Comparative Advertisements: The Confines of Law in India

Our Associate, Surabhi discusses “Comparative Advertisements: The Confines of Law in India”

It would not be an exaggeration to say that “comparative advertisement” is one of the most efficacious forms of advertisement. While this term has not been defined in any statute of Indian law, the term is commonly used to describe advertisements where the goods or services of one trader are compared to those of another. Often used as a tool to glorify one’s product in a competitive marketplace, traders resorting to comparative advertisement should be cautious of the confines of law surrounding this form of advertising.

Pertinently, the law governing trade marks in India references a situation where use of a registered trade mark in advertising by a person, other than the registered proprietor, is allowed. Specifically, it states that use of a registered trade mark by any person for the purposes of identifying goods/ services as those of the proprietor is not barred, so long as such use is in accordance with “honest practices” in industrial or commercial matters. As a corollary, the trade mark law also states that a registered trade mark is infringed by any advertising of that mark, if such advertising takes unfair advantage of, and is contrary to, “honest practices” in industrial or commercial matters.

Surely, honest business practices form the foundation of comparative advertisements. While comparative advertisements are effective and allowed in India, their misuse by giving a false statement about the products of another trader in a demeaning manner, results in disparagement of the goods of the other, and is not allowed under Indian law.

While the term “disparagement” has also not been defined by any statute of Indian law, there have been various judicial pronouncements that have played an important role in determining the ambit of law relating to disparagement in India. The term has been recognized to mean, to slight/ undervalue, bring discredit or dishonour upon the owners of the competing brands and deprecating/ derogating the value of the brand through negative or de-meaning statements about the brand.

While examining the scope of comparative advertisement and disparagement, the Calcutta High Court, in Reckitt & Colman of India Ltd. v. M.P. Ramachandran and Ors. 1999(19)PTC 74(Cal) laid down the following guiding principles that are often relied on by courts even today:

(1) A tradesman is entitled to declare his goods to be best in the words, even though the declaration is untrue.

(2) He can also say that my goods are better than his competitors’, even though such statement is untrue.

(3) 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 others.

(4) 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.

(5) 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.”

The above principles recognize that mere ‘puffery’ of one’s own goods is not actionable under law. Under the puffery rule, a tradesman can say that his goods are the best or better that those of others. However, he/she cannot, by comparison, slander or defame the goods of the competitor. Nor can he/she call them bad or inferior.

Pertinently, the Delhi High Court in Dabur India Ltd. v. Colortek Meghalaya Pvt. Ltd. and Ors. 2010(44)PTC254(Del) ruled that an advertisement is a commercial speech and is protected under the Constitution of India. However, it must not be false, misleading, unfair or deceptive. It also ruled that, while glorifying its product, an advertiser must not denigrate or disparage a rival product.  

In another landmark case of Reckitt Benckiser (India) Ltd. v. Hindustan Unilever Ltd. 2013(55)PTC126(Del), the Delhi High Court noted that, “in order to satisfy the test of comparative disparagement, the plaintiff has to establish the following key elements:

  1. A false or misleading statement of fact has been made about his product;
  2. That the statement is deceiving or has the potential to deceive, the substantial segment of prospective consumer and;
  3. The deception is likely to influence consumer’s purchasing decisions. The court has to also bear in mind while deciding whether the displayed commercial is disparaging or not, the intent of the advertisement, its manner and the effect of the telecast of such a television commercial. The manner in which the same is telecasted is of prime importance, the same should not be in the manner to ridicule or condemn the product of the competitor, resulting in disparagement or disrupting them in the market.”

The Madras High Court, however, took a significant departure from the above traditional approach on commercial puffery in the case of Colgate-Palmolive (India) Limited v. Anchor Health and Beauty Care Private Ltd. 2009(40)PTC653(Mad) where it took into consideration ‘consumer interest’ while deciding a dispute related to comparative advertising. The Court observed that recognition of the right of advertisers to puff their own products, even with untrue claims, de-recognises the rights of consumers guaranteed under the consumer laws of the country. It further ruled that “to permit 2 rival traders to indulge in puffery, without denigrating each other’s product, would benefit both but would leave the consumer helpless”. It concluded that the consumer stands to benefit when the falsity of the claim of a trader about the quality and utility value of its product is exposed by a rival.

All in all, the Indian judicial system recognizes that traders may exaggerate claims by highlighting the superiority of their products that would set them apart from their competitors, albeit without ridiculing or criticizing the products/ services of their competitors. While comparative advertisement is a fairly accepted practice in a highly competitive consumer-centric marketplace, traders should be mindful that its abuse is strictly forbidden through judicial precedence in India.