Advertisement is the act of making a representation in any form in connection with a trade, business, craft or profession in order to promote the supply of goods or services [see end note 1]. Advertising serves as a tool to promote vigorous competition and public enlightenment but when it oversteps the ethics of generally accepted competitive behavior and in comparing products, denigrate another’s product, the role of regulation comes in.
To ensure that the advertisements in India observe fairness in competition and do not exercise undue influence on the consumer’s need to be informed on choices in the market-place, the Advertising Standards Council of India (ASCI) was established in the year 1985 to achieve self regulation in advertising. Interestingly, ASCI also takes under its wings any written or graphic matter on packaging in the same manner as any advertisement in any other medium [see end note 2]. Although comparative advertising is not defined under the ASCI Code, Chapter IV of the ASCI Code permits advertisements containing comparisons with other manufacturers, or suppliers, or products, including those where a competitor is named, in the interests of vigorous competition, provided that the aspects being compared must be clearly mentioned, the comparison is factual, accurate and capable of substantiation , there is no likelihood of the consumer being misled and that the advertisement must not denigrate, attack or discredit other products, advertisers or advertisements, directly or by implication.
Section 29(8) of the Trademarks Act, 1999 (the Act) provides for situations when advertisement of a trademark constitutes infringement and includes any advertisement contrary to honest practices in industrial and commercial matters; or is detrimental to its distinctive character, or is against the reputation of the mark. Further, Section 30 (1) of the Act, impliedly allows comparative advertising as an exception to Section 29 by stipulating that an act in accordance with honest practices in industrial and commercial matters and that is not taking unfair advantage or is detrimental to the distinctive character or repute of another trademark, does not constitute infringement and is thus by deduction allowed under law. Thus, comparative advertisement is allowed under law unless an advertisement is disparaging or denigrates a product and/ or a trademark.
Meaning of disparagement
The division bench of Delhi High Court in Pepsico. v. Hindustan Coca Cola [see end note 3] stated that advertisements leave an indelible impression in the minds of the viewers and to decide the question of disparagement the following is to be considered :-
- Intention of the commercial;
- Manner of the commercial; and
- Story line of the commercial and the message sought to be conveyed by the commercial.
Further, the Division Bench observed that only if the ‘manner of commercial’ is ridiculing or condemning the product of the competitor, it amounts to disparagement and is actionable but if the manner is only to show one's product better or best without denigrating other's product then that is not actionable.
Comparative advertising - extent of comparing allowed
The extent and degree of comparison between competitors, allowed under law is the main contention that is raised before authorities. In this regard, the courts have held that tradesmen may compare and create an impression in the minds of the consumers about their products being superior or of better quality but in no way can one lower the value of the competitor’s product [see end note 4].In the recent case of Havells India Ltd. v. Amritanshu Khaitan [see end note 5] before the Delhi High Court, a new dimension was provided to the extent of comparisons allowed under comparative advertising.
In this case the plaintiff seeking to restrain misleading and disparaging advertisement, had challenged the promotional campaign / advertising of the defendants wherein the defendants compared their product i.e. 'Eveready LED Bulb' with the plaintiffs’ product i.e. 'Havells LED Bulb'. According to the plaintiff the advertisement of the defendants resulted in disparagement and misrepresentation besides misleading the consumers. According to the plaintiff the slogan of the defendant – “check lumens and price before you buy” was a selective and mischievous means of comparing two products, thus inciting the consumers to only compare two attributes of a bulb, i.e., lumens (brightness) and price. The plaintiff contended that by comparing only the two attributes, the defendants’ advertisement created an impression that the defendants’ product provided better value for lesser price. Thus, all relevant attributes connected to the value of the bulb had to be fairly disclosed and not only a few attributes thereby comparing in a tricky and misleading manner. The defendant contended that the representations made in the advertisement were true and made solely based on the information derived from the product packaging of the plaintiff. The defendants further contended that there was no requirement under law to disclose each and every factor in comparative advertisement and as the relevant factors had been disclosed and compared, no action for disparagement would lie. The defendant relied upon Dabur India v. Colortek Meghalaya, [see end note 6] which held that glorifying one’s product was permissible provided the rival’s product was not denigrated.
Findings of the Court
The Court observed that comparative advertising can be resorted to only with regard to like products. It was observed that comparative advertising is permitted when the following conditions are met:
- Goods or services meeting the same needs or intended for the same purpose;
- one or more material, relevant, verifiable and representative features (which may include price);
- products with the same designation of origin (where applicable)
The Court further made an important observation in the field of comparative advertising that mere failure to point out a competitor’s advantages is not necessarily dishonest. However, care must be taken in ensuring that statements of comparison with the competitor’s product are not defamatory or libelous or confusing or misleading. Thus, it was held that under Indian law, there was no requirement to necessarily compare all features of a product in an advertisement. The High Court further reiterated that certain amount of disparagement is implicit in comparative advertisement.
In the light of the above observations, the Court held that it was open to an advertiser to highlight a special feature/ characteristic of one’s product which sets it apart from its competitors and to make comparisons as long as it was true. The Court also held that mere trade puffery, even if uncomfortable to the registered proprietor, did not bring the advertising within the scope of trade mark infringement.
Comparative advertising has become an effective tool as a marketing strategy for manufacturers which enables a manufacturer to show the superiority or better value of its products over others. Whether such an advantage is conferred on the basis of substantiated facts or based on the whims of the advertiser/ manufacturer is the moot point which requires regulation and restraint.
Chapter IV of the ASCI Self Regulation Code which makes comparative advertising permissible makes an attempt to regulate the extent of comparison that may be allowed, keeping in mind the fairness in competition. It states that the comparative advertising is allowed provided ‘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’ [see end note 7].
The test as mentioned, above, under the ASCI Code should perhaps be treated as the yardstick to allow/ restrain the extent of comparison allowed while deciding whether an advertisement is just comparative in nature or in fact is misleading, denigrating or discrediting from the point of view of a consumer.
[The author is Junior Associate, IPR Practice, Lakshmikumaran & Sridharan, New Delhi]
- As defined under Article 2 (1) of the Advertising Directive of European Economic Community
- The ASCI Code for Self-regulation in Advertising, definitions
- Reckitt and Colman of India Ltd. v. M.P. Ramachandran [1999(19)PTC741(Cal)]
- 2015 (62) PTC 64 (Del) dated March 17, 2015
- 167 (2010) DLT 278 (DB)
- Chapter IV (1)(b) of ASCI Code for Self regulation in advertising