Comparative Advertising Case Fails to Take Off

01 February 2001

Mark Hilton

In a recent English High Court decision Mr Justice Jacob indicated that the English Courts continue to take a very robust attitude to comparative advertising. The case in question was British Airways v Ryanair.


British Airways ("BA") has a trade mark consisting of the letters BA registered for, amongst other services, "air travel services". Ryanair did not contest the validity of this registration and the Judge pointed out that their advertisements actually relied upon people knowing that the letters BA denoted the claimant.


BA sued Ryanair, a low cost airline, for trade mark infringement and malicious falsehood in response to a series of advertisements that appeared in the English press. BA complained about two advertisements that indicated, in not very subtle ways, that flights with BA were up to five times more expensive than equivalent Ryanair fares. The headlines of the advertisements were "EXPENSIVE BA****DS!" and "EXPENSIVE BA". It was noted that prior to the case Ryanair had withdrawn that "BA****DS" advertisement following a ruling from the Advertising Standards Authority that it was likely to cause serious or widespread offence.


The Judge also commented that he considered the litigation between two large companies to be immature and thought it particularly odd that BA should persist in its claim that the price comparisons are misleading. BA complained that the advertisements indicated that their fares were five times more expensive than Ryanair when in fact BA was only three times more expensive.


Malicious falsehood


The Judge questioned why there was a need to complicate the claim for trade mark infringement with the addition of a claim for malicious falsehood. Counsel for BA advanced four arguments as to why this was necessary:



  1. Ryanair might change their advertisements so as to remove the registered trade mark but to continue to advertise comparatively in a misleading way;



  2. an action for malicious falsehood allows for the recovery of damages even where there is no loss of reputation;



  3. there is doubt as to the legal status of s.10(6) of the Trade Marks Act 1994 ("the Act"); and



  4. the test for honesty for s.10(6) of the Act has not been examined by a higher court.




The Judge was not convinced by any of these arguments, but he went on to consider the law of malicious falsehood. He explained that BA had to show that:



  1. the words complained of were false;



  2. they were published maliciously; and



  3. they were calculated to cause BA pecuniary damage.




The Judge explained that it was for the court to determine the meaning of the words complained of, as their truth or falsity is tested against that meaning. Evidence of the meaning to others was inadmissible. He also stated that there is only one "natural and ordinary meaning" permissible for the purposes of this tort.


The Judge held that the use of "BA****DS" was not malicious falsehood. It was no more than vulgar abuse. The main area of contention therefore was that of the price comparisons. BA complained that the comparisons were put forward as like-for-like fares when in fact they were not.


BA complained that the comparisons were said to be for "midweek return fares" which could be taken to mean either return the same week but not on weekends or return the following week not on a weekend. BA submitted that Ryanair were not in accordance with honest trade practices by trading on this ambiguity. The Judge held that people would read the advertisement as referring to the "Saturday night rule" and would know what fares were being compared. Simply stated this rule means that a consumer can obtain a cheaper return flight if they are willing to stay over for the Saturday night. In using the example of the London to Frankfurt fares, the return same week fare for BA was £374 (about 5 times the Ryanair fare) whereas if you were prepared to stay the Saturday night the fare was only £192 (about 3 times the Ryanair fare).


The Judge found that the average consumer would not see the price comparison as misleading and that in substance the advertisements were true, i.e. BA were more expensive than Ryanair. The fact that there had not been any complaints of consumers being misled was considered particularly pertinent. The Judge ruled that, even if consumers were misled over the meaning of "midweek return fares", the advertisements were still sufficiently true. The malicious falsehood claim did not therefore get off the ground.


Trade mark infringement


There was no dispute that the use of BA by Ryanair fell within s.10(1) of the Act, namely:



"A person infringes the registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with the trade mark in relation to goods or services which are identical with those for which it is registered."



Ryanair however relied on the defence allowed by s.10(6) of the Act. S.10(6) states:



"Nothing in the preceding provisions of this section shall be construed as preventing the use of a registered trade mark by any person for the purpose of identifying goods or services as those of the proprietor or a licensee.


But any such use otherwise than in accordance with the honest practices in industrial or commercial matters shall be treated as infringing the registered trade mark if the use without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the mark."



BA submitted that the court should look at the construction of s.10(6) in light of the Comparative Advertising Directive (97/55/EC). BA maintained that s.10(6) should be treated as providing a defence only if there is a compliance with the conditions for comparative advertising laid down in the Directive. The Judge held that compliance with most of the conditions laid down in the Directive were necessary to comply with s.10(6), however, he held that there was one significant requirement in the Directive which did not apply to s.10(6). This related to "denigration" of the trade mark. The Judge held that you can be offensive about another s trade mark or name without falling outside the defence in s.10(6). He held that the "BA****DS" advertisement was just such a case.


Ryanair also relied on a defence under s.11(2) of the Act which states:



"A registered trade mark is not infringed by -





  1. ...


  2. The use of indications concerning the kind, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services, or


  3. ...



    Provided the use is in accordance with honest practices in industrial or commercial matters."




BA submitted that s.11(2) should not be considered in relation to comparative advertising. The Judge was not convinced by counsel's argument in this regard as it would have had the effect of no one in trade being permitted to describe their goods or services perfectly honestly by reference to another's trade mark. The Judge went on to say that if BA were right then comparative advertising would not be allowed throughout the European Union since the date of implementation of the Directive, which was not the case.


The Judge held that Ryanair could avail themselves of the defence under s.10(6) and s.11(2) of the Act.


Conclusion


The courts have long recognised that advertisements are full of hyperbole and puff and such advertisements do not give rise to a cause of action to a competitor even though he can show that he has suffered actual damage in his business as a result. It is now likely that we will see more aggressive comparative advertising, until such time as an advertiser oversteps the line and the court rules against them.


First published in International Law Office in February 2001.