Legal Briefing

Comparative advertising: an Indian snapshot

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Corporate & Commercial | 04 May 2011

Advertising in modern times is not just about reminding customers about products and services and boosting sales, it is also about taking the competition head on in a highly globalised and competitive market to create an identity that is distinct and appealing to the consumers.

While creative and interesting visuals do have an effect on the target audience, it may still not be enough to attract the customer in the midst of stiff market competition, thus resulting in aggressive advertising by traders, which may raise doubts on the truthfulness of the advertisers’ claims and which often tend to show the existing competing products in a negative light.

Everyone enjoys creative advertising, and even those that involve parodies and mockery of existing competing products, but often the line between freedom of speech and honest commercial practices is crossed. In a bid to resolve such issues, advertisers have looked to the courts to decide on the principles of commercial honesty and comparative advertising.

That being so, there is certainly no easy answer to the question of what these principles are and what amounts to disparagement or denigration, slander of goods or trade libel. It is imperative for an advertiser to keep the trends in this law in view before embarking on a creative campaign focused on comparisons with other products.

BACKGROUND

To understand the landscape of the law relating to disparagement in advertising, it may be useful to trace its roots to common law, which has evolved over the years through judicial precedents. Apart from common law, statutory protection is also available for trade marks under the Indian Trade Marks Act 1999 (the 1999 Act), which provides that it is infringement of a registered trade mark by any advertising of such mark if such advertising:

  • takes unfair advantage and is contrary to honest practices in industrial or commercial matters;
  • is detrimental to its distinctive character; or
  • is against the reputation of the trade mark.

This right, however, is not absolute, as, at the same time, the 1999 Act carves out an exception for third-party use of a registered trade mark, if such use:

  • is in accordance with the honest practices in industrial or commercial matters; and
  • is not such as to take unfair advantage of, or be detrimental to, the distinctive character or repute of the trade mark.

CASE LAW

Even before the aforesaid provisions were enforced in 2003, the Indian courts, in 1999 had laid down the broad guidelines of comparative advertising in Reckitt and Colman of India Ltd v MP Ramchandran & anor [1999]. Faced with a complaint from the plaintiff that the defendant, in advertising their product, a whitener under the name of Ujala, implied that the whitener of the plaintiff’s, Robin Blue, was a more expensive way to whiten clothes, because of its inferior quality (using the tagline, ‘what is more, you have to use lots of blue per wash’), the court, while holding in favour of the plaintiff, laid down the following principles of law regarding comparative advertising:

  1. A tradesperson is entitled to declare their goods to be the best in the world, even though the declaration is untrue.
  2. A tradesperson can also say that their goods are better than their competitor’s goods, even though such statement is untrue.
  3. For the purpose of saying that a tradesperson’s goods are the best in the world or that their goods are better than their competitor’s goods, a tradesperson can even compare the advantages of their goods over the goods of others.
  4. A tradesperson cannot, however, while saying that their goods are better than their competitor’s goods, say that their competitor’s goods are bad. If a tradesperson says so, they really slander the goods of their competitors. In other words a tradesperson defames their competitors and their goods, which is not permissible.
  5. 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.

It is interesting that in Reckitt, the product of the plaintiff was not identified in the print advertisement by its name, Robin Blue, but simply by a blue whitener sold at the selling price of Robin Blue, causing the judge to observe that since the only product that is a blue whitener in the market is the plaintiff’s product, undoubtedly the advertisement refers to such product, even though it is not identified by name. Thus establishing, early on, that it is not necessary to disparage the rival product by its name to be liable for disparagement.

The basic principles of law were firmly established in Reckitt, after which there were several cases of trade rivalries that came up before the court. One such case was Pepsi Co Inc & ors v Hindustan Coca Cola Ltd & anor [2003], in which Pepsi sued its competitor, Coca Cola, on the grounds that the defendant, in several commercials, had disparaged the products of the plaintiff. The court held that by calling the drinks of its competitors, ‘Yeh Bachhon Wali Hai‘ [this is a children’s (drink)], ‘Bachon Ko Yeh Pasand Aayegi‘ [children will like it] and ‘Wrong Choice Baby’, the defendant was not merely puffing up their own goods but depicting the goods of the plaintiff in a mocking and 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. The judge thought otherwise and granted an injunction in Pepsi’s favour.

In 2009, however, in Dabur Indian Ltd v Colortek Meghalaya Private Ltd & anor [2009] there was a divergence of opinion from Reckitt. 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. The court also clarified that in view of the decision of the Supreme Court in Tata Press Ltd v MTNL & ors [1995], which held that false, misleading, unfair or deceptive advertising is not protected commercial speech, proposition (i) and (ii) of Reckitt, and the first part of proposition (iii), are no longer good law. The court further observed that while hyped-up advertising is permissible, it may not transgress the grey areas of permissible assertion, and if it does so, the advertiser must have some reasonable factual basis for the assertion made.

In one of the latest judgments deciding a series of litigation between GlaxoSmithKline and Horlicks on one hand, and Heinz, the manufacturers of Complan on the other, in Glaxosmithkline v Heinz India [2010], the court, while citing the above precedents, added that in considering cases of disparaging advertising, the court must keep in mind that the public expects a certain amount of hyperbole in advertising and that the test is whether a reasonable person would take the claim being made, as a claim being made seriously. In Glaxosmithkline the court restrained Heinz from telecasting and publishing the impugned advertisements that contained content which cast a slur on Horlicks, by implying that it is cheap or inferior or that it compromises children’s growth needs. On the other hand, it dismissed Heinz’s application for injunction against Horlicks on the grounds that Horlick’s advertisement was simply puffing up as there was no comparison of ingredients, nor is the claim that Horlicks is better than Complan based on an expert opinion, it is merely the claim of a young boy.

COMMENT

In light of the decision in Dabur, there is some amount of uncertainty as to the puffery that will be tolerated by courts. Clearly puffed-up claims would have to be substantiated by some reasonable factual basis. One thing is clear though: a trader cannot disparage or denigrate the goods of their rival. While trade rivalries are here to stay, advertisers must ensure that when they are developing marketing strategies to promote their products, by comparing it to rival products, they should keep in mind that though a certain amount of hyperbole is permitted, comments that would give the impression of being derogatory, mocking or disparaging, will be actionable in court of law. Ultimately though, each case will have to be decided on the facts.

(The views expressed are those of the authors and do not reflect the official policy or position of Amarchand Mangaldas.)