Sued for criticising a competitor’s products – malicious falsehood

Is comparative advertising worth the potential downsides?

02 December 2013

Companies going head to head with their competitor’s products can be tempted publicly to point out the advantages of their own product against their opponent’s. Doing so can be a minefield of liability, if you damage your opponent’s brand.

One example is where statements are made about a competitor’s products. If a claim is made which is not objectively true it can give your competitor a claim if the words used

  • are calculated to cause financial loss to the competitor and are published in writing (this would include email); or
  • are calculated to cause financial loss connected to any business conducted by the competitor

This can be comparatively easy to do in the heat of communications where goods are head to head in the market. Special damages (not directly relating to an actual provable loss) can be claimed in such circumstances.

The recent case of Niche Products Ltd v MacDermid Offshore Solutions concerned a statement made by a manufacturer (MacDermid) that a report prepared by a competitor commenting on MacDermid’s products was “misleading” and “erroneous.” Niche complained about the comments on its report and brought an action for malicious falsehood. Although generally a claim for malicious falsehood cannot be brought where the allegedly untrue statement is about your own products (i.e. MacDermid commenting about MacDermid’s products), the court has allowed this action to continue on the basis that MacDermid’s statement is about Niche’s report not about MacDermid’s own products which featured in Niche’s report.

This highlights the care which needs to be displayed when commenting on the actions or business or products of your competitors. In a tough tussle between brands, an additional weapon can be put in the hands of your opponent if you are not careful.

Richard Binns and Georgina Shaw are commercial litigators and IP specialists who advise clients on all aspects of IP, reputation and brand issues including malicious falsehood.

Key contact

Jeremy Dickerson

Jeremy Dickerson Partner

  • Head of International 
  • Head of Intellectual Property, Media and Sport
  • Defamation and Reputation Management

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