Advertising and Trademark Infringement

Since independence the Indian businessmen and industries faced limited competition – both from within and outside the country. But, in 1990's India, in pursuit of globalization, resolved to open up its economy, removing controls and various barriers. The Government announced a new industrial policy on the 24th July, 1991 which envisaged liberalization. With this liberalization and globalization of the Indian economy, the sphere of trade, industry and commerce has increased to a great extent. Geographical barriers to trade have been removed. Various foreign multinational companies are coming to establish their business. Competition among the various products and services has become fierce and this keen competition has posed enormous challenges as well as threats to India.. Firms have been aggressively and vigorously promoting their product and services than before. Often they are taking the help of comparative advertising to achieve this goal.

This paper focuses on the concept of trademark and definition, advantages and disadvantages of comparative advertisement. This paper illustrates the existing legal mechanisms in India to control disparaging in comparative advertising and also recent judicial decisions in India on the same. This paper also highlights the 1997 directive of the European Council which determined the parameters of comparative advertising and also views of the International Trademark Association. The author is of the view that more stringent and effective legal provisions should be incorporated in the existing Trade Mark Act, 1999 to prevent the commercial disparaging in comparative advertising. The Author also suggests some measures to prevent disparaging in comparative advertising.

Concept of Trademark:

The concept of Trademark is not new in India. It was in vogue even in ancient India. The concept has been developed with the development of trade and industry. Trademark is a mark or symbol which distinguishes one product from other product of similar nature. The aim of the trademark is to identify the source of a product and to distinguish that product from product of similar nature. Trademark individualizes the goods of a particular owner and helps him to maintain and improve the quality and standard of the product. It also helps consumers to select the right choice. We are living in the era of globalization. As a result of this globalization and liberalization of Indian economy the competition among products and services are increasing day by day. In this competitive market trademark plays an important role both to the trader or owner and consumer.

However a “Trademark” means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours; and –
I. in relation to Chapter XII (other than section 107 )of the Trademark Act,1999 ,A registered Trademark or a mark used in relation to goods or services for the purpose of indicating or so as to
II. indicate the connection in the course of trade between the goods or services ,as the case may be, and some person having the right as proprietor to use the mark;

III. in relation to the other provisions of the Trademark Act, 1999, a mark used or proposed to be used in relation to goods or services for the purpose of indicating or so to indicate a connection in the course of trade between the goods or services, as the case may be and some person having the right, either as proprietor or by way of permitted user, to use the mark whether with or without any indication of the identity of that person, and includes a certification Trademark or collective mark. So Trademark is a mark or symbol which is used in relation to goods or services to establish a trade connection between the owner and user of the goods and services.

The term “Mark” includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination thereof. The selection of the graphic representation is an important step for any applicant because the Trademark is defined by the Graphic representation which is filed on or with the application form. “The term “graphical representation” means the representation of a trade mark for goods or services in paper form. The Trademark may be registered or unregistered but registration under the Trademark Act, 1999 does not confer any new right to the mark claimed. It only facilitates to get a remedy in case of infringement of Trademark. Registration itself does not create a trademark. The trademark exists independently of the registration which merely affords further protection under the statute. Infringement of Trademark takes place when a person other than the registered proprietor or registered user, uses the similar mark or a deceptively similar mark with regard to same goods or services for which the mark is registered.

The infringer uses another's registered mark, or some confusingly similar sign, as a trademark to indicate the source or goods or services. A case of infringement, however, will require proof of likelihood of confusion and likelihood of association. Similarity is an essential ingredient. Because of this similarity likelihood of confusion may exist. Advertisement of the registered Trademark of another for one's own purpose will also amount to Trademark infringement. Again, in respect of an unregistered Trademark, the owner of the Trademark may take action of passing-off against those who pass of his/ her goods or services. This remedy is known as common law remedy under the law of Torts. Comparative advertising, if accompanied with disparaging, may cause infringement or passing-off of Trademark. However there are various provisions in the Trademark Act, 1999, which deal with infringement or passing-off of Trademark. Infringement and passing-off of Trademark can also be called as unfair competition.

Advertisement And Comparative Advertisement:

“Advertising is an instrument in the hands of the people who use it. If evil men use advertising for base purposes, then evil can result. If honest men use advertising to sell an honest product with honest enthusiasm, then positive good for our kind of capitalistic society can result.”

So, advertising is a marketing tool which is used for sales promotion and publicity. Advertising techniques are used to make the products, services or opinions familiar to the people. It is a process of communication between the owner of the products or services and consumers. The consumers become familiar to the effectiveness and utility of the existing products and future products. It helps the consumer in taking right decision and it is an art of communication technique by which the Trademark or brand of the product or service is made known to the people.

Comparative advertising is an advertising that specifically compares the advertised brand with another brand of the same product. Comparative advertisement is an advertisement where a party advertises his goods or services by comparing them with goods and services of another party. It is an advertisement in which there is specific mention or presentation of competing brand(s) and a comparison is made or implied. It is a practice of either directly or indirectly naming one or more competitors in an advertising message or usually making a comparison on one or more specific attributes or characteristics. It is a technique which compares two or more brands on the basis of one or more product attributes. So comparative Advertising is a sales promotion technique that compares the products or services of one undertaking with those of another or with those of other competitors. It is aimed at to highlight the advantages of the goods or services offered by the advertiser as compare to those of a competitor.

Comparative advertising can broadly be divided into two types -firstly, a positive comparison and secondly, a negative comparison. In the first case, a positive reference is made to claim that one's own product is as good as the other. In the Second case, a negative reference is made to claim that one's own product is better than the other. The positive comparison is also known as indirect comparative advertisement and the negative comparison is also known as direct comparative advertisement. In both of these cases an unauthorized reference to the competitor is made."

Comparative advertising should not be misleading or disparaging. Because the advertisement campaign on the visual media has an immediate impact on the viewers and possible purchasers mind. The term “disparage” means to dishonor (something or someone) by comparison .To unjustly discredit or detract from the reputation of (another's property, product, or business). The term “disparagement” means a false and injurious statement that discredits or detracts from reputation of another's property, product or business. As per New International Webster's Comprehensive Dictionary the term ‘disparage' means to speak of slightingly; undervalue or to bring discredit or dishonor upon. And the term “disparagement” means the act of depreciating, aspersing, slighting, or undervaluing, derogation, or a reproach; disgrace. As per Oxford English Dictionary the term “disparagement” means lowering of value, honour, or estimation; dishonour, disgrace, indignity, discredit; something that causes this. Comparison should not be made on false or misleading statements about the goods or services. However, there are some advantages and disadvantages of comparative advertising.

These are as below:
• An honest and effective comparative advertisement has various positive benefits. It can play the role of a salesman by removing and clarifying doubts about a brand. It influences the purchase decision of the consumers and helps them to take a right decision. An honest comparative advertising provides consumers with important information about comparative products and services. This in turn, assists them to make rational purchase decision. Comparative advertising leads to product improvement and innovation and this may, in turn, lower the price of the products or services. Comparative advertising that aims to truthfully inform the consumers-promotes the transparency of the market.

• Again, comparative advertising becomes harmful to the consumers, competitors and the public at large if it is deceptive, misleading, unfair and disparaging. If it contains a misrepresentation, disparagement or deception that may mislead or confuse the consumers and may bring about chaos in the market.

Directives of The European Council and Views of The International Trademark Association:

Until very recently comparative advertising was essentially not allowed in European countries. The European Union first addressed the issue of the comparative advertising in the late 1970's. According to current European Legislation, comparative advertisement is allowed only if it is not misleading, compares like with like, does not create confusion and discredit or take unfair advantage of a rivals trademark.

The 1997 European Council Directive says that comparative advertisement shall, as far as the comparison is concerned, be permitted if the following conditions are met:
i. it is not misleading;
ii. it compares goods or services meeting the same needs or intended for the same purpose;
iii. it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price;
iv. it does not create confusion in the market place between the advertiser and a competitor or between the advertiser's trademarks, trade names, other distinguishing marks, goods or services and those of a competitor;
v. it does not discredit or denigrate the trademarks, trade names, other distinguishing marks, goods, services, activities or circumstances of competitor;
vi. for products with designation of origin, it relates in each case to products with the same designation;
vii. it does not take unfair advantage of reputation of a trademark, trade name or other distinguishing marks of a competitors or of the designation of origin of competing products;
viii. it does not present goods or services as imitations or replicas of goods or services bearing a protected trademark or trade name.
A sub-committee on comparative advertising of the International Trademark Association has been studying the current state of the Law of Comparative Advertising in various countries. On 3rd March 1998 the Committee requested the Board to approve a legislation encouraging all countries to permit comparative advertising so long as there are legal controls to prevent harm and/or damage to the marks of competitors and to prevent explicit or implicit false or misleading representations or other forms of unfair competition.

The adopted resolution is as bellow:
WHEREAS, there are a number of countries which do not permit comparative advertising of products or services;
WHEREAS, the availability of comparative advertising encourages owners to innovate and improve products and services, which increases competition in the marketplace;
WHEREAS, comparative advertising which is truthful, not misleading, consistent with principles of fair competition, and not harmful or damaging to the marks of competitors can provide consumers with useful information which assists with their purchasing decisions;
WHEREAS, legal controls can be implemented to prevent false or misleading advertisements or other acts of unfair competition and to prevent advertisements which harm and/or damage the marks of competitors.

BE IT RESOLVED, that the International Trademark Association endorses permitting comparative advertising of goods and services so long as such advertising exists within a framework which:
a) prevents comparative advertisements that are explicitly or implicitly false or misleading; or cause a likelihood of confusion or association with the marks or trade names of competitors, or otherwise violate principles of fair competition;
b) provides effective enforcement mechanisms including preliminary and permanent injunctions, corrective advertising and damages; and
c) encourages self-regulatory mechanisms if possible.

Indian Situation:
In India, the Monopolies and Restrictive Trade practices Act, 1969(MRTP ACT) dealt with, inter alia, unfair trade practices. But to keep pace with the economic reforms programme and as per the recommendation of the Raghavan Committee, the government decided to enact the Competition Act, 2002 in place of MRTP Act. However under the MRTP Act the MRTP commission resolved many disputes of comparative advertising in the nature of unfair trade practices. The Competition Act, 2002 seeks, inter alia, to promote and sustain competition in markets, protect the interest of consumers and ensures freedom of trade carried on by other participants in market. The Consumer Protection Act, 1986, also restricts unfair trade practices through comparative advertisement. As per this Act unfair Trade practice also include the practice of making any statement, whether orally or in writing or by visible representation which-gives false or misleading facts disparaging the goods, services or trade of another person.

The enactment of the Trade mark Act, 1999 has, however, opened a new chapter in regulating unfair Trade practices in comparative advertising and preventing trademark infringement in India. According to this Act a registered trademark is infringed by a person if he uses such registered trademark, as his trade name or part of his trade name, or name of his business concern or part of the name, of his business concern dealing in goods or services in respect of which the trademark is registered. A registered trade mark is infringed by a person who applies such registered trade mark to a material intended to be used for labeling or packaging goods, as a business paper, or for advertising goods or services, provided such person, when he applied the mark, knew or had reason to believe that the application of the mark was not duly authorized by the proprietor or a licensee. Again, 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; or
b) is detrimental to its distinctive character; or
c) is against the reputation of the trademark
The Act says that - nothing in section 29 shall be construed as preventing the use of a registered trademark 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 trademark.

The Trademark Act 1999,interalia, says -a registered trademark is not infringed where- (a) the use in relation to goods or services indicates the kind, quality , quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services or other characteristics of goods or services.
Again, a registered trademark is not infringed where- the use of a trademark by a person in relation to goods adapted to form part of , or to be accessory to, other goods or services in relation to which the trademark has been used without infringement of the right given by registration under this Act or might for the time being be so used, if the use of the trademark is reasonably necessary in order to indicate that the goods or services are so adapted, and neither the purpose nor the effect of the use of the trademark is to indicate, otherwise than in accordance with the fact, a connection in the course of trade between any person and the goods or services, as the case may be.

At a cursory glance to the above provisions, it can be said that the trademark Act does not prevent comparative advertising, if it is in accordance with the honest practices in industrial or commercial matters. On the other hand, the Act does not allow a comparative advertising which takes unfair advantage of and is contrary to honest practices in industrial or commercial matters. Section 30 of the Trademark Act 1999, however, deals with certain types of use of the trade mark which in the circumstances mentioned therein do not constitute infringement. So, it can be said that section 30 is an exception to section29.

A trader is entitled to “puff” his goods, but if he turns to denigrate the goods of a rival, there comes a point where this becomes actionable. An action for slander or title or injurious falsehood can be taken only if the plaintiff proves that-
i. the statements or representations complained of were false or untrue;
ii. they were made maliciously , that is ,without just cause or excuse, and
iii. the plaintiff has suffered special damages thereby.

In order to get success in an action for trade libel the plaintiff should prove either actual damage or likelihood of actual damage. An action will not lie for a false statement disparaging a trader's goods where no special damage is proved.

Judicial Decisions:
In Reckitt & Colman of India Ltd. vs. Kiwi T.T. K. Ltd. Hon'ble Delhi High Court (S.K.Mahajan, J.) held that - “a manufacturer is entitled to make a statement that his goods are the best and also make some statements for puffing of his goods and the same will not give a cause of action to other traders or manufacturers of similar goods to institute proceedings as there is no disparagement or defamation to the goods of the manufacturer so doing. However, a manufacturer is not entitled to say that his competitors goods are bad so as to puff and promote his goods.”

In Reckitt & Colman of India Ltd. vs. M.P. Ramachandran & Anr Hon'ble Calcutta High Court (Barin Ghosh, J.) laid down five principles for granting an injunction in case of comparative advertising:
i. A tradesman is entitled to declare his goods to be best in the world even though the declaration is untrue;
ii. He can also say that his goods are better than his competitors, even though such statement is untrue;
iii. For the purpose of saying that his goods are the best in the world or his goods are better than his competitors he can even compare the advantages of his goods over the goods of others;
iv. He however, cannot, while saying that his goods are better than his competitors, say that his competitor's goods are bad. If he says so, he really slanders the goods of his competitors and their goods, which is not permissible.
v. 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.

The Hon'ble court also observed in this case that “….One can boast about technological superiority of his product and while doing so can also compare the advantages of his product with those which are available in the market. He can also say that the technology of the products available in the market has become old or obsolete. He can further add that the new technology available to him is far more superior to the known technology, but he cannot say that the known technology is bad and harmful or that the product made with the known technology is bad and harmful. What he can claim is only that his product and his technology is superior. While comparing the technology and the products manufactured on the basis thereof, he can say that by reason of the new superior technology available to him, his product is much superior to others. He cannot, however while so comparing say that the available technology and the products made in accordance therewith are bad and harmful….”

In Pepsico Inc. and ors. Vs. Hindusthan Coca Cola Ltd. and Anr . it was held by the Hon'ble Delhi High Court that- comparative advertising is permissible subject to the rider that it does not denigrate the product of the appellant……If a trader compares his goods with the goods of rival without in any way advertising that the trade mark is used in relation to his goods, there is prima facie no infringement.

In Dabur India Ltd. vs. Colgate Palmolive India Ltd. Hon'ble Delhi High Court held that …”generic disparagement of a rival product without specifically identifying or pinpointing the rival product is equally objectionable. Cleaver advertising can indeed hit a rival product without specifically referring to it .No one can disparage a class or genre of a product within which a complaining plaintiff falls and raise a defense that the plaintiff has not been specifically identified……”
In Dabur India Limited vs.Emami Limited Honorable Delhi High Court held that a manufacturer is entitled to make a statement that his goods are the best and also make some statements for puffing of his goods but the same would not give a cause of action to other traders a cause of action to other traders or manufacturers of similar goods to institute proceedings as there is no disparagement or defamation to the goods of the manufacturer so doing. However, a manufacturer is not entitled to say that his competitor's goods are bad so as to puff and promote his goods.

In Karamchand Appliances Pvt. Ltd. Vs. Adhikary Brothers & Ors. , Hon'ble Delhi High Court held that a manufacturer or a tradesman is entitled to boast that his goods are the best in the world, even if such a claim is factually incorrect, and while a claim that the goods of a manufacturer or the tradesman are the best may not provide a cause of action to any other trader or manufacturer of similar goods , the moment the rival manufacturer or trader disparages or defames the goods of another manufacturer or trader, the aggrieved trader would be entitled to seek relieves including redress by way of a prohibitory injunction
The defendant is indeed entitled to boast that its product is the latest in the market and even the best but it cannot describe either the technology or the concept used by any other manufacturer or trader in the manufacture or sale of his products as obsolete or worthless. Comparative advertisement is permissible, so long as such comparison does not disparage or denigrate the trademark or the products of a competitor. Comparison of different features of two products showing the advantages, which one product enjoy over the other is also permissible provided such comparison stops short of discrediting or denigrating the other product.”

In Eureka Forbes Ltd., Kolkata and its local office at Bangalore. Vs Pentair Water India Pvt. Ltd, Goa , Hon'ble Karnataka High Court at Bangalore, held that "…an advertiser can say that his goods are better than his competitors but he cannot say that his competitors goods are bad because that would amount to slandering or defaming competitor and its goods , which is not permissible..."

Conclusion:
So, from the above discussion, the author is of the opinion that comparative advertisement should stay. It has many advantages if accompanied with true facts. It helps the market to be competitive and helps the consumers to decide between two products or services. Comparative advertising has become more effective and helpful to the consumers in the era of globalization. Now we are living in the global village. Nature of market, trade and commerce has completely been changed in this era of globalization. Consumers are badly in need of more and more information about a particular product or service in order to make their choice and decision accurate and correct. Here is the importance and efficiency of comparative advertisement. But, comparative advertisement has many disadvantages and should not be allowed if it is accompanied with false information about the products and services and intends to discredit, denigrate or disparage the products or services of rival competitors. Comparative advertisement will be harmful to the consumer in particular and society at large if it consists of false, wrong and concocted information. It will become harmful to the rival competitors if it is accompanied with disparagement.

The author is also of the opinion that – the existing legal provisions in India are not strong enough to prevent the evils of disparagement in comparative advertising. In this era of globalization the sphere of trade and commerce is widening day by day. India is heading to achieve the status of one of the powerful economic giant of the world. Various foreign companies including Multinational companies (MNC'S) are coming to establish business here. This has prompted the rapid increase in the war of advertisement among various brand owners. It is the need of the hour to strengthen the existing legal provisions and/or to introduce a new provision in the existing Acts to restrict and check commercial disparaging in comparative advertising. Otherwise Indian courts will be flooded with these type of cases. However, in doing that balancing of interest must be made judiciously. That is the interest of advertisers in promoting their products and the interest of rival competitors who are supposed to suffer a loss from that advertisement. The interest of the public in getting accurate and fair information is also to be protected.

In fine, the author would like to suggest that more stringent punishment should also be incorporated in the existing legislations to prevent disparaging in comparative advertisement. The companies or advertisers should advertise with a view to inform the consumer and not to attack, criticize, discredit or disparage other products and services directly or indirectly. The comparative advertisement should be informative and should reflect positive merits of the products or services.

References:
i. The Trademark Act -1999.
ii. Kerly'sLaw of Trademarks and Trade names (13th edition) by David Kitchin,David Llewelyn,James Mellor, Richard Meade, Thomas Moody Sturt,(London, Sweet and Maxwell-2001);
iii. William Cornish and David Llewelyn, Intellectual Property: patents,copyright,Trademarks and Allied Rights(5th edition);
iv. David Bainbridge, Intellectual Property(5th edition);
v. John W. Crawford, The Permissible Lie: The inside truth about advertising.
vi. Directives of the European Council;
vii. http://www.inta.org/index.php
viii. Black's Law Dictionary, 7th edition;
ix. http://www.en.mimi.hu/marketingweb/comparative_advertisement.html
x. The competition Act- 2002,;
xi. The MRTP Act-1969;
xii. Dr. G. B. Reddy, Intellectual Property Rights and the law (Gogia Law Agency, 4th edition, 2004-2005 );
xiii. Justice P.S. Narayana's Intellectual Property Law in India (3rd Edition-2005);
xiv. http://www.uni-miskolc.hu/uni/res/kozlemenyek/2004/DEFINITION.doc
xv. P.Narayanan, Law of Trademarks and Passing Off (6th edition,).

The author can be reached at: [email protected] / Print This Article

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