Advertising claims on labels can be immensely powerful because they take place at the point of sale and can influence a customer’s buying decision. In , dealers making such claims must ensure that the claims could not be considered false or misleading. This is particularly important given the number of avenues available to competitors to file complaints or initiate proceedings based on perceived misleading information.
Many federal and provincial laws, regulations and industry self-regulatory codes govern the packaging and labelling requirements of products, including prohibitions against false or misleading advertising. Of particular importance are the federal Consumer Packaging and Labelling Act and Competition Act, although some products have their own labelling requirements, as is the case for food, drugs, natural health products, and cosmetics. For example, the Canadian Food Inspection Agency is responsible for enforcing the food requirements of the Food and Drugs Act and Regulations. Furthermore, provincial legislation may add its own labelling requirements, such as, for example, Québec’s Charter of the French Language which requires that every inscription on a product sold in Québec must be drafted in French. If accompanied with a translation, the text in another language must not be of greater prominence than the French inscription.
The Consumer Packaging and Labelling Act
The Consumer Packaging and Labelling Act sets out mandatory labelling requirements for prepackaged products sold in and prohibits the making of false or misleading representations. The Act prohibits a dealer from selling, importing or advertising a prepackaged product that has a label that contains a false or misleading representation that relates to or may be reasonably regarded as relating to that product. The Competition Bureau is responsible for the administration of the Act except as it relates to food.
Breaches of the Consumer Packaging and Labelling Act may be prosecuted as criminal offenses. Unlike the Competition Act, there is no private right of action for non-compliance with the Consumer Packaging and Labelling Act, however, an individual can file a complaint and the information will be examined by the Competition Bureau and in appropriate cases referred to the Attorney General for possible prosecution.
The Competition Act
False and misleading advertising, including misleading labelling, is primarily governed by the federal Competition Act. Any false or misleading representation that is material – i.e. that is likely to influence the public into buying or using the product – and made to the public for the purpose of promoting a product or business interest is a reviewable matter under the Competition Act. The Competition Bureau is charged with administering and enforcing the Competition Act and will, either on its own accord or pursuant to competitor or consumer complaints, investigate problematic advertisements. Further, the Competition Act grants a right of private action to sue to recover damages for harm suffered as a result of criminal conduct, such as criminally misleading advertising where that person has been harmed by the anti-competitive conduct of others.
False labelling claims have many shapes and forms. The most obvious is a statement that is untrue or unsubstantiated. Any claims about the performance, efficacy or length of life of products must be substantiated by an adequate and proper test. Non-disclosure of material information could also be considered a false claim.
Literal meaning is not the only means of assessing whether a claim is false or misleading. A claim may be literally true, but it will still be reviewable under the Competition Act if the general impression or a secondary meaning conveyed is false or misleading. For example, fine print on a label should not contain critical information that contradicts the main message. As for visual innuendos, they can have the same misleading effect as words. The Competition Bureau has also issued guidelines regarding specific labelling claims such “product of Canada” and “made in Canada” as well as guidelines for the use of environmental claims, such as “environmentally friendly”, in advertising.
Both the civil and criminal provisions of the Competition Act contain false or misleading advertising claims. The Competition Bureau may therefore opt for a civil action or, under certain circumstances, it may prosecute offenders under the criminal provisions of the Act.
Other conflict resolution venues
Several other conflict resolution venues are available to businesses who believe that a competitor’s label claims are false or misleading. Of note, the Trademarks Act prohibits a trader from making materially false or misleading statements about the character, quality, quantity, composition, geographical origin or mode of manufacture, production or performance of its own goods or services. Also, Advertising Standards Canada has a consumer complaint procedure and offers a generally more cost-effective confidential trade-dispute procedure for alleged breaches of the Canadian Code of Advertising Standards. Common law causes of action such as trade libel and unfair interference with economic relations are also available to competitors. Pursuant to the Consumer Protection Act, 2002, consumers may also bring an action for any remedy available at law, including damages, resulting from false, misleading or deceptive representations.
Given the many different available venues to competitors seeking a remedy for false advertising, companies are advised to ensure that all claims made on labels and other advertisements could not be considered false or misleading, even if such labels/advertisements have been approved by a regulatory agency.
For further information regarding advertising and labelling law, please contact a member of our firm’s Marketing & Advertising group.
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