Bubble Tea and Comparative Advertising

Differentiating your products from your competitors products is critical if you want to achieve commercial success. This being the case, it is often risky business if you decide that the best way to do this is to undertake comparative advertising.

Comparative advertising basically is where, through advertisements, a company directly compares their products with the competitor’s products, and shows to the public that their products are better than their competitor’s. At heart, this is not illegal, however as Chatime recently found out in the case of Easyway Australia Pty Ltd v Infinite Plus Pty Ltd [2011] FCA 351, extreme care must be taken when doing this. The general principle is that your comparative advertisements must not be misleading or deceptive.

The dispute in this matter was between two asian bubble tea franchises, the popular “Easy Way” franchise and the “Chatime” franchise, operated by Infinite Plus Pty Limited.

Infinite Plus published advertisements in a 16 page booklet, a chinese magazine, and on the internet. In those advertisements,  Chatime claimed that its products were healthier, fresher, more nutritious and of a higher quality than its competitor. While the material does not strictly contain any of Easyway’s registered trade marks, the materials did contain multiple references to “the EASY WAY”, in a font and colour scheme similar to Easyway’s colour scheme.

The trial judge decided that despite the advertisements not directly referring to Easy Way, most reasonable people who consumed bubble tea products would know what those veiled references were referring to. The trial judge ultimately said:

“The representations which I have found were made by Chatime in the booklet are quite general and unqualified in their terms. No attempt was made to support them in the offending publications with hard facts or with any reasoned or logical argument. In the proceeding, Chatime conceded that it had no basis for making any of them. They were false and therefore misleading or deceptive or likely to mislead or deceive at the time when they were made.”

Chatime was ordered to:

  1. Stop distributing the advertising material
  2. Hand over any remaining material to Easyway to be destroyed
  3. Issue corrective advertising subject to Section 80 of the Trade Practices Act

In the end, the lessons learnt here are clear – be careful when engaging in comparative advertising. In fact, unless you have got all of your facts right about your competitor’s products, you shouldn’t do it at all. In addition to this, your competitors products may change as time passes. You can’t provide a “technical” argument either – your facts may be technically correct but as long as it is misleading you may end up in hot soup.