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Comparative Advertising in Argentina

by Fernando M. Alonso

The early stages

The road of comparative advertising in Argentina has been neither short nor easy.   Even though there is no regulation which expressly forbids it, the first ruling passed in 1971 in Rolex vs. Orient(1) forbade it for considering it an unfair competition act, opposed to honest commercial practices(2).

The text in the condemned advertisement read:

“If you wish a fine watch, you may buy a Rolex.  Or you may buy an Orient, the unknown watch.  Each Rolex is made with the finest mechanical movements.  So is each Orient.  Rolex is a watch for all uses, submergible, and shockproof.  So is Orient.  Rolex has a one year guarantee.  But Orient has a two year guarantee.  This particular Rolex is worth 875 new pesos.  This particular Orient is worth 325 new pesos.  We compare them to show you that Orient is also a very fine watch.  And that you don’t always have to pay a lot more to buy a fine watch.  Orient Watch.  It won’t be an unknown watch for much longer”.

The issue was debated again in 1988 on occasion of the so called “war of the supermarkets” in which the two most important chains in the country (Disco and Carrefour) published a series of ads comparing their prices(3). Although the debate did not reach the court, the discussion was revived in articles published in juridical magazines(4), lawyers’ debates(5), and even a bill on comparative advertising(6). 

A change in trend

The trend began to change in 1991 with the case known as “Navarro Correas”(7). 

In the ad under discussion called “Galería”, two glasses move in front of a series of pictures showing wine bottles.  One of the images belongs to Navarro Correas’ Pinot Noir.  Although the trademark cannot be clearly seen, the shape of the bottle and the design and color of the label, are easy to identify.  After moving by several pictures, the glasses stop in front of a bottle of wine belonging to Saint Valery and bend down, as if bowing. A voice in off says:  “Every day, something out of the ordinary. Saint Valery, the art of a great wine”.

The court ruled against the claimant with a divided vote.  On the one hand, the first vote held that referring to something as “out of the ordinary” led to thinking that the wine from the plaintiff is ordinary when in truth is a fine wine, and thus the ad was considered to be denigratory.  It was also said that using a trademark that belonged to a third party—in the comparative sense — is not admissible, except in order to compare prices, the clear and unambiguous point of which is in the public’s benefit(8).

However, the votes of the majority opened the way for comparative advertising.  They held that “… there must be a distinction between the unauthorized use of a third party’s trademark as if it was the advertiser’s own, and the mere reference or mention of it in the advertiser’s use of his own trademark, since in the first case there will always be trademark infringement, while in the second case it will depend on the special circumstances of each case, because the reference to the third party’s trademark may be legitimate, when acknowledging that the mark belongs to that third party and is not disparaging or denigrating.  Consequently, I believe that there is no prohibition in our juridical system to the mere reference or evocation of a third party mark, or even of a comparative ad, as long as its owner’s legitimate rights are not infringed on.”(9) 

Finally, it was held that “It is possible that the glasses represent the consumers, who are happy to see a new wine.  But this does not denigrate the previous wines; I myself am happy when a new painting appears in a museum, and do not, because of this, stop appreciating the paintings that were already in place at the museum.  As long as the new wine sells at least one bottle, it goes in some measure against the interests of previous marks, but this market effect is considered perfectly legal.  Forbidding this kind of advertisement would imply restricting the creative area of advertising agencies, and this is an agency’s most valuable area”.(10) 

For the first time, the ruling established the lawfulness of a third party mark use in comparative advertising, as long as the advertisement is truthful and does not discredit the third party mark. 

However, in 1993, a Court granted an injunction which prohibited the advertising campaign known as “Desafío Pepsi” (the “Pepsi Challenge”) in which Pepsi was compared, without naming it, to the “Coca-Cola” trademark.  At issue was a public sampling where the participants ignored the brand they were testing and made a choice based on the beverage’s flavor.(11)  It was said that the campaign implied an “interference or use of a third party mark, undermining the exclusive control of its commercial image on the owner’s part and the power over his own advertising message”.  The judicial decision gave rise to a debate on commercial advertising and free expression.(12) 

In spite of this, in 1998, the decision of the First Instance judge in the ordinary proceeding on said advertisement rejected Coca-Cola’s complaint.(13) The ruling, currently under appeal, followed the criteria in the “Navarro Correas” ruling, by holding that “loyal comparative advertising is not punished by any legal precept as long as it does not denigrate or undermine with falsehoods the competitors’ products or services”.

Towards the end of 1993 the trend set by “Navarro Correas” case was confirmed.  In the case known as “Tango”(14) (graphic advertisement comparing computer software “Stradivarius” and “Tango”) the Court held:  “I believe that our trademark legislation does not prohibit comparative advertisement and believe, too, that it is good not to do so, given that such type of advertisement benefits the consumer.  What the law prohibits is the use of a third party trademark as if it was the advertiser’s own, prohibiting the appropriation of a third party trademark.  But it does not prohibit the use of a third party trademark as such, in order to compare the products it identifies with the ones of its own”.

However, such advertisement was finally forbade for leaving out relevant features and including only partial aspects of the competing product, “becoming a procedure directed towards discrediting the product identified with the trademark Tango”.

In the year 2001, the “Bimbo”(15) case confirmed the same principles established in the “Navarro Correas” case.  The court considered it was not a case of comparative advertisement, as the competitor’s trademark was not perceivable in the ad.   Anyhow, it was said that “it is not enough to say that the advertiser’s trademark is better than the third party mark in certain aspects; in order for it to be reprehensible, the comparison should be false and deceptive.  If a Ferrari’s breaks work in fact better than a Mercedes Benz’s, and the Ferrari’s advertisement points it out, this does not infringe section 953 of the Civil Code… Comparative advertising is not prohibited; on the contrary this type of advertising benefits the consumer.  It is only illegitimate when carried out with bad faith that the comparative advertising is not truthful, but in order to prove bad faith there must be proof of some falsehood in said advertisement”.

Four cases on truthfulness and denigration

  • In 2000 a new case(16) took place in which Procter & Gamble obtained an injunction, prohibiting one of the advertisements in the Clorox campaign of its “Trenet” product.  The advertisement under discussion referred to an earlier advertisement of Procter & Gamble’s trademark “Ariel”, which underlined that by using “Ariel” it was not necessary to use a stain remover.  In the “Trenet” ad, although the “Ariel” trademark was not mentioned, an interviewee stated that he would “never again buy a soap whose publicity says it is not necessary to use a stain remover” —according to the court, an “unmistakable reference to its unsatisfactory results”.  It considered this statement denigrated the “Ariel” product.
  • That same year, Unilever(17) was granted an injunction consisting on the suspension of Procter & Gamble’s publicity ads where the outcome from the use of “Ariel” powder detergent was compared to that of other products belonging to the plaintiff.  The ruling objected the method of comparing because “there is no specification, not even an approximation, of the amounts of powder detergent and cleaning tablets used to wash the stained cotton garments”. For the court, “A loyal and truthful confrontation should be carried out in equal conditions for all products under comparison”.
  • In 2001, a precautionary measure granted by a First Instance judge in the “Winston”(18) case was revoked.  The launching in Argentina of the “Winston” cigarettes (property of BAT) made in Uruguay was advertised with a campaign saying “the free-shop is here,” “global prize”, “you win”, etc.  It is worth mentioning that until said moment, it was only possible to buy “Winston” cigarettes from the U.S. in the free-shops.

Massalin Particulares (local subsidiary of Philip Morris Inc.) responded with a humorous advertisement making clear reference to the Uruguayan origin of the new product.  It referred to “Cousin Wilson” (Wilson being a typical name in Uruguay), to the “left wing of Peñarol” (Peñarol is a well-known football team in said country) and ended with a phrase: “Isn’t it better to smoke red tag “LE MANS” made here and not imported from across the river? (in allusion to the “Rio de la Plata”, a river that divides Argentina and Uruguay)”.

Japan Tobacco and Nobleza-Piccardo were granted a precautionary measure to obtain the immediate cease of the Massalin Particulares advertisement for considering it disparaging.

The court of appeals revoked said ruling holding that “based on the advertising campaign launched by “WINSTON” cigarettes and the use of English phrases regarding said product, the defendant has emphasized this real and certifiable fact in a humorous way comparing it to another circumstance, also real, which is the product’s country of origin.  Although it is true that the “LE MANS” commercial makes reference in a humorous way to phrases used in the “WINSTON” advertising campaign, as well as the country from which these cigarettes are imported, the ad does not denigrate the product or its origin, and because it is an objective circumstance, it should not be considered disparaging”.

  • In 2003 the court rejected a precautionary measure requested by Bagó(19) in order to stop the use of its marks in an advertisement Laboratorio Omega had launched comparing prices of pharmaceuticals.  The court held that “the mark and commercial name included in the comparative price table published by Omega seeks to inform the consumer about the commercial value of the products indicated, and the truthfulness of the information provided was not proved to be mistaken”.  It went on to say that the “National Constitution recognizes the consumers’ right to adequate and truthful information, as well as freedom of choice”.

Quilmes vs. Isenbeck

  • In the year 2000, Quilmes(20) filed an injunction against Isenbeck before the Federal Courts requesting the cease of Isenbeck’s advertisement “¿Quién es quién?” ( meaning “Who is who”), which, after showing images of one of Quilmes’ ads (“Amigas”) and another belonging to Isenbeck (“Padres”), the advertiser suggested a possible plagiarism on Quilmes’ part.

The court granted the measure stating as sole argument the unauthorized use of Quilmes’ trademarks on the part of Isenbeck.  It was also decided that the right to freedom of speech, although disallowing previous censorship, does not exclude the responsibility for the advertisement once it has been launched. 

  • In 2003 a new ruling was passed after Quilmes(21) filed a criminal complaint against Isenbeck for an advertisement giving notice of AMBEV’s (owner of Brazilian beer trademark “Brahma” and main competitor in the Argentinean beer market) purchase of a portion of Quilmes’ shares:  “The Brazilians bought Quilmes.  Just before the World Cup?  What was the Portuguese word for selling out?”

The objective was to obtain a criminal sentence on Isenbeck’s board of directors and advertising agents based on the criminal provision of the trademark law(22) which penalizes “the unauthorized use of a registered trademark or falsified designation, fraudulently imitated or belonging to a third party”.  Up to that moment, said rule had been applied to punish trade counterfeited products, but never in a case of comparative advertising.

The court rejected the criminal action stating it would “imply an uncommon interference of the criminal system on the individuals’ behavior, by putting on the same criminal scale both the acts of mere use where a third party’s trademark was mentioned and those other [acts] prone to mislead and deceive, by means of falsifications or deceptions of any kind.  On the other hand, a non restrictive interpretation would lead to the absurd of considering any use of a trademark a crime —even the use made by the consumer— if the third party owner does not authorize it”.

  • That same year, Quilmes brought a criminal action against Isenbeck for failing to comply with the judicial order making it cease the unauthorized broadcasting of ads which included the “Quilmes” and “Quilmes Light” trademarks.

The complaint was rejected in virtue of the following arguments: “considering configured the crime of disobedience for having disregarded —at the restart of an advertising campaign — a judicial order issued within an injunction proceeding, would mean to understand said ruling as a specific state act of prior censorship, because a precautionary measure in particular would limit beforehand the exercise of legitimate rights on the part of the defendant”.

The ruling indicates that “it must be considered that freedom of speech without previous restrictions protects those behaviors that fall within commercial strategies which make use of the mass media, notwithstanding the subsequent responsibilities that may later need to be taken”.

From the above detailed case arises the right to broadcast commercial advertising without previous censorship, notwithstanding the fact that, after emission, subsequent emissions may, in case of injuring third party rights, be object of prohibition or other legal sanctions.

  • The last case refers, essentially, to two advertisements:
    • Isenbeck’s campaign offering one free Isenbeck bottle of beer to anyone who handed over one Isenbeck bottle top together with one bottle top of Quilmes.  The advertisement said, “And why, you are surely asking yourself, a campaign such as this one?”  Very easy:  Quilmes is the beer the majority of consumers drink today, but Isenbeck is the best beer. What is the idea?  That the majority of consumers try the best beer”.
    • A graphic advertisement showing a bottle of each of the marks, enlarging part of their labels with a magnifying glass, offering information on the characteristics and ingredients of both products, adding the slogan, “The best beer and the one the majority drinks today, are different”.

The federal judge of First Instance(23) ordered to cease both, saying that “they were directed to persuade about the superiority of the owner’s product as well as on the inferiority of the compared product”.  Bringing the “Rolex c/Orient” case, the judge added that “there is a prima facie interference or use of a third party trademark, making its owner loose the exclusive control of its commercial image and the power over its own advertising message”.

Isenbeck then replaced the mark “Quilmes” in the ad for a “pip”, which gave place to the enlargement of the precautionary measure. The judge held that the “viewers of said advertisement will immediately associate the new approach with the “Quilmes” trademark.

In May 2005, the Federal Chamber of Appeals(24) partially revoked the measure in the following way:

  • It confirmed the ban on the graphic advertisement (the magnifying glass on the labels) as “it is not a true enlargement of the respective labels, but a new layout of the data —in columns —on each of the beers.  Although some of these facts correspond to those included in said labels, others do not, whether because they have been enunciated differently, or  because they have not been included in either of the labels, adding to which is the absence of information such as alcoholic content”.

Regarding such inaccuracies, the ruling held that “any advertisement that may lead the consumer into error regarding the properties or characteristics of the product in order that, based on this information, he can make a decision on a purchase that he would otherwise would not have made, should be considered a deceptive commercial practice”.

  • It revoked the measure regarding the promotion (exchange of tops) with the arguments already described in the Navarro Correas case, which were:
    • “there should be a distinction between the unauthorized use of a third party trademark as if it was the advertiser’s own, from the mere reference to it when using the advertiser’s trademark, because whereas in the first case there will always be a trademark infringement, in the second, it shall depend on the circumstances of each case, since referring to a third party’s mark may constitute a legitimate act when the third party is acknowledged as its owner and there is no intent to discredit or denigrate it”.
    • “On the other hand, and always within the framework of fair competition, one of the benefits of comparative advertising is its tendency to create a balance between market forces.  Because of this, it should be expected that the one with a dominant position has to stand the pressure of those who want to claim a share in the market”.
  • The replacement of the “Quilmes” mark for the “pip” was considered an act of disobedience to the injunction previously ordered, reason for which damages were imposed to the noncompliant party.
  • It decided that the scope of the granted measure could not affect “future advertisements, on which no previous judgment may be passed without examining their modality or characteristics”, since otherwise there would be a “previous control over their entry into the freedom of speech circuit, which is opposed to the Constitution”.

Conclusions

After a very negative beginning, the evolution of judicial decisions has led to a new scene where comparative advertising is now considered, within certain limits, a useful and legal instrument for competitors and consumers.

  • From the judicial decisions mentioned above, it is worth noting the following:
  • Comparative advertising is not prohibited by law, as long as it is truthful and does not denigrate the name or trademark of the competitor.
  • The use of the competitor’s trademark in comparative advertising is not the criminal offense of unauthorized or illegal trademark use provided by section 31 b) of the Trademark Law.
  • Comparative advertising is under the protection of the right of freedom of speech and shall not be subject to prior censorship.
  • The comparison must be carried out between products or services with the same purpose; the method by which they are compared should be objective and should analyze the main and verifiable characteristics of the products and services that are being compared, among them, their price.

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End Notes
  (1) Rolex S. A. Vs Orient S. A. and another,  II División, Federal Chamber of Appeals in the Civil and Federal Commercial matters, 30. 12. 71, L.L. 147-233.
  (2) Art. 953 of the Civil Code
  (3) Among others, in La Nación, 1/9/88, 18/8/89, 1/9/89.  See also Alberto Borrini’s article “Supermercados ¿Es odioso comparar?” in La Nación, 28/6/88
  (4) Martín Zapiola Guerrico, La Publicidad Comparativa, La Ley 1988-C-772, Sección Doctrina
  (5) Ernesto F. Heitz, Publicidad Comparativa bajo la lupa de los abogados, in La Ley Actualidad  8/11/88, Publicidad Comparativa:  un tema polémico, in La Ley Actualidad 22/8/89, Publicidad Comparativa.  Ni confucionista ni denigratoria, in La Ley Actualidad 12/9/89; Atilio Aníbal Alterini, La Fuerza de las comparaciones, Ámbito Financiero 22/9/88; Ernesto Aracama Zorraquín, Medios distintivos y publicidad comparativa.  Abeledo-Perrot, 1989.
  (6) Presented by congress woman María Cristina Guzmán.  See commentary of the author in La Ley Actualidad 20/6/89.
  (7) Bodegas J. Edmundo Navarro Correas S. A. c/Agroindustrias Cartellone S. A., Cámara Nacional de Apelaciones en lo Civil y Comercial Federal, Sala 1, 22/3/91, published in La Ley 19/7/91 with a comment by the autor.
  (8) Vote by Dr. Eduardo Craviotto
  (9) Vote by Dr. Jorge Pérez Delgado
  (10) Vote by Dr. Martín D. Farrell
  (11) The Coca-Cola Company and others, Division II, Federal Chamber of Appeals in the Civil and Federal Comercial matters, 22/10/93, E. D. 1/9/94.
  (12) Miguel Angel Ekmedjian ¿La publicidad comercial es una forma del ejercicio de la libertad de expresión?;  Juan Martín Perrotto y Marío A. Triani, Reflexiones en torno a un reciente fallo sobre propaganda comparativa; Enrique Tomás Bianchi y Hernán Víctor Gullco, La libertad de expresión en materia de publicidad (“The Comercial Speech”), all of them in E. D. 1/9/94.
  (13) The Coca-Cola Company y otros c/Pepsi Cola Argentina S.A.I.C. y otros, First Instance National Court in Civil and Federal Commercial matters, N° 1, Secretariat N° 1, Expte. 7982/93, 21/10/98.
  (14) Axoft Argentina S. A. c/Megasistemas S. A., Division I, Federal Chamber of Appeals in Civil and Federal Commercial matters, 30/12/93, causa 6275/91
  (15) Gougenheim S. A. c/Bimbo de Argentina S. A., Division I, Federal Chamber of Appeals in Civil and Federal Commercial matters, trial 124/97, 19/4/01
  (16) Procter & Gamble  Interamericana Inc. Sucursal Argentina y otro c/ Cloros S.A. s/ Precautionary measures, División II, Federal Chamber of Appeals in Civil and Federal Commercial matters, trial N° 6041/2000, 4/10/00.
  (17) Unilever de Argentina  S. A. s/ Precautionary measures, División II, Federal Chamber of Appeals in Civil and Federal Commercial matters, trial N° 8426/1999, 24/02/2000
  (18) Japan Tobacco Inc. y otro c/ Massalin Particulares S. A. s/ Precautionary measures, División I, Federal Chamber of Appeals in Civil and Federal Commercial matters, trial  N° 3305/01, 14/6/2001
  (19) Laboratorios Bagó S. A. c/Especialidades Medicinales Omega y/o Casa Rubio s/ Precautionary measure, Federal Chamber of Appeals in Civil and Federal Comercial matters,   Proceedings from the period of closed courts, 31/7/03
  (20) Cervecería y Maltería Quilmes S. A. s/Precautionary measures, División 2, Federal Chamber of Appeals in Civil and Federal Commercial matters,  trial 2224/00, 10/5/2001.
  (21) Isenbeck, s/archivo, Division 1, National Criminal and Correctional Court,  trial 34884, 5/3/2003.
  (22) Law 22.362, art. 31, inc. b)
  (23) Cervecería y Maltería Quilmes S.A.I.C.A. c/C.A.S.A. Isenbeck s/ Precautionary Measures, First Instance Court in Civil and Federal Commercial matters, N° 6, Secretariat 11, 8/6/2004.
  (24) Cervecería y Maltería Quilmes c/ C.A.S.A. Isenbeck s/ Incidente de Apelación, División 1, Federal Chamber of Appeals in Civil and Federal Commercial matters, trial 13066/200

Fernando M. Alonso, born in Buenos Aires on January 8, 1956, Argentine Catholic University, is a partner of Pérez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (Jr.), where his main practice is Patent and Trademark litigation and Advertising Law.  He is a member of GALA and other leading IP associations and his articles and conferences can be found in www.pagbam.com.