COMPARATIVE ADVERTISEMENT – IS IT DISPARAGEMENT?

The recent judgment in September 2013 by the High Court of Calcutta in the case of Hindustan Unilever Ltd. v. Reckitt Benckiser (India) Ltd and with so many e-com sites doing a compare of prices, product features, we have the two part series covering aspects of comparative advertising, what’s allowed and when does it goes awry.

Comparative advertising can be loosely described as advertising in which one product is compared with another product, usually of a competitor, either implicit or explicit in nature. Comparative advertising is used for claiming that one’s product is better than those of the others or of a specific competitor.

advertsWhile comparative advertising has been around for a long time, it saw a surge in the 1970s when the US Federal Trade Commission advocated comparative advertisements on the grounds that they helped in dissemination of information and a better advertising for consumers regarding the products they use. However, comparative advertisements also have various issues which often lead to disputes between traders, primarily because a trader can never be objective while comparing his products with another’s and this bias may lead to misrepresentations and untrue claims. If the claims made by one are indeed untrue and damaging to the repute of the competitor’s products, it amounts to product disparagement.

WHEN DOES COMPARATIVE ADVERTISING AMOUNT TO DISPARAGEMENT?

Advertisements in general are a form of puffery, or a hyperbole as compared to the reality. Such puffery is still allowed even in comparative advertising, but in some cases it is disallowed. Lets examine.

Comparative advertisement itself can be of two forms – implicit comparative advertisements and explicit comparative advertisements.

Implicit comparative advertisements are those in which no direct reference is made to a specific competitor or his trade mark, but is essentially an allusion to a competitor and such allusion is clear to the reasonable man.

In explicit comparative advertisements, there is specific reference or comparison with a competitor’s product or trademark and often claims are made that the advertiser’s product is better than the other. This form of puffery is allowed, both in the implicit form as well as explicit form. However, if the comparison crosses certain limit and becomes in the nature of denigration of another product, in such cases it is said to amount to product disparagement. Along with the tortuous liability for such disparagement, the advertiser may also be liable for infringement of trademark if the advertisement is explicit in its comparison and is not within the limits allowed for.

The exact scope of comparative advertising differs from jurisdiction to jurisdiction, and hence when such an advertisement amounts to disparagement is a question of domestic law.

US AND EU POSITIONS

The US, being one of the forerunners of free-market economy, has fairly liberal rules regarding comparative advertising. In their system of law, denigration of another’s product is not actionable if such attack, discrediting or criticism is truthful and not expressly or impliedly deceptive. Carter Products, Inc. [60 FTC 782].  Under US trade mark legislation, a comparative advertisement is bad in law if it is literally false or of a deceptive nature which might pass on an implied message even though the claim is literally true or is ambiguous. However, it is up to the person claiming disparagement to prove that such an implied message which was injurious was passed on to the viewers or consumers. The Federal Trade Commission which regulates advertising has also taken a liberal view that there should be no restraint of truthful comparative advertising. Further, the US also allows goods or products of one kind to be compared with goods or products of a dissimilar kind.

The EU has a narrower scope for comparative advertising, as compared to the US position. The UK, which earlier followed common law principles while adjudging claims of disparagement, is now guided by the EU directives on the topic. The guidelines lays down that the comparative advertisements should not be misleading and must not discredit or denigrate the trademarks or goods of another. However, they are allowed to objectively compare one or more material, relevant, verifiable and representative features of such trademarks and products. The EU restricts comparisons between unlike goods or products. Even though the EU position is slightly more restrictive, in that it cannot be denigrating even if truthful, the existence of concrete guidelines defining the scope have created a favourable climate for comparative advertising.

COMPARATIVE ADVERTISING IN INDIA

Comparative advertisement and disparagement claims in India are still adjudged on the basis of common law principles. It can also be said that there is passing reference to comparative advertising in section 30(1) of the Trade Marks Act, 1999 which allows for the use of a trade mark by another as long as such use is in accordance with honest practices and not to take unfair advantage of or to be detrimental to the distinctive character of the trade mark. The Code of Advertising Standards Council of India, 1985 also prescribes conditions under which comparative advertisement can be made. Thus, even though it can be said that the legislation allows comparative advertising, the Indian position remains extremely restrictive.

The basic position regarding the nature of comparative advertising was given in case Reckitt and Colman of India Ltd. vs. M.P. Ramchandran and Anr. [1999 (19) PTC 741], wherein it was held that (i) a seller is entitled to declare his goods to be best in the world, even though his statement is not true; (ii) he can say that his goods are better than his competitors’ goods, even though his statement is not true; (iii) he can compare the advantages of his goods over the goods of others; (iv) however, he cannot say that his competitors goods are bad. Thus, while comparison of products is allowed in India what is not allowed is portraying the other’s product in a negative light. The question as to whether the comparison is disparaging the other’s product has to be answered considering factors such as: (i) intent of the commercial; (ii) manner of the commercial; and (iii) storyline of the commercial and the message sought to be conveyed. (Dabur India Ltd vs. Colortek Meghalaya Pvt. Ltd., [2009 (42) PTC 88]). Thus, what needs to be looked at is whether there is an intention to denigrate a competitor’s product, more than what is allowed or what is required to portray one’s product as better than the other’s. In Tata Press Ltd. vs. MTNL, [(1995) 5 SCC 139] it was held that if an advertiser declares his goods as better than another’s, the advertiser must have some reasonable factual basis for the assertion made. However, in the case of Reckitt Benckiser (India) Ltd. v. Hindustan Unilever Ltd. decided by the Calcutta HC in 2013, the court held that truth cannot be said to be an absolute defence to a claim of disparagement, as the court will not go into the merits of the specific claims being made. It said that while general claims of superiority may be made, specific claims ought to be avoided. If the claims are of such a nature as to make the reasonable man take it more seriously than a normal advertisement, in such a scenario the comparison may cross the permitted limit.

The problem with the law regarding comparative advertisement in India has been the multiplicity of interpretations and approaches by various courts in the absence of a specific legislation dealing with it. The general position, as of now, is that while comparisons with products of others are allowed they should not be denigrating such products, even if such claims are truthful. There is a need for the legislators to look into the issue and come up with a framework, or for an authoritative disposition on the issue by the highest court of the land.

Over the next post, we are going to examine some of the decided case laws in India and derive a cheat-sheet for comparative advertising.

AuthorGautam Aredath is a 4th year law graduate at NLIU, Bhopal. He is currently interning with NovoJuris.

Disclaimer:  This is not a legal opinion.

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