Product disparagement and nominative fair use: an understanding

By

Sakshi Shairwal

Siddharth Tripathi

1) INTRODUCTION

Advertising is a significant factor in choosing a Product’s Future Growth. It is the mode of information that it is the best and proven strategy for drawing in new clients to the business. Because of the large number of items accessible to customers, advertisers regularly compare their items with those of competitors. On a similar note, Comparative advertisement implies the advertisement of a specific item, or service by comparing it against a contender's item to show why one's item is superior in value.

Advertisers much of the time make their cases by contrasting one item or service with the product of the competitor. The point when that advertisement is misdirecting or false and goes too far into a sort of false advertisement is as called product disparagement. Product disparagement - additionally called commercial disparagement, trade maligning or slander of goods- is a false assertion about the product that harms its creator.

Business Organizations have documented product disparagements claims over:

• Bogus or deceiving correlations in promoting

• False proclamations about a competitor item's quality, valuing, or different viewpoints

• Fraudulent indictments of unscrupulousness, patent encroachment, or other negative strategic approaches by the competing organization

• Putting articles in the media with negative proclamations about a competitor.

• Advertising an item using a logo, Packaging, or different symbols the same as those of a competitor

• Online product disparagement and Trademark encroachment

Recently, a Hindustan Unilever brand, Domex, has launched another promotion campaign across print, advanced and different media, some of which unequivocally analyze itself to Reckitt Benckiser's brand 'Harpic', a toilet cleaner.

2) LEGAL POSITION ON COMPARATIVE ADVERTISEMENT

The monopolies and restrictive trade practices (MRTP) act, 1984(now repealed) was the principal legislation in India which governs unfair trade practices, by way of encouraging competition and discouraging monopoly. Under the MRTP law, The Delhi high court for the first time dealt with the issue of comparative advertisement in the case of Reckitt & Colman of India Ltd. V. Kiwi TTK Ltd.[1], wherein the court opined that the competitor can show and claim his product to be the best as compared to his competitor, without defaming rival products. Also there can be no action of claim of defamation or unfair trade practices for the simple reason that exaggerating characteristics of own product does not amount to unfair trade practices. Although the concept of comparative advertisement was prevalent under the regime of competition law, it was incorporated in the IPR jurisprudence in the year 2002 with the amendment of trademark act, 1999.

The law on ‘comparative advertising and use of a competitor’s trademark could be summarized as:

(A) The primary objective of Section 29 (8) and Section 30 (1) of The Trademarks Act, 1999, is to allow comparative advertising. These statutory provisions allow comparative advertisement so long as it in line with the permissible and legal limits. Such advertisement must not be detrimental or is detrimental to the reputation of real product with which it is compared.

(B) Until the use of competitor trademark is honest without any guilty intention, mentioned under section 29(8) and 30(1), there is nothing wrong to advertise the competing products and using registered trademark to identify them. The term “in accordance with honest practices”, under the above-mentioned section is wide enough which is to be understood in a manner when the advertisement is detrimental to repute of the trademark owner, such representation is dishonest.

(C) There will be no infringement except if the use of the advertisement isn’t as per fair practices.

(D) Statutory or industry-concurred implicit rules are not adequate guide regarding whether a practice is real and honest for the purposes of Section 29 (8) and Section 30 (1). Trustworthiness must be measured against as what is sensible and reasonable for the advertisements for the goods or services being used.

(E) It ought to be borne as a primary concern that the overall public are utilized to these methods of advertising.

(F) The Act doesn’t force on the courts an obligation to attempt to implement through the enactment a stricter norm than the overall population would anticipate from an advertisement.

(G) An advertisement, which is fundamentally deceptive is not honest for the purposes of Section 29 (8) and Section 30 (1). This point was discussed in the case of Godrej Sara lee Ltd. v. Reckitt Benckiser Ltd.[2], The court held that the advertiser has the right to represent and boost the characteristics of its goods as compared to that of competitors by expressing its technological superiority. The court was of the view that simply compared the best characteristics of products in comparison to competitor’s products will not in any circumstances amount to disparagement.

(H) If the foundation of an advertisement, as a whole, legitimizes the depiction then regardless of whether it is misdirecting for interlocutory purposes, it ought to be allowed.

(i) A minute textual examination is not something, which a reasonable reader of an advertisement embarks upon. A small text-based assessment isn't something, which a sensible reader of an advertisement embarks upon.

(J) The court ought to in this way not urge a minute way to deal with the construction of an advertisement on a movement of interlocutory relief.

In case of the “Pepsi Co. Inc. v. Hindustan Coca Cola Ltd.”[3] the Delhi High Court laid out the contemplations while deciding the issue of comparative advertisement:

I. Commercial expectation of the advertisers in regard of what they are attempting to accomplish to advance their merchandise;

II. The most vital part is the idea of the business. It is slandering if the strategy is deriding and condemning, yet it isn't noteworthy if the way is simply to show that one's item is predominant without belittling the result of others.

III. The business' plot and the message it is endeavoring to pass on.

At the point when we apply the above tests, obviously the advertisement of Hindustan Unilever for its item Domex is criticizing the picture of its rival item, Harpic of Reckitt Benckiser. It does as such by attacking Harpic as a toilet cleaner and scrutinizing its utility in containing mal odour and sanitizing the washroom over a huge period. The following inquiry is whether Hindustan Unilever can protect themselves on the grounds of nominative fair use.

The promoting of one's own products isn't precluded. In was seen by the Hon'ble Supreme Court on case of “Tata Press Limited v. Mahanagar Telephone Nigam Limited &Ors”[4] that under Article under “Article 19(1)(a) of the Constitution, which deals with freedom of speech and expression, the right to commercial speech" is perceived. In any case, it's a given that this right isn't limitless in nature and ought not be mishandled.

3) “SHOULD ALL PARAMETERS OF RIVAL PRODUCTS BE COMPARED?”

In comparative advertisement specific characteristics of rival products are compared and place them beside each other for the consumer. This issue was raised in the case of Horlicks v. Heinz, where the competitors get peeved that other better features of the product have not been shown that would have place then on better economic level. The Delhi high court was clear on its grounds mentioning that it was not necessary to show all characteristics and it was open to an advertiser to highlight only some special characteristics of its products in comparison to rival products. However, such comparison must not be mala fide and deceitful that would have the tendency to lower down the economic value of the product. There are no guidelines regarding minimum number of characteristics that should be compared in a comparative advertisement, as there is not legal mandate to disclose every characteristic in comparative advertisement. In order to succeed in a case of product disparagement the plaintiff must establish the following requisites- 1- A mala fide and deceitful statement of fact has been made about his product. 2- That the statement used to advertise the product has the potential to mislead, deceive substantial segment of customers. 3- That the deception has the potential to influence the purchasing power of consumers.[5]

Moreover, the court while adjudicating whether the controversial advertisement disparages the plaintiff product’s or not, should take into consideration the intent of advertisement, theme of advertisement and its manner. Out of these, manner and intent of advertisement is of primary importance because if manner is such that it would lead to product disparagement. However, if the manner is only to show one product’s as best without harming or derogating other’s product then it is valid.[6]

4- LEGAL VALIDITY OF COMPARATIVE ADVERTISEMENT

Comparative advertisement is legal if it meets certain legal requirements. The advertising standard council of India (ASCI) laid down regulations in its code for self-regulation of advertising content in India for making comparative claims. This means that if the advertisement has clarity regarding the aspects that are compared and these are in the “interest of vigorous competition and public enlightenment” such advertisement is legally valid. Also, comparative advertisement must be referred only in relation to similar products that the meet the like needs and are intended for the same purpose. The comparison between the rival products must be accurate and factual and must meet the intended purpose which must not mislead the consumers either about the advertised products or which is compared. On the same note, the compared advertisement must not attack, discredit or unfairly malign the products which can potentially harm the products of the real owner. A key test to determine whether an advertisement which is compared with other product is disparaging or contain(s) misleading information which affects the economic behavior of such product. In the case of Havells India Ltd. V. Amritanshu Khaitan[7], the Delhi high court mentioned that the certain degree of trade puffery is acceptable which does not degrade the value of competitor products or put them in bad light. The Hon’ble court held that it is settled principal of law that the advertiser at the best can sell his product but at the same time cannot degrade the products of the competitor.

I) Constitutional validity of comparative advertisement-

Any advertisement comes within the purview of right to commercial speech which is protected under article 19(1)(a) of the Indian constitution. However, it is restricted and limited right under situations mentioned under article 19(2) of the Indian constitution. In the case of Hamdard Dawakhana v. Union of India[8], the supreme court for the first time considered whether the advertisement is protected and comes under the purview of article 19(1)(a). the supreme court held that commercial advertisement should not be protected under article 19(1)(a) of the constitution since it comes under the ambit of trade and commerce and it has no relation to ideas- social, political, economic or human thought. However, the apex court in the case of Tata press Ltd. v. Mahanagar Telephone Nigam Ltd.[9], overruled its earlier decision and upheld that the “commercial speech” is a part of freedom of speech guaranteed under article 19(1)(a) of the Indian constitution.

II) Is the Defense of Nominative Fair Use Available to Hindustan Unilever?

Section 30(1) of the Act legitimizes comparative advertisement, approving the utilization of an enrolled trademark to distinguish products and services of the competitor however such utilize should just be done as per the genuine and fair-trade practices with no mala fide purpose to exploit competitor goodwill.

Section 30(2)(d) of the Act, nominative fair use by an third party doesn't qualify as trademark encroachment if neither the reason nor the impact of the utilization of the mark creates any turmoil as to trade origin. In its most fundamental structure, nominative fair utilization of a trademark is a lawful doctrine that can be utilized as a defence in certain sorts of trademark encroachment cases, like when an enlisted brand is utilized by another person to allude the mark proprietor's product and services. This utilization is considered nominative since its "names" the real proprietor of the imprint.

In “Consim Info Pvt. Ltd v. Google India Pvt. Ltd.”[10] the Madras High Court held that any unauthorized utilization of trademark should meet three tests to be viewed as a “nominative fair use” to be specific,

• The item or service being referred to should be difficult to distinguish without the utilization of the trademark;

• Only as a significant part of the mark or marks as is sensibly important to recognize the product or service ought to be engaged with; and

• The user should do nothing that recommends sponsorship or underwriting by the trademark proprietor when utilizing the mark.

In the above-mentioned advertisement, there is most certainly no idea of sponsorship or endorsement. Nonetheless, it isn't hard to recognize the item, for example Domex, without referring to Harpic. It very well may be additionally contended that the reason for the advertisement to introduce the Domex as a smell remover might have been accomplished without referencing or alluding to the Harpic trademark. Accordingly, the protection of nominative fair use isn't accessible for Hindustan Unilever.

However, In the case of “Havells v. Amritanshu,”11] the Delhi high court decided that an advertisement, for it to qualify as nominative fair use, may feature simply a particular nature of the item that recognizes it from that of a competitor as long as the correlation is precise and valid. Accordingly, Hindustan Unilever can take the guard of legitimate and genuine representation of facts. In any case, this is additionally exposed to the arrangement of fair-trade practice under section 30(1).

5) CONCLUSION

Section 29 (8) and Section 30 (1) of the Trademarks Act, are satisfactory to resolve issues related with Trademark encroachment, made in the garb of comparative advertising. Legal precedents on the issue have additionally clarified that there is no damage in contrasting products with those of a competitor, but the comparison ought to be reasonable and ought not carry dispute to the competitor's product or trademark, for example comparative advertisement is allowed but comparative advertisement prompting product disparagement is not permissible. The position is pretty much equivalent in almost all the countries, which permit utilization of another trademark in comparative publicizing.

There is no iota of doubt that comparative advertising is helpful as it expands consumer mindfulness and therefore, it ought to be permitted. Also, it allows an advertiser to set up his image in the market by expressing his prevalence over the setup brands. But at the same time, there must be guidelines to check abuses. In the event that the courts had acknowledged the recommendation that trade rivalries ought should be settled in the market, it would have made extraordinary bias to the public interest; as the question isn't of choosing which product is better, but of public awareness. Since, as we say that comparative advertisement builds public awareness, misleading and deluding advertisements should not mislead the public.

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