Landmark case on comparative advertising in Hong Kong

In the recent case of PCCW-HKT Datacom Services Limited & Ors v Hong Kong Broadband Network Limited (HCA 2049/2015; [2018] HKCFI 2037), the Hong Kong Courts dismissed a trade mark infringement claim brought by the PCCW-HKT group of companies (PCCW) against Hong Kong Broadband Network Limited (HKBN), accepting a defence which permits honest comparative advertising.

The dispute

The advertisements that PCCW complained about contain the English and Chinese straplines “PCCW  Home Telephone and eye Communications Service customers Say goodbye to bloated monthly fees” and 電訊盈科家居電話及eye”用戶 唔駛再忍受咁大食嘅家居電話用費 (meaning PCCW Home Telephone and “eye” customers no longer have to bear/endure gluttonous home telephone fees in English)”.

PCCW alleged that HKBN’s use of PCCW’s trade marks constituted infringement and HKBN relied on section 21 of the of the Trade Marks Ordinance (Cap. 559) as a defence. 

Under section 21 of the Trade Marks Ordinance, comparative advertising is a defence to trade mark infringement provided that the comparative advertising is in accordance with honest practices in industrial or commercial matters, determined by factors considered by the Court as relevant, and in particular the following:

  1. whether the use takes unfair advantage of the trade mark;
  2. whether the use is detrimental to the distinctive character of repute of the trade mark; or
  3. whether the use is such as to deceive the public.

The dispute turned on whether HKBN’s use of PCCW’s trade marks was in accordance with honest practices.

The average consumer in Hong Kong

The Court commented that the average consumer in Hong Kong is savvy to advertising language, exaggeration and trade puffery, bearing in mind the colloquial and often colourful and exaggerated terms frequently and commonly used in the Chinese media in Hong Kong. 

The Court went on to provide the example of a reasonable consumer and reader of advertisements in Hong Kong who would be sceptical and impervious to Hong Kong real estate advertised against a “backdrop of the French Riviera” or straplines describing a residential unit "with unrivalled sea view" for sale, well knowing that in reality, this would mean “no more than a narrow view of water, seen through gaps in buildings fronting the unit in question”.

The decision

The Court concluded that HKBN’s use of PCCW’s trade marks in the advertisements were in accordance with honest practices.

The Court accepted HKBN’s evidence that PCCW’s prices for fixed line telephone service were more expensive than those of HKBN and took the view that the average reasonable reader hardened to advertising language in Hong Kong will not consider the use of the words “bloated” or “大食” (meaning gluttonous in English) to carry any derogatory meaning of PCCW overcharging or cheating their customers. 

To the average consumer in Hong Kong, the words “bloated/大食” simply means expensive.  Referring to PCCW’s service as being more expensive is not disparaging, as a higher price tag may denote prestige and exclusivity. In fact, the evidence shows that PCCW seeks to distinguish themselves from other players who “basically work on price reduction”. 

Take-away points for advertisers

  1. Third party trade marks can be used when comparing products and services in advertisements however the comparison must be fair and honest. For example, if you claim that your fees are lower than that of your competitor’s, you should ensure that the goods or services are being compared under the same circumstances and that you specify the goods or services being compared.
  1. Exaggeration and trade puffery can be used however this should not be derogatory to the competitor.
  1. It is good practice to retain all documentary evidence to back up any statements regarding a competitor in case of challenge.
  1. In addition, advertisers should be mindful of the requirements under the Trade Descriptions Ordinance (Cap. 362), which are applicable to advertisements in general. In addition to prohibiting false, misleading or incomplete information in respect of goods and services, the Trade Descriptions Ordinance also prohibits specific unfair trade practices including misleading omissions, aggressive commercial practices, bait advertising, bait-and-switch, and wrongly accepting payment.