In this article, Sudarshna Thapa of Law College Dehradun, Uttaranchal University discusses the Law governing comparative advertisements in India.

Introduction

Every Company wants to promote their products, services, and brands in different styles. Advertising is the most crucial step in determining product’s future prospects. It is the most advantageous way to catch the attention of the consumers in the market. Speaking legally, there are multiple players in the market focusing on increasing their advertisements and many times in order to gain attention and pecuniary gain they use some tactics which land them in trouble. Comparative advertisements is one such unfair trade practice.

Comparative Advertisements

Comparative Advertisements means such practice where one goods or services is compared with another belonging to one of the same field , speaking legally through an advertisement. The comparison is made on the basis of price, quality by referring the alternative brand’s name, visual illustrations, and other distinctive attributes. This type of advertisements is mostly more attention-grabbing and have high rate than non-comparative advertisements. Such type of advertisements creates confusion in the mind of consumers. It mainly affects the goodwill and reputation of the competitors whose products are comparing in such a manner.

Reckitt & Colman v. Kiwi TTK[1]

The Delhi High Court stated that an advertiser can compare his goods by stating it better than the goods of the competitor but he cannot state the competitor’s goods as bad, this would amounts to defamation. Court has the power to grant an injunction in this regard.

Conditions

Comparative Advertising shall be permitted when the following conditions are met

1. It should not misleading.
2. There is a comparison between the goods and services which is for same needs and the same purpose.
3. It compares those goods and services where there are relevant features, which may include price.
4. It does not create any confusion in the market between the advertiser and a competitor or between the advertiser’s trademarks, trade names, other distinguishing marks, goods or services and those of a competitor.
5. In the reputation of trademarks of a competitor, there is no unfair advantage.

Classification of Comparative Advertisements

• Direct Comparative Advertising: This type of advertisement deals with the competing products either are explicitly named or can be precisely identified (by photos, images or trademark).
• Indirect Comparative Advertising:It does not directly refer to competing brand names.

Objectives of Comparative Advertisements

There are some objectives behind the comparative advertisements:

• Evaluation of brand performance,
• To degrade the competitor’s brand on the basis of value proposition the competitive brand is offering,
• To increase consumer’s information about alternative brands.
• To convince the users of competing brands to switch to the sponsored brand.

Categories

There are following categories of Comparative Advertisements:

1. These types of advertisements are done to declare that they are better than others in the market with or without referring to any other particular competing products.
2. Advertising confers that they are better than other particular class or categories of products.
3. Advertisement asserting the measurable features of the products or services to make an objective comparison.
4. Advertisements referring to the competitor’s product with a blurred trademark.
5. It directs claims that they are better than any single products/ competitor.

Role of Communication in advertising

To increase the strategy of advertising, communication plays a vital role. With the help of print media (newspapers, articles, journals, etc.), audio-visual media (television, internet, movies, etc.), or audio (FM/AM radio), an advertisement can reach to a customer.

Statutory Provisions in India

MRTP Act

The Monopolies and Restrictive Trade Practices Act was enacted to prevent monopolies and restrictive trade practices in the economy. Under the MRTP Act, any representation which gives false information or disparages the goods and services of other person is considered as unfair practices in comparative advertisements. Matters relating to untrue and misleading advertisements were adjudicated upon by the MRTP Commission, constituted under the Monopolies and Restrictive Trade Practices Act, 1969. Section 36A of MRTP Act, 1969 listed with ‘Unfair Trade Practices’.

MRTP Act deals with only three aspects of the market:

1. Monopolistic
2. Restrictive
3. Unfair Trade Practices

Unfair Trade Practices: This practice adopts an unfair method, unfair or deceptive practices for promoting the sales of goods and services. Following are the practices which make it unfair:

1. Provide false information or facts about goods and services.
2. Unfair practices of making any statement, whether orally or in writing or by visible representation.

However, MRTP Act was repealed by section 66 of the Competition Act, 2002. The provision on unfair trade practices had a life for two years under the MRTP Act. A consumer needs protection not only from defective goods and deficient services but also from unfair trade practices. The provisions on unfair trade practices were copied from the MRTP Act into the Consumer Protection Act.The definition of ‘Unfair trade practices’ was incorporated under section 2(1)(r) of the Consumer Protection Act, 1986.

1. Balasundaram v. Jyothi Laboratories[2]

An advertisement of Ujala blue showed that 2-3 drops were sufficient to bring striking whiteness of clothes while several spoons of other brands were required but no label of any brand was shown. In the advertisement, a lady holding a bottle of Ujala was looking down on other bottle and exclaiming, chi, chi, chi! in a disgusting manner. The manufacturer of Regaul, a competing brand, approached the MRTP Commission that the advertisement was disparaging its goods. The Commission was of the view that mere claim to superiority in the quality of one’s product by itself is not sufficient to attract section 36(1)(x) of the MRTP Act. The Commission was of the opinion that it could not be a case of disparagement of goods.

New Pepsodent v. Colgate

Hindustan lever ltd. advertised it’s toothpaste, ‘New Pepsodent’ claiming that it’s toothpaste i.e., ‘New Pepsodent’ is better than the leading toothpaste. The Commission was of the view that the word toothpaste has become synonymous with Colgate over the years. In addition, the Commission noted that the jingle in the background was a familiar one. Thus, it was a case of comparative advertisement where a claim could be made of disparagement of Colgate’s product.

Use of Trademark in Comparative Advertisements

Trademark Act, 1999 is enacted to guarantee protection to national and international brand owners, in conformity with the TRIPS Agreement. It regulates Unfair Trade Practices in comparative advertising and prevents trademark infringement in India.

To identify the products and services, the holder of a trademark has the exclusive rights. Sometimes these exclusive rights can be used in comparative advertisements. A registered trademark is infringed by a person if he exploits such registered trademark, as his trade name or part of his trade name, or the name of his business concern dealing in goods or services in respect of which trademark is registered. Trademark Act has made the grounds for such infringement. Section 29(8) and 30(1) deals with comparative advertisements.

Section 29(8) of the Act outlines the situations in which there is the use of another’s trademark in advertising which amounts to infringement. It is considered to be the unification of laws of unfair competition and unfair trade practices that have set considerations for the use of trademarks in comparative advertisements.[3] According to this section, a registered trademark is infringed where an advertisement:

1. Is harmful to the trademark’s reputation,
2. Is destructive to the trademark’s distinctive character,
3. Takes unfair advantage or considered to be contrary to honest practice.

Section 30(1) provides with an exception when such use of marks is done according to the “Honest Practices” in industrial and commercial matters. When there are comparative advertisements then it might lead to dilution, tarnishment of the trademark of the competitors

The Act permits Comparative Advertisements in three ways:

1. If there is a bonafide use of Trademark,
2. If in accordance with the honest practices,
3. If it does not take an unfair advantage of the reputation of the mark.

Pepsico. Inc. and Ors. v. Hindustan Coca-Cola Ltd. and Anr.[4]

The concept of disparagement was explained by Delhi High Court where it was stated that ‘a manufacturer can make a statement for making his goods at best level and he also makes statement for puffing of his goods and the same will not give a cause of action to the other traders or manufacturers of similar goods to institute proceedings. In doing so, there is no disparagement of the manufacturer’s goods. A manufacturer is not entitled to say the competitor’s goods are bad as to puff and promote his goods. Thus, it was concluded that comparative advertising cannot be permitted which denigrates the trade name or trademark of the competitor.

Reckitt Benckiser (India) Ltd. v. Hindustan Unilever Ltd.[5]

The court held that the advertisement showed between the defendant’s product “Lifebuoy” and the petitioner’s product “Dettol” was a violation of Section 30(1) of the Trademarks Act, 1999. The Court stated that a trader is allowed to declare his goods as the best but the defendant showed the comparison between the two products in his ad and crossed the thin line between puffery and disparagement.

Tata Press Ltd. v. Mahanagar Telephone Nigam Ltd.[6]

According to the Supreme Court, the information available through the advertising must be for the benefit of the public. The law relating to trademarks is also for the protection of public interests only.

Advertising Standards Council of India (ASCI) and Comparative Advertisements

It is a self-regulating voluntary organization of the Indian advertising industry. It was established for protecting the interests of the consumers while observing and guiding the commercial communications.

ASCI has adopted a Code for Self-Regulation (ASCI Code) which applies to all involved in the commissioning, creation, placement, or publishing of advertisements to scrutinize advertising in India. Chapter IV of the code deals with the form and manner of comparative advertising. Advertisements containing comparisons with competing manufacturers and sellers are permissible in the interests of vigorous competition and free dissemination of information. There are following requirements being to be satisfied are:

1. Advertiser’s product is being compared with the aspects of competitor’s product.
2. The comparison should not take place in a way which confers an artificial advantage upon the advertiser and should not suggest falsely that advertiser’s product is better.
3. A Consumer should not mislead due to the comparison.
4. The advertising does not unfairly denigrate attack or discredit other products, advertisers or advertisements directly or by implication.

The above mentioned principles ensure the advertising activities are conducted in a fair manner, with the interests of all associated groups being secured. These guidelines do not have the force of law there are merely recommendatory in nature.

Consumer Complaints Council (CCC)

The CCC is constituted by ASCI where a person can complain to the ASCI if there is an objectionable advertising. The CCC consists of eminent persons from the industry and well-known persons from the civil society. CCC hears the facts of the complaint and if it finds that the advertisement in question violates ASCI Code or any other law, then it can suggest that the advertisement is voluntarily either withdrawn or modified.

How to Lodge Complaint against Comparative Advertisements

There are three types of Complaints:

Complaints from General Public which includes Government regulators and consumer groups.

1. Intra Industry Complaints (When an advertiser lodges a complaint against another advertiser)
2. Suo Moto

Procedure for Complaint

The Complaint may be submitted by letters at the postal address which is provided on the website, visit https://ascionline.org/index.php/how-to-complaint.html

1. The Complaint can be submitted through the online form, visitwww.ascionline.org and you can also contact through the telephone in 1-800–22-2724 (toll-free) and also through Whatsapp in +91-7710012345.
2. No fee required for complaints except in case of Intra Industry complaint which is lodged under the Fast Track Complaint Redressal Scheme where the decision is delivered within 7 days and a fee of INR 75,000 is charged for complaint.
3. If the complaint is complete, the decision will be taken by ASCI’s Consumer Complaints Council (CCC) within a period of one month (approximately).
4. On receipt of a complaint, the Secretariat acknowledges the complaint and requests the advertiser or agency to provide comments in respect of the complaint.
5. Within the period of 4 to 6 weeks, the CCC decides upon the complaints.
6. If the complaint is upheld, then the advertiser and its agency are informed of the CCC decision within 5 working days.
7. To comply with the CCC decision, the advertiser is given the time of 2 weeks.

For further more information of procedure of Complaint visit. https://ascionline.org/images/pdf/ccc_procedure.pdf

Freedom of Speech and Expression and Comparative Advertisements

The Constitutional guarantee has been provided under Article 19(1)(a) to regulate the advertising as the right to advertise is implicitly provided. In the case Hamdard Dawakhana v. Union of India[6], according to the Supreme Court advertisements were not constitutive of the concept of ‘free speech’. In order to promote trade and commerce, there should be the object of commercial gain. In the market, the process of economic liberalization has brought certain changes for the consumer goods. The development of many products and services increases the competition with advertising which plays a vital role in the consumer’s demand. The media was too dependent on advertising revenues. The Supreme Court held that advertising is essential for ‘commercial speech’ and can be brought within the extent of constitutional provision conferred by Article 19(1)(a). Advertisements for non-prohibited products would be protected as free speech.

Conclusion

When we consider the competition in the market, it becomes very necessary to have an edge over the competitors. Comparative Advertisements is the one which enables an advertiser to build his brand in the market stating the supremacy of his brand over the other brands. But there must have been regulations to check the abuses. It should be kept in mind of the advertisers that they not only promote their products but also educate the consumer. An ideal comparative advertisement is that which ensures the protection of consumer interests.

References

[1] https://indiankanoon.org/doc/956353/ (Date and Time of visit the site: 25/02/2018 at 12:35 PM IST)

[2] AIR 1995 (82) CC 830

[3] Ashwini Kr. Bansal, “Law of Trademarks in India”, (2009), New Delhi, Institute of Constitutional and Parliamentary Studies and CLIPTRADE, pg 507

[4] https://indiankanoon.org/doc/924003/ (Date and Time of visit the site: 26/02/2018 at 11:40 AM IST)

[5] https://indiankanoon.org/doc/60787994/ (Date and Time of visit the site: 26/02/2018 at 2:05 PM IST)

[6] https://indiankanoon.org/doc/752455/ (Date and Time of visit the site: 28/02/2018 at 01:05 PM IST)