We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
16 March 2020
Comparative advertising can be a useful tool for marketers. It positions competing brands against each other and helps consumers to make better choices. However, there are legal limits to comparative advertising which are set out in federal statutes such as the Competition Act and the Trademarks Act. These limits were explored in the Federal Court's recent decision in Petline Insurance Company v Trupanion Brokers Ontario Inc (2019 FC 1450).(1)
Petline Insurance Company and Trupanion Brokers Ontario Inc are competitors in the Canadian pet insurance business. A dispute between the parties arose as a result of a publication by Trupanion which featured a comparison between its insurance and that offered by Petline under its registered trademark PETSECURE. There were nine impugned statements in total, including:
Petline launched an application in the Federal Court alleging that the publication amounted to:
The first issue in the case was whether the statements made by Trupanion were false or misleading. This was a necessary factor in order for Petline to succeed on the first two grounds based on Section 7(a) of the Trademarks Act and Section 52 of the Competition Act. The second issue was whether Petline had shown that its goodwill had been harmed by the statements. This was a necessary factor in order for Petline to succeed on the third ground based on depreciation of goodwill under Section 22 of the Trademarks Act. The answer to both questions was no.
In assessing each of the statements, the court considered the claims made by Trupanion and the evidence on which it had based its claims. In all cases, the court found that there was nothing false or misleading about the statements. For one of the comparisons, the judge noted that the claim was "perhaps somewhat of an overstatement", but not false. For two of the statements, Petline had changed its policies after Trupanion issued the publication, rendering the statement false or misleading. However, in those cases, Trupanion had removed the affected statement from its website after Petline updated its policy.
As regards the alleged harm to Petline's goodwill in its registered trademark PETSECURE, the court found that the company had presented insufficient evidence of harm. Notably, there was no evidence from customers, employees or others about the impact of Trupanion's statement. Further, the evidence showed that both parties' business had grown in terms of gross value of premiums during the years in question. While some customers had switched from Petline to Trupanion during that time, even more had switched from Trupanion to Petline. Further, there was no information as to why any of the customers might have made the move. The judge noted that the evidence showed that policyholders may move from one insurer to another for any number of reasons.
Since there were no false or misleading statements and no depreciation of goodwill, the court dismissed the application with costs to Trupanion.
This case serves as a reminder that comparative advertising can be effective if done well. However, advertisers should be careful to ensure that all statements made in the comparison are true, not misleading and supported by evidence – particularly since comparative claims are likely to undergo more scrutiny. In addition, advertisers should continually monitor the marketplace to ensure that their statements remain true and, if there are any changes (eg, to a competitor's policy or product), the statements should be removed or amended. Finally, while depreciation of goodwill was not proven in this case, Section 22 of the Trademarks Act remains a risk in comparative advertising, even if the claims are true and not misleading.
Finally, brand owners which find themselves the target of unfair comparative advertising should remember that there are legal tools available to combat such claims.
For further information on this topic please contact Jamie-Lynn Kraft at Smart & Biggar by telephone (+1 613 232 2486) or email (email@example.com). The Smart & Biggar website can be accessed at www.smart-biggar.ca.
(1) The full decision is available here.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.