Transcript of Regulation of comparative advertising [compatibility mode]
- 1. REGULATION OF COPARATIVE ADVERTISING Sanjeev Kumar Chaswal
Advocate and IPR Attorney LL.M ( IPR,ARB & ADR) M.S (Cyber Law
and Cyber Security)
- 2. Over view - Comparative Advertising Most comparative
advertisements refer to rival products as ordinary, instead of
specifically mentioning names of products. Aggrieved firms have
claimed that ordinary refers to all products other than the
advertised one. Comparative advertising is advertising where one
party advertises his goods or services by comparing them with the
goods or services of another party. This raises several concerns -
on the one hand, the concern of brand owners for their goodwill
being harmed and, on the other, the benefits for consumers that may
result from the reduction in information asymmetry and the
stimulation of competition. If the disparagement is based on false
and misleading facts that the advertisement becomes an unfair trade
practice. 1/29/2013
- 3. Concept and Definition Comparative advertising is an
advertisement in which a particular product, or service,
specifically mentions a competitor by name for the express purpose
of showing why the competitor is inferior to the product naming it.
Comparative advertising, also referred to as knocking copy, is
loosely defined as advertising where the advertised brand is
explicitly compared with one or more competing brands and the
comparison is oblivious to the audience. They may explicitly name a
competitor or implicitly refer to him it may emphasize the
similarities (positive comparisons) or the differences (negative
comparisons) between the two products. 1/29/2013
- 4. The advertised product is better than (superiority claims)
or as good as the competitors (equivalence or parity claims). No
Indian statute defines the term, but the UK Regulation defines
comparative advertising as meaning any advertisement which
explicitly or by implication, identifies a competitor or goods or
services offered by a competitor. In this backdrop, the Delhi High
Court summarized the law on the subject in the case of Reckitt
& Colman v. Kiwi TTK , as follows: 1. A tradesman is entitled
to declare his goods to be the best in the world, even though the
declaration is untrue. 2. He can also say that his goods are better
than his competitors, even though such statement is untrue.
1/29/2013
- 5. 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
One, cannot say his goods are better than his competitors, or say
that his competitors goods are bad. If one says so, then 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 for recovery of damages for defamation,
then the Court is competent to grant an order of injunction
restraining such defamation.1/29/2013
- 6. Statutory Provisions In India: India: The Supreme Court was
significantly led by the Judgment of the American courts. The
Indian Supreme Courts had also reflected its doubt in their
decision on the Hamdard Case in 1960 as per American courts
judgments of 1940. In the backdrop of revisions change in the
position of the American courts, the Supreme Court, gave its view
in the Tata Yellow Pages case in 1985, was categorical: We,
therefore, hold that commercial speech is a part of freedom of
speech and expression guaranteed under Article 19(1)(a) of the
Constitution. The MRTP Commission has followed the constitutional
freedom under MRTP Act. A party has a right to advertise its
product making commendation about its quality. Advertisement being
a commercial speech, which is a part of the freedom of speech is
guaranteed under article 19(1)(a) of the Constitution. The MRTP Act
and the Trade 1/29/2013 Marks Act, 1999 work in tandem
- 7. to provide the basic structure that govern Comparative
Advertising. : The Trade Marks Act is a balance to the conflicting
interests of the rights of registered trade mark owners and a keeps
a consumer interest in informative advertising. The Trademarks Act,
1999 has provisions related to this concept in Ss. 29(8) and 30(1).
According TM Act Comparative Advertising is permissible, with
certain limitations as to unfair trade practices. Section 29(8) of
the Trade Marks Act provides that a registered trademark is
infringed by any advertising, if such advertising takes unfair
advantage and is contrary to honest practices in industrial or
commercial matters, is detrimental to its distinctive character, or
is against the reputation of the trade mark. The Section 30(1)
however, provideds an escape route for what would otherwise have
been an infringing act under Section 29, if the impugned use of the
mark is in accordance with honest practices in industrial or
1/29/2013 commercial matters.
- 8. Honest practices - mandatory for Comparative Advertising
Comparative advertising aims to objectively and truthfully inform
the consumer, and promotes market transparency, keeping down prices
and improving products by stimulating competition. Therefore, it is
important to protect the interests of such competitors by not
allowing comparative advertising to cause confusion, mislead, or
discredit a competitor. There is no definition or explanation as to
what constitutes honest practices. There is a large and clear
shared core concept of what constitutes honest conduct in trade,
which may be applied by the courts without great difficulty and
without any excessive danger of greatly diverging interpretations.
1/29/2013
- 9. In BMW v. Deenik , European Court of Justice, 3 December
1998, BMW v Deenik The question was whether a trader, not being an
authorized dealer of BMW motor cars, was entitled to use the name
BMW being a registered trademark of the BMW manufacturing company,
in the context of holding itself out as having specialized
expertise in servicing BMW cars. The Court held that the proprietor
of the trademark is not entitled to prohibit a third party from
using the mark for the purpose of informing the public that he
carries out the maintenance and repair of the goods covered by that
trademark, unless the mark is used in a way that may create the
impression that there is a commercial connection between the other
undertaking and the trademark proprietor, and in particular that
the resellers business is affiliated to the trademark proprietors
distribution network or that there is a special relationship
between the two undertakings. 1/29/2013
- 10. Comparative Advertising - Unfair Trade practices:
Comparative advertising is also subject to certain other
limitations contained in the definition of unfair trade practices.
In 1984 the MRTP Act was amended to add a chapter on unfair trade
practices. Section 36A of the MRTP Act lists several actions to be
an unfair trade practice as any unfair method or unfair or
deceptive practice which gives false or misleading facts
disparaging the goods, services or trade of another person. The
object of this section is to bring honesty and truth in the
relationship between the provider of the services and the consumer,
and when a problem, arises as to whether a particular act can be
condemned as an unfair trade practice or not, 1/29/2013
- 11. the key to solution would be to examine whether it contains
a false statement and is misleading and further what is the effect
of such representation on the common man. From the above context it
may be gathered that false representation would mean an incorrect
or untrue statement or expression which is designed to influence
and induce a consumer to buy or engage, or use such goods or
services and make such advertisements available to the members of
the public.1/29/2013
- 12. Concept of Disparagement: Section 36 A of the MRTP Act
purports that unfair trade practices are those which lead to
disparagement of the goods, services or trade of another person.
The term disparagement has not been defined in any statute, but
judicial pronouncements have adopted its dictionary meaning. The
New International Websters Comprehensive Dictionary, disparagement
means, to speak of slightingly, undervalue, to bring discredit or
dishonor upon, the act of depreciating, derogation or valuation, a
reproach, disgrace, an unjust classing or comparison with that
which is of less worth, and degradation. The Concise Oxford
Dictionary defines disparage as under, to bring dis-crediting or
reproach upon; dishonour; lower in esteem; speak on or treat
slightingly or vilify; undervalue, and deprecate. 1/29/2013
- 13. In the electronic media the disparaging message is conveyed
to the viewer by repeatedly showing the commercial everyday thereby
ensuring that the viewers get clear message as the said commercial
leaves an indelible impression in their mind. But, it must be noted
that a mere opinion, which is not a statement of fact, would not
attract Clause (x) of Section 36A (1). In the New Pepsodent v
Colgate case , HLL advertised its toothpaste New Pepsodent as 102%
better than the leading toothpaste. In the television
advertisement, samples of saliva are taken from two boys, one who
has brushed with the new Pepsodent while another has brushed with a
leading toothpaste. 1/29/2013
- 14. The saliva of the leading toothpaste shows larger number of
germs. While the sample was being taken from the boys, they were
asked the name of the toothpaste with which they had brushed in the
morning. One boy said Pepsodent, the response of the second boy was
muted, however, lip movement of the boy would indicate that he was
saying Colgate. Also, when the muting was done, there was a sound
of the jingle used in the Colgate advertisement. According to the
Commission, the word toothpaste had become synonymous with Colgate
over the years and a reference to leading brand was to Colgate.
Thus it became a case of Comparative Advertisement which led to the
disparagement of Colgates products. 1/29/2013
- 15. Use of the trademark to disparage the goods of another, and
the aforementioned concepts of comparative advertising have been
dealt with in Pepsi Co. Inc. and Ors. v. Hindustan Coca Cola Ltd.
and Anr . Pepsi, the appellants filed suit against Hindustan Coca
Cola and others, who were endorsing their product with the help of
a commercial which shows that the lead actor asks a kid which is
his favorite drink. He mutters the word "Pepsi", which can be seen
from his lip movement though the same is muted. The lead actor
thereafter asks the boy to taste two drinks in two different
bottles covered with lid and the question asked by the lead actor
is that "Bacchon Ko Konsi pasand aayegi"? After tasting, the boy
points out to one drink and say that that drink would be liked by
the children because it is sweet. 1/29/2013
- 16. In his words he says. "Who meethi hain, Bacchon ko meethi
cheese pasand hai". He discredited the drink which according to him
has a sweet taste. He preferred the other drink which according to
him tastes strong and that grown up people would prefer the same.
At that point, the lead actor lifts the lid from both the bottles
and the one which is said to be strong taste reveals to be "Thums
Up", and one which is sweet, word "PAPPI" is written on the bottle
with a globe device and the colour that of the "PEPSI". Realising
that he had at the initial stage given his preference for "PEPSI"
and subsequently finding it to be a drink for kids, the boy felt
embarrassed. He depicts this embarrassment gesture by putting his
hands on his head. There are other commercials by the respondents
where the lead actor said "Wrong choice baby", and that the "Thums
Up" is a right choice, and "Kyo Dil Maange No More" for the
appellants products. 1/29/2013
- 17. Here the issue was whether the commercial by depicting that
the boy preferred Thums Up as against "Pepsi" because Thums Up is
strong drink while "Pepsi" is for children as children like sweet,
amounts to disparagement or it is only a healthy competition and
puffing the product of the respondents?The Delhi HC explained the
concept of disparagement stating that a manufacturer is entitled to
make a statement that his goods are the best and also make some
statements for puffing of his goods and the same will not give a
cause of action to the other traders or manufacturers of similar
goods to institute proceedings as there is no disparagement or
defamation or disparagement of the goods of the manufacturer in so
doing. However, a manufacturer is not entitled to say that his
competitors goods are bad as to puff and promote his goods, and
concluded that comparative advertising cannot be permitted which
discredits or 1/29/2013
- 18. denigrates the trade mark or trade name of the
competitor.In another case, the Supreme Court was of the view, that
in a democratic economy, free flow of commercial information is
indispensable and advertisement is a facet of commercial speech as
public at large is benefited by the information made available
through the advertisement. Thus, commercial speech is a part of
Freedom of Speech and Expression guaranteed under Article 19 (1)
(a) of the Indian Constitution. To decide the question of
disparagement of anothers goods. Unfair trade practice can be
ascertained only in the presence of false or misleading facts
through scientific or technical assessment of the claims. It is not
actionable if the manner is only to show ones product better or
best without derogating the competitors product. Thus, Courts have
taken the position that publicity and advertisement of ones product
with a view to boosting sales is a 1/29/2013 legitimate market
strategy.
- 19. Comparison Between Comparative Advertising Laws Of
Different Countries: Like the Indian law, jurisdictions in UK and
U.S.A. allow comparative advertising, since comparative advertising
provides consumers with information about both parties products
through a quick comparison, effectively results in lower prices,
encourages competition, and helps prevent monopolies. Comparative
advertisements could be either indirectly or directly comparative,
positive or negative, and seeks to associate or differentiate the
two competing brands. Different countries apply differing views
regarding the laws on comparative advertising.1/29/2013
- 20. United Kingdom The UK has a relatively liberal regime
permitting comparative advertising. The European Standing Committee
of the UK Parliament debated the issue of comparative advertising
in November 1995 and stated that the government viewed this type of
advertising as a legitimate, useful and effective marketing tool
which we believe stimulates competition and informs the consumers.
Section 4(1) (b) of the 1938 Act was replaced in the new Act by
Section 10(6). Also relevant is Section 11(2), which has been held
to permit fair comparisons of goods, for example, indications of
quality or price. In the UK, most of the use of competitors
registered trademark in a comparative advertisement was an
infringement of the registration up till the end of
1994.1/29/2013
- 21. However, the laws on comparative advertising were
harmonized in 2000. The current rules on comparative advertising
are regulated by a series of EU Directives. The Business Protection
from Misleading Marketing Regulations 2008 implements provisions of
Directive (EC) 2006/114 in the UK. The primary objective of section
10(6) is to permit comparative advertising, as stated clearly by
Laddie J in Barclays Bank v. RBS Advanta. Since the TMA 1994 came
into force, there have been a number of decisions under section
10(6). It include Barclays v. RBS Advanta, Vodafone v. Orange,
British Telecommunications v. AT&T . Barclays, BT, Macmillan
Magazines was an application for interlocutory injunction and
Vodafone was a trial. It is interesting to note that in all of
these cases the plaintiff was unsuccessful, with judgments being
firmly in favour of comparative advertising in general.
1/29/2013
- 22. USA History The earliest case concerning comparative
advertising dates back to 1910 in United States Saxlehner v Wagner.
Prior to the 1970s, comparative advertising was deemed unfeasible
due to related risks. For instance, comparative advertising could
invite misidentification of products, potential legal issues, and
may even win public sympathy for their competitors as victims. In
1972, the FTC began to encourage advertisers to make comparison
with named competitors, with the broad, public welfare objective of
creating more informative advertising. The FTC argued that this
form of advertising could also stimulate comparison shopping,
encourage product improvement and innovation, and foster a positive
competitive environment. However, studies have shown that while
comparative advertisements had increased since 1960, the relative
amount of comparative advertising is still small.
- 23. USA In the United States, maximizing consumer welfare and
promoting a free and competitive economy has been the guiding
objective and the keystone of governmental attitude towards the
business scene for more than 100 years. Thus, in US comparative
advertising has been a well- recognised and acceptable form of
advertising , and enjoys the additional protection of freedom of
speech laws. The 1969 Federal Trade Commission (FTC) Policy
Statement on Comparative Advertising encouraged the use of
comparisons that name the competitor or the competitive product.
However, the negative consequences of false and confusing
comparative claims led the FTC to require clarity, and, if
necessary, disclosure to avoid deception of the
consumer.1/29/2013
- 24. Another major law is the Trademark Lanham Act, which states
that one could incur liability when the message of the comparative
advertisement is untrue or uncertain, but has the intention to
deceived consumers through the implied message conveyed. The FTC
and the National Advertising Division of the Council of Better
Business Bureaus, Inc. (NAD), govern the laws of comparative
advertising in the United States including the treatment of
comparative advertising claims. FTC stated that comparative
advertising could benefit consumers and encourages comparative
advertising, provided that the comparisons are clearly identified,
truthful, and non-deceptive.[15] Although comparative advertising
is encouraged, NAD has stated claims that expressly or implicitly
disparage a competing product should be held to the highest level
of scrutiny in order to ensure that they are truthful, 1/29/2013
accurate, and narrowly drawn
- 25. For example, in Tommy Hilfiger Licensing Inc. vs. Nature
Labs LLC [2002] , Nature Labs, a shop selling pet perfumery, used
"Timmy Holedigger" as its trademark as well as the slogan "If you
like Tommy Hilfiger, your pet will love Timmy Holedigger". Tommy
Hilfiger, one of the best recognized U.S. fashion labels, brought a
lawsuit against Natural Labs for, among other things, trademark
infringement, unfair competition, trademark dilution and commercial
fraud. The court held that the use of a trademark similar to Tommy
Hilfiger by the defendant is a fair parody, a type of "freedom of
speech" protected under the First Amendment of the United States
Constitution. Consumers were more likely to laugh at the humor in
the parody than be confused about the origin of the products.
Moreover, the comparison used by the respondent did not depreciate
the claimants products in any means. Therefore, the court dismissed
all of the plaintiffs claims. 1/29/2013
- 26. Australia In Australia, no specific law governs comparative
advertising although certain cases regarding this matter have
occurred. Comparative advertising that is truthful, and does not
lead to confusion is permitted. Generally, Australian advertisers
should make sure that the following are complied when exercising
comparative advertising to avoid breaches regarding misleading
advertising under Australia Consumer Law1. Product compared should
be like products as per HCF Australia Ltd v Switzerland Australia
Health Fund Pty Ltd, or else comparison must be made clearly to
consumers as per Gillette Australia Pty Ltd v Energizer Australia
Pty Ltd; 1/29/2013
- 27. 2. Test results are presented as it is as per Makita v
Black & Decker;3. Test used are appropriate and conducted
according to industry guidelines as per Duracell Australia Pty Ltd
v Union Carbide Australia Ltd; and4. Mock up test results truly
reflects how is product functioning in real life as per Hoover
(Australia) Pty Ltd v Email Ltd1/29/2013
- 28. China: It is interesting to note that the laws relating to
comparative advertising in China are a total contrast to those of
the US, UK and India. Trade mark owners need to be careful with
advertising in China aggressive campaigns which might work in other
countries can be punished" . The Advertising Law is primarily
directed towards the protection of consumers, as distinct from
competitors, interests. In fact, Articles 7 and 12 of the
Advertising Law effectively disallow comparative advertising ,
since the ultimate purpose of comparative advertising is to prove
that the advertisers products are better than its competitors, such
comparison, has the actual effect of disparaging other commodities
or services. 1/29/2013
- 29. China Contd. Contd. Moreover, according to The Criteria for
Advertising Examination issued by the State Administration for
Industry and Commerce ("SAIC") in 1994, comparative advertising
should not involve any direct comparison of specific products or
services. Since these provisions tend to be either too vague or too
strict, Chinese enterprises hesitate to engage in comparative
advertising.1/29/2013
- 30. CASES {Regaul vs Ujala }A television advertisement
promoting Ujala liquid blue showed that two-three drops of this
brand were adequate to bring striking whiteness of clothes while
several spoons of other brands were required for the same effect. A
lady holding a bottle of Ujala was looking down on another bottle
without any label, exclaiming chhi, chhi, chhi! in disgust. The
manufacturers of Regaul, a competing brand, complained to the
Commission that the advertisement was disparaging its goods. The
Commission was of the view that a mere claim to superiority in the
quality of ones product4 by itself is not sufficient to attract
clause (x). In the advertisement, neither did the bottle carry any
label nor did it have any similarity with the bottle of any other
brand. The Commission, thus, was of the opinion that it could not
be classified as a case of disparagement of goods. 1/29/2013
- 31. Novino Batteries Case The judgement of the Supreme Court in
the Novino Batteries case has had an important influence on all the
cases raising questions about advertisements. Lakhanpal Industries
Ltd. had a collaboration with Mitsubishi Corporation of Japan for
manufacturing Novino batteries. Mitsubishi Corporation was the
owner of the well-known trade name, National Panasonic. Lakhanpal
Industries, in its advertisements, claimed that Novino batteries
were made in collaboration with National Panasonic. This was
technically incorrect as National Panasonic was only a trade name
and Lakhanpal Industries could not have collaborated with a trade
name. The Supreme Court ruled Following this, the court held that,
even though, literally, the representation made by Lakhanpal
Industries was inaccurate, it could not be held to be an unfair
trade practice. In the next case, we would see how the judgement in
the Novino Batteries case found an application 1/29/2013
- 32. Colgate vs Vicco Case A television advertisement promoting
Vicco toothpowder showed another oval-shaped tin without any label.
The white powder coming out from the can was described as useless.
Colgate claimed before the Commission that this was disparaging its
product, Colgate toothpowder. The Commission found that the shape
and colour combination of the can shown in the television
commercial resembled Colgates toothpowder can. Following the Novino
Batteries case, the MRTPC noted that the advertisement did not
explicitly mention Colgate. In fact, there may not have been any
intention of depicting the can to be that of Colgate. But, since
the advertisement created an impression among the viewers that the
can was of Colgate, it would be a case of disparagement. The
Commission took into account the nature of the Indian audience: ...
disparaging remarks about the uselessness of such toothpowder come
through a mysterious invisible voice.1/29/2013
- 33. Cherry Blossom Case The principle, thus, emerged that a
case of disparagement arises only if the product in question is
identifiable. Identification could be explicit or drawn from the
facts and circumstances. Thus, in the advertisement of Kiwi Liquid
Wax Polish, a bottle is described as X from which liquid is shown
dripping while from a bottle marked Kiwi, liquid does not drip.
From the shape of the bottle marked X and from the fact that Cherry
Blossom had a design registration for this shape, the bottle could
be identified with Cherry Blossom and the advertisement became a
case of disparagement. 1/29/2013
- 34. Colgate Dental Cream-Double Cream- Protection Case In June
1998, Colgate introduced its new brand of toothpaste as Colgate
Dental Cream-Double Protection (CDC-DP). It gave wide publicity
through print and television that the toothpaste was 2.5 times
superior to any ordinary toothpaste in fighting germs. Hindustan
Lever Ltd. moved the Commission alleging that the advertisements
disparaged toothpastes manufactured by it under various brand
names. It contended that a reference to ordinary toothpaste was to
all brands other than Colgate. The Commission was of the view that
a reference to ordinary toothpaste does not identify any specific
product. Thus, the Commission took the position that the claim of
2.5 times superiority of CDC-DP over any ordinary toothpaste did
not refer to any identifiable product or manufacturer. As a result,
it could not be a case of disparagement of goods. 1/29/2013
- 35. Godrej vs Vasmol Case The television commercial of Vasmol
Hair dye opened with a lady dyeing her hair with instant hair dye
made by mixing hair dye and developer contained in two cylindrical
bottles. The bottles were labelled as Sadharan (ordinary). The
picture then widened to show the anguish of the lady with falling
hair. The commentary attributed this to the use of inferior dye
containing harmful chemicals. The advertisement ended with the
picture of Vasmol 33 Hair Dye which is stated to contain Ayurprash,
a natural way of blackening the hair and strengthening the roots of
the hair. Godrej Ltd. was aggrieved with the advertisement. It had
products like Godrej Hair Dye and Godrej Kesh Kala for dyeing hair.
Godrejs contention was that the pictorial depiction of two
cylindrical bottles would identify it as its product. Godrej
claimed that its products were disparaged not only by insinuating
that these contained harmful chemicals but also by calling these as
Sadharan (ordinary). The Commission stated the principles as
follows: 1/29/2013
- 36. To summarize the interpretation of the Commission, an
advertisement could disparage other products and yet, it would not
be a case of disparagement so long as the disparaged product is not
identifiable. Is the law adequate to prevent unfair trade
practices? In the Indian context, should the balance in
interpreting the law not be tilted against such an advertisement?
The conflicting claims would need to be assessed in the context of
the constitutional provisions on the Fundamental Rights,
privileging the freedom to speak 1/29/2013
- 37. In the 1980s, during what has been referred to as the cola
Wars soft drink manufacturer Pepsi ran a series of advertisements
where people, caught on hidden camera, in a blind taste test, chose
Pepsi over rival Coca-Cola. The use of comparative advertising has
been well established in political campaigns, where typically one
candidate will run ads where the record of the other candidate is
displayed, for the purpose of disparaging the other candidate. The
most famous of these type ads, which only ran once on TV, consisted
of a child picking daisies in a field, while a voice which sounded
like Barry Goldwater performed a countdown to zero before the
launch of a nuclear weapon which explodes in a mushroom cloud. The
ad, Daisy", was produced by Lydon B. Johnsons campaign in an
attempt to prevent Goldwater from either winning the nomination of
his party or being selected. Another example took place throughout
starting in circa 1986, between the bitter rivalry between Nintendo
and Sega. Genesis does what Nitendont" immediately became a catch
phrase following the release of the Sega Genesis (known 1/29/2013
as Mega Drive in PAL countries).
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- 45. Thank YouKingsoft Officepublished by www.Kingsoftstore.com
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