Comparative Advertising & Trademark Infringement

Advertisements are all about representation of a product or services to the end customers. It is one of the primary steps to launch a product and create awareness in the market. It also helps to analyze the future of a product when it reaches the end customers. It is a proven fact that without advertisements, the product cannot survive in the market. However, due to the wide range of options for each product, the customers get to opt for the option that suits them the best. To survive in this competitive world, the advertisers often come up with unique concepts to showcase their product as the best in the market.

To create awareness and to make the product best-selling in the market, the advertisers often resort to a practice of comparative advertisement. These comparative advertisements are done through media. However, it is unclear about its end effect on customers.

• Comparative advertisement is a unique practice where the manufacturing entity or advertisers compares its products and services with its competitors for the purpose of selling their product and to sustain in the market.
• The intention of this type of advertisement is to influence the customers by comparing the features, benefits, price, and other essential aspects of the competitors’ products.
• In this type of advertisement, the manufacturers may name a competitor or refer to them. They also emphasize the similarities or differences between the products.

It is very common nowadays that the manufacturing entity sometimes states that the advertised product is better than the competitor’s products. It is to be noted that during such advertisements, the manufacturer or advertiser cannot disparage the goods/services of its competitors. In case such advertisements disparage the goods/services of competitors, it amounts to trademark infringement. Further, it also creates unfair competition in the market.

Provisions under Trademarks Act, 1999

Trademark infringement in advertising is defined under Section 29 (8) of the Trademark Act, which states that a registered trademark is infringed by any advertising of that trademark if such advertising:

• Takes unfair advantage of and is contrary to honest practices in industrial or commercial matters,
• Damages its distinctive character, and
• Opposes the trademark’s reputation.

Further Section 30(1) states that comparative advertisements, involving a registered trademark, can be used by an individual to identify the goods and services. However, this must only be done with honest practice and with no aim of gaining any unfair advantage in the market. It comes to our understanding that in advertisements, using competitor’s trademarks is permissible until such use is fair and honest and should not disparage the goods/services of its competitors.

Apart from trademark regulations, India has the ‘Advertising Standard Council of India (ASCI),’ which allows competitive advertising if it is:

• Transparent,
• Based on facts, and
• Does not mislead potential customers.

The advertisement shall not offer the producer an unfair advantage over the competitor’s goods, services, or brand. The Trademark Act, 1999 does not explicitly define the terms ‘Honest practices, dilution, disparagement’. However, our Indian Judiciary defines such terms through various judgments.

In the case of Reckitt & Colman of India Ltd. vs. M.P. Ramchandram & Anr, the parties involved were basically manufacturers of two detergents, where ‘Robin Blue’ was the plaintiff and ‘Ujala’ was the defendant. The plaintiff alleged that the defendant, in their advertisement, had purposely used a bottle that was similar to the plaintiff’s product. The defendant, in their advertisement, presented the plaintiff’s product as inefficient and uneconomical. The court in this case held that the manufacturer or advertiser can claim their goods as the best, or even better than that of the competitors even if the statement is untrue. But, while making such comparison, they cannot state that the competitor's goods are bad, even if that is true. They cannot make any statement which might lead to disparagement of the competitor's goods.

Another landmark case that dealt with the meaning of word disparagement is Pepsi Co. vs. Hindustan Coca Cola Ltd. wherein the plaintiff, Pepsi Co., claimed Coca Cola had allegedly infringed their trademark and belittled the plaintiff’s products by calling Pepsi ‘Bacchon Wala Drink’. In addition, Coca Cola also used the same color combination on bottles as that of the products of Pepsi and named the drink ‘Peppi’. The court, while analyzing the meaning of disparagement, held that an advertisement is considered to be defaming if it is undervaluing, bringing discredit or dishonor upon the competitor's product.

Further in Britannia vs. Unibic Biscuits India, the complainant owns a registered trademark ‘Good Day’ for one of their biscuit-products. The respondent rolled out a biscuit called ‘Great Day’ that was supported with the tagline ‘Why have a Good Day, when you can have a Great Day!’ The complainant felt that this directly compared the respondent’s biscuit with their own ‘Good Day’ biscuits and states that consumers should not try to have their biscuit – Good Day – when they have the choice to have a ‘Great Day’ – which is the respondent’s biscuit. The plaintiff alleged that, by doing so, the defendant directly infringed their trademark ‘Good Day’. The Court issued an injunction against the respondent for belittling the plaintiff’s ‘Good Day’ biscuits. The Court took crucial aspects like the advertiser’s intent, the method used and the actual message that was conveyed to the public into account while deciding this case.

Remedies Available against Infringement of Advertisement

Where there is a right, there is a remedy. Any court not inferior to the district court can grant relief both in the case of infringement and passing off suits. Below are the remedies, the aggrieved party is entitled to:

Civil Remedies

• One of the common civil remedies that may be provided by the Court is an injunction. There are two types of injunctions that can be granted i.e., perpetual and temporary. In case the suit is supposed to be decreed and, thus, is of permanent nature, a perpetual injunction shall be granted. A temporary injunction is a kind of prohibitory relief that, if granted in favor of one party to the suit, will restrict the other party from doing or continuing to do the act mentioned in the injunction order till the disposal of the suit.
• The aggrieved party can claim damages in civil remedies.
• An aggrieved party can claim handling of the profit accounts or removal of the products that have been infringed.

Criminal Remedies

• As per Section 103 of the Trademarks Act, 1999 - 6 months of imprisonment which can be extended up to 3 years for infringing trademark rights.
• As per Section 104 of the Trademarks Act, 1999 - a fine of INR 50,000, which may be increased to INR 2 lakhs.

Honest Practice

The question of whether a particular advertisement is honest or not depends upon the consumer’s perspective. Generally, honest practice is not misleading, does not disparage the goods/services of competitors and does not create any confusion in the consumer’s mind.

Further the Trademark Act, 1999 certifies three types of comparative advertisements:

• If there is a bona fide use of the competitor’s trademark,
• If the advertisement is in accordance with the honest practices,
• If the advertisement does not take an unfair advantage of the reputation of the mark.

Therefore, in cases where no derogatory references have been made against any competitor’s trademark, no action shall be taken against the advertiser or manufacturer, even if the advertiser’s or manufacturer’s claims about their product is not true. Such bona fide usage of competitor’s trademark will come under honest practice.

Advertisements actually educate the customers about the product or services. Any information which misleads the consumers about the quality of the product does not come under the ambit of honest practice under the law.

It is imperative for brands to be more creative and come up with better advertisement ideas to survive in this extremely competitive world.

In 2007, Jet Airways, as part of a campaign, put up a hoarding that said, ‘We’ve Changed!’ To sustain in the market, Kingfisher also put up a hoarding with the phrase ‘We made them change!’ Jet Airways followed up by pulling down their hoarding right away, without sending any reply to Kingfisher, as there was no form of belittling of their brand or usage of Jet Airways’ trademark involved. Such a type of advertising does not contain any element that violates the IP rights of the competitors and comes under the ambit of honest use.

Conclusion

Based upon the above analyses and precedents, the advertiser or manufacturer must take due care while comparing the products or services with their competitors. Many ads portray the trademark of their rival’s product in a negative light by damaging the reputation of the product by criticizing it. The aim of comparative advertising is consumer welfare and not a business strategy.