A recent decision of the Federal Court provides a detailed review of alleged comparative advertising. Energizer Brands, LLC v. Gillette Company 2023 FC 804
Duracell and Energizer are the leading battery brands in Canada. Duracell sold some of its batteries in packaging which contained comparative statements claiming that Duracell batteries were longer lasting than Energizer batteries.
Energizer brought an action in the Federal Court relating to labels containing statements made concerning ENERGIZER and ENERGIZER MAX brand products and which reproduced Energizer’s trademarks. Both ENERGIZER and ENERGIZER MAX are registered trademarks of Energizer. In addition, claims were made relating to similar statements made using the terms “the next leading competitive brand” and “the bunny brand” on packages of Duracell batteries. Claims were also made asserting that Duracell batteries lasted 15% or 20% longer than Energizer batteries.
Depreciating the Value of the Goodwill Attaching to the Energizer Trademarks
The Court accepted that comparative advertising helps consumers make better choices, but also noted section 22 of the Trademarks Act limits comparative advertising in Canada by stipulating that no one can use the registered trademark of another in a way likely to depreciate the value of the goodwill attached to the trademark.
To succeed in a claim for depreciation of goodwill, a plaintiff must satisfy the four part, conjunctive test established by the Supreme Court of Canada:(i) defendant has used the claimant’s registered trademark with goods or services, regardless whether they are competitive, with those of the claimant; (ii) the claimant’s registered trademark is sufficiently well known to have a significant degree of goodwill attached to it, although there is no requirement that the trademark be well known or famous; (iii) the defendant’s use of the trademark was likely to have an effect on that goodwill (in other words, there was a linkage); and (iv) the likely effect is to depreciate or cause damage to the value of the goodwill.
There is not a requirement that the challenged trademark be identical to the registered trademark. Trademarks involving misspellings and missing words (i.e. VEUVE CLICQUOT v CLIQUOT) may be sufficient to “convey the idea” of, or create the necessary association with, the registered trademark in the mind of the consumer.
The Court must consider the effect on goodwill or linkage from the perspective of the “somewhat hurried consumer.” Absent linkage, there can be no impact, whether positive or negative, on goodwill.
The trial Judge was not pleased with the evidence presented by the parties since there was an absence of any primary data about how consumers reacted to the stickers. She concluded a consumer in a hurry was unlikely to pause to look at the packaging long enough to notice the comparators and the qualifications.
Notwithstanding this conclusion she found that the defendant had bandied about the plaintiff’s trademarks resulting in lost control for the owner and lesser distinctiveness, in circumstances where jurisprudence does not permit their use by third parties absent consent. The purpose of putting the Energizer Trademarks on the packaging was to promote the sale of DURACELL batteries by suggesting to consumers that they would get a better result using Duracell’s batteries in the hope of getting a part of the market enjoyed by Energizer. As a result, she concluded Energizer had shown likely depreciation of goodwill in its registered trademarks ENERGIZER and ENERGIZER MAX by Duracell’s Campaign in a manner contemplated by section 22.
The Judge awarded Energizer damages of $179.000 and an injunction relating to these actions.
The claims under section 22 concerning “the bunny brand” and the “next leading brand” were both dismissed for failure to satisfy all four requirements.
False or Misleading Statements
Paragraph 7(a) of the Act prohibits the making of “false or misleading statement[s] tending to discredit the business, goods or services of a competitor.” The necessary elements of this cause of action thus are:
1. a false and misleading statement;
2. tending to discredit the business, goods or services of a competitor; and
3. resulting damages, causally linked to the alleged wrongful activity, i.e. the false or misleading statements.
Paragraph 7(d) of the Act prohibits making use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to, among other things, the character of the goods or services:
Subsection 52(1) of the Competition Act provides that “[n]o person shall, for the purpose of promoting … the supply or use of a product … knowingly or recklessly make a representation to the public that is false or misleading in a material respect.”
When the Judge reviewed the evidence, she concluded that there was a reasonable basis for the claims in issue and that the claims were not false or misleading in a material respect, especially given the lack of evidence demonstrating increased sales for Duracell, or conversely lost sales for Energizer, attributable to the presence of the claims in the advertisements.
The decision is interesting, and we may have not heard the last of it as the previous summary judgement motion went to the Federal Court of Appeal.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared in the Law360 Canada published by LexisNexis Canada Inc.