Electronic copy available at: http://ssrn.com/abstract=1896367

Comparative Advertisement and Infringement

of Trademarks:

A perspective from Consumers

Word count: 2990

Submitted By: Apoorva Sharma

Mailing Address: Room No. A-316

Rani Laxmi Bai Hall of Residence,

IIT Kharagpur, West Bengal-721302

Mobile No. 09547166442

Email: asapoorvasharma2@Gmail.Com

Student of: Rajiv Gandhi School of Intellectual Property Law

IIT Kharagpur, West Bengal- 721302

Year of Study: IInd Year.

Electronic copy available at: http://ssrn.com/abstract=1896367

Comparative Advertisement and Infringement of Trademarks:

A perspective from Consumers

INTRODUCTION:

In words of Leo Burnett-“Good advertising does not just circulate information. It penetrates the

public mind with desires and belief.” And this is what an advertisement does, it not only sells a

product, it makes the product a part of one’s life which is necessary and without which a person

cannot live life happily. The last half of the century has seen a remarkable change in the

marketing strategy adopted by the companies and the value the society attaches with the

advertisements. Advertising world is no longer confined to signing big celebrities to endorse the

product or to bring out the emotions people attach with it. Today, the business market is

centered on building one brand’s superior claim over the other.

Companies have started adopting a very cut-edge approach to leave their competitors far behind

in the race to show their products as the best amongst the lot. They adopt different kinds of

advertising techniques such as covert advertisement or celebrity advertisement to bring their

products to catch the attention of its consumers. Some of them also make use of their rival’s

trademarks/ logos / trade dress and comparing their products. Such form of advertising is

known as comparative advertising.

In simple words; comparative advertising is a form of advertising in which two or more brands

of same generic products are compared in terms of one or more products or attributes. It

compares the product or services of one company with that of other or with those of

competitors. These advertisements are designed to highlight the advantages of the goods and

services offered by the advertiser as compared to those of a competitor. Although, comparative

advertisement has not been defined in the Indian statute, the UK Regulations define it as an

advertisement which “explicitly or by implication, identifies a competitor or goods

or services offered by a competitor”.

These advertisements are not only centered on the merits of the product as compared

to others but also highlight the differences between the products. They may state that

the advertised product is “better than” (superiority claims) or “as good as” the

competitor’s (equivalence or parity claims). Comparative advertisements can be classified

into two types- advertisement that compare the competing products directly and the one in

which comparison is done indirectly. While in some countries, like UK, both form of

comparative advertisement are allowed, there are other countries where comparative

advertisement is not allowed at all. However, it must be noted that the countries in which

comparative advertisement is legal, it is allowed as long as while comparing the goods, a trader

does not project or say that the goods of his competitor are inferior or undesirable. All he can do

is puff up his products but he cannot belittle the products of his competitor. In India puffery is

allowed as long as it is subjective i.e. an average customer is likely to comprehend it as a puff.

Thus, a company is allowed to puff his products even if such a statement is untrue, however, it

should be kept in mind that such a statement is not objective i.e. which is likely to be believed by

the consumers coz’ in such a case it is actionable.

USE OF COMPETITOR’S TRADEMARK IN COMPARATIVE ADVERTISING:

In an era where the whole world is considered as one global village, trademarks play an

important role to distinguish the products of one business house from another. Trademark can

be defined as a mark or symbol which distinguishes one product from other product of similar

nature. Its aim is to identify the source of a product and to distinguish that product from

product of similar nature. It lends individuality to a product which helps the customers to

identify the product placed with products of similar kinds. Trade mark not only identifies the

product of its origin but it also guaranties its unchanged quality and further helps to build a

brand image by advertises the products. In a rat race to present their products as the best,

companies adopt advertising techniques that make use of trademarks, trade names, and other

trade symbols combining informational and persuasive elements. Not only has the use of their

own trademark gained popularity also the use of their counterpart’s trade mark is fast catching

up.

In Advertising and Public Interest1, Ralph Brown argues that trademarks by themselves were

worthless to the public; the public’s interest inhered in the ability of trade symbol to inform and

prevent confusion. He further asserts that the legal protection surrounding trade mark should be

driven by analysis of the degree to which advertising itself served public interest.

The public's chief interest lay in the promotion of competition through advertising, Ralph

insisted, by providing information to potential consumers about the products they might choose

to consume. Where the law enhanced or protected advertising's informative function, it 1 Ralph S. Brown, Jr., Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 YALE L.J. 1165,

1206 (1948), reprinted in 108 YALE L.J. 1619, 1659 (1999).

encouraged competition and advanced the public interest2. According to him, the focus of law

should be to protect the integrity of trade symbol in order to prevent consumer confusion or

deception; that would protect the ability of product sellers to supply information through

advertising.

The main crux of Ralf’s analysis was that trademarks alone had no legitimate intrinsic value apart

from the symbolized information they provided about the products they accompanied. However,

looking today at the way companies use their trade marks to promote their symbols, the

aforesaid assumption seems untrue. Nowadays, consumers seem to attach lot of value and faith

to the trade mark and the product it is associated with. It will not be wrong to say that these

days’ trade symbols are themselves often products devised for no better reason than to serve as a

vehicle for the trade symbol du jour3.

Since trade mark is an intellectual property owned by a company, it has all the rights to protect it

from being misused. Any unauthorised use by a competitor in which it seeks to ride on the coat

tails of the mark and benefit from the mark’s goodwill and reputation results in the dilution of

the mark. A competitor can use its rivals trademark in accordance with the honest practise in

industrial commercial matters and as long as such use does not take unfair advantage or or is

detrimental to the distinctive character and or reputation of mark. It must be kept in mind that

even though the company is allowed to puff up its produt and declare it as best in the world

while comparing it with its rivals products, it cannot in anyways say or depict that the products

of his rival are bad. Slander or defamation of the rivals trademark is also not permissible.

THE LAW RELATING TO COMPARATIVE ADVERTISEMENT IN INDIA:

The advertisement which shows the comparison between the products belonging to same class

carry with it the risk of being involved in inaccurate comparisons between goods and services of

different undertakings resulting in unfair trade practises and thereby misleading the consumers

regarding the merits of the products.

The Consumer Protection Act, 1986 protects two key rights and the right of the

consumer to be informed about the quantity, potency, purity, standards and price of

goods to guard against unfair trade practices; and the right to consumer education.

2 Jessica Littman, Breakfast with Batman: The Public Interest in the Advertising Age, The Yale Law Journal, Vol.

108, No. 7 (May, 1999), pp. 1717-1735 3 Ibid

The provision on comparative advertising and product disparagement with respect to

trademarks is given in sections 29(8) and 30(1) of the Trade Marks Act, 1999.

Section 29(8) enumerates the situations where use of another's mark in advertising can

amount to infringement, if such use does not comply with the conditions laid down

under the section. At the same time, section 30(1) makes such use, an exception, if it is

in accordance with the conditions provided under this section. Section 29(5) of the Act

provides that the use of a registered mark in an advertisement is infringing if it takes

unfair advantage of and is contrary to honest practices in industrial or commercial

matters; if it is detrimental to the distinctive character of the trade mark; and if it

affects the reputation of the trade mark. On the other hand, Section 30(1) creates an

exception to the owner's right to use the trade mark by permitting third-party use in

comparative advertisement provided it is in accordance with the honest practices in

industrial or commercial matters. Section 30(1) provides that comparative

advertisements which are fair and accurate do not harm the consumers and accordingly

should not be prohibited by the use of registered trademarks by third parties.

Apart from the above mentioned statutes concerning the law relating to comparative

advertisement in India, the guidelines of "Advertising Standards Council of India (ASCI)"

specifies that comparative advertisement is permissible if the aspects of the products compared

are clear, factual and substantial, such comparison does not confer artificial advantages on

advertiser, there is no unfair denigration of the competing product and is unlikely to mislead the

consumer.

The Supreme Court held in Tata Press Ltd. v. Mahanagar Telephone Nigam Ltd 4 that "Public at large is

benefited by the information made available through the advertisement." As a matter of fact the very basis of the

law relating to Trade Marks is also the protection of public interest only, since the courts think of an unwary

purchaser, who may buy a spurious product on the mistaken impression that it was brand 'x'. The same logic

should form the basis for an action in respect of disparaging advertisements also.”

In Reckitt Benckiser v. Hindustan Lever5, the court noted that Sections 29(8) and 30(1) of the

Trademarks Act 1999 address the issue of comparative advertising and product disparagement

with respect to trademarks. Justice Badar Durrez Ahmed in numerated the following legal

4 AIR 1995 SC 2438. 5 2008 (38) PTC139

requirements that must be met to establish commercial disparagement in cases of comparative

advertising:

- A link between the product shown in the advertisement and the plaintiff’s product

In determining whether such a link exists, the Courts must adopt the test of “an average

person of imperfect recollection”, who must be picked from the target group of users of

the product sought to be slandered or disparaged.

- A tradesman is entitled to declare that his goods are the best in the world; and that they are

better than his competitor’s goods – even if such declarations are untrue. In doing so,

however, he may not say that the competitor’s goods are bad.

- The intent and the manner in which the defendant’s goods are advertised are relevant.

Merely puffing one’s goods is not actionable, unless this results in slander of the

plaintiff’s goods.

Similar decision was given by the court in case of Hindustan Lever Limited v Colgate Palmolive (I)

Limited6 and Pepsi Co Inc v Hindustan Coca Cola Ltd 7, where both Colgate and Hindustan Coca Cola

Ltd liable for disparaging their competitors’ products, respectively. Even though in both

advertisements the competitor’s product name could not be heard but could clearly be made out

from lip movement. Such a method of circumventing the law was held to fall clearly within the

ambit of disparagement. The courts further stated that any claims made in comparative

advertisements must be backed by verifiable statistical data.

In case of Colgate-Palmolive (India) Limited vs. Anchor Health & Beauty Care Private Ltd8, the Madras

High Court for the first time looked at the comparative advertising claims taking into account

the principles of “unfair trade practice” and the Consumer Protection Act, indicating that a

comparative advertising claim involves not just the rights of the two parties but also the interests

of the consumers. In paragraph 67 of the judgement, the court recognised the rights of the

consumers and held that:

6 AIR 1998 SC 526

7 2003 (27) PTC 305 (Del)(DB)

8 2009 (40) PTC 653 (Mad.)

“On the basis of English precedents, recognises the right of producers to puff their own products even with untrue

claims, but without denigrating or slandering each other's product. But the recognition of this right of the producers

would be to de-recognise the rights of the consumers guaranteed under the Consumer Protection Act, 1986. To

permit 2 rival traders to indulge in puffery, without denigrating each other's product, would benefit both of them,

but would leave the consumer helpless... If on the other hand, the falsity of the claim of a trader about the quality

and utility value of his product is exposed by his rival, the consumer stands to benefit, by the knowledge derived out

of such exposure. After all, in a free market economy, the products will find their place, as water would find its

level, provided the consumers are well informed. Therefore, it is only on the touchstone of public interest that such

advertisements are to be tested.”

Therefore, on one hand the Madras High Court has taken into account unfair trade practise and

consumer protection into account, on the other hand, the Delhi High Court in Reckitt Benckiser v.

Hindustan Lever9, maintained that mere puffery is not actionable. In this case the court allowed

puffery only in context of tort claims between competitors. They did not in any way sanction

puffery if it violated statutory provisions of the Consumer Protection Act.

POSITION IN USA AND EU:

In the United States comparative advertising has been a well-recognised and acceptable form of

advertising. The Federal Trade Commission has supported the use of brand comparisons where

the bases of comparison are clearly identified. Comparative advertising, when truthful and non-

deceptive, is a source of important information to consumers and assists them in making rational

purchase decisions. Comparative advertising encourages product improvement and innovation,

and can lead to lower prices in the marketplace."10

On the other hand, initially the European countries were hostile to the idea of comparative

advertisement but after the EC legislation, comparative advertisement was accepted as a

legitimate means of providing product information to the consumers. The European Directive

on Comparative Advertising11 is intended to promote "fair" comparative advertising between

competitors. "Fair" comparative advertisements must not mislead or confuse the consumer and

must not denigrate or discredit a competitor's trade mark. It must not hold out goods and

9 2008 (38) PTC 139 (Del)

10 Statement of Policy Regarding Comparative Advertising, Federal Trade Commission, Washington, D.C., August 13, 1979

11 Directive 97/55

services as imitations of the goods or services of the trade mark owner. And neither should it

take unfair advantage of the goodwill or reputation in that trade mark.

Therefore, by comparing the laws relating to India, USA and EU, it is clear that use of trade

mark in comparative advertisement is legitimate as long as the emphasis is on promoting the

product based on the differences and not the similarities between the two products.

Further, the advertisement should inform and not mislead the consumer.

COMPARATIVE ADVERTISING- CONSUMER PROSPECTIVE:

In a century where consumers are spoilt for choices, comparative advertisement plays an

essential role by making a point of difference between the company’s products from the rest.

The whole idea is to make a consumer centric advertising campaign by carefully highlighting the

merits of your products while comparing it with that of the competitors. Differentiating one’s

own product from the rest and compelling differentiation; works best in case where one is trying

to establish its identity as a viable alternative in a crowd of similar lined products. For instance,

Tide’s ability to compete with Rin and Surf excel was driven by price and parity, which in turn

shifted the buying criteria of many consumers. If used carefully, comparative advertisements

help to bring out more information regarding products giving opportunity to the consumers to

make an informed choice. It can stimulate competition between suppliers which intern works to

the consumer’s advantage. It not only helps the consumers to make an informed and efficient

choice it also helps to maintain market transparency. Comparing the two products works in

public interest. The competition between the products to win more consumers results in

improvement of product quality as well as slashing of market prices.

However, on the other hand, these advertisements have made the consumer more sceptical

about the claims made by a company about its product being superior as the accurate

information has not always been provided. Consumer has an expectation of both fairness and

balance and if not done carefully, these advertisement leads to more confusion and anxiety in the

minds of the consumer.

CONCLUSION:

Consumer welfare is the by- product of market competition. According to Ralph Brown

while devising the rules of trademark law focus should be on competition. As the realm of

trademark protection expands, it necessarily does so at the expense of competition12.With an

12

Supra at footnote number 2

aim to have a larger consumer base many companies make use of the power of

advertisement as business strategy to maintain, enhance and develop brand equity.

Many of them enter into comparative advertisement using the design trademark of their

rival’s product. Even though comparative advertisement is legal in India, care must be

taken while using the trademark of others. Advertisement involving the use of

competitor’s trademark should emphasise on promoting the product based on

difference and not on similarities between the two products. Comparative advertisement is

allowed as long as while comparing the goods the trader does not belittle the products of his

competitor. Since the main focus of advertisement is to attract the consumers to a particular

product, care must be taken as to what information it provides. If done in a fair manner these

advertisements helps the consumer to make an informed and efficient choice. The aim of

comparison should be for consumer welfare and not to befool them.