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Wednesday, 31 January 2007

Potential Loopholes in Comparative Advertising


What is comparative advertising1? It takes place when the advertiser compares his product to another known product. It "rides on the reputation" of the mentioned product. It also "runs down" and potentially causes "dilution" of the competitor product. In some countries, unfair competition laws have made comparative advertising an offence. Recent laws have allowed comparative advertising as long as it does not mislead the public.

In Malaysia, sections 38(1)(b) and (c) of the Malaysian Trade Marks Act 19762 provide for the infringement of trademark by "importing a reference to the proprietor or registered user or to the goods of each of them".3

During a recent Q & A session in my LLM night class, we discovered several possible loopholes in the Malaysian law of trademarks (in relation to comparative advertising).

Potential Loophole #1

The first loophole is that the Trade Marks Act only applies to registered trade marks.4 So, this means that comparative advertising can potentially be carried out with unregistered trademarks.5 Can this be justifiable? Yes, it can be, if the Government wishes to encourage people to register under the Trade Marks Act.

Faced with the prospect of not having any statutory remedy, the trademark proprietor is forced to rely on common law remedies. Yet, the most suitable remedies to him are passing off and dilution -- both not likely because passing off requires confusion (which does not happen in comparative advertising) and dilution is difficult to prove.

Potential Loophole #2

The second loophole is the fact that comparative advertising requires that the advertiser do the comparison himself. This can be avoided if the advertiser merely reproduces a comparison survey report written by a third party. The advertiser is not representing anything, he is merely disseminating the written survey report.


Conclusion
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Footnotes

1. An attempt at defining "Comparative Advertising" was tried by Péter Miskolczi-Bodnár http://www.uni-miskolc.hu/uni/res/kozlemenyek/2004/DEFINITION.doc. A more economic-slanted article, try this one by Andersen and Renault: http://www.bu.edu/econ/seminars/microeconomics/pdfspr06/comparAd1005.pdf

2. A copy is available at the Japan Patent Office website: http://www.jpo.go.jp/shiryou_e/s_sonota_e/fips_e/pdf/malaysia/trademark_act.pdf

3. Following section 4(1)(b) of the UK Trade Marks Act 1938.

4. Section 82 of the Trade Marks Act 1976:

82. Unregistered trade marks.
(1) No person shall be entitled to initiate any action to prevent or to
recover damages for the infringement of an unregistered trade mark.
(2) Notwithstanding subsection (1), nothing in this Act shall be deemed
to affect the right of action against any person for passing off goods
or services as those of another person or the remedies in respect thereof.


5. By the way, the Coca-Cola logo is reputedly not registered in Malaysia under the Trade Marks Act 1976, but this is subject to further confirmation ;-)
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