Advertiser’s Freedom to Make Ads with “Generic Comparison” V/S Product Disparagement: Where to Draw the Line?

INTRODUCTION

Advertisement is seen by sellers as a critical tool to promote their product, grab the attention of new consumers, and retain existing consumers in this highly competitive product market. Thus, to ensure their product’s continued success, firms often engage in what is called “Comparative advertising.” Comparative advertising, in simpler terms, is a marketing strategy employed by firms where they highlight why their product is superior to their competitor’s product. In Colgate and Anr. v. Hindustan Unilever Ltd., it was observed that comparative advertising is a corpus of “commercial speech” which is protected under Art. 19(1)(a) of the Constitution of India. Things turn ugly, however, when firms indulge in “product disparagement,”, where they promote their product by defaming or denigrating their competitor’s product using misleading remarks. The challenge for the firms is that the boundary between comparative advertising and product disparagement is highly ambiguous, one needs to tread with caution to avoid any legal dispute. The recent case of Zydus Wellness Products Ltd. v. Dabur India Limited before the Delhi High Court is an example of this, where the court observed that an advertiser must have the freedom to make advertisements with generic comparisons and no objection can be raised unless the representation in the advertisement is absolutely misleading. The author of this article analyzes the ruling of the court in the above judgment and highlights its significance in the ever-evolving jurisprudence of comparative advertising and product disparagement.

FACTS OF THE CASE

The case concerns with a TV commercial (TVC) aired by the defendant that revolved around two girls who participated in a 100-meter race and were served orange drinks before the start of the race. It is shown that the girl who consumes the defendant’s “DABUR GLUCOPLUS-C ORANGE” drink wins the race. The defendant in the TVC claims that the girl who consumed its product won the race because its product contained “25% more glucose in every sip” as compared to its rival products. The plaintiff, who claims to be the market leader in orange glucose powder drinks, was aggrieved by the depiction in the TVC and approached the court seeking a permanent injunction against the impugned TVC. The plaintiff argued that the impugned TVC was a hyperbolic and serious misrepresentation of facts and gave the impression that all other glucose drinks, including the defendant’s drink, are inefficacious. The issue that arose before the court was whether the impugned TVC disparages or denigrates the plaintiff’s product (GLUCON-D TANGY ORANGE) or the product category.

ANALYSIS OF THE COURT

The first issue before the court was whether the impugned TVC could be classified as “comparative advertising.” According to the court, “comparative advertising” is a type of advertisement where the advertiser expressly or impliedly compares his product to a competitor’s goods or a product category. Further, the reference to such a product should be identified directly or indirectly and must not be a mere fleeting allusion.  Similarly in the present case, the court noted that in the impugned TVC, the plaintiff’s product was not identifiable in any manner, rather, the comparison was made with the broad orange glucose product category.

The next question before the court was whether the impugned TVC could be said to be disparaging in nature. According to the court, the law permits a person to exaggerate and highlight the features of his own goods, but the same cannot be done by belittling and disparaging the goods of others. The court referred to the principles laid down in  Pepsi Co. v. Hindustan Coca-Cola and Dabur India v. Colortek Meghalaya where it was held that the intent, manner, and overall effect of the advertisement should be considered while deciding the case of disparagement. Further, as stated above, in a case of disparagement, the aggrieved party’s product should be clearly identifiable and recognizable.

ON ADVERTISER’S FREEDOM TO MAKE “GENERIC COMPARISON” OF PRODUCT

The court opined that there is a big difference between a case where an advertiser engages in direct comparison and denigration of a competitor’s product as opposed to a mere allusion, indirect references, or a reference to a wholly unrelated category. In the view of the court, an advertiser would have greater freedom of advertising in the latter cases as compared to the former. The court asserted that the creativity of an artist cannot be stifled if it promotes or highlights the attributes of its product through a unilateral or relatively generic comparison. Further, this freedom cannot be curtailed merely on the ground that the generic comparison has a reference to a market leader unless there is a case for a decipherable comparison that is absolutely untrue or misleading. Consequently, the court ruled that an advertiser should be permitted to portray or highlight its product as being superior to or better than competing products by general comparison as long as it is made without specifically defaming or denigrating the competitor or its product. The court opined that absence of such freedom would significantly diminish the effectiveness of advertising.

The court relied on the ratio laid down in Dabur India Ltd. v. M/S. Colortek Meghalaya Pvt. Ltd., Colgate Palmolive Company v. Hindustan Unilever Ltd., Reckitt Benckiser (India) Pvt. Ltd. v. Hindustan Unilever Limited, where it was held that there cannot be a presumption that the plaintiff’s product is being targeted in a commercial if there is no explicit or direct mention of a competitor’s goods, nor can it be assumed that the marketing is targeted at the market leader solely on the basis of the market share. Applying the above principles, the court held that the impugned TVC merely highlights the qualities of the defendant’s product and doesn’t disparage either the plaintiff’s product or any other glucose orange drink. Further, in the absence of any disparaging utterance or serious misrepresentation of facts, the impugned TVC cannot be said to be disparaging just because it is unfavorable to the plaintiff. The court also noted that consumers are aware that advertisements are one-sided commentaries put out by manufacturers and sellers to promote their own products and are inherently biased in nature. Thus, considering the overall impact of the impugned TVC and the absence of any derogatory remark, the court refused to grant any injunction.

WAY FORWARD

Currently, there is no specific law on comparative commercial advertising in India. Generally, any issue or dispute that arises related to disparaging the trademark or trade name of registered brands is adjudicated by the courts and arbitration experts. However, the Trademark Act of 1999 contains a provision regarding the infringement of trademarks through unfair and discredited advertisements created by competitors. Section 29 of the Act says: A registered trademark is infringed by any advertising of that trademark if such advertising: (a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; (b) is detrimental to its distinctive character; or (c) is against the reputation of the trade mark.

In the present case, the court has ruled that advertising one’s goods by generic comparison are not prohibited in so far as it doesn’t defame or denigrate other competitors’ products. The court had rightfully followed its earlier precedents and observed that an advertisement should not be analyzed in a hyper-critical manner, ignoring the intent and overall effect of the advertisement while evaluating whether it is disparaging or not.

In the present case, both parties to the dispute were engaged in the FMCG business. The FMCG sector in India is a highly competitive market with well-known players who have been in the market for the past couple of decades. It is important for FMCG companies to safeguard their intellectual assets, as they are vulnerable to disparagement and comparisons over television commercials. The companies should be mindful of the TVCs aired by their competitors, as they’re often defamatory or denigrating in nature and can hurt brand value. Thus, it is imperative that companies take proactive measures to avoid any serious damage to brand value.