It’s not trade mark infringement to use the registered trade mark of another trader in comparative advertising. For example, if you are promoting a new cola drink, you won’t infringe Coca-Cola’s registered trade mark by advertising that “it tastes better than Coke”. However, even if there is no trade mark infringement, comparative advertising is prone to being considered misleading or deceptive. Infinite Plus Pty Ltd recently found this out the hard way.
“Tea is the most popular beverage, after water, throughout the world.” (Lester Mitscher, The Green Tea Book). One type which is becoming increasingly popular in Australia is bubble milk tea (a sweet tea based beverage originating in Taiwan). It’s not surprising then, that the Australian bubble milk tea market leader, Easyway Australia, took legal action when it formed the view that the advertising of its competitor, Infinite Plus Pty Ltd, contained disparaging and misleading representations about Easyway’s product.
The advertisement which spawned the dispute (shown below) was produced and distributed by Infinite Plus Pty Ltd which trades under the “Chatime” business name. The advertisement was placed in a Chinese lifestyle magazine and distributed in pamphlet form near Chatime and Easyway outlets in Sydney.
On seeing the ad, Easyway approached Chatime complaining that it infringed the “Easy Way” registered trade mark. Chatime disagreed, presumably on the basis of section 122(d) of the Trade Marks Act, which provides that comparative advertising is a defence to infringement. Easyway’s next complaint, which formed the basis of the legal proceeding, was that the advertisement was misleading and deceptive in contravention of section 52 of the Trade Practices Act 1974 (now section 19 of the Australian Consumer Law).
Easyway said that the use of its name in addition to the blue text was a clear reference to its business and that the advertisement contained seventeen different express or implied misleading representations, including that Easyway products were not fresh, tasty or of good quality and that Chatime products were superior to Easyway products. The fitout of a typical Easyway business is pictured below:
A director of Infinite Plus testified at trial that the choice of the words “Easy Way” were not intended to refer to the Easyway business and were merely a convenient way of encouraging people to choose between two different lifestyles – one which is “simple and convenient” and the other which is “quality and tasty”. The director also testified that the use of the colour blue was coincidental. The Court found this evidence to be “unconvincing, contrived and implausible“.
In addition, Infinite Plus argued that consumers would not consider the advert to be referring to the Easyway business. This argument was rejected as “unreal“, in part because the target demographic of the advertisements was the Asian community, who are the primary consumers of bubble milk tea in Australia and whom the Court considered is likely well aware of the Easyway business.
The Court found that the seventeen representations contended by Easyway were contained in the advertisement. Infinite Plus was permanently restrained from making further identical or similar representations unless such representations subsequently became true. Infinite Plus was also ordered to deliver up to Easyway all remaining offending advertising material. Further, in order to mark its disapproval, the Court made a declaration that the conduct of Infinite Plus was misleading or deceptive.
The Court also made an order for corrective advertising, despite the lapsing of 7 months between the offending conduct and the delivery of the judgement. A substantial lapse of time after the conduct complained of typically weighs against an order for corrective advertising because the misrepresentation is less likely to remain in the mind of the consumer. However, the Court considered that the “striking, graphic and colour features, the directness of the disparagement, and the brash aggressive character of the campaign [made it] likely that the effect of the advertising [would linger] in the public mind a long time after the… advertisement ceased to be distributed“.
The full decision can be found here.
