Comparative advertising can be a useful tool for marketers. It positions competing brands against each other and helps consumers make better choices. However, there are legal limits to comparative advertising which are set out in federal statutes like the Competition Act and the Trademarks Act. These limits were explored in the recent Federal Court of Canada decision Petline Insurance Company v Trupanion Brokers Ontario Inc, 2019 FC 1450.
Petline Insurance Company (Petline) and Trupanion Brokers Ontario Inc. (Trupanion) are competitors in the Canadian pet insurance business. A dispute between the parties arose as a result of a publication by Trupanion which featured a comparison between its insurance and that offered by Petline under its registered trademark PETSECURE. There were nine impugned statements in total, including:
- “We don’t change coverage or rates for submitting claims” whereas PETSECURE “punishes unlucky pets for filing claims”
- “PETSECURE can cancel a policy for “absolutely no reason at all” whereas “we don’t drop coverage”
Petline launched an application in the Federal Court alleging that the publication amounted to (1) false and misleading statements tending to discredit the business and services of Petline, contrary to Section 7(a) of the Trademarks Act, (2) false and misleading representations for the purpose of promoting Trupanion’s insurance product, contrary to Section 52 of the Competition Act, and (3) depreciation of goodwill of Petline’s registered trademark PETSECURE, contrary to Section 22 of the Trademarks Act.
The first issue in the case was whether the statements made by Trupanion were actually false or misleading. This was a necessary factor in order for Petline to succeed on the first two grounds based on Section 7(a) of the Trademarks Act and Section 52 of the Competition Act. The second issue was whether Petline had shown that its goodwill was harmed by the statements. This was a necessary factor in order for Petline to succeed on the third ground based on depreciation of goodwill under Section 22 of the Trademarks Act. The answer was “no” to both questions.
In assessing each of the statements, the Court considered the claims made by Trupanion, as well as the evidence on which Trupanion based its claims. In all cases, the Court found that there was nothing false or misleading about the statements. For one of the comparisons, the judge noted that the claim was “perhaps somewhat of an overstatement”, but it was not false. For two of the statements, Petline had changed its policies after Trupanion issued the publication, rendering the statement false or misleading. However, in those cases, Trupanion had removed the affected statement from its website after Petline updated its policy.
With respect to the alleged harm to Petline’s goodwill in its registered trademark PETSECURE, the Court found that it had insufficient evidence of harm. Notably, there was no evidence from customers, employees, or others about the impact of Trupanion’s statement. Moreover, the evidence showed that both parties’ business grew in terms of gross value of premiums during the years in question. While some customers had switched from Petline to Trupanion during that time, even more had switched from Trupanion to Petline. Furthermore, there was no information as to why any of the customers might have made the move. The judge noted that the evidence showed that policy holders may move from one insurer to another for any number of reasons.
Since there were no false or misleading statements, and no depreciation of goodwill, the Court dismissed the application with costs to Trupanion.
This case serves as a reminder that comparative advertising can be effective if done well. Of course, advertisers should be careful to ensure that all statements made in the comparison are true, not misleading, and supported by evidence – particularly since comparative claims are likely to undergo the most scrutiny. In addition, advertisers should continually monitor the marketplace to ensure their statements remain true and, if there are any changes (such as to a competitor’s policy or product), the statements should be removed or amended. Finally, while depreciation of goodwill was not proven in this case, Section 22 of the Trademarks Act remains a risk in comparative advertising, even if the claims are true and not misleading.
Since most of the claims in this case were quite insurance-specific, advertisers in the insurance business might be interested in reading the decision in full to get a sense of what types of comparisons may be appropriate.
Finally, brand owners who find themselves the target of unfair comparative advertising should remember that there are legal tools available to them to combat such claims. For more information on this, please contact a member of our Marketing & Advertising team.
The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.