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Treading a fine line

RNA Technology and IP Attorneys

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India February 28 2014

Comparative advertising is permitted if it can be shown that it is not an unfair trade practice by statute and  under common law.

In a bid to capture market share, rights  holders are increasingly resorting to  competitive/comparative advertising. As  each class or category of goods and services  in the fast-moving consumer goods sector  becomes crowded with brands, comparative  advertising can be extremely effective at  driving sales. However, it remains debatable  whether comparative advertising benefits  consumers, since it presupposes that the  facts are not misrepresented. India has no specific legislation  governing comparative advertising and  no directives or guidelines outlining the  boundaries of what is permissible. Thus,  case law has evolved through various court  rulings. The Indian Supreme Court holds  that commercial speech – which includes  advertising – constitutes free speech,  as guaranteed under the Constitution.  Reasonable restrictions are laid down  in Article 19(2) of the Constitution,  demonstrating that comparative  advertising is permitted if it can be shown  that it is not an unfair trade practice by  statute and under common law.  ASCI guidelines  The Advertising Standards Council of India  (ASCI) guidelines take the form of a selfregulatory code for members. However,  the ASCI is not a statutory body and thus  its guidelines are advisory only. While the  ASCI does offer a complaint process, this is  generally perceived to be time consuming.  As a result, parties often resort to litigation.  The ASCI guidelines promote the following: • honesty and truthfulness in advertising; •  decency in advertising, as per generally  accepted social norms; • the safety and protection of vulnerable  sections of society, especially children;  and • fairness in competition. Trademarks Act  In comparative advertising cases a  competitor’s registered mark is often used  for comparison. The use of a registered  mark qualifies as fair use if it falls within  the parameters of Section 30(1) of the  Trademarks Act 1999. If the use accords  with honest practices in industrial or  commercial matters, and does not take  unfair advantage of or prove detrimental  to the distinctive character or reputation  of the trademark, then it is not considered  objectionable. The infringement provisions under  Section 29(8) provide that use of a registered  trademark by an advertiser results in  infringement if it: •  takes unfair advantage of the mark’s  reputation; • is contrary to honest practices in  industrial or commercial matters; • is detrimental to the mark’s distinctive  character; or • damages the mark’s reputation. These provisions are often the subject  of debate in comparative advertising  cases. In particular, courts are asked to  determine whether the comparison has  been made with a view to disparaging the  rights holder’s goods. Advertisers often  adopt several innovative ways to overcome  the infringement provisions and avoid  a claim, such as not referring to a brand  name, but showing the product’s trade dress  or packaging. It is becoming increasingly  common for advertisers to make general  disparaging remarks against the entire  product class or category, with the aim of  taking pot shots at the market leader in  that category. An example of this sort of  indirect attack was seen in Dabur India Ltd  v Emami Limited, where the Delhi High  Court considered an advertisement which  stated (in English translation): “Forget  Chyawanprash (health tonic) in summer –  eat Amritprash instead.” The judge held that the advertisement  made insinuations against the use of  Chyawanprash during summer, and  that since Chyawanprash – in its generic  sense – was disparaged, so too was its  manufacturer Dabur.  The courts have generally tried not to  curtail freedom of speech and expression,  and have allowed advertisers ample leeway  when making ‘puff’ statements – that is,  exaggerated claims about their products.  Some important principles laid down  by the Delhi High Court in its landmark  judgment in Reckitt & Coleman of India Ltd  v Kiwi TTK Ltd include the following: •  An advertisement can declare that the  advertised goods are the best in the  world, even though that declaration is  untrue; •  An advertisement can state that the  advertised goods are better than those  of competitors, even if this statement is  untrue; •  An advertisement can compare the  advertised goods with those of its  competitors; and •  An advertisement cannot state that a  competitor’s products are bad, as this  would constitute defamation. The court held that a manufacturer  is entitled to state that its goods are the  best and to make puff statements. At the  same time, it must not give a cause of  action to other traders or manufacturers  by disparaging or defaming their goods.  A manufacturer cannot say that a  competitor’s goods are bad in order to puff  and promote its own goods. In Horlicks v Complan GlaxoSmithKline  (GSK) and Heinz battled over disparaging  advertisements in relation to their respective health drinks, Horlicks and  Complan. GSK objected to Heinz’s  advertisements for Complan, which  allegedly stated that Horlicks was made  of cheap ingredients and that Complan  contained 23 vital ingredients, which  promoted growth in children. GSK also  objected to another ad in which a Horlicks  mother asked a Complan mother how  her son had grown so tall and strong.  The Complan mother then expounded  on the virtues of Complan and asked  the Horlicks mother to read the Horlicks  label, suggesting that it provided less  nourishment and protein. The court held  that the advertisements were disparaging  and beyond the realm of permissible  puffery. It opined that the repeated use of  the words ‘cheap’ and ‘compromise’, along  with other insinuations, would harm the  reputation of Horlicks.  The case analysed the permissible  levels of puffery and concluded that  puffery is allowed, but must not disparage  a competitor’s claims: “While it may be  permissible to state that Product A is better  than Product B, it is not permissible to state  that Product B is worse than Product A.” In Dettol V Vim Reckitt Benckiser and  Hindustan Unilever Ltd (HUL) fought over  a series of advertisements concerning their  respective brands Dettol and Vim. Both  parties made puff statements through  their advertisements, but at the same  time made insinuations about the other  party’s brands that were held to be unfair  and in contravention of Section 30 of the  Trademark Act.  Protecting consumers  The law seems to be clear on the limitations  of permissible puffery. However, in Colgate  Palmolive (India) Ltd v Anchor Health and  Beauty Care Pvt Ltd the Chennai High  Court took a different view and held  that all puffery is an actionable wrong.  Colgate was unhappy that Anchor had  claimed its toothpaste was “the only  and first toothpaste to offer all round  dental protection”. While the court held  that this statement did not amount to  disparagement, it did rule that superlative  claims that are false and misleading are  harmful to consumers and are therefore not  permitted. The court took the view that the  Constitution and the Consumer Protection  Act contain reasonable restrictions,  and that the interests of consumers  must be protected against misleading  advertisements. It also held that any puffery  amounts to an unfair trade practice under  the Consumer Protection Act, and that  allowing competitors to puff their products  is not in the public interest and should not  be permitted.  Honesty in disparagement claims  The Delhi High Court Division Bench  decision in a dispute between Colgate and  HUL – over an ad for Pepsodent toothpaste  that used Colgate’s name and claimed that  Pepsodent offered 130% better protection –  raised some interesting issues. The decision  also examined the extent of an advertiser’s  determination of subjective claims which, it  seems, fall outside the scope of established  legal principles on comparative advertising.  The single judge who heard the case at first  instance dismissed it, finding that HUL  had not denigrated Colgate’s toothpaste.  According to the court, too much should  not be read into the expressions of each  individual character in the advertisements.  The court noted that the camera did not  zoom in on the teeth of the Colgate boy  and no gaps or cavities could be seen.  The expressions and effects used in the  advertisement showed only that Pepsodent  was a better product, but did not disparage  Colgate’s product. Also, the court observed  that as there was a comparison between  products and an attempt to show that  one was better than the other, both boys  obviously could not have happy faces.  Finally, it held that the word ‘attack’ in the  print advertisement related to Pepsodent’s  germ-fighting capability and was not an  attack on Colgate. The court reiterated the principles  laid down in earlier case Dabur India Ltd  v Colortek Meghalaya Pvt Ltd, in which it  was held that the following factors must be  kept in mind while deciding a question of  disparagement: •  The intent of the advertisment – this can  be understood from the storyline and  the message sought to be conveyed;  •  The manner of the advertisment – is  the comparison largely truthful or does  it falsely denigrate or disparage a rival  product? While truthful disparagement  is permissible, untruthful  disparagement is not permissible; and  •  The overall effect of the advertisement –  does it promote the advertiser’s product  or does it disparage or denigrate a rival  product? Colgate appealed the decision to the  two-judge bench (division bench). The  bench also agreed that the ad promoted  HUL’s product and did not disparage  Colgate’s product. However, it found that  the use of a voiceover at the end of a  television ad which said, “In comparison  to Colgate, New Pepsodent Germi Check  has 130% Germ Attack Power” was  questionable. The bench remitted the  matter to the single judge to look into  “whether Pepsodent was really 130% better  than Colgate”. This seems to suggest that  the court was looking into the advertiser’s  subjective claims, whereas it should  have applied the established principle of  whether Colgate’s reputation would have  been harmed in the eyes of the average  consumer by the use of this expression.  While a rights holder may exaggerate  claims and indulge in puffery, it may not  denigrate or disparage the goods of another.  In case of comparative advertisement, a  certain amount of disparagement is  implicit. If a rights holder claims that its  goods are better than those of its  competitors, it is implicit that the goods of  its competitors are inferior in comparison.  To this extent, puffery in the context of  comparative advertisement does involve  showing the competitors’ goods in a bad  light. However, as long as the advertisement  is limited to puffery, there can be no  actionable claim against the same.  WTR

RNA Technology and IP Attorneys - Rajan Narula

This article first appeared in World Trademark Review. For further information please visit www.worldtrademarkreview.com

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  • RNA Technology and IP Attorneys

Topics

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