Business mentor: Showcasing own strengths best advert

It seems like there is a hairdresser on every block in our suburb. I have decided to do some advertising in our local paper to promote my salon as better and cheaper than the rest. Is there any limit on what I say in my ads?

Small business sector specialist Sarah Trotman asked intellectual property lawyer and senior associate of Wellington-based A.J. Park Russell Law to explain:

Generally, advertisements must be factually correct and not create the wrong impression. You should also be aware of some restrictions.

First, there is the Fair Trading Act which prohibits misleading or deceptive conduct in trade.

Stick to facts, tell the whole truth, and use words and images that get your message across clearly.

Recently, Air New Zealand's cheap fare advertisements were found to be misleading and deceptive because hidden costs were not highlighted adequately.

Second there is "passing off". This is a legal action that is available to a person that feels their reputation has been used unfairly.

If your ads mention a competitor, make it clear there is no association between you and that you are only mentioning them to compare your business with theirs.

Make sure you do not create the impression your competitors have approved your ads.

If your ads induce customers to use your services, or even think about it, thinking that they will get your competitors' services, you may find yourself in trouble.

Pointing out why your business is better than the others is tempting but fraught with difficulty.

If you are going to advertise cheaper prices, then make sure they are really cheaper.

If you are advertising better services, you must have some basis for that.

You should be able to prove that your salon is better - you may have more appointment times, more available stylists, longer opening hours and so on.

Making general statements that have no basis or that may be construed wrongly or which are not correct will breach the Fair Trading Act.

Most businesses won't take an unflattering comparison well and are likely to complain so make sure you get it right. Sometimes trading on your own reputation and strengths is the best advertisement for your business.

Since the new Trade Marks Act came into force in New Zealand in August 2003, there is a specific defence to comparative advertising involving registered trademarks.

Unauthorised use of a trademark is usually an infringement but there is a provision in the act which allows you to refer to the trademark of your competitors in an advertisement.

Any use has to be honest, must not take unfair advantage of the trademark and must not be detrimental to its distinctive character or reputation.

A recent case in Britain, which will probably be followed here in New Zealand, limits this defence even further.

If your ads compare your salon with another, and refer to your competitor's word trademark (and not a logo or design feature), the comparative advertising defence would apply.

If your ads include your competitor's copyright material, however, the defence may not be available.

If you reproduce your competitor's logo in your ad, you may not be infringing their trademark, but you may well be infringing the copyright that exists in their logo.

The comparative advertising defence in the Trade Marks Act will not stop them from suing you for copyright infringement.

So compare, but take care.

* Any enquiries about advertisements can be directed to Russell Law at the email link below.