Comparative Advertisements: IPR Infringement vis-à-vis Balanced Approach

INTRODUCTION

With the advent of globalization and liberalization in Indian economy, competition has become an integral part and parcel for various firms and companies. In order to survive in the market, a company has to bring something different from others. Advertisement is a tool to promote the products and services of a company.  It can be in any form either through media channel or any other. The present paper concerns about media channel of advertisements. A new product always requires some sort of publicity and advertisement is the best way to push it.

In such globalized era and comparative atmosphere, when the companies advertise their products and services, truthfulness and fairness becomes the important question for public. Ideally, Advertising is normally said to mean “the meaning of a representation in any form inc connection with a trade, business, craft or profession in order to promote the supply of goods or services…” and Comparative advertising is “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.”[1]

Development of law on comparative advertisement in the country is a recent phenomenon. Comparative advertising is an advertisement where a party advertises his goods or services by comparing them with goods and services of another party. This is generally done by either projecting that the advertiser’s product is of same or superior quality to that of the compared product or by denigrating the quality of the compared product. There is an underlying assumption that the comparative advertising benefits the consumer as the consumer comes to know of the two products and their comparative features/merits. New or unknown brands benefit most from comparative advertising because of the potential for transfer of the intangible values associated with the compared brand with or to the new brand. Comparative advertising has become more widespread, particularly in fiercely competitive markets.[2]

Though, The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, has been repealed but it was amended in 1984 to insert a new chapter named unfair trade practices. An advertisement is a form of representation to the consumers and this chapter had provision stating that any representation which ‘gives false or misleading facts disparaging the goods, services or trade of another person’ to be an unfair trade practice. Plethora of cases decided by the various courts deals with the same. Nevertheless, s. 2 (r) of the Consumer Protection Act, 1986 provides remedy to the aggrieved from comparative advertisements in the form of prohibiting unfair trade practices.  There had been complexities in deciding whether an advertisement is causing disparagements to the products or services of another. The whole process of resolving is time consuming and involves technical search, therefore, loss may hit the business of a firm/firms other than advertised one. It shows that even instant remedy may not serve the purpose sometimes in lack of proper mechanism.

However, comparative advertisements are not allowed in every part of the world. There are certain exceptions for it such as Germany where an advertiser cannot display its product as best or probably best because it indirectly disparages the quality of other products in the respective category.

A trader is allowed to compare his product with the product of his rival but he cannot say that the products of his competitor are of inferior quality or bad.  He has liberty to compare the advantages and disadvantages, similarities and dissimilarities of the two but if he does not follow the prescribed way, it leads to infringement. A comparative advertisement consists of two components, denigration and puffery. Puffery is to make pinnacle claims about the product or service, which is often seen and if these highest claims deprecate the compared product, it leads to infringement.[3]

Trademark is a form of Intellectual property which represents the image of the company in the mind of a common man. Any holder of a trademark has exclusive right to use it to identify his products or services. In comparative advertisements, these holders of trademarks use the same to make the goods and services identifiable to general public. There are no. of issues arising on account of comparative advertisements such as brand value of one company reduces, sometimes, due to information imbalance, it may amount to deception to the consumer, who is habitual to use such goods and services. Therefore, it affects consumers, competitors, advertisers etc.

Constitutional Interpretation

Article 19 (1) (a) provides that all citizens shall have the right to freedom of speech and expression along with certain limitations under Article 19 (2). The question arose before the Supreme Court in the case of Hamdard Dawakhana v. Union of India[4] was whether advertisements are ‘commercial speech’ and protection under article 19 (1) (a) can be afforded to them. The Court held:

“The advertisements in the instant case relate to commerce or trade and not to propagating of ideas; and advertising of prohibited drugs or commodities of which the sale is not in the interest of the general public cannot be speech within the meaning of freedom of speech and would not fall within Art. 19 (1) (a).”

Again, the same question arose before the Apex Court in the case of Tata Press Limited v. Mahanagar Telephone Nigam Limited and Others[5] wherein Court held contrary to the above;

… “Commercial speech” cannot be denied the protection of Article 19(1)(a) of the Constitution merely because the same are issued by businessmen.

Supreme Court explained the significance of commercial speech in the form of advertisements as;

Advertising as a “commercial speech” has two facets. Advertising which is no more than a commercial transaction, is nonetheless dissemination of information regarding the product-advertised. Public at large is benefitted by the information made available through the advertisement. In a democratic economy free flow of commercial information is indispensable. There         cannot be honest and economical marketing by the public at large without being educated by the information disseminated through advertisements. The economic system in a democracy would be handicapped without there being freedom of “commercial speech”.

Trademarks Act, 1999

S. 29 (8) provides that if a comparative advertisement takes unfair advantage and is contrary to honest practices in industrial or commercial matters, is detrimental to its distinctive character or is against the reputation of trademark, it amounts to infringement of trademark.

S. 30 (1) is the protection provided to the comparative advertisers. It states about the conditions when comparative advertisements do not infringe the trademarks. A trader is allowed to use it in accordance with the honest practices in industrial or commercial matters, and is not such as to take unfair advantage of or to be detrimental to the distinctive character or repute of the trade mark.

Consumer Protection Act, 1986

Now, the power to enquire into the complaints of unfair trade practices is vested with the consumer forums established under the Consumer Protection Act, 1986. S. 2 (1) (r) of the Act provides for the definition of unfair trade practices which is parimateria to the definition given under the MRTP Act, 1969.

While the said provision has put in place an effective mechanism to address the grievances of the consumer, it fails to provide relief to a competing seller as the Consumer Protection Act excludes manufacturers, sell­ers and service providers from its ambit.[6]

Competition has made the market rivalries to fight for their product. Trademarks Act, 1999 does allow for competitive advertisements along with certain restrictions mentioned therein. Product disparagement may result of an excessive puffery of a product. The High Courts and Supreme Court has dealt with the issue that when comparative advertisements may lead to product disparagement. The existing law, for the purpose of understanding, may be summarized as follows:

(a) A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue.

(b) He can also say that his goods are better than his competitors’, even though such statement is untrue.

(c) For the purpose of saying that his goods are the best in the world or his goods are better than his competitors’ he can even compare the advantages of his goods over the goods of others.

(d) He however, cannot, while saying that his goods are better than his competitors’, say that his competitors’ goods are bad. If he says so, he really slanders the goods of his competitors. In other words, he defames his competitors and their goods, which is not permissible.

(e) If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation.[7]

By following the above said norms, a balance between competitive trade and consumer can be maintained. In a series of cases, the Court has allowed for puffery statements in comparative advertisements on factual basis but recently a contradiction was noticed in the case of Colgate – Palmolive (India) Limited v. Anchor Health & Beauty Care Private Limited[8] wherein court emphasized on the consumer point of view and did not permit for claiming superiority of products on false basis either directly or by comparing them with rival’s product and observed:

“The law as it developed from the decision of the Calcutta High Court in Reckitt Colman vs. M.P.Ramachandran upto Godrej Sara Lee case(Delhi High Court), on the basis of English precedents, recognises the right of producers to puff their own products even with untrue claims, but without denigrating or slandering each other’s product. But the recognition of this right of the producers, would be to de-recognise the rights of the consumers guaranteed under the Consumer Protection Act, 1986. To permit 2 rival traders to indulge in puffery, without denigrating each other’s product, would benefit both of them, but would leave the consumer helpless.”

The vast majority of the viewer of the commercial advertisement on electronic media are influenced by the visual advertisements as these have a far reaching influence on the psyche of the people, therefore, discrediting the product of a competitor through commercial would amount to disparagement as has been held by the High Courts and the Supreme Court of India as well as the Law laid down by Courts in U.K. & U.S.A.[9]

In an action for product disparagement initiated in the case of Godrej Sara Lee Ltd. v. Reckitt Benckiser (I) Ltd.[10], it was held that while deciding the question of disparagement, following factors has to kept in the mind namely, (1) Intent of commercial (ii) Manner of the commercial (iii) Story line of the commercial and the message sought to be conveyed by the commercial. Out of the above, “manner of the commercial”, is very important. If the manner is ridiculing or the condemning product of the competitor then it amounts to disparaging but if the manner is only to shown one’s product better or best without derogating other’s product then that is not actionable.

Apart from the above, the plaintiffs have to establish the following key elements:

(1) A false or misleading statement of fact about a product.

(2) That statement either deceived, or had the capacity to deceive, substantial segment of potential consumer, and

(3) The deception was material, in that it was likely to influence consumers’ purchasing decisions.[11]

In comparative advertising, a consumer may look at a commercial from a particular point of view and come to a conclusion that one product is superior to the other, while another consumer may look at the same commercial from another point of view and come to a conclusion that one product is inferior to the other. Disparagement of a product should be defamatory or should border on defamation, a view that has consistently been endorsed by this (Delhi) Court or in other words, the degree of disparagement must be such that it would tantamount to, or almost tantamount to defamation.[12]

 Chapter IV of ‘The Code of Self Regulation in Advertising’ also provides that advertisements containing comparisons with other manufacturers or suppliers or with other  products including those where a competitor is named, are permissible in the interests of vigorous  competition and public enlightenment, provided:

(a)     It is clear what aspects of the advertiser’s product are being compared with what aspects of the competitor’s product.

(b)     The subject matter of comparison is not chosen in such a way as to confer an artificial advantage upon the advertiser or so as to suggest that a better bargain is offered than is truly the case.

(c)     The comparisons are factual, accurate and capable of substantiation.

(d)    There is no likelihood of the consumer being misled as a result of the comparison, whether about the product advertised or that with which it is compared.

(e)     The advertisement does not unfairly denigrate, attack or discredit other products, advertisers or advertisements directly or by implication.[13]

Infringement may occur in two ways. A trader can be made liable for infringement of the trademark, if the trademark used by the advertising party is directly similar or specifiable identical in a category of products and services. Indirectly, an action for infringement may also lie if the advertiser has used the trademark of the competitor in his advertisement for any of the purpose and in the process denigrate the same.

Usually, it is the infringement of the trademark which causes loss to the rival party but it is not limited to this kind of intellectual property. Advertisements include contents, slogans, logos, arts, graphics, particular music and sometimes geographical indication. If the contents used by the advertiser, in a comparative advertisement, are already in public domain and rival party has copyrights for the same, they may take the advertiser to the Court of law for infringement of copyright. Sometimes, a comparative advertisement may also lead to infringement of design, if the advertiser has used the same or identical design of the product of the competitor.

To meet the end of justice, time is required. Interim injunction is available to the party whose balance of convenience is more favorable in the eyes of the Court. The object of interlocutory injunction

“..is to protect the plaintiff against injury by violation of his rights for which he could not adequately be compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The Court must weigh one need against another and determine where the` balance of convenience’ lies.”[14]

Injunction may be temporary or permanent. If the plaintiff proves its claim and the defendant is not able to counter the same, permanent injunction may be given but when an instant decision cannot be taken, temporary injunctions are afforded. In the form of civil remedy, monetary compensation is awarded to the aggrieved along with the direction for restraining the advertisement in media.

Section 102 of the Trademarks Act, 1999 recognizes the infringement as offence. It provides for criminal remedies in relation to trademark such as falsifying and falsely applying a trademark, making or processing instruments for falsifying a trademark, applying false description, applying false indication of the country of origin, tampering with an indication of origin already applied to goods, selling goods or possessing or exposing for sale of goods falsely marked, falsely representing a Trademark as registered, improperly describing a place of business as connected with the trademark office.

Section 103 provides for imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than fifty thousand rupees but which may extend to two lakh rupees but for adequate and special reasons, court may award less than six month imprisonment or penalty of less than fifty thousand. To make a company liable under this section, an intention to defraud has to be proved.

An action for passing off is provided for infringement of unregistered trademarks. The onus to prove loss and infringement is upon the plaintiff, which a quite difficult task as compared to registered trademarks. Section 27 of Trademarks Act, 1999 specifically states that:

“(1) No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark.”

Sub-section (2) provides an exception in the form of ‘passing off’ action. In order to avail remedy, the unregistered trademark holder has to prove about the belonging of the trademark, his reputation and loss occurred, with the help of documents. On the contrary, Section 135 provides that the Court shall not award damages for action of ‘passing off’ if the defendant is able to satisfy the Court that he was bona fide user of the trademark. He was unaware and had no reasonable ground to believe that the plaintiff’s trademark was in use and after becoming aware about the same, he forthwith ceased to use that trademark. Any Court inferior to District Court is competent to entertain the suit for ‘passing off’ as per s. 134 of the Act of 1999.

No particular statute regulates the advertisement ethics in India. Judiciary is the ultimate developer of law relating to comparative advertisements. Earlier MRTP Act, 1969 was dealing with the same in the name of ‘unfair trade practice’ but after the enactment of Trademarks Act, 1999 and Consumer Protection Act 1986, some headway was sought in the regime of comparative advertisements, for the purpose of development of intellectual property jurisprudence. Though, Consumer Protection Act, 1986 provides for remedy but it is not available for the parties, not qualifying the definition of consumer under this Act.

The Chancery Court of Common law in the case of De Beers Abrasive v. International general Electric Co.[15] held that the scientific comparison of the two products in a pamphlet may give impression to be true for a reader.[16] In this case, a manufacturer distributed pamphlets showing the scientific analysis of the two products including merits, qualities and performance. The Court observed such an act as mere puffery for claiming the superlative character of the product. Statements of this nature were held to be instances of simple puffery, with an attempt being made on part of the manufacturer to exaggerate the benefits or utility of its products, either in absolute terms, or by way of a comparison with rival products.[17]

In India, the issues regarding comparative advertisement arose from 1992 as per the available case laws. In the case of M Balasundaram v. Jyothi Laboratories[18]  a television commercial was promoting its brand ‘Ujala’ liquid blue by showing that 2-3 drops are enough to get striking whiteness in the cloths and the competitor brand require more than that. The lady in the commercial was saying ‘Chi Chi Chi’ in disgust looking towards the bottle other than ‘Ujala’. The competitor brand ‘Regaul’ approached the MRTP Commission for the action of product disparagement. The Commission observed:

“10… In the present case, the bottle shown on the TV is not relatable to the product of either the informant or the bottle in which he is marketing the product or even of any other manufacturer, for that matter. Indeed, the whole of the impugned advertisement takes but a few fleeting seconds within which it is impossible to identify the product or its manufacturer or the brand which is said to have been disparaged. The basic requirement of Clause (x) of Section 36A has thus remained unsubstantiated in the present case.

11…The impugned advertisement, at worst, is in our opinion simply an instance of puffing up, but certainly not disparagement of the goods of any identifiable manufacturer.”

In Reckitt & Colman of India Ltd. v. Kiwi TTK[19], an advertisement of the defendant’s liquid show polish brand ‘Kiwi’ was compared with the other shoe polish brand, though, not named but the bottle had the same design and red blob on it, which the other brand ‘Cherry Blossom’ had. The Court provided an injunction and held:

“13…Prima facie, I am of the opinion that after the removal of the red blob from the bottle of “Brand X”, the same cannot be linked to the product of the plaintiff and consequently, in- my opinion, there will not be any question of disparaging, or defaming the product of the plaintiff.

14. In view of the foregoing, I modify the interim order passed on 2nd February, 1996 to the extent that I restrain the defendant from in any manner printing, circulating or distributing the point of sale posters at the consumer outlets or in the market place, where such goods are sold or in any manner publishing the impugned advertisement on the electronic media or at any other place with red blob on the bottle of “Brand X“.

In Coalgate – Vicco Controversy, a TV commercial of defendant was promoting the ‘Vicco’ toothpowder. In a comparison, the tin used by the defendant resembled to the tin of ‘Colgate’ toothpowder. In an action by the plaintiff, the Court decided that there may not be intention on the part of defendant to disparage the image of ‘Colgate’ even then the tin carries the image of ‘Colgate’ for the viewers, therefore, action for disparagement lies.[20]

In Hindustan Lever Limited v. Colgate Palmolive (I) Limited[21] and Pepsi Co Inc v. Hindustan Coca Cola Ltd.[22], both ‘Colgate’ and ‘Hindustan Coca Cola’ were held liable for disparaging the products of their competitor. In the advertisements, disparagement was done by mutating the name of rival but it could be clearly ascertained by lip movement. In the later case, Court observed:

“17. By calling the Cola drink of the appellants “Yen Bacchon Wali Hai. Bacchon Ko Yeh Pasand Aayegi”, “Wrong Choice Baby”, the respondents depicted the commercial in a derogatory and mocking manner. It cann’t be called puffing up. Repeatedly telecasting this commercial will leave an impression on the mind of the viewers that product of the appellant i.e. “PEPSI” is simply a sweet thing not meant for grown up or growing children….The manner in which this message is conveyed does show disparagement of the appellant’s product.”

In Reckitt & Colman of India Ltd. v. MP Ramachandran & Anr.,[23] the plaintiff was engaged in the manufacturing of ‘Robin Blue’ a blue whitener. In advertisement, the bottle used by the defendant resembled with the bottle and price of the blue whitener of the plaintiff. The Court passed an injunction against the defendant and recently on 22 June, 2010 the suit was dismissed in view of the fulfillment of the injunction order of the court.[24]

In Reckitt and Coleman India Limited v. Jyothi Laboratories[25], again the issue of disparagement of ‘Cherry blossom’ a shoe polish brand arose. In the advertisement of ‘Kiwi Liquid Wax Polish’, a bottle is described as X from which liquid is dripping while from a bottle marked Kiwi liquid does not drip. The shape of another bottle marked X is such, which can be identifiable as that of Cherry Blossom and for which, they had design registration. The Court ordered for injunction seeing the contentions of the appellant.

The first quarter of 2010 also witnessed a dispute of Tide-Rin wherein the advertisers of Rin clearly depicted the ‘Tide’ as bad in the advertisement. The Calcutta High Court restrained the producer of Tide, Hindustan Unilever Limited, from screening the advertisement on TV.[26] The Court held:

“Although in Frame 2 a packet of Tide Naturals has been shown but in the voice over the Tide lady speaks of only the product “Tide” and since then it is only in respect of such product that the advertisement continues. Even when the two shirts are put side by side both of them with their respective packets of detergent the voice over speaks only of “Tide” and does not speak of “Tide Naturals” although the packet of “Tide Naturals” is depicted. Even if the dull shirt with the Tide packet is removed without the removal of the voice over – “Tide se kahi behtar safedi de Rin” – the advertisement visually will have a negative impact vis-a-vis the dull shirt which can be associated only with the Tide lady’s child who is shown approaching his mother and not the Rin boy or his mother. Therefore, the connection between the Tide lady and the dull shirt child is evident.”[27]

In a more recent dispute of Procter & Gamble India (P & G) and Hindustan Unilever Ltd.[28] (HUL), the HUL contended that the advertisement of ‘Pantene’, a brand of P & G, is misleading as it claims that the said product is the most preferred in the Indian Market. The main allegation of HUL was disparagement of its brand ‘Dove’ due to the aforesaid advertisement.  In this advertisement, a hoarding of ‘P & G’ showed an image of ‘Mystery Shampoo’ which ‘80% women say is better than anything else’. In oppose to the same, HUL came with an advertisement of ‘Dove’ saying, “There is no mystery. Dove is the No.1 Shampoo”. It did not stop here but also filed a complaint with the Advertising Standards Council of India (ASCI) against ‘P & G’ for the false advertisement as it was induced by an old study conducted in Thailand in 2008. The complaint was accepted and ASCI ordered the ‘P & G’ to refrain from making such kind of advertisement.[29]

At last, the question arises as to whether the chain of judicial pronouncement is suffice to handle the prevailing controversies of comparative advertisements? The answer needs to be pondered upon and according to the researcher, it is certainly not because court has just turned a blind eye towards the other stakeholders of comparative advertisements.  The established position provides that till the time puffing of an advertisement does not uses the name of the competitor or any specific characteristics of the competitor product, it does not amount to infringement but it seems that the court has ignored the interest of consumers except once[30], who are suffering at the most.

 It has been rightly pointed out that the objective behind comparative advertising was not only being informative and an important tool to promote competition but for comparisons to serve as benchmarks to help consumers focus on the product’s main qualities.[31] Today, every company is indulged to make its brand more superior than any other. Indian economy is facing a cut throat competition in this arena as market forces are not only attracting the consumer and their likelihoods but also trying to retain them as patrons.

Advertising Standard Council of India (ASCI) has been established in India in 1985 with a view to ensuring the truthfulness and honesty of representations, observing fairness in competition and safeguarding against the indiscriminate use of advertising for promotion of one’s product.[32] ASCI website provides that in the previous year, over 80% of the Ads have been withdrawn or modified due to efforts of it.[33]   It depicts that still advertisers do not take it seriously and which are resulting in litigation.

The law relating to comparative advertisement is also not enough as earlier MRTP Act, 1969 was dealing with the rights of aggrieved in this context but now Competition Act, 2002, replacement of MRTP Act 1969, does not deal with it. The remedy provided under Consumer Protection Act, 1986 is conditional and applicable only to the consumers. There is only Trademarks Act, 1999 which renders about comparative advertisements but the specifications given under the same, are of general character such as the advertisement should be made consistent with the honest practices of the industry. This is open for wide interpretation as to what is honest practice of an industry.

The judicial precedents have also created complexity when it comes to degree of puffery. There are contradictory decisions of Calcutta High Court and Bombay High Court where puffery was not allowed by the Bombay High Court based on false or untrue statements. The established position is such that advertisers are benefitting from the loopholes created by the contradictory precedents. It is high time that legislatures must come out with certain exhaustive guidelines or policy that when an action of advertiser may amount to  infringement and what can be the possible remedies for the sufferer.

Further, a balanced approach in comparative advertisement regime requires that:

–          A comparison should be made based on verifiable facts about the advertisers’ and the competitors’ products/services, which can be substantiated.

–          If a comparison is based on clinical tests results there should be sufficient proof that they were conducted by an independent/objective body. Partial results or differences should not be shown in the advertisements because consumers may draw improper conclusions from them.

–          Always accurately depict the competitor’s mark with appropriate trade mark symbols/notices and add a footnote identifying the correct owner and disclaiming any affiliation. A competitor’s mark should not be altered in any form.

–          Avoid using a rival mark in a highlighted or prominent fashion that implies an affiliation with or sponsorship by the competitor of your advertisement.

–          Keep the primary goal of your advertisement limited to inform the consumer and not to unfairly attack, criticize, or discredit other products, advertisers or advertisements directly or by implication.

–          The product or services being compared should reflect their value and usefulness to the consumer. The comparative advertisement should be informative and convey positive merits of the product/service.

–          The advertisement should not make unjustifiable use of any firm, company or institution and should not take unfair advantage of the goodwill of any trade name or symbol of another firm.[34]

If these guidelines are followed in true spirit, then interest of all the stakeholders can be protected along with providing greatest quality of the product and services.

About the Author

Hitesh Agarwal
Student
Institute of Law,
Nirma University
hitesh050991@gmail.com

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