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COMPARATIVE ADVERTISING AND PRODUCT DISPARAGING

COMPARATIVE ADVERTISING: My Product is better than yours

The battle between the brands to compete and promote their product has become widespread as advertisements have become the necessary tool to sustain and prevail in a competitive market. Every business now needs unique way of advertising in order to attract the target audience, engaging them and ultimately selling the products to the end customer by offering something unique in its products. In such a scenario, your unique point(s) (known as USP or unique selling point) becomes a very crucial factor and therefore every business promotes its products very aggressively on those fronts whether such differentiated selling factor is its top most quality, cheaper pricing, added features, advancement in technology and so on. Sometimes, brands/businesses not only showcase or highlight the USP of their own product but also compare the product of other competitor with their own product in order to give more insight and knowledge about the product in question to the ultimate customer. This advertising which compares the products of its competitors is known as ‘Comparing Advertising’.

Therefore ‘Comparative Advertising’ is basically a term used to describe the advertisements where a business compares its goods and services with the goods and services of another business/brand. This not only helps consumers to understand the quality, price, value and other merits of a product but also helps in consumer awareness. The aim behind this is to allow the healthy comparison between the products floating in the market and making aware the ultimate customer in a healthy and permitted manner. However sometimes brands go aggressive, offensive and over board that such Comparative Advertising may take the shape of Product/Service Disparaging which is of course not permitted at all.

Thus, in this era of cutthroat competition, it has become the need of an hour of every business to understand the nuances/laws relating to Comparative Advertising vis-a-vis Product Disparaging, because though the healthier practice of Comparative Advertising is permissible but in legal jurisdiction like India (or even UK, USA), Product Disparaging is not considered right and may lead to allegations in the nature of trademark infringement, disparagement and unfair trade practices and unfair competition etc.

LAW SPEAKING: Comparison is permitted but not disparaging/infringement

A.Indian Jurisdiction: As far as Indian jurisdiction is concerned, 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 implication allowed under law.

Thus, from a broader perspective, Comparative Advertisement is allowed under Indian law in the ordinary circumstances unless an advertisement is disparaging or denigrates a product and/or a trademark. No Indian statute defines these terms such as what is ‘Comparative Advertising’ or when an advertisement may be called ‘Product Disparaging’. It is to be seen and viewed from the underlying circumstances including the manner of advertisement, perception/influences it brings upon the ultimate customers, intent and impacts on the end consumers and so on.

B. UK Jurisdiction: As far as UK and most of the other European countries are concerned, they have adopted the European Directive (2006/114/EC) issued on Misleading and Comparative Advertising. This EU directives permits comparative advertising while at the same time lays down a number of safeguards/steps in order to prevent unfair and misleading advertising. EU directives 3 and 4 deal with the subject matter and needs to be kept in mind by the brands while initiating any comparative advertising campaign. In addition to this, in UK there is an authority known as Advertising Standards Authority (ASA) which is basically a statutory body and has power and authority to enforce its directives on limits on Comparative Advertisement. Further, ASA has the power to refer persistent cases of violations to the Director General of Fair Trading (DGFT), who can further obtain a statutory injunction against such advertisement(s).

PRODUCT DISPARAGEMENT: When comparison takes shape of disparagement

A.        Indian Jurisdiction: In Indian courts, Comparative Advertising is often supported on the basis of the argument that advertising is commercial speech and is therefore protected by Article 19 (1) (a) of the Constitution. However, freedom of speech and expression does not permit trade defamation and it would be strictly against the trade ethics and an advertiser cannot be allowed or have liberty to disparage the product of his competitor without any check, under the garb of freedom of speech. Though the irony remains, that although it is one thing to say that your product is better than that of a rival and it is another thing to say that his product is inferior to your product, still while asserting the latter, the hidden message may be the former, but that is inevitable in the case of a comparison.

The Division Bench of Delhi High Court in Pepsico v. Hindustan Coca Cola 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:- (i) Intent of the commercial; (ii) Manner of the commercial; and (iii) 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.

Delhi High Court in Reckitt & Coleman of India v. Kiwi T.T.K. explained the concept of disparagement in the context of comparative advertising, by stating that a manufacturer is permitted to state that his goods or services are the best so as to puff up his goods. This puffing up will not give a cause of action to the other manufacturers selling similar goods or services, to institute a case as there is no disparagement or defamation of the goods of the manufacturer. On the other hand, however, a manufacturer of products is not entitled to say or impute that his rival’s goods or services are bad or of low standard as to puff up and promote and market his goods or services.

B.        UK Jurisdiction:

UK seems to have relatively liberal regime as the laws specifically permits Comparative Advertising as the UK government views Comparative Advertising as a “legitimate, useful and effective marketing tool” and will help in the process of stimulating competitive atmosphere and educate consumers about market practices. EU Directives 3 and 4 state the factors which need to be kept in mind while initiating any comparative advertising campaign. UK Trade Marks Act, 1994 makes a good move as it is important to note that Section 11(2) of the act permits only fair comparisons of goods to be done between owner’s good with that of the competitor goods provided the comparison is honest one and is part of the genuine indication of quality or price. If these conditions are met then the comparison is within the provision and is admissible. Significantly misleading advertisement is not considered honest for the purposes of either Section 10(6) or 11(2).To this end, the advertisement must always be considered as a whole.

In De Beers Abrasive Products Ltd v International General Electric Co of New York Ltd brief facts of the case are plaintiffs manufactured and marketed a natural diamond abrasive under the trademark “Debdust” which is the competitive product for abrasive made from synthetic diamonds under the trade name MBS–70. The pamphlet entitled Tech-Data/1 which purported to be a report of laboratory experiments which had been carried out for the purpose of comparing the performance and qualities of MBS–70 and Debdust was circulated by the defendants. The pamphlet contained statements which reflected adversely on Debdust goodwill and reputation in the market as compared with MBS–70. It was held by the court that if a trader chose to denigrate the goods of his rival, the test to be applied was whether a reasonable man would take the claim being made as being a serious claim or not and accordingly since the pamphlet contained statements disparaging of plaintiffs goods, defendants would be liable if, on investigation, those statements proved to be false and plaintiffs could show malice.

In Asda Vs Specsaver The High Court held that Asda's use of various marketing materials featuring verbal and visual allusions to Specsavers did not amount to passing off or trade mark infringement under Article 9(1)(b) of the Trade Marks Regulation (likelihood of confusion). However, the use of the words "spec saver" in the context of one of Asda's Straplines was held to infringe the SPECSAVERS trade mark through taking unfair advantage contrary to Article 9(1)(c) (unfair advantage). Additionally, the case has important implications for comparative advertising and indeed for any advertisers that like to "live dangerously" by parodying, alluding to or otherwise referencing third party businesses and their trade marks.

CONCLUSION: Play on your positive points rather than on negative of competitors   

It can be concluded by the above discussion that there is a need of specific legislation/legal provisions to regulate Comparative Advertising in India. However, Courts apply various common law principles (including of course intellectual property laws if matters are such in nature) while deciding the comparative advertisement and disparagement claims. So, even the law is not so clear and specific on these issues, courts see what damages has been caused by the wrong and irresponsible behaviour of other party. Judicial decisions are being played an important role in determining the disputes arising out of comparative advertising, but they seem to set an inadequate precedence. As rightly said by Charrles E Clarke, in his article ‘The future of common law’ the most common types of abuses include: false claims, where the advertisers claim that his product does something that others product fail to do; product disparagement, where the advertiser unjustifiably attacks a competitor's product. In this regard it is imperative for the judges to make sure that Cases do pass the injunction stage and open a new door for damages. Such damages may come in the form of corrective advertising as well as monetary awards. Other than the monetary relief, the direction for Corrective advertising can help undo the harm caused to the competitor as it can correct any confusion that was caused due to comparative advertising taking form of the disparagement. Hence, what needs to be remembered and taken into account is the underlying intent of the commercial and bearing in mind that advertisement is not trying to denigrate or disparage the competitor’s product. An ideal comparative advertisement is that, which on one hand, while enhancing market performance of the product also ensures protection of consumer interests and the related intellectual property rights.

Advocate Kirti Tandon

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