Courts freshen up and unravel misleading statements law

In two cases, issued within a month of each other, the New Zealand courts have examined the issue of misleading and deceptive statements.

The first concerns statements made on toilet paper packaging to the effect that the product was made in New Zealand (Carter Holt Harvey Limited v Cottonsoft Limited ((2004) 8 NZBLC 101,588, October 7 2004)). The toilet paper was sold under the trademark KIWISOFT. Its packaging featured a 'Buy NZ Made' logo and also claimed that the paper was manufactured by a New Zealand company. However, not all of the manufacturing process occurred in New Zealand. The toilet paper was in fact made from imported bulk tissue and converted into toilet paper in New Zealand.

The High Court ordered the toilet paper manufacturer to alter its packaging so that it was clear to consumers that only part of the process occurred in New Zealand (see High Court flushes out unfair practices in toilet tissue case). The case was appealed to the Court of Appeal and it has now upheld the High Court's decision.

In the other case (Reckitt Benckiser (NZ) Ltd v SC Johnson & Son Pty Ltd, unreported, September 9 2004), SC Johnson & Son Pty Ltd was called to task by its competitor Reckitt Benckiser (NZ) Ltd over television commercials for an air freshener that purportedly sanitized the air by eliminating odour-causing bacteria. Reckitt Benckiser attacked the scientific basis for SC Johnson's claims and sought an urgent injunction preventing further commercials going to air. The Auckland High Court agreed that there was an arguable case and issued the injunction.

Under New Zealand law, traders are prevented from making misleading and deceptive representations and from misleading and deceptive conduct by way of the Fair Trading Act 1986. This is a consumer protection statute. Competitors, or any other person for that matter, can file a suit with the High Court. The Commerce Commission is also empowered to prosecute.

Other protection exists by way of the Trademarks Act 2002 for registered trademarks if an advertisement features a trademark in a way that is "otherwise than in accordance with honest practices in industrial or commercial matter" and "if the use, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark". The general tenor is to allow comparative advertising unless it does some damage to the trademark at issue in the comparison.

Kate Duckworth, Baldwins, Wellington