Court clarifies the limits of comparative advertising

The law of comparative advertising in India permits a tradesman to declare his goods to be the best. He can also claim that his goods are better than those of his competitors, but he is not permitted to say his competitor’s goods are bad. Clearly, however, claiming superiority for one’s own product indirectly implies that competitors’ products are inferior. Nonetheless, the law permits this, unless the implication becomes explicit.

The rationale behind the courts having established such a principle is to preserve and encourage the competitive spirit upon which brands are built.

The law relating to disparaging advertising can be traced to the Indian Trademark Act 1999. Section 29(8) of the act provides that:

A registered trademark is infringed by any advertising of that trademark if such advertising: a) takes unfair advantage and is contrary to honest practices in industrial or commercial matters; or b) is detrimental to its distinctive character; or c) is against the reputation of the trademark.

However, Section 30(1) of the Act limits the above:

Nothing in Section 29 shall be preventing the use of registered trademark by any person with the purposes of identifying goods or services as those of the proprietor provided the use: a) is in accordance with the honest practices in industrial or commercial matters, and b) is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trademark.

In a recent case, decided in May before the Division Bench of the Calcutta High Court, the issue of disparagement was raised in a dispute between two consumer products companies, Hindustan Unilever and Procter & Gamble Home Products.

Unilever sought a permanent injunction to restrain Procter & Gamble from disparaging its products, Fair & Lovely and Pond’s White Beauty, and in any manner suggesting to the public that the Unilever products do not operate from within the skin and do not make it glow. Unilever was aggrieved that Procter & Gamble was running television commercials disparaging its fairness cream. It was accepted by Unilever that any disparagement was not by name, but Unilever claimed that the commercial subtly communicated to the viewer that products of other manufacturers were lacking something.

Unilever contended that niacinamide – the product that was used in both fairness creams – was the output of its research and had been patented. Procter & Gamble’s product was introduced only after the expiry of Unilever’s patent. Thus, as Procter & Gamble’s product contained the same component as Unilever’s, any claim suggesting that the other fairness cream did operate from within the skin was unwarranted.

The single judge who decided on the matter did not regard the situation to amount to disparagement; he reasoned that the targeted consumers of the product are not illiterate, but are average individuals who are reasonably well informed. Moreover, it was pointed out that the economic loss that accrued to Unilever as a result of the alleged disparagement remained to be proved.

Aggrieved by this order, Unilever appealed before the Division Bench, contending that the economic damage caused by such advertising would be gradual and not instantaneous, and also that advertising of a product rubbishing the product of another must be disallowed.

Relying on Colgate Palmolive (India) Ltd v Anchor Health & Beauty Care Private Ltd, Unilever alleged “unfair trade practice” on the part of Procter & Gamble since the claim that Procter & Gamble’s product had a new formula was not correct, and was tantamount to false representation and misleading the public. But in permitting such kind of advertising, it was pointed out by the court that the advertising on the part of defendants amounted to “mere puff” and it never extended beyond the permissible limits.

The guiding principles to be followed while granting injunctions in cases of a similar nature were laid down in Reckitt & Coleman of India v Kiwi TTK. These were:

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.
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.

After analysing the advertisements in the light of the above principles, the Bench was of the opinion that the advertisement showed a comparison between Procter & Gamble’s fairness cream and other products, but there was no attempt on the part of Procter & Gamble to denigrate Unilever’s product specifically. It was a general comparison to indicate that Procter & Gamble’s product was the best, or “indirect comparative advertisement”. It was, therefore, permissible.

The judgment strikes a fine balance in a situation where the intellectual property rights of multiple parties are involved, and keeps in mind the legislative intent behind permitting comparative advertising, i.e. of encouraging competition. Thereby, it promotes trade and development.

Manisha Singh Nair is a partner at Lex Orbis, an intellectual property practice law firm headquartered in New Delhi