The Advertising Standards Council of India (ASCI) defines advertisements “as a paid-for communication, addressed to the Public or a section of it, the purpose of which is to influence the opinions or behaviour of those to whom it is addressed. Any communication which in the normal course would be recognized as an advertisement by the general public would be included in this definition, even if it is carried free-of-charge for any reason.”[1]

Advertisement of products is one of the best methods of reaching the target audience and providing information about a product. However, at times in order to gain monetary benefit, market players may use unlawful tactics, which may damage their competitor’s image by disparagement. One such form of disparagement is comparative advertising.

In India, the Advertising Standards Council of India (ASCI) is a self-regulatory voluntary organization which deals with disputes in advertising. The ASCI code aims at achieving fair advertising practices by controlling the content of advertisements. However, being a voluntary organization, the code is not mandatory and compliance with the code is thus optional.

Comparative advertising has been defined under Article 2(c) of the European Directive concerning Misleading and Comparative Advertising,  which states “comparative advertising” means any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor”.[2] Comparative Advertising is a marketing strategy in which a company’s product or service is presented as superior when compared to the competitor’s.[3] It is a strategy wherein the advertising company provides reasons for their product or services to be superior as compared to their competitor’s products or services. The comparison between the two products may be direct or indirect. If a competitor’s product is mentioned by name, then it is direct comparison and where a competitor's product is not mentioned directly its indirect comparison.

Disparagement, on the other hand, means, using false claims or statements about the competitor. Disparagement is, therefore, not allowed in Indian law. Thus, the moment comparative advertisement claims false information about the competitor’s product, it amounts to disparagement and is a violation of the competitor’s trademark. Thus, comparative advertising is acceptable as long as it does not amount to disparagement of the competitor’s product.

 

STATUTORY PROVISIONS

In India, section 29 of the Trademarks Act 1999, which deals with comparative advertising, states as follows-

Section 29 (8) of Trademarks Act, 1999- Infringement of registered trade marks-

A registered trade mark is infringed by any advertising of that trade mark if such advertising—

(a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; or

(b) is detrimental to its distinctive character; or

(c) is against the reputation of the trade mark.”[4]

Further, Section 30 (1) of the Trademarks Act 1999, creates a limitation on Section 29 for using comparative advertising. It states as follows-

Section 30(1) Of Trademarks Act 1999- Limits on the effect of a registered trade mark-

(1) Nothing in section 29 shall be construed as preventing the use of a registered trade mark by any person for the purposes of identifying goods or services as those of the proprietor provided the use—

(a) is in accordance with honest practices in industrial or commercial matters, and

(b) is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark.”[5]

Thus, reading both the sections together, it means that comparative advertising is allowed in India, however, there is a fine line and that is as long as the competitor’s mark is used in an honest manner. Thus, the advertisement must not be misleading or detrimental to the competitor’s product.

On the other hand, advertising comes within the ambit of the right to commercial speech which is protected under Article 19 (1) (a) of the Constitution of India. This however is a limited right and can be restricted under situations mentioned under Article 19(2) of the Constitution which states (2) Nothing in subclause (a) of clause ( 1 ) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub-clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence."

In the case of Hamdard Dawakhana v. Union of India[6], the Supreme Court held for the first time considered the question whether advertisements are protected under Article 19(1)(a) of the Constitution. The court held that a commercial advertisement shall not be protected under Article 19(1)(a) of the constitution since it has an element of trade and commerce and it no longer has the object to ideas- social, political, economic or to further literature or human thought. However, the Supreme Court in the case of Tata Press Ltd. v Mahanagar Telephone Nigam Ltd.[7] overruled the previous decision of the Supreme court and held that “commercial Speech” is part of freedom of speech guaranteed under Article 19(1)(a) of the Constitution of India.

 

JUDICIAL PRONOUNCEMENTS

There have been many pronouncements by various courts which have made it clear that comparative advertising is allowed unless it is not misleading. The Delhi High Court in the case of Havells India Ltd. & Anr v. Amritanshu Khaitan & Ors.[8] provided the meaning of misleading advertisements. It held that “Misleading advertising has been defined in Article 2(2) of the European Union Council Directive 84/450 as "any advertising which is in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor.”

In the case of Colgate Palmolive Company & Anr. v. Hindustan Unilever Ltd.[9] it was held that in comparative advertising, a certain amount of disparagement is implicit and as long as the advertisement is limited to puffing there is no actionable claim against the same. Therefore, the comparison between the products can be positive and negative. Positive comparison, wherein one shows their products or services to be superior to their competitors is allowed. However, negative comparison where one compares their products or services with the competitor’s which belittles or denigrates the competitors' products or services amounts negative comparison. The positive comparison is what is called comparative advertisement which is allowed to a certain extent. However, the negative comparison of showing the competitor's products or services in negative light amounts to disparagement, which is not allowed since it violates the goodwill of the competitor and thus, is in contradiction of the general trademark rules as well as trademark holders’ rights.

In the case of Euroke Forbes Ltd. v. Pentair Water India Pvt. Ltd.[10] the plaintiff had filed a suit seeking a permanent injunction against the defendant from restraining them from publishing, placing an advertisement or circulating any material defaming or maligning the plaintiff's product since it was a case of disparagement. The plaintiff is a leading water purifier company which uses UV rays to purify the water. The defendant company also in the business of water purifiers issued the following advertisement:

Water contains contaminants that are invisible to the naked eye and to your UV water purifier.”

The court, in this case, held that even though the defendants have not used the name of the plaintiff’s company explicitly, since the plaintiff uses UV rays technology, the advertisement does amount to disparagement of the products of the Plaintiff’s company. The court, in this case, held as follows:

“What is pertinent, is to examine the advertisement in question in the context of the business of the appellant herein. Viewed from the said angle, though the respondent has every right to market its product by claiming that its product is superior in quality, yet, at the same time, the freedom of expression i.e., the right to advertise, does not permit one to go to that extent as to cause damage or irreparable injury to the product of others. Merely because the respondent has every right to market its product by stating that its products are of superior quality over others, yet, it cannot go to the extent of stating that the contaminants are invisible even to UV water purifier.

In the case of Pepsi Co. Inc. and Ors. v. Hindustan Coca Cola Ltd. and Anr.[11] it was held that in order to decide a case of disparagement the following factors are to be kept in mind:

  1. The intent of the commercial
  2. The manner of the commercial
  3. The storyline of the commercial and the message sought to be conveyed by the commercial.

Therefore, the advertisement has to be seen as a whole. The true intention of the advertisement can be seen only when it is seen as a whole.

Thus, comparative advertising is allowed and in certain cases even encouraged in India. It helps consumers in knowing the differences between two competing products and helps them in making a sound and informed choice in selecting a product of their desire or need. However, at the same time, the law does make it illegal to disparage the product of a competitor who does so in order to gain monetary benefits in a dishonest manner. Thus, the aim of comparative advertising is to help the consumers in providing with correct information of two similar products and to make an informed choice. It is for this very reason comparative advertising is allowed, however, it is limited to a comparison of showing why one's product or service are better than that of the competitor’s and it doesn’t include the right to belittle the other party. However, there is no statutory law which deals with the advertisement made on internet portals. The ASCI code deals with cases in relation to the telecom industry. Considering disparagement and comparative advertising have the potential to affect the goodwill and reputation earned by trademark holders, there is a need for reform. Also, expansion of the power of ASCI to include online mode of advertisements or to establish a new body in order to deal with these cases in order for the law to be up to date is needed.