Proceed with caution

Advertisers must be careful when it comes to comparative advertising if two recent Ontario Court cases that resulted in interlocutory injunctions against comparative advertising campaigns are any indication.While the court decisions do not take away the freedom to do comparative advertising,...

Advertisers must be careful when it comes to comparative advertising if two recent Ontario Court cases that resulted in interlocutory injunctions against comparative advertising campaigns are any indication.

While the court decisions do not take away the freedom to do comparative advertising, they do highlight the potential risks advertisers face.

After spending a great deal of money to create a campaign, clients and agencies can find ads pulled via court injunction before they have even been ruled to be misleading, as in the case last month in Toronto of Maple Leaf Foods v. Robin Hood Multifoods.

The industry has been operating under the assumption that fair and accurate comparative advertising using trademarks relating to products or wares is legally acceptable, while past court decisions have not allowed comparative advertising using trademarks relating to services.

There was hope that comparative advertising for trademarks relating to services would some day be allowed.

The Maple Leaf-Robin Hood case, and a second case heard last month in Ontario Court, Church & Dwight v. Sifto Canada, also raised the issue of whether it is allowable to compare a product with an unnamed leading brand.

The most recent case, Maple Leaf Foods v. Robin Hood Multifoods, was decided in favor of the plaintiff, Maple Leaf.

Robin Hood is seeking leave to appeal the injunction. The leave to appeal, expected to be heard by mid-November, must be approved before the case will be allowed to move on to the Court of Appeals.

Robin Hood wants to appeal on the grounds that a number of previous cases, similar in many respects, were ruled in favor of the defendant.

If leave to appeal the injunction is denied, the original case could still continue on to trial.

By appealing, Robin Hood is seeking not only to have overturned the decision that its ads were misleading, but also to clarify the boundaries of comparative advertising.

On Sept. 29, in the General Division of the Ontario Court, Mr. Justice Peter Jarvis ruled that magazine ads for Robin Hood frozen pie crusts were false and misleading and ordered the advertising be pulled.

In ruling for the plaintiff, Maple Leaf Foods, maker of Tenderflake and Gainsborough frozen pie crusts, Justice Jarvis said the visual depiction of Maple Leaf’s products in the Robin Hood ads was false and misleading, and implied that Section 7(a) of the Trademarks Act had been violated.

He said the advertising created the impression that Maple Leaf’s pie crusts could not be used to form a top crust and would result in a misshapen pie, ruling that Maple Leaf’s brands would suffer irreparable harm if Robin Hood’s ads were not banned.

Under Section 7(a) of the Trademarks Act, ‘No person shall make a false or misleading statement tending to discredit the business, wares or services of a competitor.’

‘Their idea of a top crust’

The ads in question featured the headline, ‘Their idea of a top crust,’ with a visual of one bottom crust inverted on another, followed by, ‘Our idea of a top crust,’ and an appealing cherry pie with a decorative lattice pie crust.

The premise is that Robin Hood’s frozen pie crust offers a bottom crust and a choice of top crusts, while Maple Leaf’s Tenderflake and Gainsborough brands offer only bottom crusts.

One execution of the ad named Tenderflake and Gainsborough in the body copy, while the other did not.

It is unclear in the decision whether the injunction was granted based solely on the ad in which Maple Leaf’s products are named, or whether the ad referring to ‘other’ pie crusts is also at issue.

The ads were created by Ogilvy & Mather, Toronto.

On Sept. 23, the day the Robin Hood-Maple Leaf case was argued, the presiding judge, Justice Jarvis, surprised the lawyers involved in the case by releasing his decision in the Church & Dwight-Sifto Salt case heard earlier in the month.

Justice Jarvis granted an interlocutory injunction against Sifto Baking Soda for packaging which he said contained false and misleading information.

Jarvis said the information on the Sifto packaging discredited its competitor, Church & Dwight, holder of 80% of the market with Arm & Hammer brand baking soda, by claiming the Sifto product was the ‘only naturally occurring baking soda on the market.’

A competitor was not named in the copy.

The judge based his decision on the tort (a common law action not under a specific act) of injurious falsehood saying, ‘the plaintiff’s product is identifiable by implication in that its product dominates the market, and, for that reason, the disparaging comments would fall upon them with virtually full force.’

Elizabeth McNaughton, partner at Toronto law firm Blake Cassels & Graydon, says:

‘The tests the court applied in these two cases are the tests that are always applied in injunction matters, and a very important issue is that these are injunctions and are not trial or appeal decisions.

‘You proceed at your peril if you run a comparative ad, and it’s vulnerable in the tests enunciated in these cases,’ McNaughton says.

The test for granting interlocutory judgment is, simply put, if the plaintiff has established there is a fair case to be tried, and whether balance of convenience (which party will be damaged most if the injunction is not allowed) favors granting the injunction.

Says McNaughton: ‘The interesting facts are that the competitive trademark wasn’t mentioned in the Sifto case, and was only mentioned in one of the two ads in the Robin Hood case.

McNaughton says this suggests you cannot say things that are untrue about an unnamed competitor’s product if it is clear what product you are talking about.

‘The best advice is to recognize you have to be extra careful when you do comparative advertising, and if you’re going to make claims, you have to support them,’ she says.

Decisions in comparative advertising cases over the past two years have been going in different directions in lower levels of court such as the Federal Court of Canada, the Supreme Court of B.C. and the Ontario General Court Division.

The only way for the industry to have a benchmark is for a comparative advertising case to be heard in the Court of Appeals, and Robin Hood may be the company to set the precedent.

Lawyer Robert Mackay says while there are now few guidelines for advertisers and agencies to follow, a case going to a Court of Appeal would make the rules clearer but would not put an end to the legal wrangling.

Mackay, associate counsel with Gowling Strathy & Henderson of Vancouver has been practising in the area of advertising and marketing law since 1976 and has practical experience in this area.

Law is Mackay’s second career, entered after employment stints on the client and agency sides.

Mackay says the number of comparative advertising court cases are accelerating, attributing the change to the increasingly aggressive nature of Canadian marketers.

He points out that Section 4 of the Trademarks Act, which regulates when a mark is deemed to be used, talks about trademark of wares and services and seems to be the section that is being interpreted differently by various judges.

It had previously been thought service companies such as courier companies could not do comparative advertising naming competitors’ service marks, while companies such as Pepsi-Cola and Coca-Cola can, as long as it is fair and accurate and names only trademarks relating to wares.

Setting precedent for this belief were two cases between service advertisers in Federal Court, Trial Division: Purolator Courier v. Canadian Pacific Express & Transport in 1988, and Purolator Courier v. Mayne Nickless Transport in 1990.

Purolator was allowed an injunction in each case.

That decision was upheld in b.c. two years ago when a comparative advertising dispute between two eyewear retail chains, Eye Masters and Shopper’s Optical, allowed an injunction for the use of Eye Masters’ trademark by Shopper’s.

The judge concluded that the difference in Section 4 of the Trademarks Act between goods and services could be interpreted to ‘afford a broader measure of protection of services…than for wares,’ treating the case as one comparing trademarks relating to services, rather than one of trademarks relating to products or wares.

However, this past April in b.c., the Future Shop home electronics chain went to court against regional competitor A&B Sound, hoping the case would be ruled in the same way as Eye Masters.

Instead, the judge in the case supported the position of A&B Sound saying, ‘their fair and accurate comparative price ads do not offend.’

The judge in the case did not agree with the broad interpretation of wares and services in the Eye Masters ruling because it ‘would preclude comparative pricing, at least of services, and prohibit comparative price ads of a type that are commonplace in contemporary retail advertising of price-sensitive products.’

Mackay says beyond the services/wares distinction, the recent rulings have far-reaching implications for advertisers in other areas.

For example, in the case of Sifto, the ruling could be interpreted to apply to product advertising that compares a product with an unnamed leading brand.

‘If an advertiser is committed to a very strong comparative advertising approach, this really puts a great deal of pressure on them in terms of, are they willing to take this monetary risk while the issue gets sorted out.’

Mackay says companies that adapt u.s. creative for use in the Canadian market may also face problems because roughly 30% to 35% of u.s. advertising is comparative advertising.

The increase in comparative advertising cases taken to court mirrors the increase in trade dispute procedures heard by advertising standards councils such as the Canadian Advertising Foundation.

Susan Burke, caf vice-president of advertising standards, says, in 1993, only three disputes were heard, while there have already been seven in 1994.