For better or worse: The legal limits of comparative ads

Recently, India saw the first legal dispute related to COVID-19. Roughly 12 years after Reckitt Benckiser (RB) sued and got an order in its favour against Hindustan Unilever Limited (HUL) before the Delhi High Court in a lawsuit filed against HUL’s disparaging ads, HUL, in March 2020, filed a lawsuit against RB, alleging that the latter is disparaging the former’s Lifebuoy product through its advertisements for Dettol, being aired during the period of COVID-19.

HUL, the proprietor and rights holder of Lifebuoy Soap, filed the subject lawsuit for disparagement before the Bombay High Court, arguing:

1. The display of a soap bar that had the same unique shape, configuration and colour as HUL’s Lifebuoy soap in the advertisement, to portray that bars of soap are ineffective, clearly indicates RB’s intentions of maligning the Lifebuoy product; and
2. While on one hand, international bodies like the World Health Organization (WHO) and various nations across the world are insisting that the most effective way to stay safe from COVID-19 is to wash your hands with soap and water, RB is creating a scare and panic among the masses by claiming that soap is ineffective compared to RB’s liquid hand wash.

In the wake of the lawsuit, RB consented to suspend the ad temporarily. However, such disputes do invoke several thoughts.

The commercial angle

It is estimated that comparative advertising may have been used by brands since the 18th century in England, and has been widespread in all parts of the world, including India.

While marketing literature is largely divided on the effects of comparative advertising, the following factors have been considered to be determinant of the effectiveness of this type of advertisement:

1. The nature of the comparison. Comparative advertising works by either pointing out the similarity between the advertised brand and the compared brand, or pointing out why the compared brand is inferior. It has been observed that in the latter, the advertisement is more likely to lower the perceptions of the compared brand;
2. The familiarity of the advertised brand. It has been observed that when the advertised brand is unfamiliar, and consumers haven’t had the opportunity of positioning the brand, a comparative advertisement with a familiar compared brand is likely to be more effective and believable;
3. Measures of effectiveness. Various other factors play a major role in determining the effectiveness of an advertisement, such as attention, brand recall, persuasion and perceived similarity. It has been observed that imparting credible information in an advertisement has a more positive effect on the consumer. It has also been observed that brand recall is higher in cases of comparative advertising as opposed to non-comparative advertising.
   While comparative advertising is lawful and, in many cases, seen to be effective, sometimes the line between puffery and disparagement can become blurry, leading to actionable claims. Nevertheless, companies and businesses have continued to use comparative advertisements with the objective of targeting loyal customers of the other brands in attempts to sway them towards the brand being advertised.

Disparagement under Indian law

Comparative advertising and disparagement have been considered by courts in India on multiple occasions under Common Law, and it has been held that “discrediting the product of a competitor through commercials would amount to disparagement”. The following factors have been established by the judiciary to ascertain whether a comparative advertisement has crossed over the acceptable limits of puffery and into disparagement:

1. Whether the statement complained of was made of and concerning the plaintiff’s goods;
2. Whether the statement was false;
3. Whether the statement was published with an intention to injure the plaintiff; and
4. Whether the plaintiff suffered damage as a consequence of the statement.

Conclusion

Millions are spent every year by companies on comparative advertising, and many times these advertisements are taken down due to claims of disparagement. Yet these advertisements are widespread.

Studies suggest that comparative advertisements induce mental impressions and imagery processing by consumers is much higher. Such intangible reasons do play a role in consumer choices, which, have been recognized in Shree Nath Heritage Liquor and Ors v Allied Blenders & Distillers.

The commercial viability of these advertisements may not be up to us to determine, however, being aware of the undetected persuasion and harm that can be caused, it does fall on us to ask if the well-settled legal factors to hold an advertisement disparaging include such intangible factors.

Tusha Malhotra is a partner and Pankhuri Malik is an associate at Anand and Anand