Comparative advertising, disparagement and the limits of trade mark rights

1. The statutory framework

Section 29(8): a registered mark is infringed by any advertising of it if the advertising

• (a) takes unfair advantage of 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 trade mark.

Section 30(1): nothing in section 29 prevents the use of a registered mark by any person for the purpose of identifying goods or services as those of the proprietor, provided the use is in accordance with honest practices in industrial or commercial matters, and is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the mark. The provision is drawn from section 10(6) of the UK Trade Marks Act, 1994.

Read together, the two provisions permit honest comparison and forbid comparison that misleads, free-rides or denigrates.

2. Commercial speech

In Tata Press v. Mahanagar Telephone Nigam, 1995 INSC 435, the Supreme Court held that commercial advertisement is protected by Article 19(1)(a), since the public has a right to receive commercial information. False, misleading, unfair or deceptive advertising is not protected. Comparative advertising cases begin from this premise: advertising is speech, and restraint must be justified.

3. Puffery and disparagement: the Indian cases

In Reckitt & Colman of India v. M.P. Ramachandran (Calcutta High Court, 1999), the court stated five propositions, which later courts adopted:

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 say that his goods are better than his competitor’s, even though it is untrue.
3. For that purpose he can compare the advantages of his goods over the goods of others.
4. He cannot, while saying his goods are better, say that his competitor’s goods are bad. That would be slandering the competitor’s goods, which is not permissible.
5. If there is no such defamation, there is no action; if there is, the competitor may seek damages and an injunction.

The same approach had been taken in Reckitt & Colman v. Kiwi T.T.K. (Delhi High Court, 1996).

In Pepsi Co. v. Hindustan Coca-Cola (Delhi High Court Division Bench, 2003), a Coca-Cola advertisement for Thums Up showed a child rejecting a drink called “Pappi”, with Pepsi’s globe device and colours visible, as “bachchon wali drink”. The court held this to be disparagement, and identified the factors: the intent of the commercial, its manner, and its storyline and message. Ridiculing the rival product, as opposed to comparing it, goes beyond permissible puffery.

In Dabur India v. Colortek Meghalaya (Delhi High Court Division Bench, 2010), the court reconciled Tata Press with disparagement law: an advertisement may be hyperbolic and may puff the advertiser’s product, but it may not be false or misleading about the rival’s product, and it may not show the rival’s product in a demeaning way. Courts have since held that truthful comparative claims backed by data are permitted, while claims based on selective or untested data are not.

4. The EU model

Directive 2006/114/EC on misleading and comparative advertising permits comparative advertising if, among other conditions in Article 4, it is not misleading, compares goods meeting the same needs, objectively compares material, relevant, verifiable and representative features, does not discredit or denigrate the competitor’s marks, does not take unfair advantage of their reputation, and does not present goods as imitations or replicas of goods bearing a protected mark.

• O2 Holdings v. Hutchison 3G (CJEU, 2008): a comparative advertisement using a sign similar to the competitor’s mark does not infringe where it meets the Directive’s conditions and causes no confusion.
• L’Oréal v. Bellure (CJEU, 2009): comparison lists showing which cheap perfumes “smelled like” L’Oréal perfumes presented the goods as imitations, and so took unfair advantage, even without confusion or harm to the original.

The US allows comparative advertising freely; the Federal Trade Commission has encouraged it as useful information to consumers, and the remedy for falsity is an action under section 43(a) of the Lanham Act.

5. The other limits on the right

Descriptive and other uses (section 30(2))

• (a) use indicating kind, quality, quantity, intended purpose, value, geographical origin, time of production or other characteristics;
• (b) use outside the scope of a registration limited by conditions;
• (c) use for goods adapted to form part of, or to be accessory to, the proprietor’s goods, such as spare parts, where reasonably necessary to indicate their purpose;
• (d) and (e) use of a mark by another registered proprietor of an identical or similar mark.

Exhaustion (section 30(3) and (4))

Where goods bearing the mark have been lawfully acquired, their further sale is not infringement merely because the mark was assigned after acquisition, or because the goods were put on the market under the mark by the proprietor or with his consent. Section 30(4) excludes this where there are legitimate reasons, especially where the condition of the goods has been changed or impaired. In Kapil Wadhwa v. Samsung Electronics (Delhi High Court Division Bench, 2012), the court held that “the market” in section 30(3) means the international market, so India follows international exhaustion and parallel imports of genuine goods are lawful, subject to section 30(4). The EU follows regional exhaustion (Silhouette, CJEU, 1998).

Acquiescence, prior use and own name

• Acquiescence (section 33): a proprietor who has acquiesced for a continuous period of five years in the use of a later registered mark, being aware of that use, cannot seek to invalidate or oppose its use, unless the later mark was applied for in bad faith.
• Prior user (section 34): the proprietor cannot interfere with a person who has continuously used an identical or similar mark from a date earlier than the proprietor’s use or registration. Neon Laboratories v. Medical Technologies, 2015 INSC 728, held that the first user in the market prevails over a later registrant.
• Own name (section 35): bona fide use of one’s own name, place of business, or a bona fide description of the goods.

Parody and criticism

In Tata Sons v. Greenpeace International (Delhi High Court, 2011), Greenpeace’s online game “Turtle v. Tata”, criticising a port project for its effect on turtles, used the Tata logo. The court refused an interim injunction: the use was not in the course of trade, it was criticism protected by Article 19(1)(a), and the defamation claim did not justify prior restraint.

How this is examined

An essay on comparative advertising takes sections 29(8) and 30(1), Tata Press, the five propositions, Pepsi and Dabur, the EU conditions and the consumer protection angle. In any infringement problem, run through the defences in section 5 before concluding.