The law affecting comparative advertising in South Africa

180 Pages·2013·8.3 MB·English

by  Kadelblach, P.

LAW LIBRARY
C15 0255 0234
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THE LAW AFFECTING COMPARATIVE ADVERTISING
IN SOUTH AFRICA
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RESEARCH DISSERTATION Bry PHILIPP KADELBACH IN FULFILMENT OF THE
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REQUIREMENTS Tov OSTA IN THE MASTER OF LAW (LLM) DEGREE
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THE UNIVERSITY OF CAPE TOWN (UCT)
SU?ERVISOR AssoC. PROF. A.G. FAGAN
(Student Number KDLPHIOOI): I hereby declare that I have read and understood the regulations governing the submission of
<qualification you are registered for> dissertations, including those relating to length and plagiarism, as contained in the rules of
this University, and that this dissertation conforms to those regulations."
Cape Town Berlin (2003)
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The copyright of this thesis vests in the author. No
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quotation from it or information derived from it is to be

published without full acknowledgeement of the source.
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The thesis is to be used for private study or non-
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commercial research purposes only.

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Published by the Universit y of Cape Town (UCT) in terms
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of the non-exclusive license granted to UCT by the author.
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Reasons as
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The cUI'ope:ans aec:tae:a on COInp~l.Catlvep aa,'enlslI1lg
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on the market structure. Pre:lmllmuy r""',f>!'Irl'h
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necessary, and the to reach a more based
on literature and case to me as at 2002.
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Recent developments back up conclusions in dissertation. A central ar-
gmnellt L\J,-"''',-" on the between regulation and competition
law. When I researched in 1999 on the interaction between competition
law, I this in
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From a viewpoint beyond the confines of South African system, I
predicted a influence competition law on advertising ''''5,'''1<',«'-7J''.
quently, an article on INTELLECTUAL PROPERTY LAW COMPETITION
LAW as it confirmed my conclusions on the conflict betwet~n
The was as current IP in 2002 the head-
'IP and Competition law not lubricate'
(http://www.burrells.co.zalissues.asp ).
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I must all who helped me in compilation this dissewrtation . ..,"'~"''''u
must go Professor Anton Fagan (UCT) who o my dis-
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sertation to Professor Danie Visser (UCT) for his verdict on my work.

Harris undertook an service in thee product.
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thanks must go to Abrie du a An1erican Tobacco)
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providing information on the history of comparative advertising and policy matters;

Professor Piet of f Agencies (AAA) for
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questions on advertising self-regula tion; Paddie Pirow, Namibian Breweries
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(NBL) providing informationt on war'.
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Thanks to my Alinra, Caro, Martin and for their understanding
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and support. not least, I must thank my Achim,
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Hendrik, Kathrin aind Pitt Lutterbeck for understanding support. They
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made wondUerful in South
Philipp J:W:IiU<;illJa~,U
Berlin, 2003
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CONTENTS
PREFACE II
CONTENTS IV
ABBREVIATIONS OF JOURNAL TITLES IX
INTRODUCTION 1
2 THE SIGNIFICANCE OF COMPARATIVE ADVERTISING 4
2.1 THE U ..• . .." ,DV Of COMPARATIVE ADVERTISING 4
2.2 INTEREST GROUPS INVOLVED IN COMPARATIVE ADVERTISING 1
2.3 INSTITUTIONAL MECHANISMS REGULATING COMPARATIVE ADVERTISING 7
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3 DEFINITIONS OF COM PARAT lVE ADVERTISING w 8
3.1 COMPARATIVE VERSUS NON-COMPARATIVE ADVERTISING o 10
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3.2 DIRECT VS. IMPLIED COMPARISONS 13

3.3 DlfFERENTIATIVE VS. ASSOCIATIVE COMPARJSONS e 15
3.3.1 Differentialive Comparisons p 15
3.3.2 Associative Comparisons a 16
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3.4 TRUTHfUL VS. FALSE COMPARISONS 11
3.5 CONCLUSION 19
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4 INTEREST GROUPS IN COMPARATIVE AD VERTISING 21
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4.1 INTERESTS OF THE PUBLIC AT LARGE t 21
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4.1.1 Protection ofI ntellectual PI"'''''''s'''' 21
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4.1.2 Enhancement a/Competitioen in the Market 21
4./.3 Creation ofP ublic Welfvare and Promotion 0/ Market Transparency 21
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4.2 CONSUMER INTERESTSn 23
4.2.1 Commercial InUformation 24
4.2.2 Education 25
4.1.3 Competition in the Market 26
4.1.4 Protection against Deception and Unlawful Practices 27
4.3 REFERENCE BRAND COMPETITORS INTERESTS 27
4.:11 Protection 27
4.3.2 a/Comparative Inf,arn10i,;oll 28
4.3.3 Fair Competition 28
4.4 INTERESTS OF THE COMPARATIVE ADVERTISER 28
4.4.1 Fr:ee Commercial Speech 28
IV
4.4.2· 29
4.5 CONCLUSION 29
5 ADVERTISING A.'FECTS INTERESTS 31
5.1 AFFECTED INTERESTS OF THE PUBLIC AT LARGE 31
5.1.1 Competitive 3]
5.1.2 Promotion ofM arkel Transparency 32
5.1.3 A hi/ily to Spur Innovative Activity 34
5.2 AFFECTED CoNSUMER INTERESTS 34
5.2.1 34
5.2.2 36
5.2.3 37
5.3 AFfECTED REFERENCE BRAND COMPETITOR INTERESTS 38
5.3.1 ofI ntellectual Property 38
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5.3.3 Information 41
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5.4 AfFECTED INTERESTS OF THE COMPARATIVE ADVERTISER T 41
5.5 CONCLUSION 42
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6 TRADE MARK LAW TO REGULATE COMPARApTIVE ADVERTISING 43
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6.1 THE PROTECTION OF TRADE MARK'S DISTINGUISHING FUNCTION 43
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6.2 BRITISH TRADE MARKS ACT OF 1938 44

6.3 SOUTH AFRICAN TRADE MARKS ACT fOF 1963· 45
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6.4 SOUTH AFRICAN TRADE MARKS ACT Of 1993 46
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6.5 BRITISH TRADE MARKS ACT OF 1994 51
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6.6 GERMAN TRADE MARKsS iACT 54
·6.7 CoNCLUSION r 57
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7 SYSTEM OF SELvF·REGULATION TO REGULATE COMPARATIVE
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ADVERTISING n S9
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7.1 ADVANTAGES OF SELF-REGULATION 61
7.1.1 Cost 6]
7.2 DISADVANTAGES OF SELF-REGULAn ON 62
7.2.1 62
7.2.2 and Consumer Interests 63
7.3 STRUCTURING AND fUNCTIONING OF SELF-REGULATION AtJTHORITlES 64
7.3.1 64
7.3.2 66
7.4 CONCLUSION 67
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8 . COMPETITION LAW TO SUPERVISE ADVERTISING REGULATION 69
8.1 69
8.2 COMPETITION POLlCY 70
8.2.1 Harmonisation as a Measure to Enhance International Competitiveness 7/
8.2.2 Application on Advertising Regulation 73
8.2.3 The 'Beer War' Case 75
83 COMPETITION LAW AND ADVERTISING REGULATION IN THE U.S.A. 79
8.3.1 Endorsement 80
8.3.2 California Dental Association vs. Federal Trade Commission 82
8.4 CONCLUSION 83
9 UNLA WFUL COMPETITION LAW TO REGULATE COMPARATIVE
ADVERTISING 85
9.1 SOUTH AfRICA 85
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9.1.1 General Principles 85
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9.1.2 Boni Mores Principle 88
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9.1.3 Policy Considerations 89
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9.1.4 CClllpe'titi~)f1 Principle 90

9.2 GERMANY e 93
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9.3 CONCLUSION 94
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10 COMPARATIVE ADVERTISING AND TRADE MARK LCAW 96
10.1 SOUTH AFRICA f 96
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10.1.1 Section 34 Trade Marks Act of 1993 96

10.2 CONCLUSION y 99
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11 COMPARATIVE ADVERTISING ANiD THE LAW OF UNLAWFUL
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COMPETITION r 101 .
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11.1 SOUTH AFRICA v 101
n.l.l O. H. Dean 's Apnpiroach 102
11.2 UNITED KINGDOM U 105
11.3 GERMANY 105
11.3.1 Section 1 Of The UWG 106
J /.3.2 The Implementation of The Directive on Comparative Ad11erl'isjpll7 108
li.3.3 The implementation 2 UWG 111
11.3.4 The Goodwill Clauses UWG 111
11.4 CONCLUSION 115
12 COMPARATIVE ADVERTISING AND THE SPECIAL FORMS OF UNLAWFUL
COMPETITION LAW 116
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12.1 MISREPRESENTATION OR INJURIOUS FALSEHOOD 116
12. /.1 South Africa 116
12.1.1 United Kingdom lJ9
12.2 DISPARAGEMENT 120
12.2.1 South 120
12.2.2 United Kingdom 126
12.3 PASSING OFF 127
12.3.1 South Africa 127
11.3.1 United Kingdom 130
12.4 MISAPPROPRIATION OF THE ADVERTISING VALUE 130
12.4.1 South 130
12.4.1 United Kingdom 135
12.5 CONCLUSION 135
" . 13 COMPARATIVE ADVERTISING AND THE SYSTEM OF SELF-REGnULATION
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13.1 BASIC PRINCIPLES 137
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13.2 CLAUSES REFERRING TO COMMON AND STATUTORY LAW REQUIREMENTS 139

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13.3 CLAUSES REFERRINO TO MISLEADING ADVERTISING 139
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13.4 CLAUSES REFERRING TO GOODWILL 139
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13.4.1 Disparagement 140
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13.4.2 Adlverl'/smt!?' Goodwill 142

13.5 UNITED KINGDOM f 143
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13.5. J Summary 144
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13.6 CONCLUSION 144
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14 CONCLUSION s 147
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14.1 FINDINGS e 147
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J4.1.1 Self-Regulation 147
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14.1.2 Trande Mark Law 148
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14.1.3 Law afUnlawful Competition 148
14.2 NECESSARY MEASURES 148
14.2.1 The Gomp,etition Commission to Endorse Comparative Am/ertlSIIl!!?' 148
14.2.2 Amendment Trade Marks Act 149
IS ABSTRACT 151
16 BIBLIOGRAPHY 153
17 TABLE OF CASES 160
VII
18 TABLE OF STATUTES 165
19 APPENDIX I ADVERTISING CODE (SOUTH AFRICA) 167
20 APPENDIX II ADVERTISING CODE (UNITED KINGDOM) 169
21 APPENDIX HI DIRECTIVE ON COMPARATIVE ADVERTISING 170
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ABBREVIATIONS OF JOURNAL TITLES
BB Der DetnelJS-ljenner
Law
Cath. UL. '-'U • .uv~ .." University Law Review
DukeU Duke Law Journal
I-imr{\ni!"~n Intellectual Property Review
,,.,,.,. .. "'" Trade Mark
Urheberrnecht,
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schrift der Deutschen gewerblichen
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GR Rechtsschutz und Urheberrecht,
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Ke(;nts~scnlutz und Urheberrecht - Auslands und
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JoA Journal Advertising
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JoAR v Journal
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NJW Neue juristische Wochenzeitschrift
Me.rcarltIle U South African Mercantile Law Journal
:stellerlbo:sch Law
Int'l Rev. of Indus. International Review of Industrial Property
& Copyright L. Law
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