Comparative Advertising in India and Recent Trends

28 September 2012

Trade rivalries have always been best seen in advertisements, with companies very often taking a dig at their rivals through the medium of advertising. Commonly termed as comparative advertising, this is sometimes the most effective mud-slinging tactic adopted by companies for their competitors. Comparative advertising is not a new phenomenon in India where customers have been witness to innumerable such advertisements, be it the Pepsi and Coca-Cola war, the tussle between the health drink brands Complan and Horlicks (which eventually reached the Courts) or the very recent conflict between detergent brands Rin and Tide.

Indian law has provided some safeguards against disparaging advertisements, inter alia, in the Monopolies and Restrictive Trade Practices Act, 1984 (MRTP Act), which has now been repealed and subsequently in the Trade Marks Act, 1999. As per the MRTP Act, publishing any misleading or disparaging facts about a competitor’s goods or services amounted to unfair trade practice. The concept has also been incorporated in the Consumer Protection Act, 1986 which, inter alia, mandates that any false representation about goods or services falls within the definition of the term unfair trade practice. The Advertising Standards Council of India (ASCI Code), which is a selfregulatory code for advertisers, also lays down certain guidelines forbidding disparaging advertisements. The Trade Marks Act, 1999 provides that the use of a registered trademark by an advertiser results in infringement if it:

(1) takes unfair advantage of the trademark’s reputation;

(2) is contrary to honest industrial or commercial matters;

(3) is detrimental to the distinctive character of the trademark;

(4) damages the reputation of the trademark.

Indian Courts had so far adopted a less stringent approach in enforcing these provisions, thereby allowing advertisers to make exaggerated claims about their products in relation to rival products. Often, untrue claims were permitted, with the Courts restricting the same only when they amounted to disparagement or slander of the other producer or his goods. This approach was evident in the Calcutta High Court’s decision in Reckitt & Colman of India Ltd v. M.P.Ramachandran and Ors. (1999 PTC (19) 741), which was followed by the Delhi High Court in the case of Reckitt & Coleman of India Ltd. v. Kiwi TTK Ltd (63(1996)DLT 29), wherein the following principles were laid down:

(1) A tradesman can declare that his goods are best in the world even though this declaration is untrue;

(2) He can state that his goods are better than those of his competitors even if this statement is untrue;

(3) He can compare his goods with those of the competitors;

(4) However in the course of such comparison, the tradesman cannot state that the competitor’s products are bad as this would amount to defamation.

This approach was also apparent in the decision of the Delhi High Court in the case of Reckitt Benckiser v. Hindustan Lever (2008 (38) PTC (Del)), which allowed generic puffery.

A significant departure from this approach was made in the decision of the Madras High Court in the case of Colgate Palmolive (India) Limited v. Anchor Health & Beauty Care Private Limited ((2008) 7 MLJ 1119), wherein Anchor claimed that:

(1) Its product was the “only” toothpaste containing the ingredients calcium, fluoride and triclosan;

(2) It was the “first” all-round protection toothpaste;

(3) The fluoride in Anchor toothpaste gave 30% more cavity protection, and

(4) The triclosan contained in Anchor toothpaste was 10 times more effective in reducing bacteria.

Colgate instituted a suit against Anchor, claiming that Colgate toothpaste contained the afore-mentioned ingredients far earlier than Anchor, and that the statements made by Anchor were false and misleading. Colgate further contended that the statements amounted to disparagement of its products and that Anchor should be restrained from continuing to act in such a manner.

The Court in its interim order restrained Anchor from using the words ‘only’ and ‘first’ in the impugned advertisement and thereby refrain from misleading the public and indulging in an unfair trade practice. This was the first time in a matter of comparative advertising when the element of consumer interest was kept in mind by the Court while arriving at its decision. The Court in case observed that false claims by traders about their products is not permissible in law and that the law as it stands today no longer appears to tolerate puffery. However, it also made an exception for advertisements that “tend to enlighten the consumer, either by exposing the falsity or misleading nature of the claim made by the trade rival or by presenting a comparison of the merits (or demerits) of their respective products” as permissible and in “public good.”

With more and more consumers flocking to the online marketplace, advertisers today have an additional platform to launch their advertising crusade from, thereby marking a definitive increase in comparative advertisements. The decision of the Madras High Court in the Colgate case was a welcome reform in matters of comparative advertising, ensuring protection of the reputation and goodwill acquired by producers in their trademarks. However, a Supreme Court ruling on the issue would help strengthen and establish the law on comparative advertising.

Krishna & Saurastri

K.K. Chambers, 1st Floor,

Sir P.T. Marg, Fort,

Mumbai 400 001, India

T: +91 22 2200 6322

F: +91 22 2200 6326

E: info@krishnaandsaurastri.com

W: www.krishnaandsaurastri.com

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