by Charlotte J. Romano*
- I. Introduction
- II. A Shared Principle Resting on a Shared Policy
- A. Comparative Advertising: A Means of Improving Consumer Welfare and Stimulating Free Competition
- B. The Authorization of Truthful and Non-Confusing Comparative Advertising
- 1. The Rule: The Authorization of Comparative Advertising
- 2. Shared Corollaries to the Authorization of Comparative Advertising
- 3. Shared Limits on Comparative Advertising
- III. Different Limitations on Comparative Advertising
- A. Vague and General Comparative Advertising
- B. Comparative Advertising Dealing with the Value of Another’s Trademark138
- IV. Conclusion
Comparative advertising has been widely used for over thirty years in the United States. By contrast, the use of this advertising format has traditionally been – and still is – very marginal in France. Thus, when a commercial comparing the composition of two brands of mashed potatoes was broadcast on French national television in February 2003, several TV viewers believing this type of advertisement to be prohibited, notified the French authority responsible for controlling television information broadcasts.1 A comparison of available comparative advertising statistics provides a relevant illustration of the contrast between the two countries. About 80% of all television advertisements2 and 30% to 40% of all advertisements contained comparative claims in the United States in the early 1990’s.3 Conversely, only twenty-six advertisements were considered to be a form of comparative advertising in France in 1992 and 1993.4 Although one might assume that a lot of ink has been spilled over such a striking contrast, few commentators have devoted themselves to a comparative analysis of the two legal regimes.
The term “comparative advertising” refers to any form of advertising in which a trademark owner draws a comparison between his product, service, or brand and that of a competitor. Comparative claims are variable in nature. They may explicitly name a competitor or implicitly refer to him. They may emphasize the similarities (positive comparisons) or the differences (negative comparisons) between the products. They may state that the advertised product is “better than” (superiority claims) or “as good as” the competitor’s (equivalence or parity claims).
The issue of the legality of comparative advertising has given rise to numerous debates and discussions on both sides of the Atlantic.5 The reason lies in the fact that “[t]ypically, comparative advertisements contain more – or at least apparently more – information than ‘normal’ advertisements… and the possible abuse of or benefit to the consuming public is greater.”6 In addition, consumers seem to accord greater importance to comparative claims than to non-comparative ones.7 Legislative authorities, courts, administrative agencies, researchers, and consumers’ representatives often have to deal with the same straightforward question: to what extent should comparative advertising be authorized or limited?
The answer requires an articulation of the conflicting interests of the parties involved in comparative advertising:8 the advertiser, the competitor subject to the comparison, and the consumer. Most significant is the conflict between the advertiser and the competitor.9 On the one hand, the advertiser’s objective is to inform the public about the qualities of his products or services in a way that makes consumers more likely to buy them. He wants to be free to use comparative advertising whenever it appears to be the most effective advertising strategy.10 On the other hand, the competitor is concerned not only with decreasing the number of ways his rivals can describe their products or attract consumer attention, but also with protecting his reputation and goodwill as well as the fairness of commercial practices. He wants to impede his rivals from criticizing his trademarks or goods, or from using them as a standard which they claim to also meet. The competitor, therefore, has a clear interest in the prohibition of comparative advertising. At the very least, he wants to be able to prevent his competitors from making false or misleading statements about his offered products or services.11 For the sake of clarity, it must be noted that the competitor is also sometimes the advertiser (and vice versa) and so each has a dual interest. When it comes to comparative advertising, however, the established competitor, or the one with the strongest market position, has a greater interest in the prohibition of this marketing tool as he is more likely to be used as a benchmark by other producers in the market. Between those conflicting interests stands the interest of the consumer who desires to be accurately informed about the features of the goods or services available on the market.12
There is a close interdependent relationship between the above particular interests. Traditionally, the objective pursued in each country with respect to competition serves as a guideline in determining the individual weighting of each of them: if the objective is to protect each individual competitor against his rivals’ aggressive business practices and to promote competitor welfare, the trend will be to limit comparative advertising. On the contrary, if it is to stimulate the competitive process by promoting free competition and to improve consumer welfare in the marketplace,13 emphasis shall be focused on the interest of the advertiser. Today, both the United States and France wish to stimulate free competition and consumer welfare.14 As a result, both countries’ policies encourage comparative advertising.
The central issue of this article is to determine why, despite these identical guiding policies, comparative advertising remains unusual in France while it is commonplace in the United States. Attempting to answer that question unavoidably raises numerous related issues: can the two regimes be different and nevertheless equally meet the shared objectives of free competition and consumer welfare? Which other policies, values, and standards, if any, clash with the policy in favor of comparative advertising? Is one country’s regime better than the other?
Part II describes and analyzes the development of the policy in favor of comparative advertising in both countries. It explores U.S. and French laws of comparative advertising and explains that one same principle—the authorization of truthful and non-confusing comparative advertising—prevails in the two countries as a result of this shared policy. Part III contends that the French legal boundaries to comparative advertising are tighter than those in the United States. It analyzes the justifications for the existence of such limitations in France, as opposed to those underlying the absence of such limitations in the United States. Part IV concludes that the U.S. comparative advertising legal regime is in every respect more persuasive than the French regime.
The policy favoring comparative advertising is based on the premise that comparative advertising – insofar as it is true and does not create confusion in the public’s mind as to the source of the goods or services marketed – promotes free competition and consumer welfare. It is therefore not surprising that the basic principle of the law of comparative advertising today in both countries authorizes truthful and non-confusing comparisons.
It is a generally accepted fact that the cost paid by consumers when buying a product has two components: the price of the good and the so-called “consumer search cost” resulting from the time, energy, efforts, and amount of money incurred before the purchase in order to gather price and quality information about the product.15 As Professor McCarthy points out:
If the consumer knows quite a bit about brand A… and relatively little about brand Z, then purchasing brand Z will appear to be a risky choice. “The ideal solution in such a case would be to somehow make consumers fully informed, so that they knew as much about the second brand as about the first. The problem is that such process costs money. It takes time and effort for consumers to acquire information about the other brands for themselves, and they may rationally value the benefits of finding a lower-priced equivalent brand less that the effort required to find it.”16
Collecting information about the product may involve, for example, visiting stores, which generates time and transportation costs, making telephone calls, and buying magazines.17 In such a context, comparative advertising is regarded as a cost-effective means of informing the buying public of the similarity or superiority of the features of one particular good to those of competitive products.18 Given the wide diversity of goods and services available today, comparative advertising assists consumers in making choices among products by providing them with a basis for evaluating the merits of similar products.
By providing information to consumers, comparative advertising is deemed to facilitate competition. Entering the market is a tough challenge for a newcomer. He has to expend great efforts, skills, and large sums of money to develop the reputation of his products, services or brands through costly and extensive advertising campaigns. In this context, comparative advertising is considered a strategy to reduce market entry barriers; it provides consumers with a convenient benchmark for the new product so that the new entrant only has to advertise the special features of his product, as opposed to the characteristics it shares with comparable goods already on the market.
However, only truthful and non-confusing comparative advertising contributes to consumer welfare and free competition in the marketplace. The idea that false advertising affects the “quality of decisionmaking”19 is universally accepted.20 It is deemed to “increase uncertainty and impede informed decision-making. It is highly correlated with consumers’ dissatisfaction and disappointment.”21 Confusing comparative advertising impairs the primary purpose of the trademark, which is to provide a means for consumers to distinguish one manufacturer’s products from those of another.22 Yet, this purpose needs to be preserved to ensure consumer welfare and competition in the marketplace. This argument was articulated by the Ninth Circuit in the leading Chanel case:23
[T]he only legally relevant function of a trademark is to impart information as to the source or sponsorship of the product… Preservation of the trademark as a means of identifying the trademark owner’s products, implemented both by the Lanham Act and the common law, serves an important public purpose. It makes effective competition possible in a complex, impersonal marketplace by providing a means through which the consumer can identify products which please him and reward the producer with continued patronage. 24
The beneficial effects of truthful and non-confusing comparative advertising naturally led both countries to encourage the use of such a marketing device.
Today, the authorization of comparative advertising appears to be the rule rather than the exception and has important corollaries in the United States and in France. However, the two countries have set out identical limits on the use of this advertising tool by prohibiting the use of false and confusing claims.
The French and U.S. regimes have long been radically different. While comparative advertising has been authorized for a long time in the United States, it has been accepted only recently and with much effort in France.
In the United States, maximizing consumer welfare and promoting a free and competitive economy have been the guiding objective and “the keystone of governmental attitude towards the business scene” for more than 100 years.25 Thus, the use of comparative advertising has rapidly become a primary goal of judicial and legislative authorities, as well as administrative agencies, in the area of advertising law.
U.S. courts recognized the legality of truthful comparative advertising more than thirty years ago. However, until the late 1960’s, comparative advertising was often limited by industry self-regulatory codes. Indeed, “[a] general feeling [existed] in the advertising industry that naming one’s competitor would only give him free publicity, and might even evoke sympathy for him.”26 Competitors were therefore referred to as “brand X” or the “leading brand.”27 This changed with two decisions in the late 1960’s. First, in the leading 1968 Chanel case, the Ninth Circuit permitted a person who had copied an unpatented product sold under a trademark to use that trademark in advertising for the purpose of identifying the copied product, provided that the advertisement was truthful and did not create confusion as to source or contain misrepresentations.28
Second, and more important, was the 1969 Federal Trade Commission (FTC) Policy Statement on Comparative Advertising, which encouraged the use of comparisons that name the competitor or the competitive product.29 The FTC’s statement pointed out that truthful comparative advertising is a valuable source of information to consumers that could “assist them in making rational purchase decisions.”30 It further explained that this marketing device “encourages product improvement and innovation, and can lead to lower prices in the marketplace.”31 However, the negative consequences of false and confusing comparative claims led the FTC to require “clarity, and, if necessary, disclosure to avoid deception of the consumer.”32
The use of comparative claims subsequently increased dramatically in the United States33 and the acceptability of this advertising format has remained unchanged ever since. Courts often mention the beneficial effects of comparative advertising. For example, the Seventh Circuit held that comparative advertising naming a competitor is beneficial to consumers because “[t]hey learn at a glance what kind of product is for sale and how it differs from a known benchmark.”34 In this case, the defendant’s packaging of Life Savers Delites candies stated: “25% LOWER IN CALORIES THAN WERTHER’S® ORIGINAL* CANDY.”35 Similarly, the Eighth Circuit, recognizing the existence of the “strong public interest in lowest possible prices,” refused to issue a preliminary injunction against use of the trademark “Obsession” in a claim for a perfume advertised as “our version of Obsession.”36
Particular attention must be paid to the three different steps which characterize the history of the authorization of comparative advertising in France. Indeed, most of its current limitations37 find their roots in the old French hostility toward this advertising tool. In addition, judicial precedents provide relevant guidelines for the interpretation of the current comparative advertising law.
First step. Prior to 1992, statutory provisions were lacking and comparative advertising was considered highly suspect. It was generally regarded as an improper business practice and, as such, contrary to the rules of fair play and ethical standards of advertising.38 The underlying idea was that “businesses [have to be] protected against unscrupulous outsiders who do not play by the generally accepted rules.”39 Hence, the use of another’s trademark in advertising, even if referring to the trademark owner without causing confusion as to its source, was considered unfair trading on the owner’s reputation and goodwill or as going beyond the limits of commercial fairness.40 The courts prohibited the use of comparative advertising in principle and provided only very limited exceptions to this prohibition. Even truthful and non-critical comparative claims, such as statements that the advertiser’s product is as good as or equivalent to his competitor’s, were regarded as unfair trading.41 Moreover, any reference to another’s prices was strictly forbidden.42 The courts prohibited advertisers from disparaging goods manufactured by their competitors that did not meet regulations,43 or from comparing the quality of their products with that of their competitors’.44 Comparative advertising was generally considered synonymous with disparagement.45 Arguably, this advertising device was misinforming consumers by inducing them to think the competing product was derived from the same source as that of the advertiser.46 Such a comparison was deemed confusing to prospective purchasers and therefore inconsistent with the primary purpose of French trademark law.47
Fortunately, this position does not find any support today as most commentators agree that comparative advertising is a valuable tool for consumer information.48 While the main concern of this reluctance toward comparative advertising was the protection of competitor welfare, the consumer was also “thought to be protected indirectly, but effectively by keeping up these high standards of market ‘morals’ through competitors’ actions.”49 Such indirect protection of the consumer was not effective. If the consumer and the competitor have a shared interest in the prohibition of false and misleading comparative advertising, their interests diverge on truthful comparative advertising:
[W]hile the consumer values true comparative advertising, the competitor objects to it. Hence, comparative advertising poses a special problem… where the rules against unfair competition have as their main objective the protection of competitors against unfair practices based on the assumption of a parallelism of interests between consumers and competitors… [T]he indirect protection of consumers, via competitor actions, [does] not work.50
European institutions have played an important role in the evolution of the French approach toward comparative advertising. In 1975, the Council of the European Economic Community announced a policy favoring comparative advertising as a means of facilitating consumer choice among products. It adopted a Resolution articulating five basic consumers’ rights, among them the consumers’ right to information.51 This right rested on the idea that “sufficient information should be made available” to enable the consuming public to assess the basic features, including the nature, quality, quantity, and price, of the goods and services marketed, and to “make a rational choice between competing products and services….”52 Similarly, the 1991 European Commission’s proposal for a Council Directive on comparative advertising53 supported the necessity of harmonizing this marketing format in the Community.54 In particular, it pointed out that comparative advertising was a means of both improving consumer information and promoting competition.55
The position thus held by European institutions has, to some extent, led French consumers’ associations, as well as some researchers and practitioners, to criticize the country’s traditional stance against the use of comparative advertising. Academic researchers assert that the interests of competing enterprises to have comparative advertising prohibited should not prevail over the necessity to ensure market openness and to inform consumers.56 This idea was also supported by the leading French consumers’ organizations (Union Fédérale des Consommateurs, Institut National de la Consommation, Association Force Ouvrière Consommateurs, etc.). At the time of the debate over the adoption of the 1992 law on comparative advertising,57 these organizations announced a policy favoring the use of comparative claims as a means of increasing consumer protection by facilitating consumer information and enhancing competition.58
Second step. The remarkable shift in the attitude toward comparative advertising leads to fundamental changes in French advertising law. A breakthrough in the comparative advertising arena occurred in July 1986 when the Cour de Cassation abandoned the prohibition of this advertising format.59 Law 92-60 of January 18, 1992 codified the guidelines set out by the court.60 It authorized comparative advertising in principle, but surrounded its use with strict limitations in order to protect the interests of both consumers and competitors subject to the comparison.61 Those restrictions were ultimately so restrictive that most comparative claims were prohibited by courts.62 The most “unexpected limitation” in the 1992 Act was the requirement for comparative advertisers to disclose, in advance, the comparative advertisement to the competitors named or referred to in the ad, in order to enable them to defend against it.63 This disclosure requirement was regarded as a major obstacle to the use of comparative advertising.64 It allowed the competitor either to commercially retaliate with his own advertising campaign or to apply for an injunction restraining publication of the comparative claim. In the end, it deterred advertisers from using comparisons.65
Advertisements that did not comply with the requirements of the law were prosecuted as disparaging, misleading advertising, or trademark infringement.66 For example, the Cour d’appel de Paris prohibited an advertisement displaying a picture of three cookies together with a chart indicating the health risks resulting from the consumption of or exposure to various products: compared to the exposure to tobacco smoke which ranked eighth with a risk of lung cancer of 1.19, the consumption of one cookie per day was the fifth risk to health with a risk of cardiovascular disease of 1.49. The text of the ad stated “[t]obacco smoke in the air – Life is plenty of risks. But all are not identifiable.” The court declared the ad disparaging to cookie manufacturers.67 By contrast, it was on the ground of misleading advertising that the Cour d’appel de Bourges enjoined use of a price comparison. The claim compared the prices of a superstore to those of its competitor, but it only concerned a small number of goods that were not representative of the most commonly purchased products. The court held that the ad falsely induced the purchasing public to think that prices were generally lower in the advertiser’s superstore.68
Third step. The 1992 Act remained in force until the adoption on August 23, 2001 of Decree 2001-741,69 which implemented European Directive 97/55/EC of October 6, 1997, on comparative advertising. 70 The provisions of the 2001 Decree are now codified as articles L.121-8, 9, 10, 11, and 12 of the Code de la Consommation.71 The implementation of the Community legislation slightly relaxed the conditions of legality of comparative advertising:72 the principle remains that its authorization and the limits on its use are less draconian than those set out by the 1992 Act. The main modifications of the 2001 Decree concern the suppression of the disclosure requirement73 and the broadening of the definition of the products and services that can be compared.74 Part III discusses whether the remaining limits are flexible enough for the authorization of comparative advertising to be in practice as it is in theory or, on the contrary, whether they are so severe that they shall be regarded as a de facto prohibition of comparative advertising.
A claim is a form of comparative advertising as long as it allows the identification of the competitor or the competitive product, either explicitly or implicitly. It need not expressly name a competitor to be comparative. The rule is set out by statutory article L.121-8 C. con. in France75 and by the courts in the United States. In Castrol, Inc. v. Pennzoil Co.,76 the Third Circuit held that an advertisement stating that the advertised motor oil “outperforms any leading motor oil against viscosity breakdown” and provides “longer engine life and better engine protection” was comparative, even though the competitors were not expressly mentioned by name. The court declared, “[t]here need not be a direct comparison to a competitor for a statement to be actionable under the Lanham Act.”77 In a like manner, a New York District Court held that a claim which reproduced the headline and included a satire of a drawing recently used by the competitor in advertising was a form of comparative advertisement because it indirectly referred to the competitor.78 Likewise, in L & F Prods. v. Procter & Gamble Co.,79 the court acknowledged that using a competitor’s identifiable product silhouette was comparative advertising. In this case, where “the ‘competitor’ bottle used in the commercials [was] in the shape of the [plaintiff’s] bottle [and] the competitor bottle used in the commercials contained [plaintiff’s product],” defendant “did not dispute plaintiff’s claim that the commercials used [plaintiff’s product] as the competing product.”80
French and U.S. laws also extensively define the object of the comparison. In this regard, the French 2001 Decree amended the 1992 Act, which required that the comparison occur between “products or services of a comparable nature available on the market.”81 The current legislation offers more flexibility than the former regime to comparative advertisers by allowing comparisons between products or services “meeting the same needs or intended for the same purpose.”82 Consequently, similar products such as sunflower and olive oils, butter and margarine, gas and electric heating, or the services offered by airlines and railroads can now be compared. Similarly, U.S. courts authorize comparisons between different, but nevertheless interchangeable, products. The comparison is legitimate if it is sensible in light of consumer uses of the products or services compared.
Price is also an element that can be compared in both countries. Whereas price comparisons were allowed within narrow limits under the 1992 Act,83 the new French regime does not set any specific restriction to their use84 and therefore mirrors U.S. law more closely. Indeed, in the United States,
It is entirely permissible for an advertiser to make price comparisons between its products and similar, but not identical, products which its competitors offer… The general rules regarding deceptive advertising would apply if an advertiser were to falsely claim that its product is of comparable value to a much superior product.85
The Chanel case86 offers an illustration of lawful U.S. price comparison. The advertisement stated that the appellant’s perfumes “duplicate 100% Perfect the exact scent of the world’s finest and most expensive perfumes and colognes at prices that will zoom sales to volumes you have never before experienced” and “[w]e dare you to try to detect any difference between Chanel #5 (25.00) and Ta’Ro’s 2nd Chance. $7.00.” In France, a relevant example of a price comparison is provided by a relatively recent Cour d’appel de Paris case. The court decided that a television advertising campaign for a telephone company comparing the advertiser’s basic rate with his competitor’s price plan was licit and, thus, in accordance with the new provisions of the 2001 Decree, a comparison may be made between non-identical but interchangeable products or services.87
Article L.121-8(1) C. con. provides that the comparison must be truthful and should not be likely to mislead consumers.88 In this respect, the current provisions of French law do not differ from those of the 1992 Act,89 which themselves codified the courts’ longstanding practice of prohibiting false comparative claims. Therefore, the provisions of Article L.121-8(1) C. con. are usually interpreted and applied in the same way as those of Article 10 of the 1992 Act.90 An illustration of a false comparative advertising case subsequent to the enactment of the 2001 Decree is provided by the Cour de cassation. The court held that it was misleading for a cosmetics store to claim that it was selling certain products at the lowest price on the market when those products were actually priced for less in superstores.91 Similarly, the Cour d’appel de Versailles recently held an advertisement comparing the national rates of two telecoms companies to be untruthful and likely to mislead consumers. The ad defined the national rate as that applying to “calls made more than fifty-two kilometers away” but the competitor referred to in the advertisement charged some of those calls at the local rate.92
The same result may occur in the United States, where false comparative advertising can be actionable under both federal and state law. Section 43(a) of the Lanham Act provides competitors with a federal cause of action for false or misleading advertising.93 The FTC may also intervene against false or deceptive advertisements as a result of Section 5 of the FTC Act.94 At the state level, the Uniform Deceptive Trade Practices Act95 and the “little FTC Acts”96 are valuable tools against advertisers who engage in abusive comparative advertising. Different state law causes of action can also apply to comparative advertising, such as tortious interference with economic advantage, negligence, and product or trade disparagement.97
Although the FTC, the courts, and the states’ “little FTC Acts,” and false advertising statutes define false comparative advertising in different ways, they all take aim at advertising that deceives or misleads consumers so as to influence their purchasing choices and facilitate sales. U.S. courts enjoin the use of claims of equivalence as soon as it is proved that the plaintiff’s product is superior to the defendant’s. Summary judgment was granted against a cigar maker who claimed to sell identical copies of more expensive famous cigar brands and also claimed to perform “a certain amount of work… in an effort to duplicate the original,” because the imitator did not duplicate “the particular region and regional conditions” of the tobacco used in the original cigars.98 By contrast, superiority claims are held false if it can be shown that the plaintiff’s good is equivalent or superior to the defendant’s. For example, a television advertisement stating “[t]ests prove Quaker State 10W-30 [motor oil] protects [engine parts] better than any other leading 10W motor oil” was found to be false and in violation of the Lanham Act. The advertised motor oil did not ensure better protection of the engine parts and, therefore, was not superior.99
Article L.121-9(3) C. con. provides that the comparative advertisement “may not cause confusion in the marketplace between the advertiser and a competitor or between the advertiser’s trade marks… and those of its competitor.”100 Non-confusion was already required under former French law and courts usually prohibited comparative advertisements creating confusion as infringing upon the competitor’s distinctive mark. Thus, the tableaux de concordance practice is prohibited as creating confusion in the buying public’s mind as to the source of the products.101 This practice consists of lawfully creating copies of famous products and of advertising them as equivalent to, but cheaper than, the famous products. For instance, the Tribunal de grande instance de Paris held that the use of a sign by a superstore that was very similar to the logo registered as a trademark by the National Council of Pharmacists Order was, under certain circumstances, likely to create confusion.102 By contrast, courts expressly consider lawful claims which do not confuse consumers. For example, a radio station (NRJ) brought an action against another station (95.2) regarding the following advertisement: “Hi NRJ. 95.2 FM is coming. Music OK. Info OK. Cinema OK. Concerts OK. 6 months after its launch 95.2 already ranks second on the FM frequency band.” NRJ argued that the ad was creating a likelihood of confusion between the two radio stations. The court held that there was no likelihood of confusion because of the use of the verb “is coming,” which unmistakably referred to 95.2.103
Similarly, U.S. courts have declared as unlawful those comparative claims which are likely to confuse the buying public as to the origin of the products or services. In the well-known Charles of the Ritz Group v. Quality King Distributors, Inc. case,104 the Southern District of New York, finding “a deliberate attempt to have the consumer identify the Omni product as originating from the same source as Opium,” preliminarily enjoined defendant’s use of the slogan “[i]f you like Opium you’ll love Omni.”105
U.S. courts also generally prohibit use of comparisons between competing goods in advertising where other aspects of either the advertisement or the advertiser’s product’s packaging make the comparison confusing as to source.106 For example, a claim containing a price list reproducing both the advertiser’s and the competitor’s trademarks was held to create a likelihood of confusion because use of the word “versus” between the two trademarks was insufficient to allow consumers to identify the source of each product.107
Hence, the above developments tend to show that comparative advertising is now widely – if not universally – accepted on both sides of the Atlantic, insofar as it is neither false nor confusing. At this point of the analysis, the two regimes seem very similar and in line with the policy objectives of free competition and consumer welfare. Yet, in spite of these shared objectives and outward similarities, fundamental distinctions still exist between the French and U.S. laws of comparative advertising.
U.S. and French laws take different stands when it comes to either general and vague comparisons or comparisons dealing with the value of a competitor’s mark.
Contrary to U.S. puffery rules, the French requirement of objectivity prohibits vague and general comparative statements. This contrast between the two regimes may well be explained by the fact that the two countries take different consumer standards into account when judging advertising.
Under article L.121-8(3) C. con., the claim should “objectively compare… relevant, decisive, verifiable and representative features of the goods or services…”108 This requirement of objectivity has been judicially developed over the years and was enacted into positive law by the 1992 Act. It reflects both the courts’ and the legislature’s concern with making comparative advertising a tool of information for consumers about the features of the goods or services marketed. Simply put, it means that the claim has to compare the characteristics of the goods or services. Any vague, general, or subjective statement is forbidden. Therefore, claims such as “product X is better than product Y” are unlawful and elements such as taste, flavor, smell, aesthetics, smoothness, or sweetness cannot be compared. Comparative advertising is, thus, de facto prohibited for goods such as perfumes and food.109
French courts have always strictly interpreted and applied the objectivity requirement. The Tribunal de grande instance de Paris had to address the issue of whether an advertisement stating that the firm Renault sold twice as many cars in Germany as its competitor, Volkswagen, sold in France, was lawful. The figures indicated in the ad were correct, but the text of the ad conveyed the message that they were the result of the inferior quality of Volkswagen cars. The court considered that the advertisement was too general to constitute an objective source of information, even though the plaintiff had not shown that it was untrue.110 Likewise, a general claim stating that a magazine is superior to another without providing any information on the competitor has been prohibited by the Cour d’appel de Paris as failing to meet the objectivity requirement.111 More recently, the Cour d’appel de Versailles held that an advertisement for a telephone company claiming that the competitor had raised its subscription fee but failing to provide information on the background context for the raise lacked objectivity and, therefore, was prohibited.112
The provisions of French law regarding the objectivity requirement differ from the rules prevailing under U.S. advertising law. U.S. law only prohibits false statements of fact, as opposed to statements of opinions.113 A statement of fact is a “specific and measurable claim, capable of being proved false or of being reasonably interpreted as a statement of objective fact.”114 By contrast, when an assertion is “obviously a statement of opinion,” it cannot “reasonably be seen as stating or implying provable facts.”115 Such opinion-type statements are commonly referred to as “puffery.” U.S. courts have traditionally ruled that vague and general comparatives such as “better than” or “more than” are not actionable as false comparative advertising because reasonable consumers could not believe these statements to be assertions of fact.116 As the Fifth Circuit explained, non-actionable puffery can take the form of “a general claim of superiority over comparable products that is so vague that it can be understood as nothing more than a mere expression of opinion.”117 Generally, puffery has four characteristics: it is general and vague;118 it makes a claim that is immeasurable, unquantifiable or unverifiable;119 it is presented as a subjective statement;120 and it is the kind of claim upon which consumers are unlikely to rely.121
Therefore, the language of French law strongly contrasts with the terms used by U.S. courts to determine whether a claim is puffery. Whereas comparative statements are licit only if they concern “verifiable” qualities of the products in France, immeasurable or unverifiable claims are non-actionable puffery under U.S. law. Additionally, while comparative claims must concern “relevant, decisive… and representative” features of the goods or services concerned under Article L.121-8(3) C. con., puffery is a general and vague statement under U.S. law. In essence, while French law requires the advertisement to be useful to consumers, U.S. law encourages comparisons which are of less use to consumers.
Pizza Hut, Inc. v. Papa John’s Int’l, Inc.122 offers a relevant example of what U.S. law considers non-actionable puffery. Papa John’s ran a series of comparative advertisements specifically referring to Pizza Hut and containing the slogan “Better Ingredients. Better Pizza.” The Fifth Circuit determined that the slogan “epitomizes the exaggerated advertising, blustering, and boasting by a manufacturer upon which no consumer would reasonably rely” and declared that “it is difficult to think of any product or any component of any product, to which the term ‘better’, without more, is quantifiable.”123 Such a claim would undoubtedly be prohibited by French courts as general and subjective.
Similarly, it is worth noting that the French objectivity requirement has the effect of prohibiting the use of “[i]f you like [them], you’ll love [us]” advertisements which are widely used in the United States. In Saxony Products, Inc. v. Guerlain, Inc.,124 the Ninth Circuit denied injunction against defendant’s use of plaintiff’s famous perfume trademark, Shalimar, in the slogan “[i]f you like Shalimar, you’ll love Fragrance S.” The “like/love” advertising format, which obviously does not concern “relevant, decisive, verifiable and representative” features of the product and undoubtedly involves a subjective statement, could be prosecuted on the ground of the objectivity provisions of Article L.121-8(3) C. con..
The above analysis of the French objectivity requirement and U.S. puffery rules brings to light two different positions regarding consumers’ behavior toward advertising. Although consumer information is the primary concern of U.S. courts, they make certain assumptions about consumer credulity. Consumer welfare remains the criterion, or the relevant policy norm, but their decisions rest on the premise that the purchasing public is, for the most part, rational, reasonable, and sophisticated enough not to believe that vague, general, and subjective statements are literally true. Faced with puffery ads, U.S. consumers are presumed capable of not taking all advertisements seriously and understanding their source and limitations.
Hence, the U.S. model consumer to judge deception is the average or reasonable consumer of the relevant product or service.125 A 1983 FTC Policy Statement on Deception ruled that a practice is deceptive if it is likely to mislead “a consumer acting reasonably in the circumstances.”126 This reasonable consumer standard is also applied by the courts. In Federal Trade Commission v. Security Rare Coin & Bullion Corp.,127 the Eighth Circuit held that “[t]o satisfy the reliance requirement in actions brought under section 13(b) of the Act, the FTC needs merely show that the misrepresentations or omissions were of a kind usually relied upon by reasonable and prudent persons…”128 Advertisements are also evaluated from the perspective of the reasonable consumer under the Lanham Act. 129
Conversely, by requiring the comparison to “objectively compare relevant, decisive, verifiable and representative features” of the goods or services, the French legislation seems to implicitly take a different type of consumer into account: the “credulous, ignorant and unthinking” one.130 French courts have confirmed the legislature’s position by using the least able consumer approach to judge the legality of advertising claims. Certain commentators have correctly pointed out that,
[i]nstead of the often-quoted “bon père de famille” – a highly attentive consumer who is able to critically evaluate information contained in an advertisement and to avoid being easily deceived – the new French practice rather takes the “consommateur moyen” described as “much more vulnerable and credulous” as a guideline when enforcing the relevant provisions of the Code de la Consommation.131
Several elements distinguish the reasonable consumer from the credulous purchaser. The reasonable consumer is the attentive, mature, and critical one who does not rely solely on the advertisement. On the contrary, he “critically perceives the information given, carefully evaluates and analyzes its content and meaning and finally bases a rational decision on such analysis.”132 However, he is not a knowledgeable, sophisticated, or highly-educated consumer133 and the fact that consumers are not always capable of understanding all relevant facts is considered when judging advertising.134 Additionally, the reasonable consumer exercises common sense and does not necessarily believe and rely on all statements contained in the advertisement.135 He is the average target consumer.136 By contrast, the credulous consumer is a vulnerable, inattentive, uncritical, trusting, non-discerning, unrealistic, and unsophisticated person. He does not consult information available about the product before the purchase and only relies on the advertisement. In short, he attaches significance to any vague and general claim and is incapable of understanding the ad as a mere statement of opinion.
The U.S. reasonable consumer approach is more convincing. Consistent with the objectives of free competition and consumer welfare, the reasonable person approach allows use of comparative advertising within broad limits, while ensuring protection and information of the buying public as a whole (since puffery claims are those upon which reasonable consumers are not likely to rely). The Seventh Circuit has clearly explained why going further than the reasonable consumer standard would lessen consumer welfare. “Many consumers are ignorant or inattentive, so some are bound to misunderstand no matter how careful a producer is. If such a possibility [of confusion] created a trademark problem, then all comparative references would be forbidden, and consumers as a whole would be worse off.”137
Conversely, the credulous consumer standard or, more generally, the objectivity requirement, is a considerable obstacle to the development of comparative advertising in France. It has the effect of prohibiting a large number of comparative advertisements that are allowed by U.S. standards, such as general claims of superiority, “like/love” ads, or statements comparing the taste or smell of products. In practice, companies contemplating comparative advertising campaigns in France are deterred from using this advertising format. They have to be extremely cautious when using comparative ads in order to avoid having the advertising campaign in which they have expended great efforts, skills, and money, prohibited by the courts. To this extent, the objectivity requirement acts as a brake on the use of comparative advertising. Ultimately, this limits the information that may be communicated to the consuming public.
B. Comparative Advertising Dealing with the Value of Another’s Trademark138
By contrast with the United States, and resting upon a different conception of property ownership, France expressly prohibits not only comparative advertisements exploiting the value of a rival’s trademark, but also those attacking that trademark.
The French prohibition of comparative advertising exploiting the value of a trademark finds expression in two sets of provisions which both restate case law developed over many years. Firstly, Article L.121-9(1) C. con. states that a comparative claim “may not take unfair advantage of the reputation of a trade mark… of a competitor…”139 Secondly, under Article L.121-9(4) C. con., the advertisement “may not present goods or services as an imitation or replica of goods or services bearing a protected trademark…”140 These provisions encompass seemingly similar types of advertisements. However, while Article L.121-9(1) may be used as a ground to prohibit any comparison capitalizing on the reputation of a trademark, Article L.121-9(4) specifically prevents comparisons of the following type: “Product X is a copy of and has the same quality as product Y but is half the price of the original.”
French courts have prohibited such claims for some time. For example, advertisements presenting the advertised product as being of the same “type” or “kind” as the competitor’s trademark are unlawful.141 The advertiser is regarded as capitalizing on the trademark owner’s goodwill and improperly benefiting from his reputation. Thus, the Tribunal de Grande Instance de Bourges prohibited an advertisement for “style Barbour” hunting clothes, on the grounds that the advertiser was wrongfully taking advantage of the “Barbour” trademark owner’s reputation.142
Particularly interesting is the prohibition of the so-called tableaux de concordance. This practice, commonly referred to as “knock-off” in the United States, is frequently used in the perfume industry and is prohibited in France for infringing on the competitor’s trademark. The tableaux de concordance practice can be described as follows: perfume manufacturers lawfully create perfumes very similar to others’ famous perfumes. Then, they advertise their perfumes as being equivalent to, but cheaper than, the famous perfumes. Courts do not prohibit the manufacture of perfumes similar to other perfumes.143 They only prohibit the advertisement of these perfumes as similar to the famous ones. One hundred and thirty eight court decisions prohibited such advertisements between 1981 and 1991.144 According to French scholars, several reasons justify the prohibition of the tableaux de concordance. First, the advertiser would unfairly capture the trademark holder’s potential customers. Second, the trademark’s fame would be tarnished. Finally, the use of another’s trademark in tableaux de concordance would create a serious threat to the distinctiveness of the trademark and would raise the risk of making the words of which the mark is composed into a generic term.145
The French prohibition of comparisons exploiting the value of a trademark contrasts with the U.S. dilution-by-blurring theory which expressly exempts comparative advertising. Blurring, which is the “traditional” or “classic” form of dilution,146 occurs “when use of a mark by others generates awareness that the mark no longer signifies anything unique, singular or particular, but instead may (or does) denominate several varying items from varying sources.”147 The blurring theory is embodied in Section 43(c) of the Lanham Act.148 Most state statutes also contain dilution-by-blurring provisions.149 Typically, use of a competitor’s mark in advertising is blurring when the consumer, although he knows that the competitor did not produce the advertised good, mentally associates the competitor’s mark with the advertiser’s products upon viewing the competitor’s mark in the context of the comparative advertisement. Since, in the future, the consumer will think not only of the competitor’s products but also of the advertiser’s goods upon viewing the competitor’s mark, the mark’s distinctiveness has been blurred.
At first blush, the blurring theory seems to endanger comparative advertising. Positive comparative advertising which is usually “used to participate in the good reputation of a competitor’s [mark]”150 and, therefore, often creates an association in the public’s mind between the advertiser’s products and his rival’s marks is particularly threatened. Strictly applied, the blurring theory would provide competitors with a powerful weapon to prevent most of their rival’s equivalence and positive comparative claims. For that reason, comparative advertising may be invoked as a defense in dilution cases. Section 43(c)(4)(A) of the Lanham Act151 states that “[f]air use of a famous mark by another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark” shall not be actionable under the dilution section of the Act.152 The above provisions only exempt “fair” use of another’s mark in comparative advertising. For example, non-trademark use of one’s competitor’s mark (i.e., use of the mark in a descriptive sense for the sole purpose of identifying the competitor’s product) is considered “nominative fair use.”153 This descriptive use limitation to the dilution theory allows comparative advertising to be exempted from blurring violation to a large extent. U.S. courts, whether they deal with federal or state law, tend to authorize comparative advertising where the risk of blurring is minimized. In Deere & Co. v. MTD Products, Inc.,154 the Second Circuit had to address the issue, arising under the New York anti-dilution statute, of “whether an advertiser may depict an altered form of a competitor’s trademark to identify the competitor’s product in a comparative ad.”155 The court, after declaring that “[s]ellers of commercial products may wish to use a competitor’s mark to identify the competitor’s product in comparative advertisements,” ruled that the plaintiff’s distinctiveness of the mark was not likely to be blurred since its use by defendant posed “slight if any risk of impairing the identification of Deere’s mark with its products.”156 The advertisement was nonetheless enjoined on the ground of tarnishment.157
More specifically, the French prohibition of comparisons presenting goods as copies of products bearing a trademark set out in Article L.121-9(4) C. con. is contrary to what might be called the U.S. “right of informing rule.” Under U.S. law, “if a seller has the right to copy public domain features of his competitor’s goods, then, as a corollary, he must have the right to inform the public of this fact.”158 The principle is that the one who legally copied a competitor’s product can truthfully tell the purchasing public of the similarities between his product and the original. The rule rests on the proposition that prohibiting use of a competitor’s trademark for the sole purpose of identifying the competitor’s product would have the effect of “extend[ing] the monopoly of the trademark to a monopoly of the product.”159 As early as 1910, in Saxlehner v. Wagner,160 the Supreme Court declared that a seller of mineral water had the right to refer to a competitor’s trademark to identify the competitor’s product and truthfully inform consumers of the close identity between the water he was selling and that of the competitor.161 The rule has been followed since that 1910 mineral water case. In the Dior case,162 the Second Circuit declared:
The Lanham Act does not prohibit a commercial rival’s truthfully denominating his goods a copy of a design in the public domain, though he uses the name of the designer to do so. Indeed it is difficult to see any other means that might be employed to inform the consuming public of the true origin of the design.163
Similarly, in Calvin Klein Cosmetics Corp. v. Lenox Laboratories, Inc. ,164 the Eighth Circuit held that use of the trademark “Obsession” in a claim for a perfume advertised as “our version of Obsession” was lawful. The court explained that “the underlying rationale is that an imitator is entitled to truthfully inform the public that it has produced a product equivalent to the original and that the public may benefit through lower prices by buying the imitation.”165 Thus, using a competitor’s trademark to truthfully inform consumers of the advertiser’s cheaper versions of famous trademarked goods would be an act of unfair competition under French law, but would certainly be legal under U.S. advertising law.
Turning to the issue of disparagement, it is worth recalling that in France, prior to 1992, comparative advertising was considered synonymous with disparagement and usually prohibited as such by courts.166 The 1992 Act did not contain any express or specific provision on disparagement but only generally required the advertised comparisons to be “fair.” Many comparisons were prohibited as disparaging the competitor’s mark on the ground of this fairness requirement. Competitors also attacked comparisons criticizing their marks, products, or services using the unfair competition notion, which appeared to be a very powerful weapon in this regard.167 Today, Article L.121-9(2) C. con. is more explicit than the 1992 Act, as it provides that the comparison cannot “discredit or denigrate trademarks… of a competitor.”168 Judicial precedents are particularly relevant in interpreting this provision. An analysis of the precedents shows that the distinction between reprehensible disparagement and authorized criticism is a fuzzy one. Surprisingly, disparagement is often found even in the absence of either a false or a misleading statement about the competitor’s mark or desire to damage his reputation.169 It seems that where the critical comparison relates to facts that are proved accurate, it should be accepted. But French courts take a different stand. For example, a merchant cannot display in his store a court decision passed against his rival.170 Likewise, a coffee manufacturer may not criticize the manufacturing process of a competitor, regardless of whether that critic has sufficient grounds to do so.171 In addition, disparagement not only occurs when the advertiser expressly criticizes his competitor, but also where, for example, he reproduces certain elements of his competitor’s recent advertisement such as an animated robot.172 Hence, French courts have a strong tendency to resort to disparagement to prohibit critical comparisons in advertising: “if the exaggeration which is inherent in any advertisement does not in itself break the rules of fair competition, the [superiority claim] cannot be allowed where the [statement of superiority] ends up… depriving competitors of the same qualities.”173 As a result, advertisers contemplating comparative campaigns in France should avoid criticizing their competitors in order to maximize their chances of saving their advertisements from illegality.
The French disparagement theory must be compared to the U.S. trademark disparagement theory, more commonly referred to as “tarnishment,” which is another form of dilution. Typically, tarnishment occurs where an unauthorized use of a trademark injures the owner’s business reputation.174 As the Second Circuit stated,
“[t]arnishment” generally arises when the plaintiff’s trademark is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context likely to evoke unflattering thoughts about the owner’s product. In such situations, the trademark’s reputation and commercial value might be diminished because the public will associate the lack of quality or lack of prestige in the defendant’s goods with the plaintiff’s unrelated goods, or because the defendant’s use reduces the trademark’s reputation and standing in the eyes of consumers as a wholesome identifier of the owner’s products or services.175
In contrast with blurring, which only dilutes the distinctive value of the mark, tarnishment also degrades its positive associational value. In other words, “[t]he sine qua non of tarnishment is a finding that plaintiff’s mark will suffer negative associations through defendant’s use.”176 It must be noted that the federal anti-dilution statute does not expressly refer to tarnishment and a discussion exists as to whether it encompasses dilution by tarnishment.177 In any event, U.S. courts dealing with federal law expressly recognize and apply that theory. Most states also clearly and unambiguously consider tarnishment as a form of dilution.178
Tarnishment, which was originally limited to “unsavory” or “unwholesome” uses of a trademark, such as those associating the mark with sexual, obscene, or illegal activities, has been expanded by courts to encompass all “unflattering” uses.179 In Deere, the Second Circuit addressed a commercial that used “a static image of a graceful, full-size deer – symbolizing [plaintiff’s] substance and strength – and portray[ed], in an animated version, a deer that appear[ed] smaller than a small dog and scamper[ed] away from the dog and a lawn tractor, looking over its shoulder in apparent fear.”180 Although it observed the Deere mark was not used in connection with sexual activity, obscenity, or illegal activity, the court prohibited the ad as damaging the mark by “alteration … accomplished for the sole purpose of promoting a competing product ….”181 The court has declared that “[s]ellers of commercial products who wish to attract attention to their commercials or products and thereby increase sales by poking fun at widely recognized marks… risk diluting the selling power of the mark that is made fun of.” 182
A parallel may be established between the Deere case and a very recent Cour d’appel de Paris case involving a television commercial for Orangina, a sugar-free soda. The commercial presented a group of people dressed up as sugar lumps (the “sugar” character) who were refused entrance to a nightclub, while a tall and slender person wearing an orange outfit (the “Orangina” character) could easily get in. The court found the sugar character was presented in a ridiculous light because of its cramped look, begging attitude, and eventual failure to get in. This tarnished the image of the sugar product without adding anything to the strength of the Orangina message. The commercial was, therefore, held to be disparaging toward the sugar product.183
Just as blurring threatened positive and equivalence claims, tarnishment is a potentially important restriction to negative and superiority comparative claims. “Interpreted literally, [it] could easily be used to prevent many forms of parody in comparative advertising.”184 However, both U.S. courts and the Federal Dilution Act have limited application of the tarnishment theory when it comes to comparative advertising. As mentioned above, section 43(c)(4)(A) of the Lanham Act exempts fair comparative advertising from dilution violation. In addition, the Deere court itself has expressly established limits to the tarnishment form of dilution in the area of comparative advertising, deciding that use of a trademark in comparative ads may be authorized as long as the trademark is not significantly altered.185 Tarnishment would only occur where alterations of a mark “are made by a competitor with both an incentive to diminish the favorable attributes of the mark and an ample opportunity to promote its products in ways that make no significant alteration.”186 A good illustration of U.S. courts’ willingness to limit application of the tarnishment theory where comparative claims are involved is provided by case law considering lawful use of a competitor’s mark to advertise knock-off products.187
Although they have developed a similar theory to protect competitors against unscrupulous advertisers, U.S. and French laws do not handle the theory the same way when it comes to comparative advertising. French law extensively uses the disparagement notion to prohibit a wide range of critical comparisons. By contrast, the U.S. approach is much more moderate, as it takes into account the degree of the harm to the competitor and the advertiser’s incentive to injure his rival’s goodwill in order to decide whether the criticism should be prohibited.
Trademark rights have a “less tangible quality”188 in the United States than in France. This may explain the existence of different regimes as discussed in subsections (1) and (2) above. French law places great importance on protecting the trademark owner’s reputation and goodwill, the idea being that by investing intellectual and financial resources in the trademark itself, the owner is building “a symbol of his reputation”189 and creating “the selling power of his trademark.”190 The owner ascribes to the product an attractive image that will appeal to consumers. Enterprises spend great amounts of money, effort, skill, and ability to develop their marks and to get the purchasing public to recognize them. The outcome may be that products are sold regardless of such characteristics as quality or price, because the reputation of the mark they bear is sufficient alone to induce customers to buy them. These reasons have led French academic researchers, courts, and legislative authorities to conclude that the function of a trademark is not only to distinguish between different origins, but also to embody the owner’s reputation and goodwill that become the “protectible feature[s] of [the] trademark.”191 The Court of Justice of the European Communities has also expressly recognized that “in relation to trademarks, the specific subject-matter of the industrial property is intended to protect [the trademark owner] against competitors wishing to take advantage of the status and reputation of the trade mark ….”192
U.S. law also accords weight to the owner’s investment in his mark within the particular use of the blurring and tarnishment theories, but the policy goal of freedom of competition and consumer welfare prevails insofar as comparative advertising is concerned. Representative of this idea is the language used by Judge Browning in the “right of informing” Chanel case:193 Judge Browning first explained that the anticompetitive consequences of the protection of the trademark owner’s reputation and goodwill “have little compensating benefits.”194 The appeal of highly advertised trademarks, although it protects firms already on the market, constitutes a barrier to the entry of newcomers into the marketplace. In turn, high barriers to entry tend to “produce ‘high excess profits and monopolistic output restriction’ and ‘probably… high and possibly excessive costs of sales promotion.’”195 Judge Browning then rebutted appellees’ argument that when great resources have been invested to develop the trademark’s “selling power”196 the competitor should be prohibited from free riding on the reputation and goodwill embodied in that trademark.197 He ruled that a “large expenditure of money does not in itself create legally protectable rights. Appellees are not entitled to monopolize the public’s desire for the unpatented product, even though they themselves created that desire at great effort and expense.”198
A closely related concern explains why U.S. dilution law explicitly exempts comparative advertising: consumers may not be deprived of valuable and accurate information about either the similarities of comparable products or the defects of certain goods available on the market under the pretence of protecting the trademark’s selling power. As one commentator stated, “[i]nformative comparative advertising conveys useful information, and furthers the public interest in well-informed consumer decisions and wiser allocation of resources… This form of comparative advertising cannot be suppressed under antidilution regulation.”199
The French position seems unconvincing. Although the trademark owners’ substantial investment in their marks has to be protected in principle, when it comes to comparative advertising, the anticompetitive consequences of such protection200 could outweigh its beneficial effects. Indeed, the only purpose for preserving trademark values, other than the source identification function, is to protect the investment of the trademark owner who, therefore, is the one and only party benefiting from such expanded trademark protection. The weight accorded to those trademark values is, therefore, surprising since the traditional concern of protecting the competitor welfare, i.e., the trademark owner’s, has now been officially replaced by the policy goals of maximization of competition and consumer welfare.201 In fact, the French position confuses unfair competition with free competition. Authorizing advertisers to criticize or exploit the value of others’ trademarks in comparative advertising certainly makes competition vigorous (i.e., free) but not necessarily deceptive (i.e., unfair). There is no clash between comparative advertising and fair competition as long as false and confusing claims are prohibited.202 However, under the pretence of preserving fair competition in the marketplace, the provisions of Articles L.121-9(1), L.121-9(2) and L.121-9(4) adversely affect free competition and consumer welfare.
Particularly subject to criticism is the prohibition of comparative advertising that takes advantage of the reputation of a trademark. In most comparative ads, and specifically in equivalence claims, the primary purpose of the comparison itself is to benefit from the reputation and goodwill that the competitor has developed in his mark. Prohibiting claims that take advantage of the reputation of the rival’s trademark is therefore giving competitors a powerful device to sue any advertiser citing their mark. In particular, owners of famous trademarks may easily convince courts that the ad aims at capitalizing on their goodwill. Such a provision seems all the more useless since French courts have a great propensity to broaden the protection granted in the unfair competition area in order to prohibit any reprehensible behavior, including behavior infringing trademark owners’ reputation and goodwill.203 As a result, by prohibiting comparative advertisements from taking advantage of the reputation of a competitor’s trademark, Article L.121-9(1) C. con. is not only encouraging competitors to sue the advertiser, but also leading courts to prohibit comparative advertising to a large extent. Such a provision can be analyzed as a de facto prohibition of comparative claims involving famous trademarks.
Similar criticism can be brought against the provision inserted into the French Consumer code by the 2001 Decree, making it unlawful to disparage a competitor’s mark. It provides French judges with another weapon, in addition to the unfair competition laws, to prohibit competitors’ criticisms in advertising. This may encourage courts to prevent such claims even more than they already do. The possible drifting off of the new anti-disparagement provision is therefore obvious: combined with the courts’ tendency to broadly apply the unfair competition notion to bar critical comparisons, it may lead them to enjoin any superiority and negative claim. Yet, consumers have a strong interest in being informed of the defects of certain products and of the superior properties of others. The U.S. approach is, therefore, more persuasive. While concerned with granting the trademark owners’ investments a certain protection against exaggerated, unsubstantiated, or malicious criticisms, it protects reasonable and temperate criticisms made for informational purposes.
Overall, the U.S. comparative advertising legal regime is less restrictive and does a better job than the French one in preserving the policy objectives of consumer welfare and free competition. Although both countries authorize truthful and non-confusing comparative advertising, French law places additional heavy restrictions on the use of this marketing tool. Yet, the prohibition of false and confusing claims seems sufficient to prevent abuses.
This contrast results from different consumer standards and trademark values in each country. The great weight accorded to trademark values other than the source identification function and the use of the credulous consumer standard under French law undoubtedly favor the interest of the individual competitor advertised against to the detriment of competition in the marketplace. This is rather surprising, given that competitors facing comparative advertisements are far from being defenseless, as they usually are the ones with the strongest market positions. In practice, they have the incentives and necessary resources to retaliate with their own advertising campaigns and answer their rival’s comparative claim.204 Therefore, the negative consequences of the “over-protection” of competitors referred to in comparative advertisements – namely the impairments to consumer welfare and free competition – outweigh its benefits – the established competitor welfare. The rigidity of the French regime is also questionable in that it generally deters advertisers from using any kind of comparative advertisement, especially since competitors rarely miss the opportunity to bring suit against rivals to stop or prevent the relevant advertising campaign. Moreover, an efficient comparative advertising legal regime could play a small, yet positive, role in spurring consumer consumption in order to drive the economic recovery of France and other European Union Member States.
Some may justify the contrast between the two regimes by suggesting that French and U.S. consumers have different expectations from advertising. Certain commentators have explained that contrary to the U.S. public, French consumers do not have rational expectations in the area of commercial communication and prefer entertaining, rather than informative, advertising. Comparative advertising would, therefore, not be an effective marketing tool in France because of its informational style.205 However, this argument is irrelevant in the discussion over the conditions of legality of comparative advertising. Only companies and advertisers can best decide whether comparative advertising is the best means of praising their products; the legislator should always allow them the possibility of using such a device.
Is a reconciliation of the U.S. and French comparative advertising legal regimes conceivable in spite of the existing outstanding differences? At first glance, given the natural tendency that French judges have had for many years to limit the use of this marketing format, it seems that the two regimes will continue to be governed by very different rules in the coming decades. However, it must be borne in mind that the French regime now results from the implementation of the 1997 European Directive. The Court of Justice of the European Communities will certainly play an important role in determining of the boundaries of comparative advertising over the next few years since national judges, in order to ascertain compliance of their national legislation with the Community law, will ask for clarification on certain aspects of the 1997 European Directive. So far the Court of Justice’s decisions have been encouraging, from the comparative advertisers’ standpoint.206 It is, therefore, hoped that French judges will follow this trend and remove the legal obstacles which stand in the way of comparative advertising so as to reconcile French and U.S. law of comparative advertising.
* The author received a Masters Degree in Trade Regulation from New York University School of Law in 2003 and a D.E.S.S. in Intellectual Property Law from Paris II Panthéon-Assas University in 1999. She is a member of the New York Bar and is currently working in London with the law firm Wragge & Co LLP. The author is most grateful to Professor Rebecca Tushnet from the New York University School of Law Faculty for her support and encouragement to publish this article and for providing feedback on the draft version of this article.
1 Conseil Supérieur de l’Audiovisuel, Comment se fait-il que l’on voit apparaître des messages de publicité comparative à la télévision?, available at http://www.csa.fr/outils/faq/ faq.php (last visited Jan. 6, 2005).
2 Thomas E. Barry, Comparative Advertising: What Have We Learnt in Two Decades?, 33(2) J. Advert. Res. 19, 20 (1993); Roslyn S. Harrison, The Law of Comparative Advertising in the United States and Abroad, in Global Trademark & Copyright 1995: Management & Protection 218 (Siegrun D. Kane & Mark A. Steiner, eds., 1995).
3 Naveen Donthu, A Cross-Country Investigation of Recall of and Attitude Toward Comparative Advertising, 27(2) J. Advert. 111, 111 (1998).
4 See Direction Générale de la Consommation, de la Concurrence et de la Répression des Fraudes (DGCCRF), Rapport relatif a l’exercice de la publicité comparative, (May 1994).
5 See, e.g., André Bertrand, Peut-on vraiment légaliser la publicité comparative?, 38 Revue du Droit de la Propriété Intellectuelle 23 (1991); Monique Luby, Propos critiques sur la légalisation de la publicité comparative, D. 1993 chron. 53; Stephen Nye, In Defense of Truthful Comparative Advertising, 67 Trademark Rep. 351 (1977); Albert Robin & Howard B. Barnaby, Jr., Comparative Advertising: A Skeptical View, 67 Trademark Rep. 358 (1977).
6 Stewart E. Sterck, The Law of Comparative Advertising: How Much Worse Is “Better” than “Great,” 76 Colum. L. Rev. 80, 80-81 (1976).
7 Id. at 81 n.6.
8 Theo Bodewig, The Regulation of Comparative Advertising in the European Union, 9 Tul. Eur. & Civ. L.F. 179, 187 (1994).
9 Id. at 188.
10 Id. at 185-86.
11 Id. at 187.
12 Id. at 188.
13 The policy goals of competition and consumer welfare are closely connected. See, e.g., Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (1993) (stating “‘[a]nticompetitive’ has a special meaning: it refers not to actions that merely injure individual competitors, but rather to actions that harm the competitive process, a process that aims to bring consumers the benefits of lower prices, better products, and more efficient production methods.”); Interface Group v. Mass. Port Auth., 816 F.2d 9, 10 (1st Cir. 1987) (finding “[t]he policy of competition is designed for the ultimate benefit of consumers rather than of individual competitors, and a consumer has no interest in the preservation of a fixed number of competitors greater than the number required to assure his being able to buy at the competitive price.”) (citation omitted) (emphasis added); see also Jean Calais-Auloy & Franck Steinmetz, Droit de la Consommation 15 ¶ 16 (Dalloz, 4th ed. 1996) (asserting that the rules prohibiting aggressive business practices belong to both the consumer law area and the competition law field and that, more generally, almost all competition law rules have consequences which may affect consumers and vice versa).
14 In the United States, the right to compete is regarded as the “fundamental premise of the free enterprise system.” Restatement (Third) of Unfair Competition § 1 (1995). Courts often state that the main purpose of antitrust law is to promote free competition. See, e.g., Gordon v. N.Y. Stock Exch., Inc., 422 U.S. 659 (1975) (holding that the sole aim of antitrust legislation is to protect competition); Natrona Serv., Inc., v. Cont’l Oil Co., 598 F.2d 1294 (10th Cir. 1979) (declaring that antitrust laws were enacted for the protection of competition, not for the protection of competitors); 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 1:1 (West Group, 4th ed. 2003) (citation and footnotes omitted). In France, the principle of freedom that governs business life has its roots in the so-called 1791 “loi d’Allarde.” See Ordonnance no. 86-1243 du 1er décembre 1986 relative à la liberté des prix et de la concurrence, art. 1 [Decree No. 86-1243 of Dec. 1 1986 Concerning Freedom of Prices and Competition] (establishing the principle of competition), available at http://www.legifrance.gouv.fr/texteconsolide/ADFAR.htm (last visited Jan. 6, 2005). European law has also made the principle of competition an obligation that compels Member States. See, e.g., Treaty Establishing the European Community, Mar. 25, 1957, art. 4(1), available at http://europa.eu.int/eur-lex/en/treaties/dat/EC_consol.pdf .
15 See Sherman Hanna, The Economics of Information, at http://www.hec.osu.edu/ people/shanna/741/stigler.pdf (last visited Jan. 6, 2005); see also Andrew B. Whinston et Al., The Economics of Electronic Commerce 256 (Macmillan Technical Publishing 1997).
16 1 McCarthy, supra note 14, § 2:5 (quoting F.T.C. Office of Policy Planning, F.T.C. Policy Planning Issues Paper: Trademarks, Consumer Information and Barriers to Competition 22 (1979) (The Craswell Report)).
17 See Whinston et Al., supra note 15, at 256.
18 See, e.g., 4 McCarthy, supra note 14, § 25:52 (stating “[c]omparative advertising … is ‘highly beneficial to consumers’ and may convey to them valuable information”) (quoting August Storck K.G. v. Nabisco, Inc., 59 F.3d 616, (7th Cir. 1995)); Lee Goldman, The World’s Best Article on Competitor Suits for False Advertising, 45 Fla. L. Rev. 487, 491-92 (stating “[i]nformal advertising increases buyer knowledge about the price, quality and benefits of various products, thus reducing consumers’ search cost and the total costs to consumers of transacting business. Truthful advertising not only produces lower effective prices, but induces sellers to improve the quality of their goods.”).
19 Lilian R. BeVier, Competitor Suits for False Advertising Under Section 43(a) of the Lanham Act: A Puzzle in the Law of Deception, 78 Va. L. Rev. 1, 14 (1992). It should be pointed out that U.S. law distinguishes different kinds of falsity. First, false express claims are stated literally in the advertisement. See, e.g., Rhone-Poulenc Rorer Pharms., Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 516 (8th Cir. 1996) (finding an ad literally false where it incorporates the pictures of two identical gas pumps and two identical airline tickets with different prices, together with the slogan “Which one would you choose?,” because the ad claims that, like the pumps or the tickets, the advertised drug is equivalent to, but cheaper than, the competitor’s drug). Second, a claim may also be false by necessary implication when the claim that is necessarily implied by the ad makes it false on its face. See, e.g., Castrol, Inc. v. Pennzoil Co., 987 F.2d 939, 941, 946 (3d Cir. 1993) (finding a comparison by necessary implication where the advertised motor oil was said to provide “longer engine life and better engine protection” because, even though the competitors subject to the comparison were unnamed, the ad implicitly identified what competitors it was “longer” and “better” than). Finally, false implied claims are those that, although not literally untrue, deceive or mislead consumers by their implications. See, e.g., Am. Home Prods. Corp. v. Johnson & Johnson, 654 F. Supp. 568, 588 (finding misleading by its implications a claim that hospitals recommend “acetaminophen, the aspirin-free pain reliever in Anacin-3, more than any other pain reliever,” because hospitals were recommending Tylenol, which contains acetaminophen, but the ad conveyed the message that hospitals were recommending Anacin-3).
20 See, e.g., BeVier, supra note 19, at 14; Jeffrey P. Singdahls, The Risk of Chill: A Cost of the Standards Governing the Regulation of False Advertising Under Section 43(a) of the Lanham Act, 77 Va. L. Rev. 339, 340 (1991).
21 BeVier, supra note 19, at 14.
22 For examples of confusing advertisements, see infra notes 102-05 and accompanying text.
25 1 McCarthy, supra note 14, § 1:1 (citation and footnotes omitted). U.S. courts regularly declare that consumer welfare is the guiding objective in the competition law area. See supra note 13.
26 David I. C. Thomson, Problems of Proof in False Comparative Product Advertising: How Gullible is the Consumer?, 72 Trademark Rep. 385, 386 (1982).
27 See Suzanne B. Conlon, Comparative Advertising: Whatever Happened to “Brand X”?, 67 Trademark Rep. 407, 407 (1977).
28 Smith, 402 F.2d 562. See infra note 86, and accompanying text, for a description of the facts of the Smith case.
29 16 C.F.R. § 14.15 (2004).
30 16 C.F.R. § 14.15(c).
32 16 C.F.R. § 14.15(b).
33 See, e.g., Barry, supra note 2, at 19; Donthu, supra note 3, at 111; Thomson, supra note 26, at 387.
34 August Storck K.G. v. Nabisco, Inc., 59 F.3d 616, 618 (7th Cir. 1995). See also Deere & Co v. MTD Prods., Inc., 41 F.3d 39, 44 (2d Cir. 1994) (stating “as long as the mark is not altered [comparative advertising] serves the beneficial purpose of imparting factual information about the relative merits of competing products”).
35 August Storck K.G., 59 F.3d at 617.
36 Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 500 (8th Cir. 1987).
37 See infra Part II.B.3. and Part III.
38 See Antoine Pirovano, Publicite comparative et protection des consommateurs, D. 1974 chron. 279.
39 See Bodewig, supra note 8, at 190.
40 See Luby, supra note 5, at 12-18. See generally Pirovano, supra note 38 (analyzing extensively and criticizing previous case law which prohibited comparative advertising as impairing the competitor’s interest).
41 See e.g., CA Paris, Dec. 10, 1963, Ann. Prop. Ind. 1964, 67 (considering unlawful the comparison with one’s competitor’s products as likely to capture the competitor’s potential customers), cited in Pirovano, supra note 38.
42 See, e.g., CA Douai, Feb. 16, 1973, J.C.P. 1973, IV, 273 (holding unlawful a shopkeeper’s act of placing in his window a competitor’s advertisement showing the competitor’s higher prices together with a claim stating “[c]ompare and make up your mind before you buy”); Pirovano, supra note 38, citing CA Paris, June 7, 1973, 619 (directing defendant to pay 10,000 Francs damages for distributing a circular to the trade comparing defendant’s prices with plaintiff’s prices).
43 See, e.g., CA Paris, June 6, 1964, D. 1964 somm., 103 (holding that defendants cannot inform the buying public that the methods used by their competitors do not comply with the regulation enacted by the public health ministry).
44 See, e.g., Pirovano, supra note 38, citing Cass. com., July 19, 1973, D. 1973, 587; CA Paris, Jan. 24, 1967, Ann. Prop. Ind. 1967, 112 (ruling that one cannot compare his products to his competitor’s products in ways that put the competitor at a disadvantage, even when scientific evidence supports the comparison); Trib. civ. Seine, Nov. 5, 1949, Ann. Prop. Ind. 1950, 42 (holding unfair an ad stating that one’s lozenges are more effective that one’s competitor’s); Trib. civ. Seine, Nov. 14, 1925, Ann. Prop. Ind. 1926, 341 (declaring unfair a statement that one’s product does not have the defects of a competitor’s product).
45 See Jean-Jacques Biolay, Publicité comparative, 902 Juris-classeur Concurrence-Consommation ¶ 6 (2003).
46 See Luby, supra note 5, ¶ 8.
47 Georges Bonet, L’usage de la marque d’autrui dans la publicité, Le Nouveau Droit des Marques en France 109 (Litec, Publications de l’IRPI No. 10, 1991). Article L.711-1 of the Code de Propriété Intellectuelle [Intellectual Property Code] [hereinafter IPC] explicitly defines the trademark as “a sign … which serves to distinguish the goods or services of a natural or legal person.”
48 See, e.g., Calais-Auloy & Steinmetz, supra note 13, at 123 ¶ 126.
49 See Bodewig, supra note 8, at 190.
50 Id. at 188.
51 Council Resolution of Apr. 14, 1975 on the Preliminary Programme of the European Economic Community for a Consumer Protection and Information Policy, 1975 O.J. (C 92) 1 [hereinafter Council Resolution].
52 Id., Annex ¶ 34.
53 Commission Proposal of May 28, 1991 for a Council Directive Concerning Comparative Advertising and Amending Directive 84/450/EEC Concerning Misleading Advertising, 1991 O.J. (C 180) 14.
54 The idea was generally accepted that harmonizing the rules governing comparative advertising law in the European Union had become a necessity. See generally Rafael Cepas Palanca, The directive on comparative advertising, 3 Revue des Affaires Européennes 195, 198 (1998).
[D]ifferences between advertising rules in the Member States can complicate the marketing process and may go so far as to disrupt the free movement of goods and the availability of services in the European single market…
The Court of Justice has on a number of occasions dealt with situations where an advertisement, lawful in one Member State has run up against the laws of a neighboring Member State; in the INNO-BM case, the court held that a particular law of this type constituted an obstacle to the free movement of goods within the meaning of article 30 of the Treaty and was not justifiable under article 36 or other imperative principles.
Id. at 198.
55 See id. at 197. Analyzing the main reasons which justified, in the Commission’s view, the presentation of the proposal for a Council Directive on comparative advertising, the author explains:
Faced with such diverse information, consumers will benefit more from comparative advertising, which will demonstrate the merits of different goods belonging to the same range, than from other sources of information.
Authorization of the comparative advertising technique throughout the single market will [also] better equip firms to make an effective challenge to leading brands. The resulting increase in competition will benefit consumers and favor innovative and enterprising firms.
The present situation where comparative advertising is allowed in some Member States puts advertisers in other Member State at disadvantage.
56 Paul-Philippe Massoni, Publicité comparative, 5 Juris-classeur Contrats-Distribution, fascicule 4140, ¶ 4 (1994). See, e.g., Pirovano, supra note 38.
57 See infra note 60 and accompanying text.
58 See Massoni, supra note 56, ¶ 4. The proposal for a new Consumer Code prepared by the Commission for the Rewriting of Consumer Law in 1990 also suggested that comparative advertising be liberally permitted in order to stimulate competition and facilitate consumer information. See Commission de Refonte du Droit de la Consommation, Propositions pour un Code de la Consommation, art. L.55, La Documentation Française 23 (1990).
59 Cass. com., July 22, 1986, J.C.P. 1987, II, 14901, note Gavalda & Lucas de Leyssac.
60 Law No. 92-60 of Jan. 18, 1992 Reinforcing the Protection of Consumers, J.O., Dec. 21, 1992, p. 968; D.L. 1992, p. 129 [hereinafter the 1992 Act]. For a discussion on the provisions of the 1992 Act, see, e.g., Jean-Claude Fourgoux, L’article 10 de la loi du 18 janvier 1992. Feu sur la publicité comparative, Gaz. Pal. 1, doctr. 279 (1992); Luby, supra note 5; Yolande Serandour, L’avènement de la publicité comparative en France: article 10 de la loi No. 92-60 du 18 janvier 1992 renforçant la protection des consommateurs, J.C.P. 1992, I, 3596.
61 In relevant part, article 10 of the 1992 Act read:
I. An advertisement that contains comparisons between goods or services and thereby mentions or shows the trade or service mark, name, logo or the presentation [i.e. “look and feel”] of another party is permitted only if it is fair, truthful and not likely to mislead consumers.
It must be limited to an objective comparison that may only concern essential, important, determinant, and verifiable qualities of products of a comparative nature available on the market. If the comparison concerns price, only comparable goods sold under comparable terms may be compared and the time during which the advertiser will maintain the price mentioned for his own goods must be stated. Comparative advertising must not be based on individual or collective opinions or impressions. No comparison may be directed toward taking advantage from the notoriety of a mark. No comparison may present goods or services as imitations or copies of trademarked goods or services. If merchandise carries a controlled mark of origin, comparison may only take place among goods all bearing the same origin mark. Use of comparative advertising of the kind described above on packages, invoices, transport documents, means of payments or entrance tickets to events or at public places is prohibited…
1992 Act, art. 10.
Each of the above provisions was directly contrary to U.S. law. Particularly interesting was the prohibition of claims supported by “individual or collective opinions or impressions.” The purpose of this provision was to prohibit comparative advertisements based on tests, studies or surveys, such as “studies show consumers prefer product X more than product Y.” See Massoni, supra note 56, ¶ 29. This provision was contrary to the lawfulness of the so-called “establishment claims” in the United States. Establishment claims are claims indicating that consumers prefer one product to another or that scientific or experimental evidence supports the claim. Advertisements stating that “tests prove that product X lasts longer than product Y,” that “studies prove that doctors prefer product X to product Y,” or that “surveys show that product X is safer,” are lawful in the United States provided that the test, study or survey mentioned in the ad is “sufficiently reliable” to support the claim. See Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 62-63 (2d Cir. 1992). It must be pointed out that current French law on comparative advertising, which results from the 2001 Decree, does not prohibit claims based on “individual or collective opinions or impressions.” Since the current law has given rise to little litigation, we have to wait for future cases in order to determine whether the suppression of “individual or collective opinions or impressions” can be understood as authorizing establishment claims.
For a discussion on the differences between French and U.S. law, see infra Part III. Although they focus on the present law of comparative advertising as resulting from the 2001 Decree, the developments of Part III can be applied to the provisions of the 1992 Act which have only been slightly modified by the 2001 Decree. See infra text accompanying notes 72-74.
62 See, e.g., CA Douai, Oct. 2, 1995, D. 1996, 99, note Fourgoux. See generally Calais-Auloy & Steinmetz, supra note 13, at 123 ¶ 126 (criticizing the 1992 Act as establishing stringent limits on comparative advertising).
63 Fabrice Picod, L’obligation de communication préalable à l’épreuve de la directive communautaire sur la publicité comparative, Dalloz Affaires 2001, chron. 914, 914. See generally Massoni, supra note 56, ¶ 57-60 (analyzing the terms and remedies of the disclosure requirement).
64 Eric Andrieu, Nouvelle réglementation en matière de publicité comparative, 186 Légipresse 136 (2001); see also Picod, supra note 63, at 914, 914 n.7.
65 See Picod, supra note 63, at 914.
66 The tableaux de concordance practice, for example, was prohibited as infringing the famous perfume manufacturer’s trademarks. See infra text accompanying notes 143-405 for a discussion on the tableaux de concordance practice.
67 CA Paris, Sept. 24, 1996, D. 1997, 235; see also, e.g., CA Douai, Oct. 2, 1995, D. 1996, 99, note Fourgoux (ruling that it was disparaging for the ad to present two pictures side by side, one representing the advertiser’s service and evoking a sun explosion, the other representing the competitor’s service under a dark sky).
68 CA Bourges, Mar. 6, 1984, Gaz. Pal. 1984, 1, pan. jurispr. 370. See also Cass. crim., Dec. 22, 1986, D. 1987, 286, note Cas; CA Pau, Dec. 7, 1983, Revue Internationale de la Propriété Industrielle et Artistique 84 (1988).
69 Decree No. 2001-741 of August 23, 2001, J.O., Aug. 25, 2001, p. 13645; D.L. 2001, 2486 [hereinafter the 2001 Decree]. For a discussion on the provisions of the 2001 Decree, see Andrieu, supra note 64, at 136; Philippe Laurent, La publicité comparative harmonisée, 10 Contrats, Conc., Consom. 6 (2001); Jerôme Passa, Brève présentation du droit de la publicité comparative après la transposition de la directive communautaire, 3 Propriétés Intellectuelles 32 (2002); Guy Raymond, Ordonnance du 23 août 2002 portant transposition des directives communautaires en matière de droit de la consommation, J.C.P. 2001, 1, 50; Guy Raymond, Publicité comparative. Définition de la publicité comparative et utilisation de la marque d’autrui, 5 Contrats, Conc., Consom 28 (2002).
70 Council Directive 97/55/EC of 6 October 1997 Amending Directive 84/450/EEC Concerning Misleading Advertising so as to Include Comparative Advertising, 1997 O.J. (L 290) 18; D.L. 1997, 358 [hereinafter the 1997 European Directive]. In the mid 1970’s, the Council and the Commission decided to harmonize the rules governing misleading advertising in the European Union. They adopted a Directive concerning misleading advertising in 1984. See Council Directive 84/450/EEC of Sept. 10, 1984 Relating to the Approximation of the Laws, Regulations and Administrative Provisions of the Member States Concerning Misleading Adverting, 1984 O.J. (L 250) 17. However, because Greece refused to deal with comparative advertising, the Directive contained no provisions on this advertising format. The European Commission then decided to deal with comparative advertising separately and the 1997 European Directive was adopted. It amended Directive 84/450/EEC on misleading advertising to include certain provisions on comparative advertising. The new provisions authorize comparative advertising while establishing a number of safeguards in order to prevent unfair and misleading advertising. See 1997 European Directive, at art. 3(a)(1). For further details on the historical background of the 1997 European Directive, see Cepas Palanca, supra note 54, at 196-200.
For a discussion on the provisions of the 1997 European Directive, see Jacques-Philippe Gunther, Le parlement européen harmonise la publicité comparative, Les Echos, Oct. 10, 1997, 57.
71 French Consumer Code [hereinafter C. con.]. The new regulation defines comparative advertising as any advertising that expressly or implicitly identifies a competitor or goods or services offered by a competitor. C. con. at art. L.121-8. It then sets out a number of limits to the use of comparative advertising:
Any advertising which makes a comparison between goods or services by identifying, implicitly or explicitly, a competitor or goods and services offered by a competitor is only legal if:
1° It is not false or likely to mislead;
2° It relates to goods or services fulfilling the same requirements or having the same objective;
3° It objectively compares one or more essential, pertinent, verifiable and representative characteristics of these goods or services, one of which may be price.
Any comparative advertising referring to a special offer must clearly state the dates when the goods and services offered are to be available, where appropriate, the fact that the offer is limited to available stocks and the specific terms applicable.
Comparative advertising may not:
1° Take unfair advantage of the reputation attached to a trademark, manufacturer’s brand or service mark, to a trade name, to other distinctive marks of a competitor or to the designation of origin as well as the protected geographical indication of a competing product;
2° Lead to the discrediting or denigration of marks, trade names, other distinctive signs, goods, services, activity or situation of a competitor;
3° Engender confusion between the advertiser and a competitor or between the advertiser’s marks, trade names, other distinctive signs, goods or services and those of a competitor;
4° Present goods or services as an imitation or reproduction of goods or services with a protected mark or trade name.
For products with a protected designation of origin or geographical indication, comparison is only authorized between products each with the same designation of origin or the same indication.
… [T]he advertiser on behalf of which the comparative advertising is being circulated must be in a position to prove, within a short time, the physical accuracy of the statements, indications and presentations contained within the advertising.
For an analysis of the most relevant provisions of the new regulation, see infra Part III.
72 For an analysis of the limits on comparative advertising established by the 2001 Decree, see infra Part II.B.3. and Part III.
73 See supra text accompanying notes 63-65.
74 See infra Part II.B.2.b.
75 See C. con. at art. L.121-8, supra note 69. See, e.g., Cass. com., Mar. 27, 2001, Gaz. Pal. 2001, somm. 2089; CA Versailles, June 27, 2002, J.C.P. 2003 E, II, 56. Although the 1992 Act required that the competitor be specifically named in order for the advertisement to be comparative, courts considered that as long as the competitor could be identified, the ad was comparative. In this respect, the new law restates case law developed over many years. See, e.g., T.G.I. Paris, Nov. 18, 1992, Gaz. Pal. 1993, jur. 265 (holding that it is a form of comparative ad when there is a claim stating that natural gas is cheaper than gas produced through steam because it implicitly refers to the Compagnie Parisienne de Chauffage Urbain), cited in Andrieu, supra note 64, at 134 n.5; T.G.I. Paris, Feb. 18, 1989, Gaz. Pal. 1989, 7 (declaring that identifying competitors is easier when there are a few of them), cited in James R. Maxeiner, Peter Schotthofer, Advertising Law in Europe and North America § 13 n.73 (Aspen Publishers, 2d ed. 1999). On the contrary, when the competitor cannot be identified, the ad is not a form of comparative advertising.
76 987 F.2d 939, (3d Cir. 1993).
77 Id. at 946.
78 H.L. Hayden Co. v. Siemens Med. Sys., Inc., 1985 WL 9700, at 1 (S.D.N.Y. 1985).
79 845 F. Supp. 984 (S.D.N.Y. 1994).
80 Id. at 991. It is an interesting fact that, under U.S. law, harm is presumed when a direct comparison is made, i.e. when the competitor is expressly mentioned by name, but must be shown otherwise. The Second Circuit held that “[t]he type and quantity of proof required to show injury and causation has varied from one case to another depending on the particular circumstances. On the whole, we have tended to require a more substantial showing where … the defendant’s advertisements do not draw direct comparisons between the two.” Ortho Pharm. Corp. v. Cosprophar, Inc., 32 F.3d 690, 694 (2nd Cir. 1994).
81 1992 Act, at art. 10. See supra note 61.
82 C. con., at art. L.121-8(2). See supra note 71.
83 1992 Act, at art. 10. See supra note 61.
84 C. con., at art. L.121-8(3). See supra note 71.
85 2 Robert B. Hughes, Legal Compliance Checkups: Business Clients § 12:21 n.2 (Callaghan 1985).
87 CA Paris, Dec. 4, 2002, 4 Contrats, Conc., Consom., 33 (2003). But cf. Trib. com., Paris, May 7, 2003, 2 Contrats, Conc., Consom. 31-32 (2004) (declaring unlawful the comparison between the rates of two telephone companies because no information was provided with regard to the way the alleged saving was calculated and to the competitor’s specific rate which had been taken into account in the comparison).
88 The requirement that the claim be truthful and not mislead consumers applies to any type of advertisement, not only to comparative advertisements.
89 1992 Act, at art. 10. See supra note 61.
90 See supra notes 66-68 and accompanying text.
91 Cass. com., July 1, 2003, J.C.P. 2003 E, 38, 1461.
92 Jamal Henni, La publicité comparative de Tele2 condamnée en appel, Les Echos, Aug. 20, 2004, 19.
93 Section 43(a) of the Lanham Act reads in the pertinent part:
(1) Any person who…
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act.
15 U.S.C. § 1125(a) (2004).
Congress amended Section 43(a) of the Lanham Act in 1988 to include statements made by the advertiser about “his or her or another person’s” products. Before the amendment, courts recognized the existence of a federal cause of action for false statements about one’s own products, but considered that Section 43(a) did not encompass false statements about one’s competitor’s goods. Since the amendment, they have also applied Section 43(a) to false statements about one’s competitor’s products.
Plaintiff must prove several elements in order to establish a false advertising claim under Section 43(a) of the Lanham Act: (1) a false statement of fact, (2) in interstate commerce, (3) in connection with commercial advertising or promotion, (4) that actually deceives or has the capacity to deceive an appreciable number of consumers, (5) that is material, i.e. likely to influence purchasing decisions, and (6) causes or is likely to cause injury to the plaintiff. Skil Corp. v. Rockwell Int’l Corp., 375 F. Supp. 777, 783 (N.D. Ill. 1974); see also, e.g., Tacquino v. Teledyne Monark Rubber, 893 F.2d 1488, 1500 (5th Cir. 1990) (stating “to succeed it must be proved that; (1) [defendant] made a false statement of fact about their product; (2) statements deceived or had the capacity to deceive a substantial segment of potential customers; (3) the deception is material in that it is likely to influence the purchasing decision; (4) [defendant] caused its product to enter interstate commerce; and (5) [plaintiff] has been or is likely to be injured as a result.”).
94 Section 5 of the FTC Act declares unlawful “[u]nfair methods of competition … and unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45 (2004). The FTC Act, which created the FTC, was passed by Congress in 1914. At that time, the FTC had a mandate to prohibit only “[u]nfair methods of competition … in or affecting commerce.” The prohibition of “unfair or deceptive acts or practices” was added in 1938 by the Wheeler-Lea Amendment to the FTC. The courts consider three basic elements in any deceptive trade practice case under the FTC Act: (1) “there must be a representation, omission or practice that is likely to mislead the consumer,” (2) the consumers who are likely to be misled must be “acting reasonably under the circumstances,” and (3) “the representation, omission or practice must be a material one.” Kraft Inc. v. F.T.C., 970 F.2d 311, 314 (7th Cir. 1992).
95 The Uniform Deceptive Trade Practices Act provides in relevant part:
§ 2. Deceptive trade practices. (a) A person engages in a deceptive trade practice when… he:
(5) Represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that he does not have;
(8) Disparages the goods, services, or business of another by false representation of fact…
U.D.T.P.A. § 2(a) (amended 1966). The Act has been enacted by about a dozen states. States that have enacted the U.D.T.P.A. include: Colorado, Delaware, Georgia, Hawaii, Illinois, Maine, Minnesota, Nebraska, New Mexico, Ohio, Oklahoma, and Oregon.
96 The expression “little FTC Acts” designates some form of consumer protection statute which has been adopted by many states. These state statutes are traditionally known as “little FTC Acts” because their language is very similar to the language of the FTC Act. Their provisions may encompass false comparative advertising. For example, the Massachusetts Consumer Protection Act prohibits “unfair methods of competition and unfair or deceptive acts or practices.” Mass. Gen. Laws Ann. Ch. 93A, § 2(a) (2003). Similarly, the California Business & Professional Code defines “unfair competition” to mean “unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising,” Cal. Bus. & Prof. Code § 17200 (West 2003), and the Florida Annotated Statute declares unlawful “[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Fla. Stat. Ann. § 501.204 (West 2003).
97 See Harrison, supra note 2, at 232-34 (stating the elements of and case law relating to each of these causes of action). For a brief comparison of the product disparagement cause of action in the United States and in France, see infra note 168.
98 JR Tobacco, Inc. v. Davidoff of Geneva (CT), Inc., 957 F. Supp. 426, 433-34 (S.D.N.Y. 1997); see also, Am. Home Prods. Corp. v. Johnson & Johnson, 654 F. Supp. 568, 585 (S.D.N.Y. 1987) (holding false an unqualified equivalence claim for analgesics because it was true for mild to moderate pain, but not for strong pain).
99 Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 63 (2d Cir. 1992).
100 Although this analysis may also apply to trade names and other distinctive signs, it will focus on trademarks as they are the distinctive signs most frequently involved in comparative advertising.
101 See infra text accompanying notes 143-45 for a discussion on the tableaux de concordance practice.
102 T.G.I. Paris, Jan. 11, 1998, 1988 Bull. l’Ordre des Pharmaciens No. 309, 330, cited in Biolay, supra note 45, ¶ 55.
103 CA Paris, Mar. 16, 1984, Gaz. Pal. 1984, I, pan. jurispr. 369.
104 636 F. Supp. 433 (S.D.N.Y. 1986).
105 Id. at 437. It must be pointed out that where trademark infringement is found, the courts’ tendency is to consider that the infringer’s use of a “like/love” slogan may exacerbate the likelihood of confusion. See, e.g., Bausch & Lomb, Inc. v. Nevitt Sales Corp., 810 F. Supp. 466, 477 (W.D.N.Y. 1993) (issuing an injunction against defendant’s use of the slogan “if you like Ray-Ban, you’ll love Rayex,” considering that it would exacerbate defendant’s infringement of plaintiff’s trademark). However, courts refuse to enjoin the use of “like/love” advertisements where there is no likelihood of confusion. See infra note 124 and accompanying text.
106 4 Louis Altman & Rudolf Callmann, Callmann on Unfair Competition, Trademarks and Monopolies § 22:28 (Callaghan, 4th ed. 1998).
107 Oral-B Labs., Inc. v. Mi-Lor Corp., 810 F.2d 20, 22 (2d Cir. 1987), cited in Altman & Callmann, supra note 106, § 22:28.
108 C. con., at art. L.121-8(3). The requirement that the feature be “decisive” can be compared to the U.S. materiality requirement. In the United States, to be actionable, a falsehood must be “material,” i.e. likely to influence consumers in making their purchasing decisions. Skil Corp. v. Rockwell Int’l Corp., 375 F. Supp. 777, 783 (N.D. Ill. 1974); see also, e.g., Zine v. Chrysler Corp., 600 N.W.2d 384, 398 (Mich. Ct. App. 1999) (“[A] material fact for the purposes of [Michigan law] would… be one that is important to the transaction or affects the consumer’s decision to enter into the transaction.”).
109 Massoni, supra note 56, ¶ 28.
110 T.G.I. Paris, Sept. 23, 1991, Gaz. Pal. 1991, 2, pan. jurispr. 576.
111 CA Paris, 4e ch., July 1, 1998, D. 1998, inf. rap. 197; see also CA Paris, 4e ch. B, Sept. 10, 1999, D. 1999, 30 (holding unlawful a general claim stating that a radio station is superior to another).
112 CA Versailles, June 27, 2002, J.C.P. 2003 E, II, 56.
113 See 15 U.S.C. § 1125(a) (2003); see also, e.g., Randa Corp. v. Mulberry Thai Silk, Inc., 58 U.S.P.Q.2d 1718, 2000 WL 1741680, at *3 (S.D.N.Y. Nov. 27, 2000) (holding that a statement that licensor is going to suffer a 30% revenue loss due to competition is opinion-type puffery and therefore non-actionable).
114 Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 731 (9th Cir. 1999); see also Presidio Enters., Inc. v. Warner Bros. Distrib. Corp., 784 F.2d 674, 679 (5th Cir. 1986) (stating “[a] statement of fact is one that (1) admits of being adjudged true or false in a way that (2) admits of empirical verification.”).
115 Groden v. Random House, Inc., 61 F.3d 1045, 1051 (2d Cir. 1995).
116 See, e.g., U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914, 926 (3d Cir. 1990) (finding that the health insurer’s claim “Better than HMO. So good, it’s Blue Cross and Blue Shield” is puffery), cert. denied, 498 U.S. 816 (1990).
117 Pizza Hut, Inc., v. Papa John’s Int’l, Inc., 227 F.3d 489, 497 (5th Cir. 2000).
118 See, e.g., Blue Cross of Greater Phila., 898 F.2d at 926; Smith-Victor Corp. v. Sylvania Elec. Prod., Inc., 242 F. Supp. 302, 308 (N.D. Ill. 1965) (“[A]dvertising which merely states in general terms that one product is superior is not actionable.”).
119 See, e.g., Clorox Co. Puerto Rico v. Procter & Gamble Commercial Co., 228 F.3d 24, 39 (1st Cir. 2000) (commenting “[s]tanding alone, [‘Whiter is not possible’] might well constitute an unspecified boast, and hence puffing. In context, however, the statement invites consumers to compare Ace’s whitening power against either other detergents acting alone or detergents used with chlorine bleach … . [I]t is a specific, measurable claim, and hence not puffing.”); Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997) (holding that the claim that advertised defendant’s grass seed as “Less is More” was general and unmeasurable non-actionable puffery; by contrast, the claim that defendant’s grass required “50% Less Mowing” was actionable because it was “a specific and measurable advertisement claim of product superiority based on product testing.”).
120 See, e.g., Omega Eng’g, Inc. v. Eastman Kodak Co., 30 F. Supp. 2d 226, 259 (D. Conn. 1998) (finding subjective a claim that a product is “perfect” for a specific purpose).
121 See, e.g., Blue Cross of Greater Phila., 898 F.2d at 922 (“Mere puffing, advertising ‘that is not deceptive for no one would rely on its exaggerated claims,’ is not actionable under § 43(a)” (quoting Toro Co. v. Textron, Inc., 499 F. Supp. 241, 253 n.23 (D. Del. 1980)); United States v. An Article…Consisting of 216 Individually Cartoned Bottles, 409 F.2d 734, 741 (2d Cir. 1969) (ruling that claims which contain “familiar exaggerations” may not be prohibited because “virtually everyone can be presumed to be capable of discounting them as puffery.”).
122 227 F.3d 489 (5th Cir. 2000).
123 Id. at 498-99. However, the court held that advertisements using the “Better ingredients. Better pizza” slogan and comparing the ingredients used by Papa John’s to those used by Pizza Hut constituted actionable factually-based claims. The court reasoned:
[T]he message communicated by the slogan… is expanded and given additional meaning when it is used as the tag line in the misleading sauce and dough ads. The slogan, when used in combination with the comparison ads, gives consumers two fact-specific reasons why Papa John’s ingredients are “better.”… In short, Papa John’s has given definition to the word “better.”
Id. at 501. Despite the fact that the superiority claims were false, the court dismissed the case because evidence did not prove that the Papa John’s claims were “material,” i.e. that consumers relied on them). Id. at 503-04.
124 513 F.2d 716 (9th Cir. 1975); see also Diversified Mktg., Inc. v. Estee Lauder, Inc., 705 F. Supp 128 (S.D.N.Y. 1988) (refusing to enjoin use of the comparative advertising slogan “If You Like Estee Lauder … You’ll Love Beauty USA”). But cf. Charles of the Ritz Group, Ltd. v. Quality King Distrib., Inc., 636 F. Supp. 443 (S.D.N.Y. 1986); see supra notes 104-05 and accompanying text. See generally Diane Martens Reed, Comment, Use of “Like/Love” Slogans in Advertising: Is the Trademark Owner Protected? 26 San Diego L. Rev. 101 (1989).
125 It must be pointed out that the credulous consumer was the criterion before the reasonable consumer became the standard. See, e.g., Florence Mfg. Co. v. J.C. Dowd & Co., 178 F. 73, 75 (2d Cir. 1910) (ruling that “the law is… made for the protection of… the ignorant, the unthinking, and the credulous, who, in making purchases do not stop to analyze but are governed by appearances and general impressions.”); Doe v. Boys Clubs, Inc., 907 S.W.2d 472, 479-80 (Tex. 1995) (stating “an act is false, misleading or deceptive [under the Texas Deceptive Trade Practice Act] if it has the capacity to deceive an ‘ignorant, unthinking or credulous person.’”). The “reasonable consumer” standard was applied for the first time in Cliffdale Assocs., 103 F.T.C. 110 (1984) (finding a claim stating that the advertiser’s engine device would enable consumers to save fuel as deceptive).
126 F.T.C. Policy Statement on Deception, 103 F.T.C. 174, appended to Cliffdale Assocs., 103 F.T.C. 110 (1984), [hereinafter Policy Statement on Deception] available at http://www.ftc.gov/bcp/policystmt/ad-decept.htm (Oct. 14, 1983).
127 931 F.2d 1312 (9th Cir. 1991).
128 Id. at 1316.
129 Ulf Doepner & Frank-Erich Huagel, Towards a European Consumer Protection? Protection Against Misleading Advertising in Europe, 88 Trademark Rep. 177, 193 (1998) (stating “[c]ourts applying the Lanham Act have held that an advertisement may be deemed misleading if ‘a not unsubstantial number of consumers receive a false or misleading impression from it.’”) (quoting McNeilab, Inc. v. Am. Home Products Corp., 501 F. Supp. 517, 528 (S.D.N.Y. 1980), modified, 501 F. Supp 540 (S.D.N.Y. 1980)).
130 U.S. case law used that language to define the credulous consumer before the reasonable consumer became the standard. See supra note 123. For examples of French cases using the “consommateur moyen” as a standard, see, e.g., CA Paris, Sept. 27, 1993, D. 1994 somm. 77, note M.-L. Izorche (stating that a likelihood of confusion exists when the “consommateur d’attention moyenne” is not able to carry out a technical examination capable of disclosing the differences between the products which he does not simultaneously have in front of him”), cited in Pascal Wilhelm, La Concurrence déloyale et parasitaire appliquée à la publicité, http://www.p-wilhelm.com/?p_idref=32 (last visited Jan. 5, 2005).
131 Doepner & Huagel, supra note 129, at 192 (quoting Calais-Auloy & Steinmetz, supra note 13, ¶ 117 at 111).
132 Id. at 185.
133 A sophisticated consumer has special knowledge of the type of product advertised. See, e.g., Sandoz Pharms. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 229-30 (3d Cir. 1990) (commenting “a target audience’s special knowledge of a class of products is highly relevant to any claim that it was misled by an advertisement for such a product.”); Plough, Inc. v. Johnson & Johnson Baby Prods. Co, 532 F. Supp. 714, 717-18 (D. Del. 1982) (stating “[c]ontext can be important in discerning the message conveyed and this is particularly true where, as here, the target of the advertising is not the consuming public but a more well informed and sophisticated audience of merchants.”); Policy Statement on Deception, supra note 126 (commenting “a practice or representation directed to a well-educated group, such as prescription drug advertisement to doctors, would be judged in the light of the knowledge and sophistication of that group.”).
134 See, e.g., Standard Oil Co. v. Fed. Trade Comm’n, 557 F.2d 653, 658 (9th Cir. 1978) (upholding the FTC’s finding that consumers would be deceived by an ad stating that gasoline additive would reduce pollution by transforming clear exhaust into dark exhaust because many consumers are not well-informed about the effects of visible and invisible components of exhaust on air pollution and would falsely believe that the gasoline additive would significantly decrease pollution).
135 See, e.g., Marcus Marcus v. AT&T Corp., 138 F.3d 46, 57 (2d Cir. 1998) (holding that when a telephone company’s slogan claims that using its services would enable consumers to amass “true savings,” the consumer who did not accumulate “true savings” cannot be granted remedy).
136 See, e.g., Grolier, 91 F.T.C. 315, 430 (1978) (stating “[i]n determining the meaning of an advertisement…the important criterion is the net impression that it is likely to make on the general populace.”), remanded on other grounds, 615 F.2d 1215 (9th Cir. 1980), modified on other grounds, 98 F.T.C. 882 (1981), reissued, 99 F.T.C. 379 (1982); Policy Statement on Deception, supra note 126, § III (declaring that the FTC examines “expectations and understandings of the typical buyer”).
137 August Storck K.G. v. Nabisco, Inc., 59 F.3d 616, 618 (7th Cir. 1995) (citation omitted); see also Doepner & Huagel, supra note 129, at 186 (stating “consumer protection would be undermined if strict advertising laws effectively prevented the dissemination of information which, though potentially misunderstood by a minority of the consumers addressed, enhanced the transparency of the market for the vast majority of the public.”).
138 Although the analysis conducted in this article may also apply to trade names and any other distinguishing signs, it will focus on trademarks as they are the trade symbols most frequently involved in comparative advertising cases.
139 C. con., at art. L.121-9(1), supra note 71.
140 Id. at art. L.121-9(4).
141 This form of comparative advertisements is also declared unlawful by L.713-2 IPC, which prohibits the “reproduction, use or affixing of a mark even with the addition of words such as formula, style, system, imitation, type or method.” See, e.g., CA Versailles, Jan. 19, 1987, D. 1993 somm. 113.
142 T.G.I. Bourges, June 15, 1995, P.I.B.D. 1995, III, 595, 432; see also, e.g., CA Paris, Sept. 19, 1997, Gaz. Pal. 1998, 1, somm. 372.
143 See, e.g., Cass. com., July 8, 2003, 11 Contrats, Conc., Consom. 29 (2003) (holding that does not constitute an unfair business practice the fact of copying the product of another).
144 See, e.g., Cass. com., Oct. 16, 1985, 1985 Bull. Civ. IV, No. 243; Cass. com., Jan. 27, 1981, Ann. Prop. Ind. 1981, 91.
145 Christine-Maud Vilmart, La réference à la marque d’autrui sera-t-elle encore sanctionnée en dehors de la contrefaçon – Le cas de la parfumerie, Gaz. Pal. 1991, 8, doctr.
146 4 McCarthy, supra note 14, § 24:68.
147 Beverly W. Pattishall, Dawning Acceptance of the Dilution Rationale for Trademark-Trade Identity Protection, 74 Trademark Rep. 289, 308 (1984).
148 15 U.S.C. §§ 1125(c), 1127 (2003). Section 1125(c) provides: “(1) The owner of a famous mark shall be entitled… to an injunction against another person’s commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark ….” Section 1127 defines dilution as “the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of – (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception.”
149 States started to adopt dilution statutes in the 1940’s. For an example of state anti-dilution law, see, e.g., N.Y. Gen. Bus. Law § 360-1 (McKinney 2003) (“Likelihood … of dilution of the distinctive quality of a mark or trade name shall be a ground for injunctive relief in cases of infringement of a mark registered or not registered or in cases of unfair competition…”).
150 Bodewig, supra note 8, at 184.
151 15 U.S.C. § 1125(c)(4)(A) (2003).
152 Id. It must be noted that courts consider that state dilution laws should be analyzed and construed as the Federal Dilution Act. See 4 McCarthy, supra note 14, § 24:79 (quoting Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 51 U.S.P.Q.2d 1801, 1806 (9th Cir. 1999) (“We have interpreted [the California Bus & Prof Code] § 14330, like the Federal Dilution Act, to protect only famous marks.”); Network Network v. CBS, Inc., 2000 WL 362016 at *4 (C.D. Cal. 2000) (“Dilution under state law is subject to essentially the same analysis as dilution under the FTDA.”); see generally Nancy S. Griewe, Antidilution Statutes: A New Attack on Comparative Advertising, 72 Trademark Rep. 178 (1982) (exploring the relationship between state anti-dilution statutes and comparative advertising).
153 See Playboy Enters., Inc. v. Welles, 279 F.3d 796, 806 (9th Cir. 2002) (“A nominative use, by definition, refers to the trademark holder’s product. It does not create an improper association in consumers’ minds between a new product and the trademark holder’s mark.”).
154 41 F.3d 39 (2d Cir. 1994).
155 Id. at 40.
156 Id. at 44.
157 See infra notes 174-77 and accompanying text.
158 4 McCarthy, supra note 14, § 25:52.
161 The court explained:
The real intent of the plaintiff’s bill, it seems to us, is to extend the monopoly of such trademark or trade name as she may have to a monopoly of her type of bitter water, by preventing manufacturers from telling the public in a way that will be understood, what they are copying and trying to sell. But the plaintiff has no patent for the water, and the defendants have a right to reproduce it as nearly as they can. They have a right to tell the public what they are doing, and to get whatever share they can in the popularity of the water by advertising that they are trying to make the same article, and think that they succeed. If they do not convey, but, on the contrary, exclude, the notion that they are selling the plaintiff’s goods, it is a strong proposition that when the article has a well-known name they have not the right to explain by that name what they imitate. By doing so, they are not trying to get the good will of the name, but the good will of the goods.
Id. at 380-81 (citations omitted).
162 Société Comptoir de L’Industrie Cotonnière, Etablissements Boussac v. Alexander’s Dep’t Stores, 299 F.2d 33 (2d Cir. 1962).
163 Id. at 36. The Chanel court similarly stated:
Assuming the equivalence of “Second Chance” and “Chanel No. 5,” the public interest would not be served by a rule of law which would preclude sellers of “Second Chance” from advising consumers of the equivalence and thus effectively deprive consumers of knowledge that an identical product was being offered at one third the price.
By taking his “free ride,” the copyist, albeit unintentionally, serves an important public interest by offering comparable goods at lower prices.
Chanel, 402 F.2d at 568. The Chanel case is often cited as an authoritative decision. See, e.g., Sykes Lab., Inc., v. Kalvin, 610 F. Supp. 849 (C.D. Cal. 1985) , declaring:
One consequence of the rule announced in Smith v. Chanel is that the copyist may freely capitalize on the goodwill and product recognition developed at great cost by the trademark owner…
… If they have taken a “free ride” on plaintiff’s name without causing confusion or deception, then they have taken that to which they were legally entitled.
Id. at 854-55.
165 Id. at 504.
166 See supra note 45 and accompanying text.
167 See supra note 67 and accompanying text.
168 Article L.121-9(2) of C. con. also prohibits comparisons discrediting or denigrating a competitor’s products or services. Although the analysis of article L.121-9(2) focuses on comparative claims disparaging a competitor’s trademark, it is worth mentioning that, contrary to French law, U.S. law requires falsity in product disparagement cases. Under U.S. law, product disparagement occurs when “when one publishes, with the requisite state of mind, a false statement of fact disparaging another’s goods or services which is proven to have caused a specific loss of sales.” 4 McCarthy, supra note 14, § 27:91. The elements of the tort of product disparagement usually are:
(1) a falsehood; (2) published, or communicated to a third person; (3) when the defendant-publisher knows or reasonably should know that it will likely result in inducing others not to deal with the plaintiff; (4) the falsehood does play a material and substantial part in inducing others not to deal with the plaintiff; (5) special damages are proximately caused as a result of the published falsehood.
Harrison, supra note 2, at 233-34. Consequently, product disparagement falls under the rubric of false advertising.
169 Noël-François Alpi, Action en Concurrence Déloyale. Eléments de Procédure, Juris-classeur Concurrence-Consommation, fascicule 245, ¶ 47 (2003).
170 Cass. com., Mar. 2, 1982, cited in Biolay supra note 45, ¶ 49.
171 CA Paris, Mar. 27, 1977, cited in Biolay, supra note 45, ¶ 49.
172 CA Paris, Feb. 12, 1988, D. 1988 inf. rap., 75. See Biolay, supra note 45, ¶ 45, 47.
173 CA Douai, Oct. 2, 1995, D. 1996, 99, note Fourgoux; 9 Légicom 52 (1995). But cf. CA Paris, Jan. 18, 2002, Gaz. Pal. 2002, II, jur. 1668 (holding that it was not disparaging for a radio station to display two soda cans of different sizes, the big one bearing the logo of the advertiser (NRJ) and the small one the logo of one competitor (Europe 1) accompanied by a slogan of the type: “NRJ has 30% listeners more than Europe 1.”).
174 Tarnishment has its roots in the 1964 USTA (now the International Trademark Association or INTA) Model Bill which used the language “likelihood of injury to business reputation.” Today, most anti-dilution state statutes use that same language. See Robert S. Nelson, Unraveling the Trademark Rope: Tarnishment and Its Proper Place in the Laws of Unfair Competition, 42 IDEA 133, 146 (2002).
175 Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir. 1994).
176 Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497, 508 (2d Cir. 1996).
177 The Federal Dilution Act does not expressly use the terms “tarnishment” and “likelihood of injury to business reputation.” See supra note 152. Certain commentators have asserted that legislative history makes it clear that Congress did not intend to exclude tarnishment from the Federal Dilution Act. See 4 McCarthy, supra note 14, § 24:95; Nelson, supra note 174, at 150. However, in Moseley v. Victoria Secret Catalogue, Inc., 537 U.S. 418, 432 (2003), the Supreme Court cast doubt on this. It held that “the contrast between the state statutes, which expressly refer to both ‘injury to business reputation’ and to ‘dilution of the distinctive quality of a trade name or trademark,’ and the federal statute which refers only to the latter, arguably supports a narrower reading of the FTDA.” It must be noted that the Restatement (Third) of Unfair Competition encompasses dilution by tarnishment. Restatement (Third) of Unfair Competition § 25 (1995).
178 See Nelson, supra note 174, at 145-46 (2002).
179 See id. at 171.
180 Deere, 41 F.3d at 45.
181 Id. at 45. After observing that the advertisement constituted neither blurring nor tarnishment, the court declared that “the blurring/tarnishment dichotomy does not necessarily represent the full range of uses that can dilute a mark…” Id. at 44. The alteration form of dilution created by the Deere court has later been construed as “a broad view of tarnishment” rather than as “a new category of dilution.” See Hormel Foods, 73 F.3d at 507.
182 Deere, 41 F.3d at 44.
183 Lionel Forest, Publicité: l’humour n’excuse pas tout, Les Echos, Sept. 1, 2004, 12.
184 Nelson, supra note 174, at 171.
185 The Second Circuit held that when a mark is used “to identify a competing product in an informative comparative ad, … the scope of the protection under a dilution statute must take into account the degree to which the mark is altered and the nature of the alteration.” Deere, 41 F.3d at 45; see also Girl Scouts of U.S.A. v. Personality Posters Mfg. Co., 304 F. Supp. 1228, 1233 (S.D.N.Y. 1969) (holding that a poster depicting a pregnant girl scout, thereby conveying the idea that the traditional image of girl scouts as chaste must be challenged, did not injure the Girl Scouts’ trademark).
186 Deere, 41 F.3d at 45 (emphasis added).
187 See supra notes 152-59 and accompanying text.
188 Comparative Advertising, 67 Trademark Rep. 351, 351 (1977).
189 Arthur R. Miller & Michael H. Davis, Intellectual Property: Patents, Trademark, and Copyrights In a Nutshell 189 (3d ed. 2000).
190 Griewe, supra note 152, at 179.
191 Miller & Davis, supra note 189, at 191.
192 Case 16/74, Centrafarm BV v. Winthrop BV, 1974 E.C.R. 1183 (1974).
193 Smith v. Chanel, Inc., 402 F.2d 562 (9th Cir. 1968).
194 Id. at 566.
195 Id. at 566-67 (quoting J. Bain, Barriers to New Competition 114-15 (1955)).
196 Griewe, supra note 152, at 179.
197 Smith, 402 F.2d at 568.
199 See Griewe, supra note 152, at 202-03.
200 See supra note 194-95 and accompanying text.
201 See supra Part II.B.1.b.
202 See generally 5 McCarthy, supra note 14, § 31:90 (analyzing the consistency between “free” competition and “fair” competition).
203 Andrieu, supra note 64, at 136.
204 See Goldman, supra note 18, at 507.
205 Christian Dianoux & Jean-Luc Heerman, Comparative Advertising in Europe: State of the Art and Perspectives, available at http://www.escp-eap.net/conferences/marketing/pdf/dianoux.pdf (last visited Jan. 5, 2005).
206 See Case C-44/01, Pippig Augenoptik GmbH & Co KG v Hartlauer Handelsgesellschaft mbH, 2003 E.C.R I-03095:
[Provisions of the 1997 European Directive] preclude the application to comparative advertising of stricter national provisions on protection against misleading advertising as far as the form and content of the comparison is concerned, without there being any need to establish distinctions between the various elements of the comparison, that is to say statements concerning the advertiser’s offer, statements concerning the competitor’s offer and the relationship between those offers.
[Provisions of the 1997 European Directive] must be interpreted as meaning that… the advertiser is in principle free to state or not to state the brand name of rival products in comparative advertising…
[Provisions of the 1997 European Directive] do not preclude compared products from being bought through different distribution channels.
[C]omparing rival offers, particularly as regards price, is of the very nature of comparative advertising. Therefore, comparing prices cannot in itself entail the discrediting or denigration of a competitor who charges higher prices…
[Provisions of the 1997 European Directive] do not prevent comparative advertising, in addition to citing the competitor’s name, from reproducing its logo and a picture of its shop front, if that advertising complies with the conditions for lawfulness laid down by Community law.
© 2005 C. Romano. This HTML edition © 2005 University of Oxford. Published simultaneously in Northwestern Journal of International Law and Business, Vol. 25, No.2. Published in OUCLF by special permission of Northwestern University School of Law, Northwestern Journal of International Law and Business
The contents of this page may be downloaded and printed out in single copies for individual use only. Making multiple copies without permission is prohibited.