Comparative Advertising,Product Disparagement and Trademark Infringement

INTRODUCTION

The basic principles of advertising law in India include the dissemination of information and creation of awareness about the products advertised, while ensuring that the same is not offensive to public order and decency. The basic principles are also enumerated in a self-regulating code adopted by the Advertising Standards Council of India (ASCI) . The purpose of the code is to control the content of advertisements. The ASCI adheres to the following basic guidelines to achieve fair advertising practises in the best interests of the consumers:

• To ensure the truthfulness and honesty of representations and claims made by advertisements and to safeguard against misleading advertisements;

• To ensure that advertisements are not offensive to generally accepted standards of public decency;

• To safeguard against indiscriminate use of advertising for promotion of products that are regarded as hazardous to society or individuals to a degree or type which is unacceptable to society at large; and

• To ensure that advertisements observe fairness in competition because consumers need to be informed on choices in the marketplace.

CONSTITUTIONAL SOURCES:

Though there is no specific provision in the constitution that is explicitly devoted to advertising, the right to advertise is implicitly provided for under Article 19(1)(a) of the Constitution which guarantees the fundamental right to freedom of speech and expressions.

The Supreme Court held in Hamdard Dawakhana that the sale of prohibited drugs was not in the interest of the public, and that the advertisement of such drugs therefore “could not be speech” within the meaning of freedom of speech and expression under Article 19(1)(a) of the Constitution. The Court further held that, while an advertisement is no doubt a form of speech, the object that it promotes reflects the true character of the advertisement. Significantly, the Supreme Court held in this case that the advertising by itself would not come within Article 19(1)(a) of the Constitution. Advertisements for non-prohibited products would be protected as free speech. Though advertisements would in general be protected under Article 19(1)(a) of the Constitution, certain kinds of advertisements that are prohibited by various statutes, codes, rules and regulations in India would not be considered as protected. This is for the reason that Article 19(2) of the Constitution permits reasonable restrictions on the freedom of speech and expression guaranteed under Article 19(1)(a) of the Constitution. Hence, any prohibition or restriction on advertisements as stipulated by various statutes, codes, rules and regulations may be considered as a reasonable restriction. Accordingly, the legality of the advertisement as per applicable laws would determine whether it is protected speech or not.

Conversely, in the case of Tata Press Ltd V. Mahanagar Telephone Nigam Ltd., a three judge bench of the Supreme Court differed from the view expressed in the Hamdard Dawakhana case by holding that “commercial advertisement” was covered by Article 19(1)(a). In this case, a suit was instituted by the Mahanagar Telephone Nigam Ltd and the Union of India against Tata Press Ltd for a declaration that they alone have the right to print or publish the list of telephone subscribers and “that the same cannot be printed or published by any other person without express permission of the Nigam/Union of India.” A further declaration was sought to the effect that Tata Press Ltd has no right whatsoever to print, publish and circulate the compilation called the “Tata Press Yellow Pages” (Tata Pages). A permanent injunction was sought from the court. The three-judge bench argued that the commercial advertisement related to the dissemination of information regarding the product and should therefore be protected under the Constitution. The Court, however, made clear that the government could regulate commercial advertisements that are deceptive, unfair, misleading and untruthful.

CODIFIED SOURCES:

The ASCI has adopted a code for self-regulation. This code applies to advertisements in India (to the extent that the advertisements are directed to consumers in India or are exposed to a significant number of consumers in India), even if the advertisements originate or are published abroad. The advertising code provides, inter alia, that the advertisements must be truthful and should not distort facts or mislead the consumer by means of implications or omissions. They should not be framed so as to abuse the trust of the consumers. It should be ensured that the advertisements are not offensive to generally accepted standards of public decency; nor should they propagate products that are banned under any law. Advertisements should observe fairness in competition because consumer needs to be informed on choice in the marketplace.

Though the ASCI advertising code is self-regulating code, a Rule to the Cable Television Networks Act provides that no advertisement that violates the advertising code should be carried in Cable services.

There are several other codified sources that address advertising, including the following:

• The Consumer Protection Act of 1986

• The Prevention of Food Adulteration Act of 1954

• The Young Persons (Harmful Publications) Act of 1956

• The Emblems and Names (Prevention of Improper Use) Act of 1950

• The Drugs and Magical Remedies (Objectionable Advertisement) Act of 1954

• The Indecent representation of Women (Prohibition) Act of 1986

• The Drugs and Cosmetics Act of 1940

• Motor Vehicles Act of 1988

• The Prize Competition Act, 1955

• The Transplantation of Human Organs Act, 1994

• The Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994

 

WHAT IS COMPARATIVE ADVERTISING?

A survey of advertisements reveals that there are three categories into which all advertisements fall:

1. Advertisements that refer only to one brand of product and make no reference to competing products either directly or indirectly – ‘non-comparative’ advertisements (‘NC’);
2. Those that refer only to attributes of one brand of product but that refer indirectly to the attributes of rival or competing goods – ‘indirectly comparative’ advertisements (‘IC’);
3. Advertisements that directly compare attributes of one product with attributes of a specifically named or recognizably presented, competing brand – ‘directly comparative’ advertisements (‘DC’).[1]

Although it is common for both IC and DC advertisements to be referred as Comparative Advertising, it is essential to distinguish between these different categories, as in some countries neither IC nor DC advertisements are allowed, whereas in others one or both are permitted. The United Kingdom is an example of a country that allows both (within limits), whereas Germany is an example of one which allows neither IC nor DC advertisements. Accordingly, the tag line with which UK residents are familiar in relation to advertisements for Carlsberg lager-‘Probably the best lager in the world’ – is not one that is heard in Germany where it would be regarded as an IC advertisement, since it implies that all other lagers are inferior to Carlsberg lager.[2]

Comparative Advertising can be defined as the advertising in which a trader compares his products or services with that of another trader, by using the trade mark or trade name of such trader. Such advertising by a trader usually compares the prices and qualities of the products or services, in a manner representing that the product or services of the trader is superior to those of another trader. Such advertising methods mostly target the major players of products or services in the market.

There are different methods of Comparative Advertising which are usually taken up by the traders to promote their products or services, which include:

a)      Reference to a competitor’s name;

b)      Reference to a competitor’s trade mark;

c)      Reference to the major brand instead of referring to the competitor by name directly, but such reference makes the customer recognise the major brand.

Comparative Advertising refers to the advertising of a product or service, by comparing or drawing an analogy with similar products or services. more often than not the product being advertised is being compared to its closest rival, depicting itself to be about what “others are not” or “characteristics others are devoid of”. The key to Comparative Advertising lies in the depiction of the rival goods in a discreet yet explicit fashion.

The history of comparative advertising goes back to the history of economy and commerce itself.

It was common for a trader to compare the good qualities of his products over the products of his competitor and promote his own product by doing such comparison. The initial form of comparison used to be in the form of actually listing out the characteristics/ features of a particular product and comparing the same with another by merely listing the features. But when the traders started crossing the limits of comparative advertising and started to compare and deprecate competitor’s products, the law has stepped in.

India has witnessed a spate of litigation in this area in the last few years. May it be in the form of car manufacturers comparing the features each others’ cars or one cola manufacturer comparing his product with the other[3]. The growth of economy resulted in large number of disparaging advertisements which has led to large number of cases.

In the recent times, the judgement of Calcutta High Court in Reckitt & Colman of India Ltd V. M.P. Ramachandran & Another[4] clearly rules out the principles in comparative advertising. The Ld Single Judge of Calcutta High Court laid down that a person is entitled to puff up his own goods but cannot in the process defame the goods of the competitors. This judgement also held that if any product claims to be based on new technology, such a trader can positively say that such product consisting of new technology is superior to the existing technology but in the bargain cannot say that the product using the old technology are bad and harmful.

This judgement was cited with the approval of the Ld Single Judge of Delhi High Court in Reckitt & Colman v. Kiwi T.T.K. Ltd[5].[6] In this case the defendant was asked to modify the commercial so that the commercial becomes less damaging and disparaging. However, against the grant of only partial injunction, this was taken to the division bench by the plaintiff on the ground that the commercial had to be completely restrained. The Ld Division Bench of Delhi High Court held as under:

“We are of the opinion that the advertisement is prima facie disparaging to the appellant’s product. The respondent may highlight the quality of its product and may proclaim that it is the best in the market but cannot be permitted to openly condemn the other products available in the market the way it is being done. Aggressive advertising is permissible to a limited extent, exaggeration is also permissible to a certain extent, but not to the extent of disparaging the goods of others.”

In Tata Press Ltd[7], there is no doubt, “Right to freedom of speech” includes commercial speech, we are unable to accept that the contention of Shri Arun Jaitley, learned senior counsel that no restriction could be placed on the said right in view of clause (2) of Article 19 (2) of the Constitution.

Subsequently, in recent times, the Delhi High Court was ceased with a dispute between Pepsico Inc and Hindustan Coca Cola Ltd[8], wherein the Ld Single Judge held that the mere mocking at a particular product by calling the plaintiff’s product a drink meant for children was not by itself disparaging. However, this judgement got reversed in appeal and the Division bench of Delhi High Court held that it is not the mere terminology used in the commercial which is relevant but also the manner in which the commercial is portrayed which is important. The expression used, feelings portrayed, etc in the above cases related to instances wherein the product which was compared was clearly identifiable in the commercial and the competitor’s product was being specifically targeted. However, the problem did not stop here.

Competitors found new ways of indulging in comparative advertising. They started condemning a whole class of products of a specific competing product. This started a new species of disparaging advertising called “Generic Disparagement”.

In this new form of comparative advertising, the competitor would not merely disparage a specific product but would indulge in disparagement of a complete class of products. One of the first few cases of the Generic Disparagement is the judgement of the Dabur India Ltd v. Emami Ltd[9]. In this case the court was concerned with a commercial wherein the entire class of products, namely, Chyawanprash was shown in a negative campaign. One of the market leaders manufacturing Chyawanprash objected to the commercial by filing a civil suit for injunction. The Hon’ble court held that the plaintiff enjoyed a market share of more than 63% for this class of products and thus has a vital interest in ensuring that its product/ class as a whole is not condemned in any manner.

Thus the Plaintiff had a clear cause of action to maintain the suit irrespective of the fact that there may or may not be a direct reference to the product of the Plaintiff but the reference to an entire class of Chyawanprash. The Ld Single Judge of the Hon’ble Court recognised the concept of Generic Disparagement and granted an injunction.

This was followed by another case decided by the Delhi High Court itself in the Dabur India Ltd v. Colgate Palmolive India Ltd. In this case the defendant sought to disparage the tooth powder manufactured by the plaintiff.

In another judgment, Justice Ravindra Bhat of the Delhi High Court had passed interim orders in longstanding litigation between Glaxo Smithkline & Horlicks on one hand and Heinz, the manufacturers of Complan, on the other hand. This particular ad-war took a rather ugly turn with the competitors called each others’ product ‘cheap’. Hopefully Justice Bhat’s lucid order clarified the law to the advertising community. Justice Bhat had very clearly ruled in favour of Horlicks since the ad-campaign against them was clearly disparaging and also ordered Complan to pay Horlicks costs of Rs. 2.2 Lakhs only.[10]

The most recent judgement on this issue is the case of where Hindustan Lever Limited(HUL)[11] aired a television commercial which depicted a child being sick because of the alleged use of Dettol as an antiseptic liquid in bathing water whilst promoting the superiority of Hindustan Lever Limited’s Lifebuoy Soap. The plaintiff, Reckitt Benckiser filed a suit for an ad interim injunction against the telecast of the television commercial of defendant Hindustan Lever Limited’s Lifebuoy Soap, which was disparaging and denigrating the reputation and goodwill of the plaintiff’s product Dettol in the commercial market. 

Justice Kailash Gambhir of the Delhi High Court decided that the commercial telecast by the respondent indeed disparaged the product of the plaintiff and granted an interim injunction to the plaintiff against the telecast.[12]

The review of the various case laws, therefore clearly states that the courts in India have gone beyond the days of White v. Mellin, wherein the basic principle laid by Lord Watson was as follows :-

“In order to constitute disparagement which is, in the sense of law injurious, it must be shown that the defendant’s representations were made of and concerning the plaintiff’s goods; that they were in disparagement of his goods and untrue; and that they have occasioned special damage to the plaintiff. Unless each and all of these three things be established, it must be held that the defendant has acted within rights and that the plaintiff has not suffered any legal injuria.”[13]

The concept of comparative advertising has now been expanded, and disparagement to even a class of products and not merely disputes between any two individual manufacturers. The underlying principle being that no tradesman has a right to condemn any specific product or any specific class of products while advertising its own virtues.

The most important question here is whether the use of trademark in comparative advertising constitutes infringement of trademark?

The primary purpose of a trademark is to ‘distinguish the goods of one person from another’. Therefore, a trademark enables a consumer to identify the goods and their origin. Hence in case, if an advertiser uses a competitor’s trademark to make comparison between his goods and those of his competitor, and in the process disparages them, then such an act on the part of the advertiser would not only invoke issues relating to comparative advertising and product disparagement, but also would invoke issues related to trademark infringement.

In the case of comparative advertising and product disparagement,trademark issues arise only when a competitor’s trademark is used, e.g, in Duracell International Ltd v. Ever Ready Ltd[14], the advertisement in question had referred to the corporate name of the competitor, Duracell Batteries Ltd while depicting the appearance of a distinctive Duracell battery and without mentioning the brand name. It was held that the defendant had not infringed the trademark of the plaintiff. Furthermore, although Duracell had registered its battery as a trademark, it was in copper and black colours, while colours used in the plaintiff’s advertisement were white and black. Hence, it was held that the defendant had also not infringed that trademark.

The law on comparative advertising and product disparagement, in relation to tardemarks, in India, is based upon the law as laid down in Irving’s Yeast Vite Ltd v. FA Horse- nail [15] wherein it was held that use of another’s trademark in comparative advertising does not amount to infringement.

Section 29(8) of the Trademarks Act, 1999 enunciates situations, when the use of a trademark in advertising can constitute infringement. It says that any advertising which is not in accordance with honest practices; or is detrimental to the distinctive character, or to the repute of the mark, shall be an act constituting infringement.[16] At the same time section 30(1) makes comparative advertising an exception, to acts constituting infringement under Section 29. It provides that any advertising which is in accordance with the honest practices, and does not cause detriment to the distinctive character or to the repute of the trademark will be permissible and will not constitute infringement.[17]

Section 29(8) and Section 30(1) of the Trademarks Act, are adequate to address issues related to trademark infringement, made in the garb of comparative advertising. Judicial pronouncements on the issue have also made it clear that there is no harm in comparing your goods with those of the competitor, but the comparison should be fair and should not bring disrepute to the competitor’s products or trademark, i.e comparative advertising is permissible, but comparative advertising leading to product disparagement is not permissible. The position is more or less the same in almost all the countries, which allow use of another’s trademark incomparative advertising.

CONCLUSION:

No doubt that comparative advertising is beneficial as it increases consumer awareness and therefore, it should be allowed. Moreover, it enables an advertiser to establish his brand in the market by stating his superiority over the established brands. But, at the same time there times there have to be regulations, to check abuses. If the courts had accepted the proposition that trade rivalries should be settled in the market, it would have caused great prejudice to public interest; as the question is not of deciding which product is better, but of public awareness. Because, as we say that comparative advertising increases public awareness, misleading and disparaging advertisement should not mislead the public.

In respect of the law on comparative advertising, it can be said that it has really come a long way since the early 90’s. Indian courts have clearly taken a position in favour of plaintiff in these cases. However, it is required to be borne in the minds that in an appropriate case, if the defendant is merely indulging in truthful comparative advertising, merely comparing the features of the competing products and not giving any judgement on the same, such comparative advertising may find favour with the courts and may start the development of a completely new jurisprudence. Until such a thing happens and an appropriate reaches the courts, the law is titled in favour of the plaintiff and such law is going to be here for some time at least.

However, we must remember that the onus of ensuring healthy competition does not merely lie with the courts. It is of equal importance that the marketers of products engage in comparative advertising within the permissible parameters of law. Establishing a brand marketing policy within a company ought to be as important as watching for use and misuse by other competitors. If proper guidelines are followed by the product marketers, it allows for the fostering of a better corporate environment to invest in. it is of utmost importance for both companies and the judiciary to work in tandem to restore the parity in comparative advertising whereby fair trade practices; intellectual property protection and consumer interest can go hand in hand.

Submitted by:

DHARA DOSHI

LLM II Year

NALSAR UNIVERSITY OF LAW, HYDERABAD