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Comparative Advertisement and Disparagement upon the Anvil of Trademark Laws

Khurana and Khurana, Advocates and IP Attorneys India


INTRODUCTION

“Advertising is an instrument in the hands of the people who use it. If evil men use advertising for base purposes, then evil can result. If honest men use advertising to sell an honest product with honest enthusiasm, then positive good for our kind of capitalistic society can result.”[i] Advertising is one of the best methods to reach the consumers and inform them about the product. It is a marketing tactic used for publicise and promote sales. Advertising strategies are employed to familiarize the public with the products, services or opinions. The players in the market quite often use the comparative advertisement with their competitors for the monetary benefits. However, for the monetary benefits, the advertisement may go to the extent of damaging the competitor’s image and reputation in the market. Such advertisement lock horns with trademark laws. It is a well settled law that “where there is right there is remedy” and if any right of a trademark owner gets violated, a remedy can be available under the Trademarks Act, 1999. It is evident from the case of “N. R. Dongre v. Whirlpool Corporation”,[ii] wherein the Hon’ble Delhi High Court opined the significance of such remedies and gave emphasis on the “exclusive rights” of a trademark owner.

  1. Comparative Advertisement And Trademark Law

Comparative advertising is a marketing strategy wherein companies draw comparison between their products and those of their competitors. The trademark owner has the “exclusive right to use” his trademark in order to identify its product and distinguish it from another. However, the advertiser uses trademark of the proprietor in comparative advertising to identify the goods or services of a competitor. This gives way to key concerns. On the one hand, the goodwill of trademark owner will be sabotaged and, on the other, the advantages for consumers may also result as the comparison would enhance the awareness of a consumer and would make the market competitive.

  1. Legal Framework

The trademark law has outlined certain parameter pertaining to advertising. Section 29(8) of Trademarks Act, 1999 forbids any act, in pursuance to advertisement, which is done with the intent of taking unfair advantage of a registered trademark, or is detrimental to the distinctive nature of the other mark, or is detrimental to the reputation of the registered trade mark.   

However, Section 30 of the Act justifies comparative advertising as it permits to use the registered trademark provided that such use must only be carried out in consonance with the “honest and fair-trade practices”. Such use must not be motivated to take undue advantage of competitor’s goodwill.

  1. A String of Judicial Pronouncement Favoring Comparative Advertisement

There exists a trail of judicial pronouncements which validate the comparative advertisement. For instance, in the case of “Havells India Ltd. and Ors. vs. Amritanshu Khaitan and Ors”,[iii] the Delhi High Court permitted the comparative advertisement considering the cutthroat industrial competition and for the reasons pertaining to public insight. Further, in case of “Horlicks Limited v. Heinz India Pvt. Ltd.[iv], Heinz published an advertisement in which it compared Complan, a health drink with Horlicks, another health drink. The court held the impugned advertisement valid comparative advertisement compares a material, relevant, verifiable, representative features of goods in question and is factually true.

Similarly, in the case of “Barclay’s Bank v. RBS Advanta”,[v] the defendant handed out a brochure which included a comparative table of the fees and interest rates of different credit card companies, including “Barclaycard Visa”, which is a registered mark of the Barclays Bank. The Court determined that the defendant's act was bona- fide with an intent to educate consumers. Additionally, the defendant claimed that comparative charts improved their relationship with customers. Therefore, Comparative advertising was approved by the Court.

  1. Comparative Advertisement turns into Disparagement

Abuse of Comparative Advertising can lead to Disparagement. A disparaging statement regarding a competitor’s product is one that is false or deceptive and is intended to persuade the public not to purchase that product. A manufacturer has the right to claim that his products are the most effective or to make any other claims to sell his products, but he does not have the right to disparage his competitors’ products. Thus, the advertisement which leads to belittle, discredit or defames the reputation of another’s product are forbidden. Section 29(8) of the Trademark Act evidently forbids an advertisement which is detrimental against the reputation of the registered Trade Mark. For instance, in the case of “Compaq v. Dell”,[vi] in an advertising, “DELL” asserted that although their personal computers cost less, they performed equally to “COMPAQ” models. The court found it disparagement and granted remedy for infringement.                           

  1. Identification of Disparagement

The court tends to perform its duty to distinguish between a comparative advertisement and disparagement. In the case of “Pepsi Co. Inc. and Ors. v. Hindustan Coca Cola Ltd”,[vii] the court outlined factors which are to be considered:

    1. Intent of Commercial
    2. Manner of the Commercial
    3. Overall effect of the Commercial

In the case of “Reckitt & Colman of India Ltd. v. M.P. Ramachandran”,[viii] the Court held that a manufacturer has the right to claim that his product is the best or even better than those of his competitor. However, while making such comparison he is not allowed to make any claim which could be led to demeaning or disparagement of his competitor’s product. For instance, in the case of “Dabur India Ltd. v. Emami Limited”,[ix] the adavertisemnt claims “Garmion mein Chyawanprash bhool jao, Himani Sona Chandi Amritprash khao”. It was opined that the advertisement implies that using “Chyawanprash” during the summer is not a good idea, and as “Chyawanprash” in general is being disparaged, the plaintiff, who is a maker of “Dabur Chyawanprash”, is also being disparaged.

  1. Right to Expression is not Absolute

It is a well settled principle that Right to Expression, as enshrined under Article 19 of the Indian Constitution, is not absolute, rather it is qualified. One of the limitations on the fundamental right to free expression, is that it is not permitted to defame someone. In the case ofHamdard Dawakhana (Wakf) Lal vs. Union of India”,[x] the apex court held that Article 19(2) gives way to “reasonable restrictions” on the freedom of expression. The advertisements of the prohibited drugs are not qualified as right to expression. Thus, when a product advertises, it must be mindful of the limitations on how it can be compared to similar products on the market.

  1. Trending is a Trend

Social Media influencer uses different platforms such as blogs, vlogs, tweets, and reels to create awareness about various products. They review a wide range of products, some of which may be sponsored, while others are not. Trending topics can impact the success or failure of businesses. Thus, in the case of “Marico Limited vs Abhijeet Bhansali”,[xi] the Court opined that social media influencers enjoy a certain level of trust from their flowers, who tend to take their words on face value. The Court further emphasized that a social media influencer does not have the same freedom to make opinions that an average person has. Such influencers are supposed to be responsible and answerable in case of any false and malicious allegations.

CONCLUSION

“Comparative advertisement” is advantageous since it raises market competition, consumer knowledge, and product identification, therefore it ought to be permitted. The courts have also favored the comparative advertisement in several judicial pronouncements. However, a comparative advertisement is different from a disparaging advertisement or disparagement. The advertiser shall not make false claims so as to portray a bad image of the competitors’ goods. There must be checks to ensure that companies using comparative advertising do not deceive consumers, engage in dishonest business practises, disparage rival brands, or infringe on their trademarks. The public should not be misled while seeing their products advertised.

 

[i] John W. Crawford, Communication Professor, Quoted in Samm Sinclair Baker, The permissible Lie: The inside truth about advertising, 1968, Cleveland, OH: World Publishing Company.Page-180.

[ii] (1996) 5 SCC 714.

[iii] 2015 (62) PTC 64 [Del].

[iv] CS (COMM) 808/2017.

[v] [1996] RPC 307.

[vi] 1992 FSR 93.

[vii] 2003 (27) OTC 305.

[viii] 1999 (19) PTC741 (Cal).

[ix] 2005 (125) DLT 502.

[x] [SCR 1960 (2) 671].

[xi] COMIP No. 596 of 2019, decided on 15th January, 2020, (Bombay High Court).

 

Khurana and Khurana, Advocates and IP Attorneys



About the Firm

Khurana and Khurana, Advocates and IP Attorneys

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