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When Comparative Advertising Turns into Trade Disparagement

By Eric Misterovich

One technique that companies often use to advertise their product or service is by drawing comparisons against their competitor’s product or service. This advertising technique is known as comparative advertising. Comparative advertising specifically identifies the competitor by name and highlights discrepancies in the quality of the competitor’s product or service compared to its own product or service.

A common example of comparative advertising that many are familiar with is an advertisement made by cellular telephone companies where a wireless service coverage map of the United States is shown in a side by side comparison to the leading competitor’s wireless service coverage map of the United States. These advertisements are impactful because they show a gripping visual comparison between the advertising company’s coverage map and the leading competitors, and the maps are often strikingly different.

The purpose of these types of advertisements is to illustrate to consumers the inferiority of the competitor’s product or service, while encouraging the consumer to think that their product is better. If companies want to use a comparative marketing campaign, it is important to fully understand the potential legal and business ramifications if something goes wrong with the comparative advertising campaign.

When Comparative Advertising Turns into Trade Disparagement

While comparative advertising is effective, sometimes it can create false advertising legal issues for the advertiser that uses this technique. Specifically, inappropriate or misuse of comparative advertising can result in a trade disparagement lawsuit. Trade disparagement is essentially the same as the tort of libel, except it is applied in a commercial context. It is trade disparagement when a company knowingly makes a false statement about the competitor or the competitor’s product or service with the intention of causing financial harm to the competitor through lost sales or lost customers, and the competitor suffers an actual financial harm as a result of the false comparative advertising.

It is often challenging to prove that the competitor suffered actually financial harm and losses that are directly related to the comparative advertising. But this does not stop businesses from suing companies that run comparative advertising campaigns showing the competitor’s product or service in an inferior light. Not only do competitors sue for trade libel, but they also often sue for defamation as well.

When it comes to false advertising claims, and advertisement claims that make competitors look bad in the eyes of consumers, it is not surprising that the gloves come off when comparative advertising goes too far. Perception is everything in business, and if consumers were falsely led to believe that a competitor’s product or service is inferior to the products or services of the company responsible for the comparative advertising campaign, there will be legal trouble.  

Accused of Trade Libel? Get a Lawyer

When you need a qualified business or false advertising lawyer in New York, you should consider working with the professionals at Revision Legal. We understand the impacts that trade disparagement accusations can have on you and your business and we will work closely with you to ensure that your legal matters are resolved quickly. Contact us today using the form on this page or call us at 855-473-8474.

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