This article is written by Parul Chaturvedi, from Dr R.M.L Law College, Bangalore. It presents the commercial-disparagement and trademark infringement dispute between the two big FMCG companies Dettol and Lifebuoy in Bombay High Court.

Introduction

In the middle of the COVID-19 crisis, a commercial-disparagement dispute between the two big FMCG (Fast Moving Consumer Goods) with the coming of numerous medical advisories. The dispute was brought before the Honourable Bombay High Court by the manufacturers of Lifebuoy soap – Hindustan Unilever Limited (‘HUL’) against the manufacturers of Dettol hand wash – Reckitt Benckiser (India) Private Limited (‘RB’). It appears to be India’s first reported IP-related coronavirus dispute, Hindustan Unilever (HUL) brought Reckitt Benckiser (RB) to the Bombay High Court. The Reckitt Benckiser’s (RB) recent Dettol handwash advertisement was alleging that it commercially disparages the HUL Lifebuoy advertisement.

HUL would have Lifebuoy soap advertised to promote the significance of washing hands to maintain self-hygiene. Followed on by HUL ‘s commercial, RB released an ad which was supposedly more effective than standard bar soap (shown as red bar soap) with its Dettol hand washing. HUL’s position was that Reckitt Benckiser’s had sought to disparage Hindustan Unilever’s Lifebuoy soaps, and the red bar shape was visible in RB’s advertising, prompting HUL to move the court to claim damages and a permanent injunction.

What is commercial disparagement in advertising?

Concept of disparagement 

It is the repeated advertisements of various commercials on television to make lasting impressions in the minds of the consumers that leads to commercial disparagement. Puffing is a type of commercial disparagement. It is a weird type of claim for one’s product. These type of claim would not be trusted by an average consumer. Essentially, an advertiser would claim that his product is better than his competitors. Yet, he cannot claim that the goods of his competitor are bad, as these means that the competitor and his goods are disparaged or defamed. 

What leads to commercial disparagement?

• A trader has the right to call his products the best in the world, even though the declaration is false.
• He can also claim that his goods are better than his competitors, even if such an argument is false.
• To say that his goods are the best in the world or that his goods are better than his competitors, he can even compare his goods’ advantages over the goods of others.
• However, he cannot, though claimed that his goods are better than those of his competitors say that the goods of his competitors are poor. He cannot, however, conclude that his competitor’s goods are bad, although he says his goods are better than his competitors.

What is comparative advertising?

Comparative advertising is an advertisement in which a company evaluates its product with competing goods either directly or indirectly. It is a marketing technique in which a company’s product or service is viewed as superior to a competitor’s. A comparative advertising strategy can include a side-by-side comparison of the characteristics of a company’s products with those of its competitor.

The criterion used to determine a comparative advertisement case varies a stringent criterion is used to define a test of a ‘misleading advertisement,’ in this case the two essential elements must be satisfied:

• First, the misleading message must deceive or at least have the potential to deceive, the people it is addressed to. 
• Second deceptive nature of misleading advertising will possibly affect the economic conduct of the public it is addressed to, or damage the competitor advertiser.

The comparative advertisement may be limited to comparing such related features. It is also found that an exhaustive list of features to be listed in comparative advertising cannot be set out as these features vary from manufacturer to manufacturer, and from customer to customer. Comparative advertising can be one of the safest ways for consumers to rely on the details found in the advertisement, meaning that the advertiser must be cautious in narrating the advertisement because it can also lead to conflicts of legal and ethical standards.

Dettol	Lifebuoy
Reckitt Benckiser product	HUL product
Antiseptic soap	Disinfectant soap
Big market share in the urban market	King of rural market
Less aggression in advertisements	Aggressive advertisements and promotions
Clean ad strategies	Fine for delivering slander

Analysis 

Comparative advertising and Trademark Infringement

The MRTP(Monopolies and Restrictive Trade Practices) Act,1984 initially protected competitive advertising as an unfair trade practice. Following the enactments of the Trademarks Act, 1999 which made some headways in the direction of comparative advertising via a jurisprudence of intellectual property.

Comparative Advertisement as the Constitution of India

Article 19(1)(a) of the Indian Constitution talks about the right to freedom of speech and expression, and advertisements may argue in this respect. It is, therefore, necessary to examine Article 19(1)(a ) of the Constitution related to the comparative advertisement. The right under this article is available for public speaking, radio, television and the newspapers, but under Article 19(2) of the Indian constitution, this has some restrictions on it by the State. Now whether commercial speech can be protected under Art 19(1)(a) of the constitution or not. The Trademarks Act, 1999 Section 29 (8) clearly states that when the use of the trademark in advertising constitutes infringement it states that any advertisement which is not in honest practices or is detrimental to distinctive characters or the repute of the mark shall be an act constituting infringement.

At the same time, Section 30(1) makes an exception about comparative advertisement to acts constituting infringement under Section 29. It provides that any advertisement which is in honest practices and does not cause detriment to the distinctive character or repute of the trademark will be permissible and not constitute infringement.

1. The primary objective of Section 29(8) and 30(1) of the Trademark Act 1999 is to permit comparative advertising.
2. As long as the competitive trademarks are honest, there is nothing wrong with telling the merits of competing goods or services and using registered trademarks to identify them.
3. The onus is on the registered proprietor to show that the factors used in the provision to the section are applicable.
4. There will be no infringement unless the use of the mark is with honest practices.
5. The advertisement considered as a whole.
6. If the background of the advertisement as a whole justifies the description, that even if it is misleading for interlocutory purposes, it should be permitted. 

The Paris Convention for the Protection of Industrial Property, 1883 has made an effort at defining honest practices in industrial or commercial matters. The Convention provides that, the following, in particular, shall be prohibited :

1. All acts of a nature that causes uncertainty in some way with a competitor’s establishment, products or industrial or business activities.
2. False claims in the course of business of nature which discredits a competitor’s government, products or commercial or industrial activities.
3. Indications which may deceive the public concerning the design, manufacturing method, characteristics, appropriateness to its function or quantity of the products in the course of trade.
4. In the context of comparative advertising, these terms take unfair advantage of ‘and are contrary to honest practices in industrial or commercial matters.’ Comparative advertising is legally permitted in India as in many other jurisdictions, such as the UK. However, certain restrictions are imposed on it. This should not be misleading, just one of the agreed principles of comparative advertising.

Trademark Act, 1999 requires comparative advertising according to Section 30(1) to be directed to the use of a registered trademark by any person to distinguish goods or services as those paid for by the owner for the use of the Registered Trademark.

1. By the honest practices in industrial and commercial matters. 
2. This is not intended to take undue advantage of or be harmful to the distinctive character or value of the Trademark.

A certain restriction is provided for in Section 29(8) of the Trademark 1999 as a registered Trademark is infringed by any advertisement of that Trademark in the event of such advertisement.

• Takes an unfair advantage and is contrary to ethical practices in matters of industry or trade. 
• It is harmful to be a distinctive character.
• The Trademark Act of 1999 was more inclusive and answered the issue of the extent of liability in comparative advertising.
• The MRTP Act deals with the issue of puffing or disparagement only as long as the product is puffed up or disparaged Section 30 of the Trademarks Act, 1999.

In the case of Hindustan Unilever Ltd v. Reckitt Benckiser, the High Court of Calcutta analysed the legality of four comparative advertisements published by Reckitt Benckiser and Hindustan Unilever. 

• The first advertisement portrays Dettol Kitchen Gel as killing 100 % more germs than the leading dish wash of the day. 
• The second advertisement is similar to the first advertisement, with the significant difference that instead of using the term leading dishwasher, the name VIM‘ is clearly shown. 
• The third advertisement shows Lifebuoy Soap- a product of HUL, as having 100% germ removal capacity while Dettol Antiseptic Liquid was shown to have close to none.
• The fourth advertisement shows an antiseptic liquid as unsafe for children while stating that VIM was safe owing to its natural ingredients. 

All the advertisements were found to be unfair, not with honest intention and tend to lower the reputation of the comparing goods. Thus in the given case Section 30 of the Trade Marks Act, 1999 was attracted. The court further observed that comparison should not be more than a puff. If this comparison is shown as a serious one, then it would amount to the denigration of the competitor‘s trademark. This cannot be allowed and will be prohibited by the courts. Only in such instances, the court will interfere. Which means that the company is free to resort to general comparative advertisements where there is no denigration of trademarks. 

HUL appeals before Bombay High Courts

In the case of an advertisement allegedly degrading the former soap brand, the latter company agreed to suspend the advertisement from 22 March to 21 April. HUL, Lifebuoy’s makers had complained to the High Court alleging that Dettol’s makers were maliciously publishing ads against their drug, as well as violating their trademark rights. HUL reports that it had released advertisements through different media in the public interest aiming to encourage hand washing to counter the spread of COVID-19.

Infringement of Trademarks rights

A prima facie case 

While we are no longer able to view Dettol ads to check HUL ‘s claims, comparative advertising does not affect the two parties.

Given the claims of HUL, there is a question as given in Section 30 of the Trademarks Act, RB’s puffery of his label is allowed and permitting the same, as long as it has no adverse impact on a registered mark of a rival? According to the above argument, HUL argues that Dettol has made a misleading argument that bar soaps are not successful (1st requirement), which in turn leads to customer confusion (2nd requirement), which in turn leads to them not actually having to use bar soaps during the pandemic, thereby fulfilling the (3rd requirement) to influence consumer behaviour. The existence of the COVID-19 pandemic contributes to the ‘disparaging’ impact on the Plaintiff’s drug that may have resulted in Dettol advertisement. In reality, making a claim that deviates from one of the basic responses to the pandemic, i.e. washing hands with soap and water, will influence consumer behaviour. RB has agreed to suspend the commercial and even after the courts intend to shut themselves off with matters moved to more suitable dates and forums.

For disparagement claims the 3 step test is used to determine for a claim to succeed.

• Misleading or false claims 
• Deception of the consumer
• Affect consumer behaviour 

The balance of convenience is false with claimants. Since the advertisement is not aired from Dec 2018. The balance of convenience tilted in favour of the Plaintiff. Taking all these factors into consideration, the Judge granted an interim injunction in favour of the Plaintiff in this case as the advertisement was found to violate Section 30 of the Trade Marks Act, 1999 because it was ‘detrimental to the distinctive character’ of Dettol’s trademark.

Claims

• The RB’s advertising misrepresented a doctor telling patients to stay away from soap-the shape, colour and configuration of which Lifebuoy soaps highly resembled;
• This indicates that Dettol handwashes are more efficient than soaps (especially those sold under the brand Lifebuoy); and
• HUL also went ahead and relied on the recommendations of the World Health Organization, arguing that RB’s advertisement was against it and planned to build discrimination against the use of soaps for washing hands instead of encouraging awareness.

Judicial precedent holding 

Based on the cases of HUL v. Gujarat Co-operative Milk (the Amul case) Reckitt Benckiser v, HUL, GlaxoSmithKline v. Heinz, PepsiCo v. Coca Cola etc., which concerned comparative advertising, for a disparagement claims to succeed –

1. The plaintiff’s product must be misleading/false,
2. The argument leads to customer deception, and
3. The same could affect customer behaviour.

Based on previous case law in comparative ads, HUL would have to have sufficient evidence of the following :

• A libel by RB on account of a misleading/false claim concerning the product of HUL.
• The argument has misled or caused consumer disappointment.
• The public will see HUL ‘s goods as inferior, eventually impacting customer behaviour, decisions and leading HUL to lose business.

RB will defend against HUL ‘s arguments by showing that the above conditions have not been met and arguing that puffery is not allowed under Section 30 of the Trade Marks Act, 1999, in defence of the honest practice. The said clause provides for acts such as saying that its goods are better, without denigrating the goods of the competitor.

The contention put forth by HUL was two-fold

First, the Dettol handwash had dismissed Lifebuoy soaps by displaying a soap of the same form, configuration and colour as the red Lifebuoy soap reported by HUL and second, by copying the aforementioned HUL commercial. In his lawsuit, HUL argued that while attempting to raise awareness of COVID-19 by promoting the practice of regularly washing hands, using not only Lifebuoy soaps but any soap, the defendant was aimed at dismissing and denigrating the commodity of HUL.

HUL said that, given the recommendations of the World Health Organization to use soap and water for routine handwashing, the Dettol ad allegedly causes fear and wrongly propagates the ineffectiveness of soaps. 

The lawsuit said –“Nations around the world are doing the contrary and calling for people to wash their hands with soap and water, whilst the defendant sets the public panic by misleading advertising that soaps are useless by destroying the market leader for soap. When we need to come together and aim for the common good, the actions of the defendant are unethical and contrary to public morality”.

HUL demanded damages for Rs 1 crore and a permanent order for RB. The case has been heard by the High Court of Justice of the Single Judge in Bombay. K R Sriram. RB decided to postpone use of the ad challenged from 22 March 2020 noon to 21 April 2020 for a month until the suit could enter into substantive claims and averages.

Held 

The Delhi High Court noted that what arises from the above argument is that this is the plaintiff’s third claim of the same nature against the defendant before this Court (previously there were also two cases filed by the plaintiff in Delhi High Court on the same issue, apart from disputes in Calcutta High Court ). Also, the Court noted that the parties are playing the game of litigation using their financial prowess. In the commercial challenged by comparing his Lifebuoy Soap with Dettol Antiseptic Liquid’s plaintiff (as evident from the use of the words “USSE STRONG ”), the plaintiff has a prima facie argument.

The Court also found that indication of intent was found in the defendant’s advertising showing the defendant’s Lifebuoy Soap as having excellent ability to destroy germs while showing an antiseptic solvent in a bad light and as a dangerous and ineffective product. Therefore, it is determined to be prima facie disrespectful of the plaintiff’s product and determined to be in breach of the earlier orders/judgments binding on the defendant, the plaintiff will suffer irreparable damage and injury unless temporary relief is obtained. Furthermore, it is found that the balance of convenience is in favour of the plaintiff and against the defendant because the defendant did not even air the commercial for the last one and a half years.

Conclusion 

The court observed in the comparative advertising case of FMCG, HUL and RB, first, the frustration will be reduced in gross cases similar to it and in addition to the granted cases, secondly, there should be an investigation to see the impact of marketing on advertising. Next, by looking over it the court found the repetitive cases of these arguments for the same cause, which brought disappointment and resulted in temporary injunctions. In the final judgement of HUL and RB, the court ruled in favour of the plaintiff and the injunction was given to the defendant by prohibiting him from broadcasting the advertising until the lawsuit’s judgment.

References

• https://www.who.int/

• https://indiankanoon.org/doc/98659454/

• https://indiankanoon.org/doc/22644009/

• https://indiankanoon.org/doc/924003/

• https://indiankanoon.org/doc/154218353/
• https://www.advocatekhoj.com/ 

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