IP Disputes in Comparative Advertising: Is it healthy competition after all?

It is without a doubt that advertising plays an instrumental role for companies to land successful communication with its target customers. Its effectiveness is beyond measure and the more creative the industry gets with its advertising tactics, the higher are the chances of brands stepping on each others’ toes in their bid to get ahead. A simple example, comparative advertising. While, undoubtedly, this creative and effective measure may achieve the needed publicity, the same has not been without its risks and consequences. Time and again, lines have been blurred between what may be a good natured puffery and what may be considered as unhealthy competition after all. The latter resulting in acts of infringement and disparagement.

While those advocating in favour of comparative advertising may wish to pass this off as commercial rivalry, to be dealt with in the marketplace. The proposition has thus far been rejected by the Judiciary.

Is comparative advertising entirely unethical? The Indian Legal Landscape

The Supreme Court in the 1959 judgment of Hamdard Dawakhana v. Union of India[1] had established that advertisements, although a manner of speech, cannot entirely fall within the arena of free speech. Notwithstanding exceptions that may be carved out, the moral spectrum remains the requisite standard. Thus, evidently comparative advertisement shall be viewed within the same spectrum as well.

Broadly, comparative advertising can be categorized as either direct or indirect, wherein the former outrightly refers to the rival brand and its goods whereas the latter makes a simple implication of the same, indicating the advertising brand surpassing its rivals, one and all. What is thus required is a mechanism of checks and balances, largely monitored by the Advertising Standards Council of India (hereon the ASCI) per the Code for Self-Regulation of Advertising content in India. The generally agreed upon standard of honest advertising stipulates for the advertisement to not indulge in disparagement, be misleading or capable of creating confusion, all judged from the perspective of the general consumer.

Further, the Trade Marks Act, 1999 (here on the Act) facilitates certain genus of comparative advertisements. However, in order to meet this threshold, Sections 29(8) and 30(1)of the Act provide that it is essential that the use of the competitor’s trademark is bona fide, in accordance with honest practices and does not take unfair advantage of the reputation of the competitor’s trademark. For instance, in 2003, the beverage conglomerates Pepsi and Coca Cola were embroiled in an advertising dispute when the latter used the term ‘PAPPI’, taken to be deceptively similar to the trademark “PEPSI”, to portray a ‘child’s drink’. The former filed a suit alleging their trademark being depicted in a derogatory manner. The Court, while granting an injunction, stated the "manner of the commercial" to be of essence, referring to the intent and story line in order to decide upon disparagement.[2] Earlier on in the 1989 judgment, Duracell International Ltd. Vs. Ever Ready Ltd.,[3] a distinctive image of the Duracell battery without its brand name had been mentioned in an advertisement for Eveready, however, the same did not amount to infringement owing to the absence of the trade name.

Moreover, Section 2(28) of the Consumer Protection Act, 2019 also provides a general framework for combating unfair trade practices including misleading concealment/representation/advertisement in respect of false descriptions as to the nature and characteristics of products/services as well as fallacious guarantees in respect thereof. In Hindustan Unilever Ltd. v.  Reckitt Benckiser (India) Private Limited, comparative advertisements were made permissible with the condition of accurate representation of facts and statements, thus the overall message not being misleading.[4]

Further, the Courts have laid down several principles in order to determine a guarded path for comparative advertising and have time and again emphasized the need for taking all factors and the overall impact of the commercial into consideration in order to differentiate between puffery and disparagement including not only the intent of the commercial but also the medium of advertisement and other economic market factors. In a landmark judgment in 2013, Palmolive Coglate brought injunction proceedings against the Hindustan Unilever alleging disparagement of its product Colgate Dental Cream Strong Teeth in the latter’s advertisement for its product Pepsodent Germicheck Super Power, where the term "130% superior" had been used for comparison.[5] While the Court did not find any actual cause for disparagement in the commercial, when viewed in its entirety, however, stated that since the consumer is likely to rely upon such factual statements, the same cannot be treated as mere puffery. 

In fact, the Court in Havells India Ltd & Anr. v. Amritanshu Khaitan & Ors further carved out a possible deviation when comparison is specifically with respect to facts.[6] As in the case, the Eveready advertisement provided a comparative chart of prices and lumens of the rival brands to emphasize upon its superior numbers. In view of the Court, the same were mere facts and could not be considered as disparagement in any manner. More recently in the 2023 judgment, Reckitt Benckiser (India) Pvt. Ltd. v Wipro Enterprises (P) Ltd., Delhi High Court reaffirmed the same.[7] It was held that unfavourable comparisons that do not affect the overall impact of the commercial, shall be permissible. Further, in the 1998 judgment Reckitt & Colman of India v MP Ramachandran, the Calcutta High Court gave a similar decision and stated that to the extent that a promoter does not engage in defamation, comparative advertisement shall be acceptable. Thus, the established practice with respect to comparative advertisement remains the overall effect being true and correct and not represented in a misleading manner.

Conclusion

Marketing is the heart of commerce and it is natural that creating marketing strategies such as comparative advertising are here to remain a dynamic element of the advertising industry. However, in order to maintain harmony and balance in the market, it is essential for the governing bodies to maintain an ecosystem of honest trade practices and healthy competition. It is well established that the Judiciary has recognised comparative advertisement not resulting in disparagement as an honest trade practice and a legitime advertising strategy. The consistent reliance of the Judiciary on ethical standards indicates a clear intention to ultimately decide in the interest of the consumer.