INTELLECTUAL PROPERTY RIGHTS

(Hons.II) PROJECT
“THIN LINE BETWEEN DISPARAGEMENT AND FAIR USE OF
TRADEMARK”

PROJECT SUBMITTED TO:

MS. KUHU TIWARI
(ASSISTANT PROFESSOR OF INTELLECTUAL PROPERTY RIGHTS)

PROJECT SUBMITTED BY:

RAHUL MANDAVI
Semester VII, Section A

ROLL NO. 125

SUBMITTED ON: 26.09.2016

HIDAYATULLAH NATIONAL LAW UNIVERSITY

RAIPUR, CHHATTISGARH
Contents
Declaration............................................................................................................ii
Acknowledgements..............................................................................................iii
Aims and Objectives............................................................................................iv
Research Methodology.........................................................................................v
INTRODUCTION................................................................................................1
WHAT IS COMPARATIVE ADVERTISEMENT.............................................2
Comparative Advertisement in India....................................................................4
Concept of Disparagement...................................................................................7
CASE STUDY......................................................................................................8
CONCLUSION..................................................................................................11
WEBIBLIOGRAPHY........................................................................................12

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Declaration

I hereby declare that this research work titled “THIN LINE BETWEEN DISPARAGEMENT AND
FAIR USE OF TRADEMARK” is my own work and represents my own ideas, and where others’ ideas
or words have been included, I have adequately cited and referenced the original sources. I also
declare that I have adhered to all principles of academic honesty and integrity and have not
misrepresented or fabricated or falsified any idea/data/fact/source in my submission.

(RAHUL MANDAVI)

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Acknowledgements

I, Rahul Mandavi, would like to humbly present this project to MS. KUHU RIWARI. I would
first of all like to express my most sincere gratitude to MS. KUHU TIWARI for her encouragement and
guidance regarding several aspects of this project. I am thankful for being given the opportunity of
doing a project on ‘THIN LINE BETWEEN DISPARAGEMENT AND FAIR USE OF TRADEMARK’.
I am thankful to the library staff as well as the IT lab staff for all the conveniences they have
provided me with, which have played a major role in the completion of this paper.
I would like to thank God for keeping me in good health and senses to complete this project.
Last but definitely not the least, I am thankful to my seniors for all their support, tips and
valuable advice whenever needed. I present this project with a humble heart.

- RAHUL MANDAVI
SEMESTER VII, SECTION A, ROLL NUMBER 125
BA.LLB (HONS.)

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 "Thin line between Disparagement and Fair Use of Trademark"

Aims and Objectives

I. To understand what is Comparative Advertisement

II. To understand the practise of Comparative Advertisement in India

III. To understand the concept of Disparagement

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Research Methodology

Nature of Research
This research work is descriptive in nature. It describes the perspective of Thin line between
Disparagement and Fair Use of Trademark.

Sources of Data
This study is done with the help of secondary data. This secondary information has been obtained
from published sources such as books, journals, websites, newspapers, research works etc.

v
 INTRODUCTION

In today's world when wide range of products and brands eagerly look for consumer's
attention, advertisements become critical in determining product's future prospects. In the
race of promoting one's own product lot many producers adopt different styles of advertising
their product to attract consumers. Sometimes such advertising can fall between the thin line
of fair and unfair trade practices and can cause legal consequences. Comparative advertising
is one such way. Comparative advertising is a practice where a producer while advertising his
product compares it with the product of the competitor by reference or by any representation
of competitor's product. It may highlight either the similarities in the two products or even
differences. The producer uses the products of its competitor as a standard or benchmark and
claims to exceed it.

Comparative advertising displays a comparison of two different brands on numbered variants

like price, quality by referring the alternative brand by name, visual illustrations or other
distinctive attributes. Advertisers employ this technique to increase their visibility in the
market and to promote their product.

The debate in regard to the jurisprudential justification of comparative advertising is always

open. Proponents of comparative advertising consider it to be a positive thing in the world of
advertising. They think it is not misleading rather promotes healthy competition. It only
compares goods or services meeting the same needs or intended for the same purpose. As per
their view comparative advertising does not create confusion in the market place between the
advertiser and a competitor. However the opponents of comparative advertising believe that
these kinds of practices hamper the reputation of goods of the competitor. They argue that the
major objective behind comparative advertising is to gain unfair advantage at the cost of
competitor's goodwill.
 "Thin line between Disparagement and Fair Use of Trademark"

WHAT IS COMPARATIVE ADVERTISEMENT

Comparative advertising or advertising war is an advertisement in which a particular product,

or service, specifically mentions a competitor by name for the express purpose of showing
why the competitor is inferior to the product naming it. Also referred to as "knocking copy",
it is loosely defined as advertising where “the advertised brand is explicitly compared with
one or more competing brands and the comparison is obvious to the audience.”

This should not be confused with parody advertisements, where a fictional product is being
advertised for the purpose of poking fun at the particular advertisement, nor should it be
confused with the use of a coined brand name for the purpose of comparing the product
without actually naming an actual competitor.

Comparative advertisements could be either indirectly or directly comparative, positive or

negative, and seeks “to associate or differentiate the two competing brands”. Different
countries apply differing views regarding the laws on comparative advertising.

The comparison can be made with a view towards increasing the sales of the advertiser, either
by suggesting that the advertiser's product is of the same or a better quality to that of the
compared product or by denigrating the quality of the compared product.

The holder of a trademark has the exclusive right to use his trademark to identify the products
or services , which is used by advertiser in comparative advertising , in order to identify the
goods or services of a competitor by making reference to a trade mark of the proprietor. This
raises several concerns - on the one hand, the concern of brand owners for their goodwill
being harmed and, on the other, the benefits for consumers that may result from the reduction
in information asymmetry and the stimulation of competition. As a result, it becomes
incumbent to understand the law relating to comparative advertising to better understand how
it affects the various parties - consumers, competitors, proprietary right holders and,
ultimately the general public.

The Delhi High Court in Reckitt & Coleman of India v. Kiwi T.T.K.1 explained the concept of
disparagement in regard to comparative advertising, stating that "a manufacturer is entitled to
make a statement that his goods are the best and also make some statements for puffing of his
1
[1996 PTC (193) T 399],
http://www.mondaq.com/india/x/371760/Trademark/Comparative+Advertising+How+Far+Can+One+Go

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 "Thin line between Disparagement and Fair Use of Trademark"

goods and the same will not give a cause of action to the other traders or manufacturers of
similar goods to institute proceedings as there is no disparagement or defamation or
disparagement of the goods of the manufacturer in so doing. However, a manufacturer is not
entitled to say that his competitor's goods are bad as to puff and promote his goods," and
concluded that comparative advertising cannot be permitted which discredits or denigrates
the trade mark or trade name of the competitor.

There is no specific legislative mechanism regulating comparative advertising in India

therefore the precedents set by various courts are followed while adjudging such matters.
Though the Courts rule in favour of liberty to advertise but do not hesitate in granting
injunctions and imposing damages against infringers.

However, the Delhi High Court summarized the law on the subject in the case of Reckitt &
Colman v. Kiwi TTK , as follows:

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 competitor’s, 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 competitor’s 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.

Comparative Advertisement in India

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Use of anybody else's trademark in any advertisement becomes an illegal act if it affects the
reputation and goodwill of the trademark. Additionally comparative advertising can also lead
to disparagement of goods. Disparagement of goods is as such not defined in the statute but it
can be understood as an untrue or misleading statement about a competitor's goods made with
the purpose of persuading consumers not to buy the product. Such acts can attract serious
legal liabilities.

Few provisions under the Trademarks Law come into picture when any comparative
advertising is done. The same is also checked under provisions relating to unfair trade
practices.

Section 29(8) of Trademarks Act, 1999 says that,

A registered trade mark is infringed by any advertising of that trade mark if such 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.

This provision of the Trade Marks Act quite clearly mentions that if an act while advertising
a particular mark is done to take unfair advantage of another mark, or is detrimental to the
very distinct character of the other mark and is also against the reputation of the trade mark,
then such act is an infringement and necessary action can be taken against the infringer. One
cannot use the mark of another for his own profit.

Section 30 (1) of Trademarks Act, 1999 justifies comparative advertisement saying:

(1) Nothing in section 29 shall be construed as preventing the use of a registered trade mark
by any person for the purposes of identifying goods or services as those of the proprietor
provided the use--

(a) is in accordance with 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 trade mark.

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This provision of Trade Mark Act justifies comparative advertising authorising every person
to use a registered trade mark for the purpose of identifying goods or services of the
competitor but such use must only be done in accordance with the honest and fair trade
practices. There should not be any mala fide intent to gain advantage of competitor's goodwill
behind such use.

Comparative advertising is legal to the extent where it does not hamper the reputation of
competitor's mark and is in accordance with the honest practices in industrial matters. A
person while advertising his goods can compare the advantages of his goods over the goods
of his competitor, but one cannot say that his competitor's goods are bad as this may lead to
disparagement of goods of his competitor. A person cannot use any false or misleading
statement while promoting his goods.

The Monopolies and Restrictive Trade Practices, 1984 (herein after “MRTP Act”) and the
Trade Marks Act, 1999 work in tandem to provide the basic structure that govern
Comparative Advertising.

The Trade Marks Act is an attempt to balance the conflicting interests of the rights of
registered trade mark owners and a compelling consumer interest in informative advertising.
Section 29(8) of the Trade Marks Act provides that a registered trademark is infringed by any
advertising of that trade mark if such advertising takes unfair advantage and is contrary to
honest practices in industrial or commercial matters, is detrimental to its distinctive character,
or is against the reputation of the trade mark.

Section 30(1) has, however, provided an escape route for what would otherwise have been an
infringing act under Section 29, if the impugned use of the mark is in accordance with
“honest practices” in industrial or commercial matters.

Advertising Standards Council of India has specified the certain norms or guidelines which
should be kept in mind while promoting their goods through ads in its Code of Conduct,
1985. The guidelines states as follows:

1. The producer must only make honest representation in the ads;

2. The ads must not be offensive in any way to the general public;
3. Ads must not be used for the promotions of products, hazardous or harmful to
society or to individuals particularly minors, to a degree unacceptable to society at
large;

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4. Ads must not in any way hamper competition.

Few points of caution are given by the High Court's also in the same regard in order to raise
awareness among the producers of their rights and limitations allowing them to prevent all
kind of legal liabilities.

“Honest practices”- mandatory for Comparative Advertisement

Comparative advertising aims to objectively and truthfully inform the consumer, and
promotes market transparency, keeping down prices and improving products by stimulating
competition. Therefore, it is important to protect the interests of such competitors by not
allowing comparative advertising to cause confusion, mislead, or discredit a competitor.

There is no definition or explanation as to what constitutes “honest practices”. There is a

large and clear shared core concept of what constitutes honest conduct in trade, which may be
applied by the courts without great difficulty and without any excessive danger of greatly
diverging interpretations.

In BMW v. Deenik, the question was whether a trader, not being an authorized dealer of
BMW motor cars, was entitled to use the name BMW being a registered trademark of the
BMW manufacturing company, in the context of holding itself out as having specialized
expertise in servicing BMW cars. The Court held that the proprietor of the trademark is not
entitled to prohibit a third party from using the mark for the purpose of informing the public
that he carries out the maintenance and repair of the goods covered by that trademark, unless
the mark is used in a way that may create the impression that there is a commercial
connection between the other undertaking and the trademark proprietor, and in particular that
the reseller’s business is affiliated to the trademark proprietor’s distribution network or that
there is a special relationship between the two undertakings.

Comparative advertising is also subject to certain other limitations contained in the definition
of ‘unfair trade practices’. In 1984 the MRTP Act was amended to add a chapter on unfair
trade practices. Section 36A of the MRTP Act lists several actions to be an ‘unfair trade
practice’ as any unfair method or unfair or deceptive practice which gives false or misleading
facts disparaging the goods, services or trade of another person.

The object of this section is to bring honesty and truth in the relationship between the
provider of the services and the consumer, and when a problem, arises as to whether a

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particular act can be condemned as an unfair trade practice or not, the key to solution would
be to examine whether it contains a false statement and is misleading and further what is the
effect of such representation on the common man

Concept of Disparagement

Section 36 A of the MRTP Act purports that unfair trade practices are those which lead to
disparagement of the goods, services or trade of another person. The term “disparagement”
has not been defined in any statute, but judicial pronouncements have adopted its dictionary
meaning. As per The New International Webster’s' Comprehensive Dictionary,
disparagement means, to speak of slighting, undervalue, to bring discredit or dishonour upon,
the act of depreciating, derogation, a condition of low estimation or valuation, a reproach,
disgrace, an unjust classing or comparison with that which is of less worth, and degradation.
The Concise Oxford Dictionary defines disparage as under, to bring dis-crediting or reproach
upon; dishonour; lower in esteem; speak on or treat slighting or vilify; undervalue, and
deprecate.

In the electronic media the disparaging message is conveyed to the viewer by repeatedly
showing the commercial everyday thereby ensuring that the viewers get clear message as the
said commercial leaves an indelible impression in their mind. But, it must be noted that a
mere opinion, which is not a statement of fact, would not attract Clause (x) of Section 36A
(1).

In the New Pepsodent v Colgate2 case , HLL advertised its toothpaste ‘New Pepsodent’ as
“102% better than the leading toothpaste”. In the television advertisement, samples of saliva
are taken from two boys, one who has brushed with the new Pepsodent while another has
brushed with “a leading toothpaste”. The saliva of “the leading toothpaste” shows larger
number of germs. While the sample was being taken from the boys, they were asked the
name of the toothpaste with which they had brushed in the morning. One boy said Pepsodent,
the response of the second boy was muted, however, lip movement of the boy would indicate
that he was saying “Colgate”. Also, when the muting was done, there was a sound of the
jingle used in the Colgate advertisement. According to the Commission, the word toothpaste
had become synonymous with Colgate over the years and a reference to “leading brand” was
2
AIR 1998 SC 526

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to Colgate. Thus it became a case of Comparative Advertisement which led to the

disparagement of Colgate’s products.

CASE STUDY

 Pepsi Co. Inc. and Ors. v. Hindustan Coca Cola Ltd. and Anr.3

Pepsi, the appellants filed suit against Hindustan Coca Cola and others, who were endorsing
their product with the help of a commercial which shows that the lead actor asks a kid which
is his favorite drink. He mutters the word "Pepsi", which can be seen from his lip movement
though the same is muted. The lead actor thereafter asks the boy to taste two drinks in two
different bottles covered with lid and the question asked by the lead actor is that "Bacchon
Ko Konsi pasand aayegi"? After tasting, the boy points out to one drink and say that that
drink would be liked by the children because it is sweet. In his words he says. "Who meethi
hain, Bacchon ko meethi cheese pasand hai". He discredited the drink which according to
him has a sweet taste. He preferred the other drink which according to him tastes strong and
that grown up people would prefer the same. At that point, the lead actor lifts the lid from
both the bottles and the one which is said to be strong taste reveals to be "Thums Up", and
one which is sweet, word "PAPPI" is written on the bottle with a globe device and the colour
that of the "PEPSI". Realising that he had at the initial stage given his preference for "PEPSI"
and subsequently finding it to be a drink for kids, the boy felt embarrassed. He depicts this
embarrassment gesture by putting his hands on his head.

There are other commercials by the respondents where the lead actor said "Wrong choice
baby", and that the "Thums Up" is a right choice, and "Kyo Dil Maange No More" for the
appellant’s products.

Here the issue was whether the commercial by depicting that the boy preferred Thums Up as
against "Pepsi" because Thums Up is strong drink while "Pepsi" is for children as children
like sweet, amounts to disparagement or it is only a healthy competition and puffing the
product of the respondents?

The Delhi HC explained the concept of disparagement stating that “a manufacturer is entitled
to make a statement that his goods are the best and also make some statements for puffing of
3
2003 (27) PTC 305 (Del)

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his goods and the same will not give a cause of action to the other traders or manufacturers of
similar goods to institute proceedings as there is no disparagement or defamation or
disparagement of the goods of the manufacturer in so doing. However, a manufacturer is not
entitled to say that his competitor’s goods are bad as to puff and promote his goods, ” and
concluded that comparative advertising cannot be permitted which discredits or denigrates
the trade mark or trade name of the competitor.

 Havells v. Eveready4

The case dealt with an advertisement which compared “Eveready LED Bulbs” with the
plaintiff’s product i.e. “Havells LED Bulbs”. The main parts of the advertisement (see
picture) are: the tag line “Switch to the brightest LEDs” (referring to the defendant’s bulbs)
and a chart that compares the brightness and price of the defendant’s bulb with that of its
competitors and cautions the consumer to “check lumens and price before you buy”.

The court laid down several tests and standards to be applied to cases of comparative
advertising before answering the issue at hand. In this regard, it was held that the standard
used in deciding a case of comparative advertisement was different from the strict standards
used in interpreting a Will or a clause of an agreement. Citing Marico Ltd. vs. Adani Wilmar
Ltd.5, the court held that the public expects a certain amount of puffing and hyperbole in
advertisements. Therefore, the standard to be applied is whether “a reasonable man would
take the claim being made as one made seriously.”

With regard to the test of ‘honest’ advertising as per Section 29(8) and 30(1), the court held
that this is an objective test which depends on a ‘reasonable audience’. Honesty also depends
on the kind of goods or services in question. In this regard, the court uses a curious example:
an advertisement for second hand cars may not be honest if used to encourage the use of
‘powerful medicines’.

n relation to the test of a ‘misleading advertisement’ the court holds: “two essential elements
must be satisfied. First, misleading advertising must deceive the persons to whom it is
addressed or at least, must have the potential to deceive them. Secondly, as a consequence of
its deceptive nature, misleading advertising must be likely to affect the economic behaviour
of the public to whom it is addressed, or harm a competitor of the advertiser.”

4
2015
5
CS(OS) No.246/2013

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After discussing these standards, the court holds that there is no rule which requires an
advertiser to necessarily compare all the features of a product. Therefore, comparative
advertisements can be limited to comparing certain relevant features (brightness of a bulb
being one of the most essential features). It is also observed that it is not possible to lay out an
exhaustive list of features which should be mentioned in comparative advertising as such
features differ from manufacturer to manufacturer and consumer to consumer.

CONCLUSION
From the above research, it can be concluded that the Indian law, although interpreted to
allow comparative advertisement, does not address the issue in a direct or comprehensive
manner in any legislation.

TM Act and MRTP Act have to be read together to understand the concept of Comparative
Advertisement. In view of the policy shift from curbing monopolies to promoting

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competition, the Union Cabinet on June 26, 2001 approved the repeal of the Monopolies and
Restrictive Trade Practices Act. Hence, the Competition Law which aims at doing away with
the rigidly structured MRTP Act is tipped to come into force by mid-2008, and all cases
pertaining to unfair trade practices referred to in clause (x) of sub-section (1) of section 36A
of the MRTP Act, and pending before the Monopolies and Restrictive Trade Practices
Commission on or before the commencement of this Act shall, on such commencement,
stand transferred to the Competition Commission of India, and the Competition Commission
of India shall dispose of such cases as if they were cases filed under that Act.

It must also be noted that several important terms related to the concept of comparative
advertising such as “disparagement” and “honest practices” are not defined in any legislation,
and the dictionary meaning or judicial interpretations have to be used in ascertaining the
meaning of these terms. ‘Unfair trade practice’ has been defined u/s 36A of Monopolies and
Restrictive Trade Practices, 1969 that stands repealed now. Another statute, Consumer
Protection Act, 1986 provides protection against unfair trade practice but in the cases of
‘comparative advertising’ the parties are firms (whose products are endorsed by the
advertisements), which would not come in the ambit of ‘consumers’ to approach the
consumer forum.

WEBIBLIOGRAPHY
 https://indiancaselaws.wordpress.com/2014/06/17/disparagement-comparative-
advertising-or-puffing-2/
 http://www.mondaq.com/india/x/371760/Trademark/Comparative+Advertising+How
+Far+Can+One+Go
 http://spicyip.com/2013/08/colgate-v-pepsodent-comparative.html
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