Advertising Law Part 2: Facing the Competition

We frequently tell clients and prospective clients that no matter what kind of business you own and no matter how much time you’d like to spend developing your products or providing your services, the thing that will take up most of your time as an entrepreneur is really marketing. You have to let potential customers and clients know about your products or services and why they should choose you over the competition. But how much can you really say about the competition in your advertising materials? ​

Making Comparisons With Your Competitors
A federal law known as the Lanham Act provides the basis for our current system of trademark registrations. But it’s also used for a variety of unfair competition and false advertising claims, especially claims that your marketing disparaged one of your competitors or their products or services. Truthful, non-deceptive, and objectively measurable comparisons with your competitors are legal, even if you identify the competitor by name or brand name*, illustrate the differences between your products or services, or provide other factual information. 
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And while your ad campaign might be true and perfectly legal, you should still be careful when taking on competitors with much larger advertising (and legal) budgets than your own. Attracting the wrong kind of attention can not only drown out your marketing efforts but may also drown you in legal fees. Even if the law is on your side, can you afford to spend months or years in litigation proving that your marketing campaign was true and not misleading or deceptive? 

In addition to the possible monetary damages, your competition may also seek a preliminary or permanent injunction (a court order that you stop the advertising campaign, either while the case is being decided or permanently) and an order requiring you to pay for and run a corrective advertising campaign. 

Before your marketing campaign turns into more of a war campaign, collect the data to back up your claims. If you claim “3 out of 4 customers prefer our brand to Brand X” or “studies show our product has A, B, and C benefits,” then you need to know before your campaign goes live that those surveys or studies are sound and that you’re not misconstruing the data to get to your preferred results. Stick to the measurable facts as much as possible. 

*In case you are wondering, using a competitor’s trademark in your advertisement in these circumstances has been considered a “nominative fair use” when the competitor’s trademark is only used to the extent necessary to make the comparison. Howing, using someone else’s trademark in a way that creates consumer confusion will still lead to trademark infringement claims.
 
Similarly, you should also be careful about copying the design or other artistic elements of your competitor’s marketing materials. Trying to make your ad look like their ad can lead to copyright infringement claims. Something as seemingly simple as copying a distinctive video style or background image, or sequence has been found to violate copyright law. 

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