Writs Follow Adverts and Press Releases
Aggressive adverts and press releases comparing one business’s products and services with another’s are all the rage.
In the cut-throat marketplace, major companies increasingly go head to head in marketing publications, trying to persuade customers they would be better off switching allegiance from a rival.
But pitfalls of defamation and unlawful advertising await the unwary.
Currently we are acting for a national computer software supplier whose trading record was inaccurately summarised and undermined in a circular letter sent by a competitor eager to muscle in on its client base.
The circular letter, signed by the Managing Director of the rival, was sent to key countrywide customers just before their most important exhibition of the year, and contained untrue assertions that are very damaging to our client.
The letter was along the (inaccurate) lines of: “Three businesses, A, B and C, left our rival, X Ltd., in the last 12 months and joined us to improve their client service. We would like the opportunity to explain why businesses currently using X’s systems are switching to us.”
‘Malicious Falsehood’
Far from being a successful pitch for new business, they have received a claim from our client for ‘malicious falsehood’ (which is similar, but different, to libel). And by signing the letter, the MD has exposed himself to personal liability!
From a complainant’s point of view, the beauty of relying on ‘malicious falsehood’ is that very little has to be proved. The letter, press release, or advert, need not be libellous. It simply has to be false, financially damaging, and motivated by malice (which has a number of meanings in law).
Even simpler, if the false statements are published in writing or other permanent form (including television, radio broadcasts or the internet), a claimant does not have to prove any actual loss, just that the publication is likely to be financially damaging.
And ‘Malice’ does not just mean an improper motive or knowing that the information is not true, it also applies to someone who has not bothered to check whether the allegation is true or not, or who is ‘reckless’ as to the truth.
So, inaccurate press releases may turn out to be costly and counter-productive in the long run.
Comparative advertisements also needs scrutiny. Under the Control of Misleading Advertising (Amendment) Regulations 2000, they are permitted in accordance with free market policy, but only if they satisfy a raft of legal requirements.
For example, comparative advertisements must not be misleading, must compare goods or services meeting the same needs or are intended for the same purpose, and must not discredit or denigrate the trade marks of a competitor.
Complaints can be made to the Office of Fair Trading, who can apply to a court for an injunction. The right to sue for malicious falsehood or other similar claims remains unaffected.
In short, ‘puff’ and praise for your own business in marketing is routine and relatively risk-free. Usually the most you have to worry about is breaching the code of the Advertising Standards Authority.
But remember - when statements about other businesses are added to the mix, it’s a whole new ball game.
Contact Nigel Hanson on 01392 411221 or email nigel.hanson@ foot-ansteys.co.uk for further information
Published 27/02/2007.
