This is an era of technology and competition wherein each one is not only promoting his business but also making an attempt to claim superiority of their business and identity to its competitors. Advertisement is the most vital tool of companies across the globe to enhance their business territories and expand beyond their physical boundaries. In today’s technology and media driven world the impact of a catchy advertisement for a product on the viewer is simply unmatched in juxtaposition to the other tools for promoting a product. Companies today are adopting all kinds of means and tools not just to promote their brands, but also to create an identity that its brand is distinct and appealing to the eyes of consumers.
Nowadays almost all the major companies across the globe adopt comparative advertising to make sure that they highlight the qualities and advantages of their products in a manner to attract the consumers showing how their product is superior in all respects than the products available in the market or even to any specific competitor’s products. Commercial comparative advertisement by companies for promotion of their brands and products is healthy for any industry as it keeps each competitor in the industry on its toes. But it is on the other hand also important that it is done within the legal boundaries and is not at the cost of the reputation of the competitor in business.
In the absence of any existence of any codified law regulating comparative advertisements in India, the Consumer Protection Act 1986 and Trade Marks Act 1999 provide a framework that attempts to balance the conflicting interests of the rights of the brand and business owner, circumstances which may invite an actionable claim in case the violator crosses the line of permissible comparative advertisement and interest of the viewers and the consumers.
Apart from the above statues which discusses the legal implications pertaining to advertisement there is also a body called The Advertising Standards Council of India pertaining to governing of advertisement and action in case of any misleading advertisement. The Advertising Standards Council of India is a non statutory body set up in 1985 and incorporated under Section 25 of the Companies Act, 1956. It entertains and disposes of complaints based on its Code of Advertising Practice. The Code is based on certain fundamental principles. Clause 1 of its principle says "To ensure the truthfulness and honesty of representations and claims made by advertisements and to safeguard against misleading advertisements. However the aforesaid Rules do not create an enforcement mechanism which has the necessary teeth
Publication of advertisement being free commercial speech, is protected by Article 19 (1) (a) of the Constitution. There are a few restrictions on the aforesaid right, which would satisfy the test of reasonableness under Article 19 (2). These restrictions could be traced to the definition of the term "unfair trade practice" Section 2 (1) (r) of the Consumer Protection Act, 1986.
The definition of “unfair trade practices” has been imported into the Consumer Protection Act, 1986 by the Amendment Act 50 of 1993 in Section 2(1)(r) of the Consumer Protection Act, 1986. A careful scrutiny of all the sub-clauses in Section 2(1)(r) of the Consumer Protection Act would enumerate that 4 types of representations are categorized as "unfair trade practices" namely
False representations falling under sub-clauses (i), (ii) and (iii) of section 2(1)(r) ;
Representations which may not necessarily be false but are nevertheless incorrect coming under sub-clauses (iv) and (v) of section 2(1)(r);
Warranty or guarantee coming under sub-clauses (vii) and (viii) of section 2(1)(r);
False or misleading representations falling under sub-clauses (vi), (ix) and (x) of section 2(1)(r).
If an advertisements contains a false representation within the meaning of sub clauses (i) to (iii) or an incorrect representation within the meaning of sub clauses (iv) and (v) or a warranty or guarantee within the meaning of sub clauses (vii) and (viii) or a false or misleading representation or fact within the meaning of sub clauses (vii), (ix) and (x) of Clause (1) of Section 2(1)(r) of the Consumer Protection Act.
Under Trademarks Act if an advertiser uses the trademark of the competitor to make a comparison between his goods and goods of competitor and in this process if he defames or disparages the goods of the competitor then such act of the advertiser shall not only invoke an action for disparagement but shall also invoke issues pertaining to trademark infringement under section 29(8) of the Act. While on the other hand Section 30 (1) of the Act makes comparative advertisement an exception to the acts constituting infringement under section 29 of the Act by laying down that any advertisement which is in accordance with honest practice and does not cause detriment to the distinctive character of or to the reputation of trademark will be permissible and will not constitute infringement. Hence the situation which emerges from a conjoint reading of section 29 and 30 of the Trade Marks Act, 1999 is that that if the comparative advertisement has been done in accordance with honest practice and is not detrimental to the interest of competitor’s product it is permissible in the eyes of law.
Apart from the remedy available under the Consumer Protection Act and the Trade Marks Act, 1999 the aggrieved in case of disparagement of its brand and product also has a remedy under the common law regime of passing off and claim damages for the loss caused to its reputation.
Courts in India have time and again held that under law any trader is entitled to puff his own goods even though such puff as a matter of pure logic is not true. It is permissible under law to say that my products are best in town or city or even in the world and even if the said statement is false it is not an actionable offence. Even by saying that my products are better than the rival’s product no action under law lies. However in case when a party not only claims to be the best but also targets its rival by saying that his product is bad then action lies under law. The Courts have time and discussed the scope and ambit of permissible limits of comparative advertisement and the circumstances which result in disparagement.
Discussing the principle of comparative advertisement and disparagement the Delhi High Court in Reckitt & Colman of India Ltd. Vs. M.P. Ramchandran and Anr canvassed the following principles :-
A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue.
He can also say that his goods are better than his competitors’, even though such statement is untrue.
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.
He however cannot, while saying that his goods are better than his competitors, say that his competitor’s 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.
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.
With passage of time courts in India by judicial pronouncements have time and again made sharp distinction between comparative advertisement and disparagement. In Pepsi Co. Vs. Hindustan Coca Cola, it was held that by calling the drinks of its competitors “Yeh Bachhon Wali Drink Hai” 'Bachon Ko Yeh Pasand Aayegi' and 'Wrong Choice Baby', the defendant was not merely puffing up their own goods but also depicting the goods of the plaintiff in a derogatory manner. In its defence, one of the grounds taken by the defendant was that the Cola war was a matter of trade rivalry and the forum of settling such a dispute is the marketplace and not a court of law. However the judge thought otherwise and granted an injunction in Pepsi's favour.
In Dabur Indian Ltd v Colortek Meghalaya Private Ltd there was a divergence of opinion from Reckitt case. In Dabur the makers of a mosquito repellant cream 'Odomos' sued the respondents for telecasting a commercial that referred to some mosquito repellant creams as causing skin problems, which would not be the case with the mosquito repellant cream of the respondents, as it contained natural ingredients. The makers of Odomos, alleged that even though there was no direct reference to their product, because they enjoy a huge market, the commercial was obviously targeted at them. The court dismissed the allegation and stated that the appellant should not be hypersensitive because the market factors, economic climate, and the nature and quality of product, would ultimately be the deciding factors for consumers to make a choice.
In Marico Limited Vs. Adani Wilmar Delhi High Court applying the principle of above mentioned cases held that the storyline conveyed by the defendant that RBO is the healthiest oil in the world, healthier than cooking oil and better than cooking oils which are a blend of RBO and some other oils because 100% RBO has a higher quantity of Oryzanol which is good for heart, cholesterol immunity, skin and harmones is not disparaging the plaintiff’s product. Court held that in this case only thing which is sought to be conveyed to the consumer by way of advertisement is that the Oryznol content in the product of the plaintiff is less than that required by the human body and that the Oryzanol content in the product of the defendant satisfies the daily requirement for Oryzanol of the human body. The Court concluded that the advertisement does not amount to disparagement as it only reflects the advantages of the defendant’s goods over the goods of others and no parts of the advertisement is found to be saying that plaintiff’s goods are bad.
The Delhi High Court in a case of Reckitt Benkciser vs Hindustan Unilever Ltd was posted with the question of commercial disparagement in respect of the trademark DETTOL HEALTHY KITCHEN of the plaintiff when the defendant came out with an advertisement wherein it equated the Plaintiff’s product bearing the mark DETTOL HEALTHY KITCHEN with a harsh antiseptic. The Court while relying on the principles culminated in Marico case observed that the defendant by using the adjective “harsh” along with the indicative word “antiseptic” with respect to cleaning utensils was trying to connote the consumers that the Plaintiff’s product DETTOL HEALTHY KITCHEN has the same effect as that of its other product DETTOL ANTISEPTIC LIQUID although the two products are having different formulations thereby misleading the consumers at large.
In the present era of globalization, competition and brand promotion among companies, the companies should be given enough chance to convey to the consumers the benefits of their product than the products available in the market. It is no doubt true that comparative advertisement is beneficial as it enhances consumer awareness and keeps the companies on their toes in view of the strict competition. In a comparative advertising campaign which involves the use of a competitor's trademark, the emphasis should be on promoting the product based on the differences, not the similarities, between the two products. While trade rivalries irrespective of any industry are here to stay, the companies must ensure that they in the process of developing their advertisement strategies to promote their products by comparing it to rival products should keep in mind that though certain permissible comparison with competitor is permitted, comments or sayings which tend to denigrate or derogate the rival party’s will be actionable in the court of law.