forum, 1994, 179-214, at p.185 Also see Samia M

Kirmani,“Cross-boder Comparative Advertising in the European Union, 19 Boston College International &

Com-parative Law Review, No.1, 1996, 201-215, at p.201.

ing and point out the similarities and differences in the definitions in two countries.Moreover, this thesis will present and analyse the conditions of lawful comparativeadvertising in both Vietnamese and English law through legislation, case law andpractice to review the similarities and differences in the rules of legal comparativeadvertising under Vietnamese and English law In addition, it will evaluates andcompare the sanctions applied to unlawful comparative advertising Finally, the the-sis will suggest some ways of improving the provisions on comparative advertising

in Vietnamese law

1.3 Methods

In the process of writing this thesis, several methods such as description, synthesis,analysis, interpretation and especially comparison were used The descriptive andsynthetic methods6 were used to collect all materials on comparative advertising and

to give the main contents of the provisions on comparative advertising in Vietnameseand English law In addition, based on the analytic method, fundamental conceptsand conditions concerning the legality of comparative advertising in Vietnamese andEnglish law will be examined The comparative method, a study of the relationshipbetween the laws of more than one country, is not limited to comparing legal rulesbut requires comparing the relevant non- legal (political, economic, ethical,

religious, ect.) aspects of the two countries as well7 It can lead to a better

understanding of Vietnamese laws on comparative advertising In addition, thecomparative method can help us to find out the similarities and differences in thelaws related to comparative advertising and explain why these differences or

similarities exist Moreover, after having compared how to Vietnamese and Englishlaw deal with the laws of comparative advertising, we can evaluate the solution used

in Vietnamese and English law in order to determine which of them is the best one.8

Finally, based on comparative method, the good legal rules of comparative ing developed in English law can be implemented to Vietnamese law.9

advertis-6 The descriptive method is a way of presenting and explaining provisions and cases, and the synthetic method is a process by which we collect materials and combine them together resulting

in the formation of something new.

7

Michael Bogdan, On the value and method of rule- comparison in comparative law, in

Heinz – Peter Mansel, Thomas Pfeiffer, Herbert Kronke, Christian Kohler, Rainer Hausmann,

Festschrift fur Erik Jayme, Sellier European Law Publishing 2004, p.1239.

1.4 Delimitation

My research is limited to English law and Vietnamese law Further, the UK law isbased on EU Directives, therefore, this thesis also will examine these Directives re-lated to comparative advertising as well as cases from the ECJ interpreting of theDirectives Moreover, special rules applicable to comparative advertising related tocertain goods or service such as medicinal products or solicitors are beyond the scope

of this thesis In addition, it does not mention criminal sanctions but concentrates oncivil and administrative sanctions

2.

2.1

The definition of comparative advertising

The general definition of advertising

Advertising originated from the word “adverture” in Latin language means tiveness, charm and allurement.10 According to the Vietnamese dictionary, Advertis-ing means “propagandize, introduce goods, services or undertakings to consumers inmany way with the purpose of persuading them to buy these goods or services andthus promote the goods and services”.11 According to the Oxford dictionary, adver-tising is drawing attention to or describing favourably (goods or services) in a publicmedium to promote sales or making them generally or publicly known, or seeking bypublic notice to make them so known.12 Advertising is a paid form of a nonpersonalmessage communicated by business firms, non-profit organizations, or individualsand is transmitted to a target audience through mass media such as television, radio,newspapers, magazines, direct mail, outdoor displays or mass - transit vehicles13 The

attrac-ion I focus on the statutory, case law and preparatory and secondary sources such as articles and books.

Truong Dai Hoc Luat Ha Noi, Giao trinh Luat Thuong Mai Viet Nam tap 2 (Text book on

Vietnamese Commercial Law volume 2 by the Law College of Hanoi), Cong An Nhan Dan lishing 2006, p.151 Also see Nguyen Thi Dung, “Khai niem quang cao trong phap luat Viet Nam

Pub-và anh huong của no đen viec hoan thien phap luat ve quang cao” (The definition of advertising

in Vietnamese law and its influences on improving law on advertising), 12 State and Law

main objectives of advertising is14 informing and persuading consumers to purchasespecific brands offered by the advertisers, thereby getting profits.15 However, adver-tising is also used to inform, educate and motivate the public about non-commercialissues, such as AIDS, political ideology, energy conservation, religious recruitment,deforestation and charity.16 Thus, as far as language alone is concerned, the notion ofadvertising not only covers the giving of information about goods and services topromote sales but also its use to inform, propagandize and motivate the public re-garding social and cultural life.

In the UK, advertising is regulated through self-regulation, case law and statutes.Self-regulation which has a long tradition in U.K commerce,17 plays an essential role

in advertising.18 The most important element of this self-regulation is the code ofadvertising, the CAP code.19 It lays down standards for non-broadcast advertise-ments, sales promotions and direct marketing communications This code reflects theprinciples of the International Code of Advertising and Practice issued by the Inter-national Chamber of Commerce20 The code is monitored by The Committee of Ad-vertising Practice (CAP) Although the code does not provide a definition of adver-tising, it does lay down the scope of the regulation of advertising activities Pursuant

to this code, statutory, public, police and other official notices/information, produced

by public authorities and the like as opposed to marketing communications, are side its scope.21

out-14 Armand Dayan, Le marketing (translated into Vietnamese by Do Duc Bao), Ho Chi Minh

City publishing 2001 p 8 (Originally publishing by Presses Universitaires de France 1985).

The first voluntary codes were introduced to regulate some professions at the end of the 19 th

century: see L Brandmair, Die Freiwillige Selbstkontrolle der Werbung, Carl Heymanns

British Code of Advertising, Sales Promotion and Direct Marketing 11 th version 2003.

Ohly & Spence, supra note 2, p.6.

British Code of Advertising, Supra note 19, Art 1.2 (f).

In relation to broadcasting advertising, the BCAP TV Code22 and The RadioCode23 set out the rules that govern advertisements on television and radio respec-tively According to TV Code, advertising means “any publicity by advertisers inbreaks during or between programmes This is irrespective of whether payment ismade.”24 From this definition as well as from the regulations in the code, we canconclude that it regulates not only advertising related to commerce but also advertis-ing concerning religion, faith, philosophies, beliefs25 and charity.26 The code applies

to undertakings which use advertising to promote their business as well as to anyother relevant organisation or individual The Radio Code states “Advertising refers

to any items, including spot advertisements and promotions with advertisers, whichare broadcast in return for payment or other valuable consideration to a licensee or

which seek to sell to listeners any products or services.27 This definition seems rower than the one in TV Code as it is restricted to paid broadcasting advertising forthe purpose of selling goods and services to listeners Yet, the regulations of thiscode state that advertising is not only used to promote the commercial activities ofundertakings but also to solicit donations by organisations28 and related to religion,systems of belief or philosophies of life.29

nar-According to the Town and Country Planning Act (Control of Advertisements)Regulations 1992 and the Town and Country Planning Act 1990, “advertisementmeans any word, letter, model, sign, placard, board, notice, awning, blind, device orrepresentation, whether illuminated or not, in the nature of, and employed wholly orpartly for the purposes of, advertisement, announcement or direction.”30

The UK is a member of the EU Thus, advertising activity is also regulated by theregulations which is enacted to implement the EU Directive regulating advertisinginto national law With the purpose of unifying the European common market, har-

22 Television Advertising Standards Code November 2004 (The Code is an updated edition of the 2002 ITC Advertising Standards Code.)

23 Radio Advertising Standards Code November 2004 (The Code is an updated edition of the former Radio Authority’s advertising and Sponsorship Code).

Radio Code, supra note 23, section 1.

Ibid, section 3, rule 2.

Ibid section 3, rule 3.

The Town and Country Planning Act 1990, section 336(1).

monising the laws of its Member States and protecting the economic welfare of sumers by acting against unfair competition, the EU has adopted many directivesconcerning advertising e.g Directive 89/552/EEC concerning the pursuit of televi-sion broadcasting activities31, Directive 97/36/EC32 amending Directive 89/552/EEC,Council Directive 84/450/EEC concerning misleading advertising (Directive

con-84/450/EEC),33 Directive 97/55/EC of European Parliament amending Directive84/450/EEC concerning misleading advertising so as to include comparative adver-tising (Directive 97/55/EC)34 and Directive 2006/114/EC of the European Parliamentand the Council concerning misleading and comparative advertising (Directive2006/114/EC).35According to Directive 84/450/EEC “advertising” means the making

of a representation in any form in connection with a trade, business, craft or sion in order to promote the supply of goods or services, including immovable prop-erty, rights and obligations36 Directive 2006/114/EC, which repeals Directive

profes-84/450/EEC, also provides the same definition of advertising at article 2(a) Thus, theadvertising regulated in these directives is mainly that used by undertakings to pro-mote their business

The UK has enacted The CMARs 1988 (amended 2000, 2003)37to transpose rective 84/450/EEC into its national law and enacted The BPRs38 to implement Di-rective 2006/114/EC Pursuant to the BPRs, “advertising” means any form of repre-sentation which is made in connection with a trade, business, craft or profession in

Di-order to promote the supply or transfer of a product.”39 “Product” in BPRs means anygoods or services and includes immovable property, rights and obligation.40 so thedefinition of advertising in BPRs is the same as that in Directive 2006/114

Dir 84/450, Supra note 33, Article 2.

The Control of Misleading Advertisements Regulations 1998 (amended 2000,2003), SI

1988/915 This regulations regulated business to business relations and business to consumers

relations in misleading and comparative advertising but it is now invalid.

The definition of advertising is also covered in the case Richard Butler v DerbyCity Council.41 The claimant displayed a banner in the front elevation of his propertywith the phrase “Save Five Lamps” in red capital letters and below this appeared thelogo, telephone number and website of the “Derby Heart” organisation The judgeheld that a banner is an advertisement if it is “in the nature of and employed, wholly

or partly for the purpose of, advertisement, announcement or direction ” The DerbyHeart logo and the blue lower- case lettering giving its telephone number and websitewere advertising the existence of Derby Heart It matters not whether, when com-bined with the words “Save Five Lamps”, the logo and lettering are regarded as be-ing in the nature of (and for the purpose of) an advertisement for Derby Heart andone of its aims, or as an announcement of its existence and one of its aims, or as adirection to those who might wish to support one of its aims.42 The court affirmedthat the banner fell within the extended definition of advertisement in section

336(1).43 According to this, the definition of advertisement is clearly intended tohave a wide meaning, covering not only materials which promote a product or ser-vice but also an announcement or direction publicizing the activities of a non-

commercial organization

In short, in English law, definitions of advertising can be found in regulations,statutes and case law Based on the purpose and the applicable entities of each code,regulation or statute, advertising can be understood in a broad or narrow sense In thenarrow sense, advertising is the making of a representation in connection with trade

to promote the supply of goods or services In its broader sense, it covers not only themaking of representations about goods or service in public to promote sales but alsoany announcement or direction about the activities of non-commercial organisationssuch as charities or religious organisations

In Vietnam, advertising has been prominent for some time.44 In the years of menting the Centrally Planned Economy, advertising was not a concern of business

imple-41

42

43

44

Case Richard Butler v Derby City Council [2005] EWHC 2835 (Admin).

Ibid paragraph 29 of the judgement.

Ibid paragraph 30 of the judgement.

In the book “Thương hoc phương cham”(Guideline on commercial studies) in 1928 by

Lu-ong Van Can, it states that if a trader would like to increase the number of his consumers, to velop business, advertising should take place as it has much power Thus, to make advertise-

de-ments, it should not be regretted that it costs much money Also see, Le Tai Trien, Luat Thuong

Mai Viet Nam dien giai (Interpretation on Vietnamese Commercial law) Vo.1, Kim Lai

Publish-ing 1976, p 32.

entities because at that time the need to promote goods and services as well as petition between undertakings seem nonexistent When Vietnam changed the countryfrom one having a Centrally Planned economy to one with a market economy with aSocialist Orientation45, advertising become a vital promotional tool frequently used

com-by business entities From 1990 on, legal documents regulating advertising have beenenacted.46 One of the important of these is Decree No.194 /CP on the 31st of Decem-ber, 1994 of the government on advertising activities on Vietnamese territory.47 Ac-cording to this Decree, advertising activities comprise the presentation of announce-ments regarding businesses, commodities, services, trade-marks, names and logos asrequired by the activities of the production-business-service establishments.48 It isalso affirmed that the information activities of the agencies of the Party and Stateaimed at disseminating and popularizing their policies, undertakings and laws are notcovered by this Decree The definition of advertising in this Decree is thus a narrowone The advertising only aims to cover businesses, commodities, services, trade-marks, names and logos Information in the form of announcements, messages orclassified advertisements is not considered as advertising

Advertising activities are currently regulated by two main groups of legal norms.The first is legal documents drafted or enacted by the Ministry of Culture and Infor-mation49 which include the Ordinance on Advertising 2001 of the Standing Commit-tee of National Assembly and these guiding documents such as Decrees or Circularwhich also regulate advertising The second is legal documents promulgated by theMinistry of Trading50which regulate commercial advertising Pursuant to the Ordi-nance on Advertising 2001, advertising is interpreted in a broad sense, and meansintroducing business activities and goods and services to consumers, including ser-vices both with and without a profit-making objective.51 Advertising of profit-

45 Vietnam launched its Open Door policy called “Doi Moi” (renovation) in 1986 See the

sixth Party Congress Document.

46 See (a) Circular No.738/VP on August 10 th ,1990 of Ministry of Culture Information –

Sports and Tourism on Advertising management, (b) Joint Circular No.1191- TT/ LB on June

29 th 1991 regulating on “label administration and product advertising“, (c)Decision

No.3248/QĐ-UB on December 12nd on regulations of panel advertising in Hanoi.

This Decree is now invalid.

See Decree No.194/ND- CP on December 31 st , 1994, Article 1.

Now, It is changed into the Ministry of Culture, Sports and Tourism.

Now, It is changed into the Ministry of Trading and Industry.

See Ordinance on Advertising No.39/2001/PL-UBTVQH 10 of 16 November 2001, Article 4(1).

making services means advertising economic and social services, aiming to generateprofits for service-providing organizations or individuals while advertisement of non-profit services means advertising services for realizing social policies and providinginformation in the form of announcements, messages or classified advertisements52.These regulations provide that advertising with a non-profit making objective shouldstill be regulated to ensure the unified treatment, truthfulness and exactness of adver-tising; to protect the welfares of advertisers as well as the receiver; and to improvemorality, lifestyles and ethnic culture.53 Decree No.24/2003 expressly stipulates thatpolitical information is not subject to regulation by the Advertisement Ordinance orthis Decree.54

The Law on Commerce does not define advertising but it does give a definition ofcommercial advertising: “activities of commercial enhancement conducted by abusiness entity aimed at introducing customers to the business activities in goods andservices of such business entity.”55 In practice, the case between Kymdan and VanThanh,Uu Viet56 illustrates how this definition works The case arose from the factthat, in 2001, KimDan Mattress Company placed a notice in some newspapers57 withthe following content “KymDan has the honour to inform our honourable consumersthat in a spring mattress, the force supporting the body is irregularly distributed and,

in addition, its quality will decreased over time due to inferior raw material If theelastic level of the springs is low, the mattress will become flat after being used for along time Conversely, if the elastic level of spring is high, springs can easily be bro-ken and this causes danger for users In poly-urethane foam mattresses, the plasticity

is very high This kind of mattress is inelastic and as a result of this, it will quicklyfatten For these reasons, KymDan does not produce spring mattress or poly-urethanefoam mattresses All of KimDan’s products are made of 100% natural rubber has

52See Decree No 24/2003/ND-CP of March 13, 2003 detailing the implementation of the

or-dinance on advertising, Article 2.

See Decree No.24, supra note 52, Article 1.

Law on Commerce No 36/2005/QH, Article 102.

Case Kim Dan v Van Thanh,Uu Viet, Quyet dinh giam doc tham cua Hoi dong tham phan

Toa an nhan dan Toi cao (the review judgements of the council of judges of the Supreme Peope Court No.20/2003/ DS – GDT, June 23 rd 2003 ) 2003- 2004, Vo.1, pp 119-124.

57

The newspapers include Sai Gon giai phong (Sai Gon Liberation newspaper), phu nu (

Woman Newspaper), Tuoi Tre Newspaper, Nguoi lao dong (The Labour newspaper), Sai Gon

Tiep Thi (SaiGon Marketing Newspaper).

high durability and do not become flat over time…” The Council of Judges of the

Supreme People Court affirmed that this notice is an advertisement of Kymdan.From this, it can be concluded that an announcement in the public media made by acompany to introduce its goods will be an advertisement Although Vietnamese lawmakes a distinction between advertising and commercial advertising and commercialadvertising seems to be just a part of advertising, in practice, there is no distinctionbetween the terms In a word, pursuant to Vietnamese law, advertising involves in-troducing business activities and goods and services to consumers, including servicesboth with and without a profit-making objective

Both English and Vietnamese law have defined advertising and regulated advertisingactivities doubtless because of the important role of advertising in the economy andsociety Both laws defined advertising to cover the making of representations by un-dertakings about goods or services to promote sales and the announcements made byindividuals or non-profit organizations giving information about their activities.Nevertheless, in Vietnamese law, the subjects subject to regulation as advertisinghave been restricted due to the use of the term “consumers” in the definition of ad-vertising This means that advertising is only directed toward consumers while thesubjects of advertising could be any audiences e.g the watchers, listeners or readers

of these advertisements in general On the other hand, English law does not mentionthe person whom advertising is directed towards It might be better to replace theterm “consumers” in the definition of advertising in Vietnamese law by the term

“audience” or “public” This is reflected in the draft of the Law on Advertising.58

Accordingly, advertising means introducing business activities and goods and vices to the public, including services both with and without a profit-making objec-tive

ser-English law only uses the one term “advertising” for advertising made by takings with a view to profit and advertising made by non-profit organisations orindividuals Contrariwise, Vietnamese law use two terms “advertising” and “com-mercial advertising” to refer to different kinds of advertising though there are fewregulations relating to the advertising of non-profit services Most of the provisionsrelated to advertising are in the Ordinance on Advertising 2001 and the CommercialLaw 2005, which is used to regulate commercial advertising This creates an unnec-essary redundancy in advertising law In the draft Law on Advertising, there are still

under-58 See the 4 th Draft of Law on Advertising, Article 1.1, available at

http://www.vibonline.com.vn/vi-VN/Drafts/Details.aspx?DraftID=310&Version=4

no provisions related to the advertising of non-profit services.59By contrast, Englishlaw has special regulations covering special kinds of such as appeals for charitabledonation or advertising related to religious or belief issues.60 Any future Law on Ad-vertising in Vietnam should contain more provisions related to the advertising ofnon-profit making purposes.

2.2 The definition of Comparative Advertising

Comparative Advertising is a special form of advertising61, a sales promotion devicethat compares the products or services of one undertaking with those of another, orseveral competitors.62Comparative Advertising persuades consumers of the superior-ity of one brand in a product category by comparing it implicitly or explicitly to an-other brand in the category63 It is also a useful source of information to the con-sumer, as well as an effective promotional tool for the advertiser64 Comparative ad-vertising has been widely used in the United States65 with 80% of all television ad-vertisements66 and 30% to 40% of all advertisements, containing comparative

claims.67 Nevertheless, before the adoption of the EU directives related to tive advertising, in some Member States, comparative advertising used to be consid-ered “bad” and unnecessarily harmful to competitors68 Thus, in order to enhance

See TV code, supra note 22, rule 10 and Radio Code, supra note 23, section 3, rule 2, rule

Péter Miskolczi- Bodnár, “Definition of Comparative Advertising”, 3 European Integration

See Opion on Amended Proposal supra note 62.

Charlotte J Romano, “Comparative Advertising in the United States and in France”, 25

Northwestern Journal of International Law and Business (2005), pp.371- 413, at p.371

66

67

Ibid.

Naveen Donthu, “A Cross-Country Investigation of Recall of and Attitude Toward

Com-parative Advertising”, 27 J Advert.(2008), pp.111- 128 , at p.111.

Paul Spink and Ross Petty, “Comparative advertising in the European Union”, 47

Interna-tional and Comparative Law Quarterly (1998), pp 855- 876, at p 855 The explicit identification

of competitors is banned in Belgium, Italy and Luxembourg and generally prohibited as unfair

market transparency, provide information for customers, promote competitivenessbetween suppliers and create conditions for the free movement of goods and ser-vices69, the EU has enacted many directives to regulate comparative advertising70 Inthese directives, “comparative advertising” means any advertising which explicitly or

by implication identifies a competitor or goods or services offered by a competitor.71

2.2.1

2.2.1.1

The definition of comparative advertising in English laws

Definition and classification

Comparative advertising is fairly popular in the UK It has been calculated that morethan 30 per cent of advertising there is comparative to some degree.72 Even beforethe EU promulgated Directive 97/55 regulating comparative advertising, a definition

of comparative advertising has already appeared in English case law In the caseBismag Ltd v Amblins (Chemists) Ltd,73 Amblins issued an advertising pamphlet inwhich they claimed that most patent medicines were sold at too high a price by com-paring its product formula and prices with those of well known proprietary medi-cines, including Bismag’ product, to highlight its own lower prices In this case, thecourt held that although the defendant had only used the plaintiffs' trade mark as aconvenient method of describing the merits of their own goods, they had infringedthe exclusive right of the plaintiffs.74In Compaq Computer Corporation and Another

v Dell Computer Corporation Limited and Another,75 Dell Ltd placed two tisements which used the plaintiffs' trade mark COMPAQ in respect of the plaintiffs'personal computers to compare the plaintiffs' computer system with the defendant’s

adver-In this case, the court also held that there was a clear case of infringement of the

reg-competition in Germany and France It is permitted in Spain and the Netherlands but only in very limited circumstances.

Dir 97/55 supra note 34, recital 1, 2, 3, 5 and Dir 2006/114, supra note 35 recital 3, 4, 5, 6 ,

Dir 84/450/EEC, Dir 97/55/EC and Dir 2006/114/EC.

Dir 2006/114, supra note 35, Article 2c.

Hazel Carty, “Registered Trade Marks and Permissible Comparative Advertising”[2002] E.

I P.R, pp 294- 300, at p 294.

73

74

75

Case Bismag Ltd v Amblins (Chemists) Ltd [1940] EWCA, Ch.D 667.

It is noted that at that time the Trade Mark Act 1938 is valid.

Case Compaq Computer Corporation and Another v Dell Computer Corporation Limited

and Another [1992] EWHC Ch.D.

istered trade mark From these cases, it could be concluded that comparative tising is a form of advertising in which a trader refers to the trade marks of othertraders (usually its competitors) to compare its products or prices with those of theother traders to highlight its products In statutes, comparative advertising was firstdefined in the Control of Misleading Advertisement Regulations(amendment) 2000now in the BPRs The definition of comparative advertising in BPRs is similar to that

adver-in CMRs Accordadver-ing to rule 2(1) of BPRs “comparative advertisadver-ing means ing which in any way, either explicitly or by implication, identifies a competitor or aproduct offered by a competitor.”76

advertis-The term “comparative advertising” may cover different forms of advertisingclaims.77 For Theo Bodewig, comparative advertising consists of single productcomparative advertising, system comparative advertising or personal comparativeadvertising, depending on the nature of the object of comparisons 78 Usually the ob-jects of the comparison are the product or service offered by the advertiser and those

of his competitors The claim may be, for example, that X has as many features as Ybut X costs less In that case, a product or service is directly addressed and its pro-ducer is identified However, the object of the comparison may not be a single prod-uct of an identified or identifiable competitor, but a whole range or category of prod-ucts with certain properties This kind of comparison is most often found in adver-tisements of trade or industry associations promoting the products of their members,and comparing them to near substitute products of other branches of the industry.The association of producers of glass bottles may, for instance, place an advertise-ment alleging that glass bottles are better for the environment than plastic bottles.This kind of advertising is “systems comparisons” in which reference is made not toone brand or producer but to a whole class of products and a whole branch of indus-try A third category of comparative advertising does not directly compare the prod-ucts or services of a competitor, but is instead directed to the competitors themselvesand their personal characteristics This category includes, for instance, reference torace, gender, religion, nationality, professional conduct and experience

Apart from the object of comparison, other criteria for distinguishing differentkinds of comparative advertising can be used One such criterion is the degree ofexplicitness of the comparison Comparative advertising may consist of direct com-parative advertising and indirect comparative advertising The reference to the com-petitor may be explicit when the competitor is expressly mentioned in the advertis-

76

77

78

The BPRs, supra note 38, regulation 2(1)

Bodewig, supra note 5, at p.182.

Ibid.

ing On the other hand, the reference may be more subtle and the competitor notmentioned expressly but the circumstances and the design or wording of the advertis-ing make it clear to the consumer whose products are being compared with those ofthe advertiser.

In addition, comparative advertising may divide into positive comparative tising and negative comparative advertising79 Positive comparative advertising aims

adver-to take advantage of the reputation of a competiadver-tor’s product by identifying oneproduct with the other The advertiser claims that its product is “as good as” thecompetitor’s product, or that it is made the same way A negative comparative adver-tisement, on the other hand, aims to alert the consumer to differences between thetwo products in a way which casts a bad light on the competitor’s product The ad-vertiser often claims that its product or service is better than its competitor’s andthereby at least implicitly criticizes it Advertisers can combine negative and positivecomparison in its claims like “as good as ….but cheaper”

2.2.1.2 Analysing the definition of Comparative Advertising

In order to engage in comparative advertising under English law, an advertisementmust identify “a competitor or products offered by a competitor.” In addition, based

on case law, the ECJ also stated that the test for the comparative nature of advertising

is whether this advertising could identify, explicitly or by implication, a competitor

or goods or services offered by a competitor.80 The identification of a competitor or

of the product of a competitor plays an important role in determining whether anadvertisement is a comparative one or not Hence, an advertisement that only looks

as the advertiser’s own products, for example comparing the present price of a

product with the old price or an earlier model with its new product, are not

considered as comparative advertising.81 This is correct because this type of

comparison does not refer to an identifiable competitor or its product Also,

advertising comparing the advertiser’s own products to each other does not involvethe conflicts of interest/infringement issues caused by normal Comparative

79Ardi Kolah, Essential Law for Marketers, Butterworth - Heinemann Publishing 2002, at p.

183.

http://books.google.com.vn/books?id=5_TzRGogOhsC&pg=PA184&dq=%22comparative+adve rtising%22&lr=&sig=ACfU3U3btGdcUSSwcgltG9baW82CHNGzUg#PPA183,M1 ; see Ulf

Doepner and Frank – Erich hufnagel, “German Courts Implement The EU Directive 97/55/EC –

A Fundamental shift in the law on Comparative Advertising?” 88 Trademark Reporter(1998) ,

pp 537-540, at p 541.

80

81

See Case C-112/99 Toshiba Europe [2001] ECR I- 7945, paragraph 29.

Miskolczi- Bodnár, Supra note 61, at p 33.

advertising Further, if an advertiser uses the legally protected word “Champagne” in

an advertisement for computers, or indeed mineral water, this does not fall within itsscope either even though comparison are made, because wine is not sold in competi-tion with computers.82As mentioned above, the main element in determining a com-parative advertising is that there is a reference to a competitor or products of a com-petitor Unless the undertakings or their products referred to in advertising competewith the advertiser, there is no comparative advertising Whether there is a competi-tive relationship between undertakings depended on the finding that the goods thatthey offer have a certain degree of substitutability for one another Products whichare, to a certain extent, capable of meeting identical needs may be substitutable forone another.83 So, in order to determine whether there is a competitive relationshipbetween the advertiser and the undertaking identified in the advertisement, it is nec-essary to consider (a) the current state of the market and consumer habits and howthey might evolve; (b) the part of the Community territory in which the advertisingwas disseminated, without, however, excluding, where appropriate, the effects whichthe evolution of consumer habits seen in other Member States might have on the na-tional market at issue, and (c) the particular characteristics of the product which theadvertiser sought to promote and the image which it wished to impart to it For thepurpose of measuring the possible degree of substitution, it is impossible to restrictoneself to consumer habits in a Member State or in a given region.84

An advertisement which explicitly or by implication identifies a competitor orproducts of a competitor will, as noted, fall under the definition of comparative ad-vertising Direct comparative advertising is present when the name, or brand of thecompetitor or the product of the competitor is expressly mentioned in the compari-son Indirect identification exists if there is a reference to the competitor, the businesscircumstances of the competitor or a direct or indirect group designation85 Neverthe-less, if advertising only refers to a type of product but does not refer to a specificundertaking or product, it raises the question whether it is still comparative advertis-ing A recent judgement of the ECJ86 affirms that a reference in an advertisement to atype of product and not to a specific undertaking or product can be considered to be

82 Jeremy Phillips, Trade mark Law - A Practical Anatomy, Oxford University Press 2003,

p.249.

83

Case 170/78 Commision v United Kingdom [1980] ECR 417, paragraph 14 and Case

356/85 Commission v Belgium [1987] ECR 3299, paragraph 10.

84

85

86

Case C-112/99, supra note 80, at paragraph 42 of the judgement.

Miskolczi- Bodnár supra note 61, p.10.

Case C- 381/05 Delandtsheer Emmanuel SA [2007] ECR I- 08501.

comparative advertising where it is possible to regard that undertaking or the goodsthat it offers as actually referred to by the advertisement.87 According to case law, thedefinition is broad and covers all forms of comparative advertising, so it is sufficientfor there to be a statement referring even by implication to a competitor or to thegoods or services which he offers.88 If an undertaking solely refers to a type or

product, this does not mean that the advertisement in principle falls outside the scope

of the directive In practice, where there is only one competitor in the particular ket, it is not difficult for an undertaking to affirm an implied reference when the ad-vertiser claims his product’s superiority without naming the competing product.89

mar-A literal interpretation of the definition of comparative advertising which required

a single competitor of the advertiser, or the goods or services of a single competitor,

to be identified would be incompatible with the broad definition of comparativeadvertising and, accordingly, contrary to the case law of the ECJ That a number ofthe advertiser’s competitors or the goods or services that they offer may be identified

as being referred to by the advertisement is of no relevance for the purpose of

recognising the comparative nature of the advertising Thus, it is for the nationalcourts, in each individual case, to determine whether, having regard to all the

relevant elements of the case, an advertisement enables consumers to identify,

explicitly or by implication, one or more specific undertakings or the goods or

services that they provide as actually referred to by the advertising90 The court,when making that assessment, must take into account the presumed expectations of

an average consumer who is reasonably well informed and reasonably observant andcircumspect.91

Note that the definition of comparative advertising does not require that the ence to a competitor or products of a competitor involves an actual comparison Inparticular, it is not the case that advertising must contain claims on its superiority toits competitor or regarding the products of the advertiser and those of competitors

refer-87

88

Ibid, paragraph 24.

Ibid paragraph 16, also see Case C-112/99 supra note ,81 paragraphs 30 and 31, and Case

C-44/01 Pippig Augenoptik [2003] ECR I-3095, paragraph 35.

89

Munuel Morasch, Comparative Advertising: A comparative study of trade mark laws and

competition laws in Canada and the European Union, p.48, available at

http://papers.ssrn.com/sol3/results.cfm?RequestTimeout=50000000; also see Ohly & Spence

supra note 2, p 46.

90

91

Case - 381/05 supra note 86, paragraph 22.

Ibid, paragraph 23 Also see Case C-44/01 Pippig Augenoptik [2003]ECRI- 3094,

paragraph 55, and Case C-356/04 Lidl Belgium [2006] ECR I-8501, paragraph 78.

This is confirmed by the eighth recital of the preamble to Directive 2006/114.92 Caselaw also shows that in order for there to be comparative advertising within the

meaning of the definition, it is sufficient for a representation to be made in any formwhich refers, even by implication, to a competitor or to the goods or services which

he offers There is no need for a comparison between the goods and services offered

by the advertiser and those of a competitor.93 In Toshiba v Katun (Case C-112/99),that Katun in its catalogue refers to the Toshiba machines with which its spare partscan be used, and that in the list of available parts identifies the corresponding To-shiba part under the heading OEM product number could be considered as a refer-ence to Toshiba Though there is no claim containing a comparison saying, for in-stance, that Katun’s product is better than Toshiba’s, there is a competitive relation-ship and there is a reference to a competitor or product of competitor This reference

is enough to constitute comparative advertising.94

2.2.2 The definition of Comparative Advertising in Vietnamese law

There are a few regulations on comparative advertising in Vietnamese law, but itseems that Vietnamese legislators do not pay much attention to this field Before theLaw on Competition was adopted, comparative advertising was in the list of prohib-ited advertising regulated by Commercial Law.95 The Ordinance on Advertising 2001does not list comparative advertising as a prohibited advertising activity Yet, it isstill prohibited in the Decree guiding this Ordinance.96 At present, comparative ad-vertising is regulated by Commercial Law 200597 and Law on Competition 2004.98

Nevertheless, these laws as well as the draft Law on Advertising99 do not have adefinition of comparative advertising and also do not mention any elements whichmay indicate its presence In practice, advertisements like, for example “Detergent X

is the best”, “Conditioner Y is more fragrant” or “Bank Z is the best foreign bank inVietnam” commonly appear in broadcasting and non broadcasting media These

See the eighth recital of the preamble to Dir 2006/114, supra note 35.

Case C-112/99 Supra note 80, paragraph 31.

Ibid , paragraph 40.

See Law on Commerce No.05/1997/QH 9 of 10 May 1997, Article 192(2).

See Ordinance on Advertising, supra note 51, Article 5, also see Decree No 24/2003 supra

note 52, Article 3(7).

97

98

99

Law on Commerce 2005, supra note 55, Article 109(6).

See Law on Competition No.27/2004/QH 11 of 03 December 2004, Article 39 (6).

See draft 4 th of Law on Advertising, supra note 58.

raises the question whether such advertisements constitute comparative advertising.

It is hard to answer this question in the absence of a definition Normally, where lawdoes not provide a definition, we can reason that the term should be understood inthe common or usual way.100 So what is the common understanding of comparativeadvertising ? According to the Vietnamese dictionary, “comparison” means consider-ing or examining one thing and another with a view to recognizing similarities anddifferences between the things compared or their relative superiority or inferiority.101

Based on the definition of the terms “comparison” and “advertising”, we can say thatcomparative advertising means activities of commercial enhancement conducted bybusiness entities aimed at introducing customers to the goods and services of suchbusiness entity by claiming similarities, differences or relative superiority betweenthe goods or services of the advertiser and those of the competitor Accordingly,comparative advertising may consist of advertisements claiming equality, advertise-ments claiming superiority and advertisements claiming superlative or unique qual-ity.102

An advertisement claiming equality is a kind of advertising which exploits thereputation of the advertiser’s own products or service by advertising them as beingequivalent to those of the competitor Advertisements claiming superiority claim thatthe products of the advertiser have a quality or style superior to those of the competi-tor Superlative comparative advertising claims that the products of the advertiser arethe best on the market, that its quality, design, service is the best or that none of theother products on the market have the same standards as its products Depending onthe degree of comparison and the truthfulness of the information, the likelihood ofharm to the consumer will vary Yet, it seems that this definition we have suggested

is both too broad and too narrow For example, advertising which does not present acomparison but merely refers to the products of competitors would not be seen ascomparative advertising On the other hand, advertising which compares its productwith products of another undertaking which is not its competitor would be seen ascomparative advertising In the KymDan case,103 Kymdan mentioned the quality of

100 Phan Huy Hong, “Quang cao so sanh trong phap luat canh tranh - Mot nghien cuu so sanh

Luat” (Comparative advertising in Competition Law- A comparative legal study), State and Law

Journal No.1 (2007), pp 43-51, at p.44.

101

Nguyen Nhu Y, Dai Tu Dien Viet Nam (Great Vietnamese Dictionary), Minister of

Educa-tion and Vietnamese Culture & Language central publishing 2000, p.1448.

102

Le Danh Vinh, Hoang Xuan Bac, Nguyen Ngoc Son, Phap luat canh tranh tai Viet Nam

(Competition laws in Vietnam), Judicial Publishing 2006, p 165.

103

Case Kim Dan v Van Thanh,Uu Viet, supra note 56, pp.119-124.

various kinds of mattress in its advertisement It pointed out the disadvantages ofkinds of mattress that it did not produce On the other hand, it highlighted the bene-fits of the rubber mattress it did produce The Supreme People Court affirmed thatKymdan had used an advertisement which compared its goods with those of otherundertakings (including Van Thanh and Uu Viet) From this case, it could be as-sumed that comparative advertising is advertising in which the advertiser comparesits goods with those of other competitors with or without mentioning their names.However, settled cases and the general understanding are not enough to enable one toaffirm whether an advertising is a comparative one because neither is regarded as alegal source.

Like Vietnamese law, before the enactment of Directive 97/55, English statutes didnot contain a definition of comparative advertising though comparative advertisingwas permitted After Directive 97/55 was adopted, the UK amended the CMRs 1988

to implement this directive As a result, a definition of comparative advertising vided in what is now regulation 2(1) of BPRs On the other hand, there is no officialdefinition on comparative advertising in Vietnamese law at all even though the na-ture of comparative advertising is different from that of general advertising Deter-mining whether an advertisement is a comparative one is an important step prior toexamining whether it is permitted or prohibited

pro-The definition of comparative advertising in English law has also been examined

by case law and the ECJ According to case law, comparative advertising is to beunderstood in a broad sense All advertising which can explicitly or by implicationidentify a competitor or product offered by a competitor will constitute comparativeadvertising Advertisements which only compare the advertiser’s own product

among themselves or which do not identify a competitor or the products of a petitor are outside its scope Unlike English law, Vietnamese law does not acceptcase law or the judgement of courts as sources of law Thus, the judgement of thecourt in KymDan case only has value as a reference and is not a rule for determiningwhether advertising is comparative Therefore, it is necessary to provide a definition

com-of Comparative advertising in Vietnamese law as this will help traders draw a linebetween advertising and comparative advertising In addition, this would allow trad-ers to be more flexible in their promotional activities and would create a fair com-petitive environment between undertakings The definition of comparative advertis-ing in English law could be used as a starting point for Vietnamese law It should besupplemented by a definition of comparative advertising in the law of advertising.Comparative advertising would then mean advertising which explicitly or by impli-cation identifies a competitor or a product offered by a competitor

3.1

Lawful comparative advertising

Lawful comparative advertising in English law

The UK is one of the Member States of the EU, which regarded comparative tising as legal before the EU Directives regulating misleading and comparative ad-vertising were adopted.104 Comparative advertising can provide consumers with use-ful information, encourage fair competition and suppliers and enhance market effi-ciency.105 Comparative advertising, if conducted in an unlawful way which presentsinadequate or overly subjective information on competing goods and services maydenigrate competitors and derive unfair advantages from such inaccurate compari-sons.106 It would be desirable to set up conditions to ascertain the legality of com-parative advertising

English law

The 1994 TMA permitted the use of a sign or trade mark of another business wherethe use of a mark in advertising is "for the purpose of identifying goods or services asthose of the proprietor or a licensee” is not contrary to honest practices in industrial

or commercial matters; and does not take unfair advantage of, or is not detrimental

to, the distinctive character or repute of the trade mark.107 BPRs, which was enacted

to transpose directive 2006/114 into national law is considered as the main statutoryprovision regulating comparative advertising in the UK This regulation has set outcriteria to verify the legality of comparative advertising.108 Further, at common law,comparative advertising is only permissible if it does not amount to passing off109,

104 Brunhildesteckler Steckler and Frank Bachmann, “Comparative Advertising in Germany

with Regard to European Community Law”, 10 E.I.P.R (1997), pp.578-586, at p.578.

105

See Preamble of Directive 97/55 supra note 34 and Preamble of Directive 2006/114 supra note 35 Besides, World Federation of Advertisers (WFA) at http://www.wfanet.org and Euro- pean Association of Commercial Communications Agencies (EACA) at http://www.eaca.be af- firm that “comparative advertising, when correctly done is a desirable means of product commu- nication.”

106

107

108

109

Miskolczi- Bodnár, supra note 61, at p.26.

Section 10(6) Trade Marks Act 1994.

See Dir 2006/114, supra note 35, Article 4 These conditions will be analysed below.

Passing off is a common law tort which can be used to enforce unregistered trademark

rights Passing off is designed to prevent trader from misrepresenting his goods or services as

being the goods and services of the plaintiff, and also prevents one person from holding out his

injurious falsehood110, or defamation.111 112 The CAP code is built upon four generalprinciples: (i) that all advertisement should be legal, decent, honest and truthful, (ii)that all advertisements should be prepared with a sense of responsibility to consum-ers and to society, (iii) that all advertisements should respect the principles of faircompetition accepted in business and (iv) that no advertisement should bring adver-tising into disrepute.113 There are several specific rules of BCAP that directly impact

on comparative advertising Under rule 18.1 comparisons with identified competitorsand/ or their product are allowed “in the interests of vigorous competition and publicinformation They should neither mislead nor be likely to mislead”.114 The otherconditions e.g comparing products meeting the same needs or intended for the samepurpose, objectively comparing one or more material, relevant, verifiable and repre-sentative features of those products…115 are the same as the conditions provided forlawful comparative advertising in BPRs Finally, the TV Code and the Radio Coderequire that advertising be “legal, decent, honest and truthful.”116 Both of these codesalso contain specific rules regulating comparative advertising that are equivalent tothose in the BPRs and the CAP code.117 The conditions for verifying the legality ofComparative advertising can be divided into two kinds: negative and positive.118

goods or services as having some association or connection with the plaintiff when this is not

Defamation is the statement which might tend to harm the reputation of the competitor so

as to lower him or her in the estimation of the community or to defer third parties from ing or dealing with him or her.

associat-112

Paul Stephenson, “Comparative Advertising and Intellectual Property Rights”, [2006]

E.I.P.R, pp 182 – 191, at p.182 Also see Ohly & Spence, supra note 2, p 8.

See Television Code, supra note 22, p.6 and see Radio Code, supra note 23, p.1.

Ibid, rule 5.4.6, p 23, and see Radio Code, supra note 23 rule 6, pp.11- 12.

See Miskolczi- Bodnár ,supra note 61, p.6.

3.1.1.1 Negative conditions

The negative conditions are that comparative advertising is not misleading;119 doesnot create confusion among traders,120 does not discredit or denigrate the trade

marks, trade names, other distinguishing marks, products, activities, or circumstances

of a competitor.121 It must not take unfair advantage of the reputation of a trade mark,trade name or other distinguishing marks of a competitor or of the designation oforigin of competing products.122 Finally, it should not present products as imitations

or replicas of products bearing a protected trade mark or trade name.123

a Comparative advertising is not misleading

The prohibition of misleading comparative advertising is easy to justify.124 ing advertising provides untrue and deceptive information which can give rise toerroneous consumer decisions, thereby distorting the market As misleading advertis-ing is incapable of assisting rational consumer choice, it also affects the competitor’sgoodwill to a disproportionate extent Pursuant to regulation 4 of BPRs, comparativeadvertising shall be permitted only when it is not misleading under regulation 3 ofBPRs and under regulation 5 of the CPRs125 or a misleading omission under regula-tion 6 of CPRs According to regulation 3 paragraph 2 of BPRs, advertising is mis-leading which (a) in any way, including its presentation, deceives or is likely to de-ceive the traders to whom it is addressed or whom it reaches; and by reason of itsdeceptive nature, is likely to affect their economic behaviour; or (b) for those rea-sons, injures or is likely to injure a competitor According to regulation 5, a mislead-

Mislead-119 The BPRs, supra note 38, Part 1 regulation 4a,b (replicates Article 4a of Directive

Ibid regulation 4e (replicates Article 4h of Directive 2006/114).

Ibid regulation 4f (replicates Article 4d of Directive 2006/114).

Ibid regulation 4h (replicates Article 4f of Directive 2006/114).

Ibid regulation 4i (replicates with Article 4g of Directive 2006/114).

Ohly & Spence, supra note 2, p.59.

Consumer Protection from Unfair Trading Regulations 2008 implements Directive

2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business to consumer commercial practice in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council O.J L- 149, 11/06/2005.

ing action can include false product information or deceptive presentation.126 leading actions also cover any marketing of a product (including comparative adver-tising) which creates confusion with any products, trade marks, trade names or otherdistinguishing marks of a competitor; or involve any failure by a trader to complywith a commitment contained in a code of conduct which the trader has undertaken

Mis-to comply with.127 According to regulation 6, misleading omissions include ting128 or hiding material information;129 or providing material information in a man-ner which is unclear, unintelligible, ambiguous130or failure to identify commercialintent.131

omit-Nevertheless, to verify whether a comparative advertisement is misleading is notalways easy Some questions concerning the interpretation of the provisions related

to misleading have arisen In particular, it has been asked whether a comparison thatdoes not list all relevant aspects is misleading for that reason alone According tosome commentators, as a matter of principle, it is not misleading for a comparisonnot to list all relevant aspects132 Regulation 4d of BPRs133 indicates that the charac-teristics compared must be representative, so only in exceptional cases can the selec-tion of characteristics be so arbitrary that the overall impression is misleading So,there is no obligation to be complete The question has also been discussed by theECJ in Pippig v Hartlauer.134 This case arose after Hartlauer ran an advertising cam-paign in which leaflets directly compared Pippig’s prices for frames with Zeisslenses with Hartlauer’s prices in respect of the same brand of frames but with Op-timed lenses In addition to leaflets, Harlauer also advertised on television and in

Ibid, Regulation 5, paragraph 3.

Ibid, Regulation 6.1(a).

Ibid, Regulation 6.1(b) “Material information” means: (a) the information which the age consumer needs, according to the context, to take an informed transactional decision; and (b) any information requirement which applies in relation to a commercial communication as a result

radio broadcasts These advertisements featured the same price comparison but didnot state that the lenses were different brands and (on television) showed a Pippigshop front and the company logo This also raised the question whether the

comparison of the price of a brand-name product with the price of a no-name product

of equivalent quality is permitted where the name of the manufacturer is not

indicated The ECJ stated that in the context of comparative advertising, where there

is compliance with the conditions set out in Article 3a(1) of Directive 84/450 onmisleading and comparative advertising, as amended by Directive 97/55135, an

advertiser is able to use the trade mark of a competitor's products.136 However, theECJ also noted that the omission of a better known brand name could, in certaincircumstances, be misleading This occurs when the brand name of the products maysignificantly affect the buyer’s choice, the comparison concerns rival products andthe extent to which the respective brand names are known differs significantly137.Nevertheless, the ECJ did not state that the comparative advertisement in this caseviolated the required conditions It was up to the national court having regard to all

the relevant factors of the case which is brought before it, to decide whether the

conditions for lawful comparative advertising are met, taking into account the

presumed expectations of an average consumer who is reasonably well informed andreasonably observant and circumspect.138

In addition, an advertisement which compares the general price level based on abasket of consumables selected from goods sold by various competitors can be con-sidered misleading The case of Lidl Belgium GmbH & Co KG v EtablissementenFranz Colruyt NV139 has provided some clarification of this issue In this case, Lidland Colruyt each operated a chain of stores that sold basic consumables Colruytlaunched an advertising campaign based on a comparison of his prices with those ofhis competitors using two separate types of comparative advertising In the first type,

he sent his customers a leaflet in which he compared the general level of the pricescharged by him and his competitors in respect of a wide range of products He usedthe comparison to estimate the amount of money that consumers could save annually

135

136

137

138

Now, it is Directive 2006/114, Article 4.

Case C-44/01 supra note 134, paragraph 49.

by making all their purchases from him The comparison related to both branded andunbranded products and the competitors were divided into two general groups,namely supermarkets and hard discount stores The leaflet did not specify the generallevel of prices charged by each competitor It only contained a collective reference to

a range of amounts that could be saved by shopping at the advertiser rather than atany other supermarket and hard discount store Secondly, he announced he had re-cently launched a line of basic consumables which were cheaper than any other com-parable product sold on the market These products were properly labelled so thatconsumers could identify them easily and distinguish them from all other similargoods sold by the advertiser

To decide whether the advertisement was misleading, it is essential to take intoaccount the information contained in the advertisement and all its relevant features

An omission may make an advertisement misleading, especially when it seeks toconceal a fact that would have deterred a significant number of consumers from mak-ing a purchase.140 Thus, comparative advertising related to a general level of pricesmay be misleading in any one of three ways First, if it leads consumers to believethat the comparison relates to all products sold by the advertiser rather than just thesample of them selected Secondly, if the advertisement fails to identify the precisedetails of the comparison thereby creating the impression that all the products sold bythe advertiser are cheaper than those of his competitors Finally, if the advertisementcontains a collective reference to a range of amounts that may be saved by consum-ers making their purchases from the advertiser without specifying individually thegeneral level of the prices charged by each of his competitors.141 In short, the firstand most important condition for a comparative advertisement to be lawful is that it

is not misleading

b It does not create confusion among traders

Regulation 4(e) of BPRs prohibits any comparison that “creates confusion amongtrader, between the advertiser and a competitor or between the trade marks, tradenames or other distinguishing marks or products of the advertiser and those of acompetitor.” This condition was also specified in CMRs However, some commenta-tors wonder whether this regulation is really necessary since it seems similar to theprevious condition.142 In fact, both misleading advertising and advertising that cre-ates confusion are almost identical with regard to protecting both consumers and

competitors Both of them can lead to wrong purchase decisions and can unfairlydamage a competitor’s goodwill.143

Based on the language of Regulation 4e of BPRs, this condition refers only tocomparisons creating confusion and not to comparisons that run the risk of creatingsuch confusion Pursuant to EU Trade mark Directives144 and TMA 1994 of UK, amere risk of confusion is sufficient to establish trade mark infringement145 Bodewigreasoned that, as the ECJ held in the Toshiba decision,146 the rules on comparativeadvertising are to be construed in such a way that they take account of the purpose oftrademark law (and vice versa) It is generally assumed that terms that are used iden-tically in both directive - for instance the likelihood of confusion - are to be inter-preted in the same way The abstract likelihood of confusion is sufficient and there is

no need for there to have been actual confusion147

This has also been clearly explained in the O2 case.148 Hutchison 3G (“H3G”) ran

a series of television advertisements comparing H3G’s mobile telephone “pay as yougo” services with those of its major UK competitors, including O2 The advertise-ment in question made a price comparison between O2’s and H3G’s services In do-ing so, the advertisement featured bubbles similar to those registered as trade marks

by O2 In its judgement, the ECJ confirmed that it was apparent from Article

3a(1)(d) of Directive 84/450 that comparative advertising is not permitted if there is alikelihood of confusion between the advertiser and a competitor or between theadvertiser’s trade marks, goods or services and those of a competitor149 In order todetermine whether the use of a sign identical or similar to a registered mark creates alikelihood of confusion, it is necessary to consider the following four conditions150.Firstly, that use must be in the course of trade Secondly, it must be without theconsent of the proprietor of the mark Thirdly, it must be in respect of goods or

143

144

Article 6(2) a of the Directive 2005/29/EC, O.J L- 149, 11/06/2005.

Directive 89/104/EEC of 21.12.1988 approximate the laws of the Member States relating

to trade-marks, (OJ L 40, 11.2.1989, at 1), Directive as last amended by Decision 92/10/EEC (OJ

L 6, 11.1.1992, at 35) and Directive 2008/95/EC of 22.10.2008 repeals Directive 89/104/EEC.

Case C- 112/99 Toshiba supra note 80.

Henning- Bodewig, supra note 132, p.47.

Case C-533/06 O2 Holdings Limited v Hutchison 3G UK Limited [2008] not yet reported.

Ibid, paragraph 55 of the judgement.

Ibid, paragraph 57 of the judgement.

services which are identical with, or similar to, those for which the mark is

registered Finally, it must affect or be liable to affect the essential function of thetrade mark by reason of a likelihood of confusion on the part of the public The factthat there was a risk that the public might believe that the goods or services in

question come from the same undertaking or from economically-linked undertakingsconstitutes a likelihood of confusion In this case, the use of bubble images similar tothe bubble trade marks did not give rise to a likelihood of confusion on the part ofconsumers The advertisement, as a whole, was not misleading and, in particular, didnot suggest that there was any form of commercial link between O2 and O2 (UK) onthe one hand, and H3G, on the other151 Generally, only if a comparative

advertisement gives rise to a risk of confusion will it be considered unlawful

c It does not discredit or denigrate the trade marks, trade names, other distinguishing marks, products, activities or circumstances of a competitor

Discrediting is a milder form of denigration and since both are covered there is noneed for further distinctions Nevertheless, not all of comparative advertising whichdiscredit the trade marks or trade names of a competitor always constitutes discredit-ing within the meaning of this provision since any critical comparative advertisinginvolves a certain discrediting of the competitor or his products.152 If this were en-tirely prohibited, the intended liberalisation of comparative advertising would not beachieved Therefore, only in cases where advertising unnecessarily discredits ordenigrates the trade marks, trade names, products or activities of a competitor, should

it be considered unlawful In particular, if comparative advertising emphasises thebenefits of its own goods or service and reasonably shows the disadvantages of rivalproduct, this advertising is always permissible153 On the other hand, that compara-tive advertising only focuses on negative aspects of the competitor or his product isnot acceptable Discrediting can also result from an inappropriate and aggressivetone, an unobjective representation or valuation or even a unspecific, global rejec-tion

Turning back to Pippig Augenoptik v Haurlter,154 we should consider whether aprice comparison in which the products are chosen in such a way as to obtain a pricedifference greater than the average price difference and/or the comparisons are fre-

151

152

Ibid, paragraph 63 of the judgement.

Henning-Bodewig, supra note 132, p.47, also see at

http://www.asa.org.uk/cap/advice_online/advice_online_ database/Show+Entry.htm?advice_onlin e_id=62.