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4.3. FALSE AND COMPARATIVE ADVERTISMENT
Ales Rozehnal, Ph.D, Attorney-at-Law in Prague, Head of the Department of Law of the Banging College, Assistant of the Faculty of Humanitarian Studies, Charles University, Prague, External lecturer of the Faculty of Law, Charles University, Prague
Place of employment: Advokatni kancelar Rozehnal & Kuchar, Charles University in Prague Praha, Charles University in Prague
rozehnal@ak-rozehnal. cz
Abstract: False advertisement means the distribution of information about one’s own or someone else’s enterprise, products or performances, which has the capacity to induce a false impression and thus establish favour to one’s own or someone else’s enterprise in competition to the detriment of other competitors, consumers or customers. Advertisement does not need to be a 100per cent true or complete, and cannot be restricted to the point where it would become impossible. The falsity is thus judged namely with respect to the characteristics of the advertised goods or services, especially their availability, make, origin, utilization, suitability for use, results that may be expected from the use, and results of the tests or inspections of goods or services, as well as to the price or method of calculation thereof, and the conditions under which the goods is supplied and the services are provided. It is always necessary in an advertisement to expect a certain exaggeration or adornment of the fact; otherwise, it would cease to be an advertisement and remain unnoticed. However, the law does have some requirement for its verity. It is sufficient if the advertisement has the capacity to deceive, while the deception may not occur at all. False advertisement mostly contains incorrect information, i.e. the information which does not comply with reality. However, it is not sufficient for an advertisement to become false by containing untrue information; it must also provide one’s own or someone else’s enterprise with a benefit in the economic competition to the detriment of other competitors or consumers, and there must be a causal link between the untrue information and the provision of a benefit to the detriment of others. Comparative advertisement is not a special type of advertisement but only a special type of presentation of goods, services or competitors. It is any advertisement which directly or indirectly identifies another competitor or goods or services offered by another competitor. Comparative advertisement may be classified in four groups as follows: criticising comparative advertisement, personal comparative advertisement, supporting comparative advertisement, systemic comparative advertisement. A conceptual element of the comparative advertisement is the identification of another competitor or goods or services offered by another competitor.
Keywords: advertisement, comparative advertisement, competitor, economic competition, false advertisement, false information, falsity, incompleteness, untruthfulness
False advertisement means the distribution of information about one's own or someone else's enterprise, products or performances, which has the capacity to induce a false impression and thus establish favour to one's own or someone else's enterprise in competition to the detriment of other competitors, consumers or customers. Distribution of the information is deemed to be the communication in the spoken or written form, press, picture, photograph, radio, television or via any other media. Therefore, it is the communication beyond the framework of a privately expressed opinion; however, publication of the information is not required.
Should a competitor distribute false information unrelated to the enterprise, products or performances but for example relating to the competitor, such act would not constitute a false advertisement. The competitor also cannot hide behind any allegations or assumptions of third parties, for example by quoting a newspaper article in its advertisement that would contain untrue or false information. Even a true piece of information may be false if it is misleading given the circumstances under which it has been provided.
It is also irrelevant whether or not the false advertisement is distributed by the competitor itself or by a third party upon the competitor's instruction (for example advertisement agency). Major part of the relevant literature1,2,3 derives the liability of the media for the unfair competition in the case of false advertisement distribution, despite the
1 Pelikanova, I. Komentar k obchodnimu zakoniku [Comments to the Commercial Code]. 1. dfl. 2. aktualizovane a rozsirene vydam. Praha: Linde Praha a.s., 1997.
2 Munkova, J. Pravo proti nekale soutezi [Law Against Unfair Competition]. Komentar. Praha: C.H. Beck, 2001.
3 Hajn, P. K odpovednosti medn za nekalou reklamu [Liability of the Media for Unfair Competition]. Pravn praxe v podnikan c.11, 1994, 1s.
fact that there is no competition relationship between the media and competitors of their advertisers. Mere provision of a paid service to a third party consisting in the placement of an advertisement, while the third party is liable for the advertisement, does not usually establish any economic competition act. Once exception could be the advertisement where the breach of law is “striking". Therefore, if a medium publishes an advertisement in return of payment, it is not an economic competition act in the field referred to by the advertisement. The competition intention of the medium cannot be identified with the competition intention pursued by the client who ordered the advertisement1 4.
Advertisement does not need to be a 100per cent true or complete, and cannot be restricted to the point where it would become impossible. The falsity is thus judged namely with respect to the characteristics of the advertised goods or services, especially their availability, make, origin, utilisation, suitability for use, results that may be expected from the use, and results of the tests or inspections of goods or services, as well as to the price or method of calculation thereof, and the conditions under which the goods is supplied and the services are provided. The false information is the information that is untrue, undocumented, incomplete, inaccurate, unclear, ambiguous or exaggerated. The falsity is also regarded in withholding the information about the actual features of the products or services or the level of purchasing conditions. False advertisement is also deemed to be the offer of goods or services that infringe some intellectual property rights. The terms "warranty", "guaranteed", as well as any other terms of the similar content may be used only in cases where the contents and the terms and conditions of the warranty is
4 Judgment of the High Court in Prague dated 26 May 2010, case no. 3 Cmo 248/2009
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specified at the same time.
It is always necessary in an advertisement to expect a certain exaggeration or adornment of the fact; otherwise, it would cease to be an advertisement and remain unnoticed. However, the law does have some requirement for its verity. Adornment is permitted if it is clear to almost everyone that it is an adornment. In order to see whether or not an adornment could be recognized, it is important to consider the education and intelligence of an average consumer who has average knowledge and who does pay only superficial attention to the advertisement. Therefore, judgment of the individual customer is not decisive. It is irrelevant that a customer did not get fooled by a false advertisement and even could not be fooled because he is an expert or he just noticed the falsity of the advertisement. If the advertisement, however, is intended to professionals in a certain industry, the degree of admissibility of a false advertisement increases to a higher level, which is comparable to the knowledge of the professionals and that of the average consumers. Therefore, the assessment of which advertisement is false and which is not very much depends on maturity of the society and on the demands imposed upon the society by courts. For this reasons, there are sociological surveys conducted in some states as to whether or not a given advertisement may deceive the customer, whereas the false advertisement is deemed to be the advertisement which is able to mislead 5 to 15 per cent of the target group, depending on the commodity surveyed. In other states, the liability of customers for their property is taken into account (the bon pere de famille doctrine)5.
It is sufficient if the advertisement has the capacity to deceive, while the deception may not occur at all; also, such an advertisement does not need to be detrimental to one but it may cause a benefit to another. Here again, it is enough if it has the capacity to such effects. Such effect does not occur when the information is obviously not meant seriously (for example in a bigmouth, obviously exaggerated, superlative or humorous advertisement). Some examples of such an exaggerated advertisement is the catchword „unbelievably low price", "the price you have never seen before", "almost for free", etc. If a competitor claims that his products are “the best", he also claims at the same time that other comparable products made by the competition are worse. Even if it is necessary to anticipate admissibility of exaggeration in advertisement, including superlative advertisement, it cannot be ruled out that it might constitute unfair competition, namely in the cases where a group of entities offering the identical kind of goods is so small that even an average consumer will figure out with whom is the competitor comparing itself in its catchword6. However, even the advertisement consisting in a fortune-teller's catchword has been considered false: "The percentage of success is 99.998per cent"7. On the other hand, it is not false advertisement if it states a certain allegation about a product, whereas it must be clear to everyone on the very first sight that the product cannot have the feature claimed in the advertisement. However, if it points to a special feature which does not
5 Hajn, P. Soutezn chovani a pravo proti nekale soutezi [A] [Competitive Behaviour and Law Against Unfair Competition]. Brno: Masarykova uni-verzita, 2000.
6 Resolution of the High Court in Prague dated 30 March 2001, case no. 3 Cmo 540/2000
7 Munkova, J.: Pravo proti nekale soutezi [Law Against Unfair Competi-
tion]. Komentar. Praha: C.H. Beck, 2001.
exist, such exaggeration is not permitted.
False advertisement mostly contains incorrect information, i.e. the information which does not comply with reality. Under some circumstances, however, even correct information may give a misleading impression. False advertisement thus may include the use of certain, albeit correct, indication of origin, provided that the customer could associate it with a certain quality, which is not the case (for example a Solingen knife, which may be made in Solingen but not in the typical high quality). False advertisement must be deemed to be the advertisement which claims that a certain product has been approved or recommended by an institution but the approval or recommendation applies only to some parts of the product concerned. False or, as the case may be, untrue advertisement does not mean an incomplete advertisement8. Therefore, if an advertiser states that the "leasing increase" is 17.5 per cent without stating what is the base of the "leasing increase" calculation, it is not a false advertisement. It does not matter that the published information is clearly incomplete when it failed to say that the "advantageous" percentage is being calculated from a higher base than the customer expects. "Incompleteness" and "untruthfulness" are two different categories which must be distinguished, not substituted. It is known that many advertisement events are incomplete to the point where nothing at all could be actually ascertained about the offered products from the advertisements published by renowned companies (for example the billboards of Benetton); they are so "incomplete" that the question of their verity cannot be even reasonably asked. It must be noted though that he question of completeness is not unified in our judicial practice. For example, it was ruled that an advertisement promising the customer a double amount of minutes if he joints a certain telephone operator, despite the fact that the information applied only to certain types of calls, was not a false advertisement, whereas a travel agent's advertisement stating that the customer will obtain a free trip for a child in return of purchase of goods, although the offer applied only to a certain type of trips, was defined as false. The only difference between the two advertisements consisted in the fact that the advertisement published by the telephone operator offered a telephone number where the customer could obtain complete information. It must be also noted that the false advertisement as an institute of private law cannot be made identical to the untruthful advertisement as an institute of public law because they are purposefully distinctive and have a different legal function.
Commercial practice is considered deceitful if, in its material context and with regard to all of its features, circumstances and limitations imposed by the media, it omits to provide significant information which an average consumer needs in the given context in order to make a decision about a business transaction, which results or may result in the average consumer making decision he would not have made otherwise. False omission also occurs if an entrepreneur withholds significant information from the customer or provides the customer in an unclear, incomprehensible or ambiguous manner or in an unsuitable time with respect to the circumstances specified in the preceding subsection, or if he fails to specify the business purpose of a business practice, unless it is obvious from the context and if it in both cases causes or may cause the
8 Judicial judicature no. 4, 2000, p. 343.
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customer to make a decision about a business transaction that he would not have otherwise made. If a medium that distributes the business practice imposes limitations to space and time, the limitations as well as any and all measures adopted by the entrepreneur in order to provide the customers with an access to the information by other means must be taken into account to see if the information were omitted. In the case of an invitation to purchase, the following information is deemed to be significant (unless it is obvious from the context):
a) the key features of a product within the extent corresponding with a given medium and product;
b) the address and identity of the entrepreneur, for example its trade name, or address and identity of the entrepreneur on whose behalf it acts;
c) the price including tax or, if the price cannot be reasonably determined in advance due to the nature of the product concerned, the method of calculation, and any other fees associated with transportation, supply or postage, or, if such fees cannot be reasonably determined in advance, the fact that the price may include such additional fees;
d) terms and conditions of the payment, supply, performance and claim settlement, provided that they deflect from the requirements stipulated for due professional care;
e) the existence of the prospective right to withdraw or cancel applicable to the products or services concerned9.
Misleading commercial practices consist of the following:
a) an entrepreneur claiming that it has signed the code of conduct but he has not;
b) using of a symbol of trust, a symbol of quality or any other similar symbol without the respective licence;
c) claiming that the code of conduct has been approved by a public or other authority but it is not the case;
d) claiming that an entrepreneur (as well as its commercial practices) or a product has been awarded approval, certificate or permit by a public or a private entity but it is not the case, or such a claim is not in compliance with the terms and conditions applicable to such approval, certificate or permit;
e) entrepreneur's invitation to purchase products for a certain price without publishing the grounds on which he may assume that he or a contracted supplier will not be able to supply the products or similar products for the price agreed for the given period and in an adequate volume with respect to the nature of the product, scope of advertisement and offered price (enticing advertisement);
f) invitation to purchase product for a certain price and then
- refusing to show the advertised product to consumers, or
- refusing to accept orders for the product or supply of the product within a reasonable deadline, or
- presentation of a defective product sample with the aim to promote a different product ("entice and change" advertisement);
g) untrue assertion stating that a product will be available only for a limited time or only under certain conditions made in order to force the customer to make an immediate decision without providing him a chance or enough time to make an informed choice;
h) undertaking to provide after-sale service to the cus-
9 Directive of the European Parliament and Council 2005/29/EC dated 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, and amending Council Directive 84/450/EEC, Directives of the European Parliament and Council 97/7/EC, 98/27/EC and 2002/65/EC, and regulation of the European Parliament and Council (EC) no. 2006/2004 (Directive concerning unfair business-to-consumer commercial practices)
tomers with whom the entrepreneur communicated before the execution of the transaction in a language which is not a language of the member state in which the entrepreneur has its establishment, and consecutive provisioning of service only in another language without clearly informing the customer about it before the customer committed to complete the transaction;
i) claiming or making an impression that the sale of product is permitted but it is not the case;
j) stating the rights the customers have by virtue of law as the benefits of the entrepreneur's offer;
k) using space in the media for the purpose of product promotion for which the entrepreneur has paid but the consumer is unable to tell so without doubts from the contents, pictures or sounds. Material allegations about the nature and degree of the risk threatening personal safety of the consumer or his family in case that he will not purchase the product;
l) promotion of a product similar to a product of a specific manufacturer in a fashion which purposefully misleads the consumer to the point where he will come to believe that the product concerned has been made by the same manufacturer, albeit it is not the case;
m) launching, operating or promoting a pyramid programme where the consumer pays for a chance to obtain bonus which does not depend on the sale or consumption of the products but mainly on obtaining new consumers of the programme;
n) entrepreneur's claim that he intends to discontinue trading or is about to move, which is not the case;
o) entrepreneur's claim that the products will facilitate winning a prize in the games based on coincidence;
p) untrue statement that a product is able to cure illnesses, disorders or handicaps;
q) providing materially incorrect information about market conditions or about an option to obtain a product with the aim to force the customer to purchase it under less favourable conditions than the regular market conditions;
r) commercial practice claiming that the promotion includes a prize-winning contest without awarding the prizes that comply with the description or their substitutes;
s) description of a product by the words "gratis", "free of charge", "at no cost" etc., but the customer must pay any other costs but those immediately associated with the response to the commercial practice and with the collection or delivery of the item;
t) attaching an invoice or similar receipts of payment to marketing leaflets, thus inducing the impression that the customer has already ordered the advertised product, which is not the case;
u) untrue statement or making an impression that the entrepreneur is not acting for the purpose associated with its commercial or entrepreneurial activity, trade or profession, or a misleading presentation of the entrepreneur as a consumer;
v) making a false impression that the after-sale service of a product is available in other member state but that in which the product is being sold10.
However, it is not sufficient for an advertisement to be-
10 Directive of the European Parliament and Council 2005/29/EC dated 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, and amending Council Directive 84/450/EEC, Directives of the European Parliament and Council 97/7/EC, 98/27/EC and 2002/65/EC, and regulation of the European Parliament and Council (EC) no. 2006/2004 (Directive concerning unfair business-to-consumer commercial practices)
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come false by containing untrue information; it must also provide one's own or someone else's enterprise with a benefit in the economic competition to the detriment of other competitors or consumers, and there must be a causal link between the untrue information and the provision of a benefit to the detriment of others. Therefore, one of the competitors must gain and another competitor must lose or be endangered by a prospective loss, respectively, even in a non-property sphere (for example harm caused to reputation of a company or an entrepreneur). Moreover, the person who distributes false advertisement and the person who is harmed by the advertisement must be linked by a competitive relationship. On the other hand, if an advertisement providing one's own or someone else's enterprise with a benefit to the detriment of other competitors does not contain any untrue or true information, which cause a false impression in the context of its placement, it is not a false advertisement. False advertisement is not sanctioned by the state through its supervisory bodies but it is the competitors and consumers who do so because such an act would constitute unfair competition sanctioned exclusively on the basis of private law.
Comparative advertisement is not a special type of advertisement but only a special type of presentation of goods, services or competitors. It is any advertisement which directly or indirectly identifies another competitor or goods or services offered by another competitor. Comparative advertisement is admissible only in the following cases:
a) it is not false (this requirement is redundant because any false advertisement is prohibited, not just any false comparative advertisement. Therefore, comparative advertisement must provide the consumer with information about the actual difference in features of a certain performance, which is the objective of the regulation),
b) it compares only the goods or services which satisfy the same needs or those that are designed for the same purpose (if the advertisement would compare incomparable goods or services, it would constitute false advertisement as it would make an impression about the quality of the offered goods or services which would not comply with reality),
c) it impartially compares only such elements of the given goods or services which are significant, relevant, verifiable and representative for them. The comparison must be usually made in multiple aspects, with the price included. In exceptional cases, the comparison may be carried out with respect of one feature only, provided that the comparison fully meets all terms and conditions. The impartiality of comparison is important in the case where one competitor claims that his product is better than the product of another competitor because only impartial comparison would be verifiable by the court,
d) it does not cause a prospective confusion in the market between the competitor whose products or services are supported by the advertisement and the competitor or between their businesses, goods or services, trademarks, companies or any other special features, which would become typical for one or the other (such advertisement would also constitute an unfair competition-related offence of causing confusion or false appellation of goods and services),
e) it does not use untrue information as to depreciate the enterprise, goods or services of a competitor or its trademarks, trade name or any other features that have become typical for the competitor, or its activities, situation or other circumstances relating to it (such an advertisement
would also constitute an unfair competition-related offence of depreciation. If the depreciation would be contained anywhere else but in the advertisement, it would be constitute unpermitted comparative advertisement but a mere depreciation),
f) it applies to the products for which the competitor is authorised to use a protected appellation of origin but at all times only to products with the same appellation of origin,
g) it does not cause unfair profit from good reputation associated with a competitor's trademark, with its company or with any other special features that have become typical for the competitor, or from the good reputation associated with an appellation of origin of a competitor's goods (such an advertisement would also constitute an unfair competition-related offence of sponging on someone else's reputation), and
h) it does not offer any goods or services as an imitation or reproduction of the goods or services protected by a trademark or a trade name.
In general, the comparative advertisement must comply with the requirements established by the general unfair competition clause and respect the bans listed under the individual merits of the unfair competition acts. Any comparison referring to a special offer must clearly state the date of termination of the offer, or it must state that it will be terminated when the offered goods are sold out or the services are exhausted. If a special offer has not been launched yet, the competitor must also state the date of the beginning of a period in which a special price or any other special conditions are being launched.
Comparative advertisement may be classified in four groups as follows:
a) criticising comparative advertisement,
b) personal comparative advertisement,
c) supporting comparative advertisement,
d) systemic comparative advertisement.
The criticising comparative advertisement stresses better features or quality of one's own products and services compared to other products and services. The personal comparative advertisement does not compare goods or services but the competitors as such or their features (business traditions, corporate culture, and years of presence in the market11). The supporting comparative advertisement compares one's own products or services with products or services or another competitor or draws an analogy between them. The supporting comparative advertisement is also the comparative advertisement which compares goods or services of different kinds, which are not intended for the same purpose. However, this kind of an advertisement is prohibited. The systemic comparative advertisement compares goods or services with the achieved level of technology development or skills. The comparative advertisement does not include the so-called internal comparative advertisement, which is the advertisement comparing one's own goods or services with the goods or services of an anonymous producer or provider.
A conceptual element of the comparative advertisement is the identification of another competitor or goods or services offered by another competitor. The identification does not need to be explicit; it is sufficient if the competitor could be identified directly or by means of its products on the basis of any element contained in the advertisement. The degree of identification must be assessed with respect to an average consumer; it is insufficient if an ele-
11 Dedic, J. a kol.: Obchodni zakornk [Commercial Code]. Komentar. Praha: Polygon, 2002.
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ment is identifiable by an expert but an average consumer is unable to recognize it. However, it does not mean that the identity must be revealed in a legal sense. “It may be just a vague and maybe a deformed idea (the consumer does not need to know whether it is a company or a natural entity, a part of a group of companies, what is the country where it has the registered office, etc.)“12 If the comparative advertisement does not comply with the aforesaid requirements, such act is not sanctioned by the state via its supervisory bodies but it is sanction by the very competitors or consumers because such act would constitute unfair competition sanctioned exclusively on the basis of private law.
Reference list:
1. Pelikanova, I. Komentar k obchodnimu zakoniku [Comments to the Commercial Code]. 1. dll. 2. aktualizovane a rozsirene vydani. Praha: Linde Praha a.s., 1997.
2. Munkova, J. Pravo proti nekale soutezi [Law Against Unfair Competition]. Komentar. Praha: C.H. Beck, 2001.
3. Hajn, P. K odpovednosti medil za nekalou reklamu [Liability of the Media for Unfair Competition]. Pravni praxe v podnikani c.11, 1994, 1s.
4. Judgment of the High Court in Prague dated 26 May 2010, case no. 3 Cmo 248/2009
5. Hajn, P. Soutezni chovani a pravo proti nekale soutezi [A] [Competitive Behaviour and Law Against Unfair Competition]. Brno: Masarykova univerzita, 2000.
6. Resolution of the High Court in Prague dated 30 March 2001, case no. 3 Cmo 540/2000
7. Munkova, J.: Pravo proti nekale soutezi [Law Against Unfair Competition]. Komentar. Praha: C.H. Beck, 2001.
8. judicature no. 4, 2000, p. 343.
9. Directive of the European Parliament and Council 2005/29/EC dated 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, and amending Council Directive 84/450/EEC, Directives of the European Parliament and Council 97/7/EC, 98/27/EC and 2002/65/EC, and regulation of the European Parliament and Council (EC) no. 2006/2004 (Directive concerning unfair business-to-consumer commercial practices)
10. Directive of the European Parliament and Council 2005/29/EC dated 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, and amending Council Directive 84/450/EEC, Directives of the European Parliament and Council 97/7/EC, 98/27/EC and 2002/65/EC, and regulation of the European Parliament and Council (EC) no. 2006/2004 (Directive concerning unfair business-to-consumer commercial practices)
11. Dedic, J. a kol.: Obchodnl zakonik [Commercial Code]. Komentar. Praha: Polygon, 2002.
12. Pelikanova, I. Komentar k obchodnimu zakoniku [Comments to the Commercial Code]. 1. dil. 2. aktualizovane a rozsirene vydani. Praha: Linde Praha a.s., 1997.
РЕЦЕНЗИЯ
Автор статьи относится к известным юридическим экспертам в области права СМИ в Чешской Республике. Он является автором ряда признанных публикаций, преподаёт предмет Международное право СМИ на Юридическом факультете Карлова Университета в Праге.
Содержанием статьи являются юридические вопросы недобросовестной и cравнительнoй рекламы в СМИ, то есть вопросы, являющиеся в настоящее время очень актуальными.
Оценка текста относительно формальных и языковых требований:
Что касается формального оформления текста и его языкового и стилистического уровня, считаю, что текст вполне соответствует данным требованиям.
Замечания рецензента:
Относительно содержания статьи не имею никаких замечаний по существу. В статье содержатся точки зрения автора к данной проблематике.
Рекомендую, чтобы автор в начале статьи указал, что речь идёт о чешском правовом урегулировании исследуемой проблемы.
Заключительная точка зрения к публикации статьи:
Представленную статью считаю очень удачной и поэтому рекомендую её к изданию.
Рецензент:
проф., канд. юридических наук,
Юридический факультет
Карлова Университета в Праге,
Юридический факультет Западно-Чешского
Университета г. Пилзень.
Др. Кветослав Ружичка
12 Pelikanova, I. Komentar k obchodnimu zakoniku [Comments to the Commercial Code]. 1. dfl. 2. aktualizovane a rozsirene vydani. Praha: Linde Praha a.s., 1997.
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