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This article is written by Tanisha Kohli, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Dipshi Swara (Senior Associate, LawSikho).

Introduction

Advertising wars between competing businesses are not uncommon. Some well-known advertising rivalries exist between Burger King and McDonald’s, Coca Cola and Pepsi and so on. However, the use of a registered trademark of the other business in one’s advertisement can lead to legal trouble, resulting in an order prohibiting one from displaying or running the said advertisement. 

The Trademarks Act, 1999 (‘the Act’) declares that certain usage of a registered trademark in an advertisement can constitute an infringement of the trademark. 

This article aims to answer whether and in what conditions can the competitor’s trademark be used in an advertisement. It primarily relies upon the judgment of the Division Bench of the Delhi High Court in the case of Pepsi Co Inc. v. Hindustan Coca Cola Ltd., 2003 (27) PTC 305 (Del) (DB) (“Pepsi case”) and the judgment of the Delhi High Court by learned Single Judge in Dabur India Ltd. v. Colgate Palmolive 2004 (29) PTC 401 (Del) (“Colgate case”). 

What is known as a trademark?

A trademark includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination thereof, which is capable of being represented graphically and capable of distinguishing the goods or services of one person from those of others. This understanding is arrived at from a combined reading of Section 2(1)(m) and Section 2(1)(zb) of the Act. 

Examples of trademark: 

Implications of using a registered vs. unregistered trademark in advertising 

A trademark can be registered or unregistered. A registered trademark is one that is on the Register of Trademarks and is actually in force. This understanding is arrived at from a combined reading of Section 2(1)(t) and Section 2(1)(w) of the Act. 

Section 29 of the Act deals with situations in which the use of a registered trademark in the course of trade is considered an infringement. Section 29(8) of the Act provides that a registered trademark is infringed by way of advertising  if the advertisement:

  1. Takes unfair advantage of, and is contrary to honest practices in industrial or commercial matters; or
  2. Is detrimental to the distinctive character of the trademark; or
  3. Is against the reputation of the trademark.

Section 29(8) may be represented as the following equation:

Registered ™ + Advertisement + Unfair Advantage of and contrary to honest practices/Detrimental to Distinctive Character/Against reputation = Infringement

If the trademark is not registered, the proprietor cannot rely upon Section 29(8). However, this does not mean that he is remediless. An unregistered trademark that is being disparaged in the advertisement is also entitled to get an injunction against the disparaging advertisement. For instance, in the Colgate case, the plaintiff was unable to prove that his mark was registered and thus did not press upon his contention of violation of Section 29(8). However, the court granted an interim injunction in favour of the plaintiff, as the plaintiff was able to establish a prima facie case, that the balance of convenience was in his favour as the effect of an advertisement cannot be repaired easily. Moreover, the injury caused to the plaintiff would be irreparable and unable of being compensated with damages. 

Displaying the trademark in the advertisement is not ipso facto infringement

Only because a trademark is used in an advertisement by someone who is not a registered proprietor of the trademark, or a permitted user of the trademark, does not by itself amount to infringement of the trademark.

Infringement of a trademark by a proprietor requires that the trademark is used in such a manner that suggests that the trademark is associated with that proprietor’s goods. If a trader compares his goods with the goods of a rival without in any way advertising that the trademark is used in relation to his goods, there is prima facie no infringement. 

For example, in the Pepsi case, Coca Cola in its advertisement had made use of Pepsi’s Globe Device, which was Pepsi’s registered trademark. The Court held that this is not ipso facto infringement. There was nothing in the advertisement to show any connection between Pepsi’s trademark and Coca Cola’s drink. 

Comparative advertising is permissible as held by the Delhi High Court in Reckitt & Colman of India v. Kiwi TTK Ltd.[1996 PTC (16) 393], however, it is not permissible to defame the competitor’s product. 

Limits of comparative advertising 

In Reckitt & Colman of India Limited vs. M.P. Ramchandran & Another reported in 1999 PTC (19) 741 the Calcutta High Court, set out five principles that effectively sum up the limits to comparative advertising. 

These principles are as follows:

“I. A tradesman is entitled to declare his goods to be best in the words even though the declaration is untrue.

II. He can also say that my goods are better than his competitors, even though such a statement is untrue.

III. For the purpose of saying that his goods are the best in the world or his goods are better than his competitors’ he can even compare the advantages of his goods over the goods of the others.

IV. He, however, cannot, while saying his goods are better than his competitors, say that his competitors’ goods are bad. If he says so, he really slanders the goods of his competitors. In other words, he defames his competitors and their goods, which is not permissible.

V. If there is no defamation, to the goods or to the manufacturer of such goods no action lies, but if there is such defamation, an action lies and if an action lies for recovery of damages for defamation, then the court is also competent to grant an order of injunction restraining repetition of such defamation.”

In effect, what we derive from these principles is that advertisement statements can be of four types.

  1. My product is the best in the world;
    1. True – Not infringement
    2. False – Not infringement
  2. My product is better than X’s product;
    1. True – Not infringement
    2. False – Not infringement
  3. My product (E.g. soap) has  2 times more advantages (E.g. cleans faster and kills more germs) than X’s product;
    1. True – Not infringement
    2. False – Not infringement
  4. X’s product is bad;
    1. True – Infringement
    2. False – Infringement

In sum, a comparative advertisement that denigrates or disparages the trademark of the competitor is not permissible. For example, in the Colgate case, in the advertisement by Colgate,  Sunil Shetty rubs the rival product Lal Dant Manjan on the purchaser’s spectacles which leave marks on the spectacles. Sunil Shetty says that the rival product is like sandpaper on the teeth. When the purchaser says “but my glasses?”, implying that the glasses are now ruined, Sunil Shetty tells him that it is easy to change spectacles but not the teeth. The Court restrained Colgate from telecasting this advertisement. It observed that a prima facie case is made out in favour of the manufacturer of Lal Dant Manjan, particularly when Colgate did not deny that its campaign points out the deleterious effects of Lal Dant Manjan. The advertisement impugned in the Colgate case can be seen here

What if the rival product is not specifically mentioned?

Not mentioning the rival product specifically cannot help one escape liability for disparaging and/or infringing another’s trademark. 

It is not permissible to disparage a class of products and get away with it by raising the defence the plaintiff’s product was not mentioned. For instance, in the Colgate case, Colgate offered that it will remove the red container whose contents were being stated as harmful in the impugned advertisement, to avoid any identification of the red container with the Plaintiff’s product. The Court noted that the plaintiff rightly rejected this offer. The Court stated that generic disparagement without pinpointing the rival product is also objectionable. 

Impliedly referred to the rival product – It is also possible that although the rival product is not mentioned, it is clear that the comparison is with that rival product. For instance, in the Pepsi case, the Court held that it was clear that in the advertisement by Coca Cola it was comparing itself with Pepsi even though the word on the bottle was PAPPI because of three reasons. 

  • Firstly, in the advertisement, a boy is called from the audience and asked which cola drink he would prefer. His response to the question is muted, but it is clear from the movement of his lips that he says Pepsi. 
  • Secondly, there were only three cola brands, out of which Coca Cola and Thumbs Up belonged to the defendants/respondents, thus the bottle shown had to be Pepsi, regardless of whether it had PAPPI written on it. 
  • Thirdly, the colour scheme of the bottle and the Globe Device on it were also that of Pepsi. 

Puffing up vs. disparagement

It is not an easy task to determine whether the advertisement is disparaging (impermissible) or merely puffing up one’s one product (permissible). For instance, in the Pepsi case, where the advertisement by Coca Cola referred to Pepsi as “Bacchon Wala Drink” and the lead actor said “Wrong Choice Baby” to the boy who chose Pepsi as his preferred cola drink, the learned Single Judge held that the advertisement was only healthy competition and Pepsi was not disparaged. However, on appeal, the learned Division Bench held that the commercial depicted Pepsi in a derogatory manner. 

The learned Division Bench in the Pepsi case stated that 3 factors have to be considered while deciding the question of disparagement. 

  • Firstly, the intent of the commercial. 
  • Secondly, the manner of the commercial. This means whether the commercial is condemning the competitor’s product or merely showing one’s product as the best or better without ridiculing or derogating the competitor’s product. This aspect is particularly important. 
  • The storyline of the commercial and the message sought to be conveyed by the commercial. 

Conclusion

Compliance with trademark laws is an essential aspect to be considered when considering an advertising campaign that involves comparison with other products. It is imperative to keep these considerations in mind even when the rival product is not expressly mentioned. Disparaging, ridiculing and condemning a rival product through advertising can signal the commencement of a legal battle. 

References

  1. Trade Marks Act, 1999
  2. Pepsi Co Inc v. Hindustan Coca Cola Ltd., 2003 (27) PTC 305 (Del) (DB)
  3. Dabur India Ltd. v. Colgate Palmolive 2004 (29) PTC 401 (Del) 
  4. Reckitt & Colman of India Limited vs. M.P. Ramchandran & Another reported in 1999 PTC (19) 741
  5. Reckitt & Colman of India v. Kiwi TTK LTD. [1996 PTC (16) 393]
  6. Lecture of Prof. Raman Mittal on Comparative Advertising delivered on 6th April 2021 in online classes at Campus Law Centre, Delhi University.

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