A Cautionary Tale in Comparative Advertising
October 31st, 2012
National Energy Corporation was recently ordered by the Ontario Superior Court of Justice to stop distributing a comparative advertising brochure which contained false and misleading statements about the services and products of its competitor, Direct Energy Marketing Limited.
National Energy’s brochure misled consumers by overstating the price increases Direct Energy had imposed on its customers and by wrongly suggesting that Direct Energy could not supply “Energy Star” certified water heaters, the court held. The representations made in the brochure likely left the public with a negative impression of Direct Energy. It was clear that the brochure’s purpose was to draw Direct Energy customers away and bring them to National Energy.
In the result, National Energy’s brochure tended to discredit Direct Energy’s business, wares or services contrary to s. 7(a) of the Trade-marks Act and constituted misleading advertising contrary to s. 52(1) of the Competition Act, the court held. National Energy also misused Direct Energy’s registered trade-mark, contrary to s. 22(1) of the Trade-marks Act.
Even though Direct Energy had not yet quantified its damages at the time of the application, the court was satisfied that it likely had, and directed a reference to quantify damages.
The decision is under appeal.
Read the Direct Energy Marketing Limited v. National Energy Corp. decision.