This article is written by Radhika Ghosh, a law student pursuing B.A LLB (Hons.) from Hidayatullah National Law University (HNLU). This is an exhaustive article dealing with the concept of comparative advertisement and how it affects trademark infringement. 

Introduction

When you go to an e-commerce site to view a product, say mobile phones, you will find a section where you can compare the selected phone with other similar phones based on price, features available, the megapixel of the cameras, battery power, and so. As the name suggests, comparative advertisement means when one product is advertised, and simultaneously compared to another product/service with another mostly on the same platform and the similar field of products. It not only helps the customer to buy the most desirable product but also to the brands as the visibility of those products increases and hence profit is earned more on the same. 

History and evolution of comparative advertisement

The history of comparative advertisement can be traced back to the time at which commerce and business started. It was a general technique of ‘puffery’ where the traders used to list facts and claims about the products they are selling. It is a general scheme for a trader to uphold the particular brand he is selling so that more profit could be made.

In India, initially advertising companies and manufacturers were not forward into utilising comparative advertisement because it was complex for them to use. They thought that it would bring a wave of negative advertisements and have to merge themselves into legal intricacies. However, in 1971, many countries around the world began to formulate laws regarding comparative advertising. They realised that with the help of comparative advertisement distinctive information about various attributes of the same product of different brands can be put forward. The Government of India then amended “The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969”. In 1984, a new chapter on unfair trade practices where it mentioned that portraying facts while comparing products does not lead to the unfair practice of the trade. During the late 1990s, courts took the view that ‘puffing’ is permissible. However, any statement or image which demeans or disparages another competitor’s product is not permissible. 

Comparative advertisement as an important field of IPR

Intellectual Property law deals with the protection of exclusive rights in products/goods of the intellect. It comprises the laws of patents, designs, trademarks, and so on. In general, intellectual property law has a little significance in competitive advertising that looks forward to promoting the sale of a particular product/good/service solely by featuring out the superiority of the product by its characteristics. The prime areas of Intellectual Property law which has an impact on competitive aspects of advertising are the law of trademarks and unlawful competition. 

The common law of unlawful competition deals in specific ways with this particular form of advertising which is misleading or follows unfair practices of trade regarding its content but in intellectual property law generally comes into play when advertising screens comparison with another product/service in the market or his flash of advertisements for such products/services for influencing the public. In this case, an advertiser can depend upon the intellectual property rights of a competitor’s goods/services.

Why is comparative advertisement important

Firstly, comparative advertisement helps to increase profits by declaring that one superior to another, and hence the customers will buy it. Puffery is where the advertisement plays into diverting the consumer’s attention by making sugar-coated claims about one product which cannot be verified, and hence catfish customers into buying that product. The reach of the product in the market increases due to that. In the landmark case of Reckitt Benckiser (India) Ltd. vs. Hindustan Unilever Ltd., the Court stated that even if a trader is allowed to declare his goods as the superior one, the comparison done by them can sometimes go beyond the boundaries of puffery and disparagement, and the advertisement was accounted to be violative of Section 30(1) of Trademarks Act, 1999. In many cases, it was observed that a times puffer cases cross the line and end up portraying the other product in a negative light. This also is an infringement of multiple rights of the other manufacturer, including trademark infringement as per Section 29 (8) of the Act. However, with the digital world simplifying and speeding all our jobs by just one touch, comparative advertisement is important for the customer to choose the most desirable product in the minimum amount of time. So, I go to the market, compare and sort all kinds of laptops manually, according to price, and quality for hours. The comparative advertisement does the job and it’s ready for me to select the one I always wanted.

How does comparative advertisement result in trademark infringement?

‘Trademark’, as the name suggests, it is a mark or symbol used for a product so that it could be distinguished from another product of another brand.  The customers should be able to distinguish between the trademarks one from another. It can be any word, name, symbol, or device, or its combination, taken and utilised by a manufacturer or merchant, to recognise his goods and differentiate from other manufacturer’s products.

Trademark infringements occur when two, or more trademarks are so similar, as to the customer being confused when distinguishing the products. If one mark is too close to another that an ordinary prudent purchaser is likely to get confused, misled or deceived as to the source and manufacturer of the goods or service, it is most likely to qualify for trademark infringement. The courts, while making judgements in this situation, try to reflect the mindset of the customer while purchasing the items and whether they are likely to get confused between the symbols or not. Sometimes, manufacturers with the mindset of passing off their items in the market, they build trademarks so close to another famous brand to deceive the customer into buying their product, that it qualifies as trademark infringement. 

The pivotal purpose of a trademark is to ‘differentiate the goods/services of one manufacturer from another’ and a trademark allows a consumer to recognise the goods and their source. In situations, if an advertiser uses a competitor’s trademark to make a comparative advertisement of his goods and his competitors’, and in the process puts the other product down, then such an act of the advertiser would not only raise issues related to comparative advertising and product disparagement but would also take down issues related to trademark infringement. The law says that any advertising act which is not done with honest practices; or is detrimental to the distinctive character, or the repute of the mark, it shall constitute infringement.

What are the penalties and remedies of trademark infringement?

Penalty

In India, by the Trade Marks Act, 1999 trademark infringement is a cognisable offence, meaning, the infringer may also face civil charges along with criminal charges. Registration of the trademark is not required by the Indian law civil or criminal proceedings. This is because it comes under the common law of passing off a good by the pretension of something else.

In the case of a criminal proceeding (for Selling Products or Services with Unauthorized Trademark, or Incorrectly Representing the Trademark as Registered), the court dictates the following punishment:

1. Imprisonment for a period not less than six months that may extend to three years
2. A fine that is not less than Rs 50,000 that may extend to Rs 2 lakh.

Remedies

In the case of trademark infringement, the court may award the following remedies:

1. An account of profits (damages in the amount of the profits gained from the infringement).
2. Cost of legal proceedings.
3. Damages- The compensation that was suffered by the plaintiff due to the trademark infringement by the accused.  
4. Destruction of goods using the infringing mark- the destruction of products that resulted from such infringement, that is, the elimination of the advertisement used that qualified for the infringement.
5. Permanent injunction- asking the party that infringed the trademark of another good/service to stop promoting or using such an advertisement in the future.
6. Temporary injunction- asking the infringing party to stop screening, or promoting the advertisement for a stipulated period or until any further court order can/would be passed.

Important case laws

Reckitt & Colman of India Ltd. v. Kiwi T.T.K. Ltd. (India) [63 (1996) DLT 29]

In this case, Reckitt & Colman, under the brand name Cherry Blossom Premium Liquid Wax Polish, manufactured and marketed liquid shoe polish. Defendant, KIWI was also involved in the manufacturing, development and marketing KIWI liquid polish. However, KIWI claimed in its advertisement that its shoe polish to be superior to the plaintiff as the opposites’ polish had less wax and more acrylic content and with time it will break and cause damage to the footwear. This situation was promoted by showing a bottle of KIWI which does not crack and drip and showing another bottle of polish marked as brand X that drips. This was on the website of the defendant. Brand X was also advertised with a red blob on its outer packaging which looked very identical to the cherry which was shown on the plaintiff’s bottle. The Court held that the defendant was disparaging the goods of the plaintiff. After that, they were restrained from advertising the competitor’s product in the negative light looking down upon them. The High Court of Delhi also added that the advertiser can do puffery or can even make statements that his goods are of superior quality but in no way, this should disparage or defame the competitor’s product.

Reckitt & Colman of India Ltd. v. M.P. Ramachandran and Anr. [1999 PTC (19) 741]

The plaintiff manufacturers in this case and markets blue whitener under the brand name Robin Blue. Robin Blue also has a particular styling and has a registered design. The defendant also started manufacturing and marketing blue whitener under the name ‘Ujala’. The marketing advertisement showed a packaging similar to that of the plaintiff’s and was identified that it was priced at Rs. 10. Since no other product of blue whitener in the market was priced at Rs. 10, it was very obvious plaintiff’s product Robin Blue was being shown and this way the plaintiff’s product was shown disparagingly by indicating that it’s a bad buy as it is more expensive compared to its utility. It further picturised the opponent’s product to be badly bottled. The High Court of Calcutta held that the defendant had done infringement as they disparaged the opponent’s goods and was granted an injunction. After this judgement, the court also laid down some five principles to guide future cases of infringement.

‘New Pepsodent’ v ‘Colgate’ (1997)

In this case, the marketing advertisement of the New Pepsodent, Hindustan Lever Limited disclosed that their product was 102% better in the context of antibacterial actions as compared to ‘the leading toothpaste available in the market’. In the advertisement, samples of saliva were taken from two people; one who has brushed with the New Pepsodent toothpaste and another who brushed with the leading toothpaste available in the market then. The inference of the experiment showed that a maximum number of germs in the saliva of the leading toothpaste. And when they were asked about the toothpaste they used, one said Pepsodent while the response was censored in the other case, his lip movements could very obviously infer that the person was mouthing ‘Colgate’. The court held that it led to the disparagement of the goods of Colgate as that was the leading brand also.

Colgate Palmolive v. Hindustan Lever Limited [(1998) 1 Comp LJ 171 MRTPC]

 In this case, advertisements on Colgate banners,  print media, TV campaigns were released by using a Suraksha Chakra and an alluring song jingle signifying a circle of protection saving the family by fighting all tooth-problems. Aftermath boosted the sales of Colgate by decreasing the sale of HLL. HLL filed a suit alleging that it contained a misrepresentation of facts and therefore it was misleading. They also complained that only in this country, Colgate claimed to protect the tooth from tooth decay in the absence of the element, fluoride whereas fluoridated products in other countries did the same. The court held that as per the Monopolistic and Restrictive Trade Practice (MRTP Act), 1969 puffery of goods was still maintainable but not a misrepresentation of data. The court had put their feet in the consumer’s shoes and realised no consumer has reported having misled due to the advert of Suraksha Chakra. Hence, no injunction was granted to Colgate; it meant to provide Suraksha to the bacterial tooth decay, foul breath and other germ-killing by using chakra.

Dabur India Ltd. v. Colgate Palmolive India Limited. [AIR 2005 Del 102] 

Colgate released an advertisement on the media where it was shown to have stopped the purchasers from purchasing the tooth powder by detailing the ill effects of the plaintiff’s products. The product constancy was very similar to that of Dabur. They also compared their product to be 16 times less course and non-damaging. Section 29(8) of Trade Marks Act 1994, states that the competitor should not take any unfair advantage which will harm the reputation and goodwill of the TM and be harmful to its peculiar character. Although the rival can make false statements that his goods are superior (puffery), he cannot show the quality of other products in the negative light. Hence this case, the court held that Colgate disparaged the goods and was granted an injunction.

PepsiCo. Inc. and Ors. v. Hindustan Coca Cola Ltd. and Anr: [2003 (27) PTC 305 Del]

In this case, Pepsi filed a suit against Coca-Cola for using its trademark wrongfully and disparaged their products in an advertisement. Here in the commercial, the actor asks some kinds regarding their favourite drink and they all point out to a drink whose packaging was very similar to Pepsi. Then the actor goes on to say that they like this better because it’s too sweet and meant for kids. He says that Coca Cola is for grown-ups because it is strong. The kids are then made to taste both of the drinks, and later on reveals that the drinks they liked were actually Coca Cola. The packaging of the other bottle was very similar to Pepsi, and the wordings ‘Pappi’ was written on the bottle cap in a similar pattern. The kids then feel embarrassed and disappointed with their wrong choice. The actor also mentions how the kid made the wrong choice, and that the coca-cola drink is better. The court held on the grounds of disparagement and depreciating the goodwill of PepsiCo. Inc.’s products under trademark protection have been infringed by the defendant.

Godrej Sara Lee Ltd. v. Reckitt Benckiser (I) Ltd [2006 (32) PTC 307]

The defendants, in this case, advertised their product ‘Mortein’. The advertisement highlighted the aspect that it was indicated to kill both cockroaches and mosquitoes together. The plaintiff filed a suit saying that this commercial disparaged their product ‘Hit’ because it had two separate products and components for killing cockroaches and mosquitoes. The Court looked into the matter and said that that the advertiser has a right to show off of its technological advancements and can rightfully compare with the product of the competitor and suggested that the advertiser could have used one single product on the screen and not the animation of compiling the two to kill two different species of insect-repellents. This aspect of the add showed the other product disparagingly. This important decision by the Court explained the meaning of honest comparative advertising.

Hindustan Unilever Limited v. Gujarat Cooperative Milk Marketing Federation and Other [2017 (71) PTC 396 (BOM)] 

 In this case, two television advertisements by Amul suggesting its product to utilise real milk Amul ice cream and not ‘frozen desserts’ which have vanaspati in it. The ad also used the tagline “Amul is real milk, Real ice cream”. The plaintiff filed a suit of “generic disparagement/slander of goods” for their product referred to as “frozen desserts”. The Bombay High Court had restrained airing of Amul’s advertisement on ice cream. Justice S J Kathawalla, while granting an injunction to the applicant, said that Amul’s advertising was disparaging because the entire category of frozen desserts including applicant’s product was looked down upon. The court held that although the advertisement was for educating the public, as viewers/ consumer’s need to know that frozen desserts contain vegetable/vanaspati oil, the advertisement is channelizing wrong information and hence creating confusion amongst the consumers. 

After this judgement, the courts held that the law was laid down on comparative advertisements by engaging in comparative representations cannot in any manner, disparage or defame the goods of his rival. Puffing, in the traditional view is that puffery can be done to any extent as long as it does not cross the line.

All the cases in a nutshell–

Is there a role of ACSI in advertisements

The Advertising Standards Council of India (“ASCI”) works under the Indian advertising industry as a self-regulating and voluntary body which has drafted a Codes regarding advertising. If an advertisement is checked to be in contravention of the Advertising Standards Council of India Code on advertising, it cannot be aired on cable service as per Rule 7 of the ‘Programme and Advertising Codes prescribed under the Cable Television Network Rules, 1994. Chapter 4 of the ASCI code says that comparative advertisements are permitted only in the interests of cut-throat competition and on public interests provided that:

1. The advertisement must transparently show the aspects of comparative products/goods. 
2. The common subjects or aspects chosen between the products must be judged on a substantial, and logical method. It must not compare different products on the basis of superficial or vague terms.
3. The comparative advertisement must not mislead the consumer at any cost regarding the advertiser’s or competitor’s product. 
4. The advertisement must not allegorically denigrate, attack or show the competitor’s product in a negative light directly or indirectly.

ASCI has also constituted a Consumer Complaints Council (CCC) which consists of eminent persons from the industry. It is mainly made so that people can file a complaint to the ASCI if an advertisement is thought to have not followed proper terms. On receiving a complaint, the council hears the defences of the advertiser. If CCC finds that the advertisement in question is violative of ASCI codes or any other law, then CCC suggests that the advertisement be voluntarily either withdrawn or modified. Hence to conclude, the role of ASCI has an importance in the advertising industry as it has the power to air off advertisements that violate its codes. 

Settled law on trademark infringement and comparative advertisement

Trade Marks Act, 1999

The Trade Marks Act 1999 provides for the infringement of a trademark through advertisement by the following sections:

Section 29(8) of Trade Marks Act, 1999 states:

A registered trademark 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 trademark.

Section 30 (1) of Trade Marks Act, 1999 provides an exception to Section 29 by stating that:

(1) Nothing in section 29 shall be construed as preventing the use of a registered trademark 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 trademark.

Consumer Protection Act, 2002

Even though the Consumer Protection Act, 2002 does not directly discuss comparative advertising, it has provisions related to Unfair Trade Practices under Section 2(1)(r).

Section 2(1)(r) in the Consumer Protection Act, 1986

(r) “unfair trade practice” means a trade practice which, to promote the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:

(1) the practice of making any statement, whether orally or in writing or by visible representation which,

(x) gives false or misleading facts disparaging the goods, services or trade of another person.

What is the say of USA jurisdiction?

There is an underlying concept of promoting consumer welfare, promotion of the freedom of free speech and expression and the competitive market in the USA. FTC focused on the benefit which advertisers and advertising agencies with getting when using comparative advertisement as a tool. However, deep analysis and transparency were needed in FTC to deal with the drawbacks of unfair practices. This huge range of comparative advertisement is protected under freedom of speech and expression laws. The Federal Trade Commission (FTC) Policy Statement, 1960 points out that a comparison of advertisements of different competitors in the market non-anonymously is a common practice. Since there is no mention of unfair trade practice in it, the US TM Act (Lanham Act, 1946) which primarily catered to protecting consumers from unfair trade rituals and confusion. It also brought objectivity as for the source of goods/products and, or on various services available in the marketplace.

In the case of Tommy Hilfiger Licencing Inc. v. Nature Labs LLC [2002]Nature Labs was a shop which marketed a perfumery product called ‘Timmy Holedigger’ as his trademark and the slogan for the product was ‘If you like Tommy Hilfiger, your pet will love Timmy Holedigger‘ and was attached with the product in their commercials. Hence, Tommy Hilfiger filed a suit of infringement and commercial fraud against Nature Labs as they thought that Nature Labs was infringing their rights. The court held that similarity cannot qualify for infringement of the trademark. Here, to make the public laugh Nature Labs used the trademark as a means of entertainment purpose. Therefore, freedom of speech played a role in this situation and hence the advertisement was a fair practice of the trade. The US court rejected the plaintiff’s charge of infringement against the defendant.

In the USA, the laws of trade regarding comparative advertisement are very liberal. They innately believe that any advertisement is a kind of promotion for the products or services. They dig deep into the freedom of speech and allow advertisements on the comparison. 

Suggestions and conclusion

Advertisement plays a very important role in marketing products/services. It also helps customers to realise the products available in the market, and then through a comparative advertisement, he can choose the most desirable one according to the demand. Nevertheless, the grey area is the legality of nature and extent of such advertising prevails. It is very stringent in India. It is only the judiciary that has taken the situation at hand, although the number of cases that reaches the court is also a handful. India has failed to understand the need of the hour, and the importance of legislative laws on a comparative advertisement, which could specify what road can be taken by the advertisers and what has to be discarded by them. To curb this narrow pass of comparative advertisement, it is high time that India makes laws on the very issue to define and clarify the benchmark of what would and would not constitute trademark infringement or disparagement. 

Even though the penalties and remedies of infringement of such rights are available, the doubt remains as to the extent of panacea that is effective. Once the advertisement is promoted, or screen in a big platform it reaches a huge number of audiences or potential customers. Hence the mindset changes immediately when a comparative advertisement is wrongfully done. This not only minimises the profits but also destroys the goodwill of that particular product even if injunctions are passed by the courts. Once more comprehensive laws are drafted in India, this situation will not arise easily. Sometimes puffery also crosses the line when products/services are held superior by the virtue of false claims, especially when such statements are difficult to prove. That creates not only confusions amongst customers, but also a false belief. Hence laws regarding this issue are also needed. 

Although Article 19(1) of the Constitution of India talks about the freedom of speech and expression, which technically allows to exploit it via comparative advertisement, or any form of advertisement to attract customers. However, to avoid undesirable situations Article 19(2) deals with the restrictions imposed upon the very freedom of speech. The article states that the operation of any existing law shall neither be affected, nor it shall prevent the State from making any law, that is if proper and comprehensive laws deal with the boundaries imposed on comparative advertisements, the grey areas and the conflict between fair advertisement and the freedom of speech shall settle down. 

The notable thing is that there is no Indian law on comparative advertising and hence no damages can be awarded for it also. It becomes very difficult for the plaintiff manufacturer to prove that an advertisement caused a direct loss in potential sales. Hence, it becomes crucial for the judges to analyze such cases through the test of the injunction and open a room for damages. Damages need to be paid for the loss that was suffered dues to the direct form of comparative advertisement. Such damages may come in the form of corrective advertising, that is, exemplary damage as well as monetary awards.

Corrective advertising can be said to have been passed when in the form of liquidated damage, the cost of the potential loss is paid back along with a sum that poses as an example for the future brands/manufacturer who is planning to infringe the rights of the opponent through a way of comparative advertisement. The USA passes such orders when via comparative advertisements, a potential loss is caused. 

References

• Chapter 2, Historical background of Comparative Advertising, https://shodhganga.inflibnet.ac.in/bitstream/10603/102183/6/06_chapter2.pdf 
• Dr Owen Dean, Intellectual Property and Comparative Advertising, Intellectual Property and Comparative Advertising
• Selven and Selvan, Comparative advertisement and trademark infringement, Comparative advertisement and trademark infringement 
• Comparative Advertisement & Infringement of Trademark 
• http://www.cablequest.org/pdfs/i_b/PROGRAMME-ADVTCODE.pdf 
• https://ascionline.org/images/pdf/asci_code2new.pdf 
• https://ascionline.org/index.php/how-to-complaint.html  
• complaints process  
• Functions of the FTC available at Our History 
• 15 U.S.C. §§ 1051-1127 (1996).
• Section 32(1)(a) of the Lanham Act protects federally registered trademarks from subsequent unauthorized uses that are likely to cause confusion or deceive consumers.
• 221 F. Supp. 2d 410 (2002).

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