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August 26, 2020

Comparative Advertising – How To Walk The Tightrope Without Tipping Over!

Author: Janaki Arun

Introduction

One of the biggest contributors to brand recognition is advertising, and for brands in the internet era, it has now become commonplace to take friendly jibes at competitors. However, the line between a friendly jibe and disparagement is as thin as a rail.

Comparative advertising is a marketing strategy in which a brand presents its product/service as being superior to a competitor’s product/service. More often than not, however, the competing product is shown in a disparaging light which then gives courts cause to intervene in order to prevent brands from indulging in unfair and unethical trade practices.

Interestingly, the ongoing pandemic has also not deterred brands from running comparative advertisements. Most recently, in June 2020, a single judge bench of the Delhi High Court, in Cerveciria Modelo De Mexico, S. De .C.V. v. Whiskin Spirits Pvt. Ltd [CS (COMM) 186/2020], granted an ex-parte ad interim injunction preventing the defendant from publishing and distributing an advertisement on the ground that that the plaintiff’s statutory and commercial interests will get jeopardised. The advertisement in question depicted bottles of alcohol maintaining social distance from the plaintiff’s CORONA beer.

Law governing comparative advertising

The Trade Marks Act, 1999 in Section 29(8) provides for instances wherein a trademark may be infringed by an advertisement. Section 29(8) states that:

A registered trade mark is infringed by any advertising of that trade mark if such advertising-

        (a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; or

        (b) is detrimental to its distinctive character; or

        (c) is against the reputation of the trade mark.

On the other hand, Section 30(1) of the Act, culls out an exception to trademark disparagement, by stating that:

(1) Nothing in section 29 shall be construed as preventing the use of a registered trade mark by any person for the purposes of identifying goods or services as those of the proprietor provided the use

(a) is in accordance with honest practices in industrial or commercial matters, and

(b) is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark.”

In addition to the statutory provisions under trademark law, protection against disparagement is also provided under provisions of the Consumer Protection Act, 2019 which places restrictions on unfair trade practices.

In India, the Advertising Standards Council of India (ASCI), a self-regulatory voluntary organization of the advertising industry, whose functions have been recognized by the Supreme Court, also adjudicates upon objectionable advertisements. In its Code for Self Regulation in Advertising, the ASCI provides guidelines on fair competition in advertising, including the ones below:

  1. It is clear that 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
  2. the comparisons are factual, accurate and capable of substantiation, 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,
  3. the advertisement does not unfairly denigrate, attack or discredit other products, advertisers or advertisements, directly or by implication, etc.

Landmark jurisprudence on comparative advertising

In one of the earliest judicial pronouncements on disparagement in comparative advertising, the Calcutta High Court, in Reckitt & Colman of India Ltd v. MP Ramchandran & Anr. [1999 PTC (19) 741] laid down the following guiding principles on comparative advertising:

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

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

iii.   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.

iv.   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.

v.     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.

In Pepsi Co. Inc. & Ors. v Hindustan Coca Cola Ltd. [2003 (27) PTC 305 (Del)], the Delhi High Court observed that “to decide the question of disparagement we have to keep the following factors in mind namely: (i) Intent of commercial (ii) Manner of the commercial (iii) Story line of the commercial and the message sought to be conveyed by the commercial. Applying these principles, the Court held that the manner of the respondent’s advertisement calling the cola drink of the appellants – “Yeh Bachhon Wali Hai, Bachon Ko Yeh Pasand Aayegi” (this is a children’s drink and only children will like this) was clearly derogatory to the appellant’s product, and is intended to and would cast a negative impression of the appellant’s products in the minds of the consuming public.

In Dabur India Limited v. Colgate Palmolive India Ltd. [2004 (29) PTC 401 (Del)], the defendants aired an advertisement on television wherein a Bollywood actor educated consumers of a ‘lal dant manjan’ powder (red tooth powder) of its ill-effects by demonstrating its harsh effects on a consumer’s spectacles. Thereafter, in the same advertisement, he goes on to endorse the defendant’s COLGATE tooth powder as being 16 times less abrasive than the red tooth powder. The Delhi High Court, while granting an injunction to the plaintiff held that “…generic disparagement of a rival product without specifically identifying or pin pointing the rival product is equally objectionable.” and that “the advertisement campaign on the visual media has an immediate impact on the viewers and possible purchaser’s mind particularly when a well known cinestar is endorsing it.

Thus, the judgements in the Pepsi Co. and Dabur cases took into consideration an extremely important angle to disparagement suits, viz. the impact of the advertisements on a consumer’s psyche and perception of products.

In Gujarat Cooperative Milk Marketing Federation Ltd. v. Hindustan Unilever Ltd. and Ors. [2019 (2) ABR 401], an appeal was preferred by the Gujarat Cooperative Milk Marketing Federation(popularly known as Amul, one of the leading manufacturers of dairy products in India) against an order restraining it from broadcasting two television commercials, in which it compared its ice cream with generic frozen desserts and stated that its products contain 100% milk, whereas the frozen desserts are manufactured using hydrogenated vegetable oils. Although there was no specific reference to the trademark of the respondent, viz. KWALITY in the commercials, the respondent contended that the commercials had an effect of disparaging frozen desserts in general, majority of which are manufactured by it. The appellant contended that at least 30% of the manufacturers of frozen desserts use hydrogenated vegetable oils and therefore, the commercial was based in fact. The division bench observed that the appellant has itself admitted that only 30% of the manufacturers of frozen desserts use hydrogenated vegetable oils (which are allegedly harmful to health), which meant that 70% of the manufacturers do not use hydrogenated vegetable oils. Accordingly, the division bench, in upholding the decision of the single judge bench, held that the appellant had attributed negative qualities to frozen desserts in general and, thereby dissuaded consumers from purchasing frozen desserts (including that of the respondent).

Conclusion

Brands that are looking to explore comparative advertising as part of marketing strategy must keep in mind that courts have over the years come to attribute more and more importance to the impact of advertising on consumer behaviour and purchase patterns. Therefore, the advertisements must be tailored to avoid any disparagement of the competitor’s products/services. Moreover, even while relying on facts, as was done by Amul in the above case, it is important to not pick out facts that will suit the brand’s products, but to ensure that by doing so, it does not inevitably result in miseducation of consumers, resulting in disparagement.

While consumers of above average intelligence are able to discern and appreciate healthy rivalries in advertising, such as those of Burger King and Mc Donald’s, Apple and Samsung, etc., the test to be applied while discerning whether an advertisement is disparaging is the impact it has on an average consumer of average intelligence and the impact on their purchase patterns.

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

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