Comparative Advertising code of ethics

18/06/2020 1 By indiafreenotes

Comparative advertising is a widely used form of commercial advertising in many countries. This type of advertising intends to influence consumer behavior by comparing the features of the advertiser’s product with that of the competitor’s product.

Comparative claims are variable in nature. They may explicitly name a competitor or implicitly refer to him. They may emphasize the similarities (positive comparisons) or the differences (negative comparisons) between the products. They may state that the advertised product is “better than” (superiority claims) or “as good as” the competitor’s (equivalence or parity claims). The aim behind this concept is to allow honest (i.e. not misleading) comparison of the factors of one trader’s products with those of another; such a comparison will inevitably involve the use of the trademarks associated with the products in question. In the absence of provisions controlling this, such use could constitute trade mark infringement.

No Indian statute defines the term, but the UK Regulation defines comparative advertising as meaning any advertisement which “explicitly or by implication, identifies a competitor or goods or services offered by a competitor”.

In this backdrop, 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.
    He can also say that his goods are better than his competitor’s, even though such statement is untrue.
  2. 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.
  3. 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.

Statutory Provisions In India:

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 Trademarks Act, 1999 has incorporated the provisions related to this concept in Ss. 29(8) and 30(1). According to the statute Comparative Advertising is permissible, with certain limitations as to unfair trade practices.

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.

“Honest practices”: mandatory for CA:

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 limited by Unfair Trade practices:

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 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.

From the above context it may be gathered that false representation would mean an incorrect or untrue statement or expression which is designed to influence and induce a consumer to buy or engage, or use such goods or services and make such advertisements available to the members of the public.

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 slightingly, undervalue, to bring discredit or dishonor 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 slightingly 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 Colgate 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 to Colgate. Thus it became a case of Comparative Advertisement which led to the disparagement of Colgate’s products.