Comparative advertisement, product disparagement and trademark infringement

Market competition is making brands go creative with ways they can better sell their product. Advertisements have become an essential aspect of running a business today. One such advertisement technique which has become common now is the art of comparative advertisement. This involves comparing one’s products or services rendered with that of another company’s products in order to promote their sales. While such comparative advertisement is legally permissible and allowed, going too far with such comparison tactics may result in something called as product disparagement, insulting or degrading others’ products in order to make one’s product/service look better. Often the difference between comparative advertisement and product disparagement is very thin if one does not know its limits, lawsuit will be attracted and disparagement of products is not permissible under the law.

Trademark is a unique identification mark of a brand which distinguishes it from its other competitors, enabling consumers to identify and differentiate goods from one brand to another. A trademark often forms the identity of a company or company and therefore the trademark protection Act is a statutory body which gives protection to the holder of trademark protection rights. Any unauthorised person who makes use of such a protected trademark are said to infringe upon the exclusive rights of the trademark holder. What happens sometimes in comparative advertising is that when a comparison between two products or services is made, there is an inevitable use and mention of registered trademarks. An unfair use of a registered trademark for generating profits leads to a claim of copyright infringement. Herein also arises the concept of product disparagement. Comparative advertisement has risks of trademark infringement and also when taken too far results in product disparagement, which is also prohibited.

Under the Trademark Act of 1999, sections 29 and 30 govern the rules regarding trademark infringement. Section 29(8) talks about trademark infringement through advertisement. It lays down that if an advertiser compares two products in a manner which results in disparagement of the one, then it raises issues not only related to the concept of comparative advertisement but also trademark infringement. However, honest use of trademarks, which neither takes any unfair advantage or causes any harm to the reputation or distinctiveness of another registered trademark, then it does not amount to infringement under section 30(1) of the 1999 Act. Therefore, if comparative advertisement is done right, i.e., without causing any unfair harm to the distinctive character of the product or disparagement of their products, then it is permissible.

The Advertising Standard Council of India (ASCI) is a regulatory body which deals with advertisement disputes. It adopted an advertisement regulation code which among other things provided for non-disparagement, attack or discredit other products. In the case of Dabur India Ltd. v Colortek Meghalaya pvt. Ltd. it was held that commercial speech is a protected right under article 19 of the Constitution. Glorifying one’s product by way of advertisement, without being misleading, false or unfair is permissible as long as no other product’s reputation is tarnished in the process. The effect of an advertisement is to be considered in such cases which also includes taking into account intent of the advertisers. In effect, sometimes truthful comparative advertisement is allowed even it paints a bad picture of the other product, depending on the circumstances and facts of the case.

In the case of Horlicks v. Complan, Heinz India pvt. Ltd. advertised a comparison between its product Complan and Horlicks claiming that two cups of Horlicks is required to match the amount of protein in one cup of Complan. Horlicks filed a suit alleging product disparagement based on misleading and false facts. A violation of Horlicks’ trademark was also contended by Horlick under section 29(8) and 30 of the Trademarks Act. Complan deferred by stating that it was an ASCI code complaint and that the use of Horlicks’ trademark was necessary and honest use to depict the comparison between the two products. Section 30(1) of the Trademarks Act permits honest and bona fide use of trademarks without attracting provisions of infringement.

The Delhi HC held that no harm had been caused to the distinctive mark of Horlicks and therefore it would not attract trademark infringement. Complan pointing out its advantages does not amount to dishonest use. The primary object time of section 29(8) and 30(1) of the Trademarks Act is to allow comparative advertising as long as it is an honest use. The test of honest use is an objective test which depends on whether the use is considered honest by members of a reasonable audience. In this context, the failure to point out a competitor’s advantages is not necessarily dishonest, and by corollary, highlighting the advantages of the competitor’s product by the advertiser in the advertisement is not a dishonest practice either.

In another case of Amul v. Kwality, Amul, in its advertisement had compared its ice creams with other ‘frozen deserts’ stating that used Vanaspati or hydrogenated vegetable oil but Amul, true to its quality only used 100% milk. Amul had however, made no reference to kawality specifically.

Kwality on the other had urged to the court that Amul’s advertisement had a disparaging effect on all ice creams in the market and therefore it included Kwality manufactured ice creams as well. They claimed that Amul’s Vanaspati claims were in fact wrong. All of their products were manufactured with vegetable oil and contained 90% milk. Amul on the other hand contended that at least 30% of the frozen dessert manufacturers use Vanaspati and that was a factually correct position. The court in this case was of the opinion that an advertiser may make exaggerated claims about the superiority of their products but actively attributing negative qualities to other frozen desserts based on incorrect facts was not permissible. It put a negative impact on the consumer market and effected an entire class of market population even though there was no specific mention of kwality or use of their trademark. Such product disparagement is not permissible. Court permitted the use of the advertisement only after deletion of the segment which was unlawful.

Therefore, it is clear the comparative being a popular and powerful advertising tool, the court have been flexible and considerate of all facts and situations while deciding on advertisement conflict cases. A manufacturer is allowed to use trademark of another brand or company for honest use in advertising and it would not amount to trademark infringement. As for the restriction of non-permissibility of product disparagement is involved, even though it is an objective test which is to be decided on a case-by-case basis, the rule seems to be that as long as there is no active effort by a manufacturer to deliberately cause harm to the reputation of another’s products or services, it is permissible.

References:

Horlicks Limited v. Heinz India pvt. Ltd. [CS (COMM) 808/2017]

Gujarat Co-Coperative Milk Marketing Federation Ltd. & Ors v. Hindustan Unilever Ltd Apveal no. 340 of 2017 dated December 13, 2018

Siddharth Ratho & puja Saha, ‘Comparative advertisements vs. product disparagement: walking the thin line’ (LawsStreetIndia 6 February 2019) http://www.nishithdesai.com/fileadmin/user_upload/pdfs/NDA%20In%20The%20Media/News%20Articles/190214_A_COMP_ADSVS_PRODUCT_DISPARAGEMENT.pdf

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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