PREFACE
The Delhi High Court, recently, had to deal with an issue of comparative advertising (in the case of Havells India ltd v. Amritanshu Khaitan1).
In the aforesaid case, it was alleged by the Havells India (Plaintiffs and owners of the “Havells LED Bulbs”) that the defendants (owners of the “Everready LED Bulbs”) had done a promotional campaign / advertising of their product ‘Everready LED Bulb’, in which the defendants had compared their product with the Havells LED Bulb and other competitors’ LED Bulbs only on the basis of two attributes of the bulb, namely lumens and price and not other attributes such as power factor, life of bulb etc.
The Plaintiff was aggrieved with this comparative advertising because according to it, the aforesaid limited comparison only on 2 factors resulted in disparagement and misrepresentation besides misleading the consumers.
In its judgment (order) given in the case on March 17, 2015], the Delhi High Court held that comparative advertising is legal and permissible as it is in interest of vigorous competition and public enlightenment.
It particularly held that in Indian law, there is no rule which requires that all the features of a product have to be necessarily compared in an advertisement. It was open to an advertiser to objectively compare one or more material, relevant, verifiable and representative feature of the goods and services in question which may include price. There is no requirement in law to disclose each and every factor/characteristic in comparative advertisement. No reasonable observer would expect one trader to point to all the advantages of its competitor’s business and failure to do so does not per se regard the advertising as dishonest.
Failure to point out a competitor’s advantages is not necessarily dishonest if care is taken in ensuring that statements of comparison with competitors’ products are not defamatory or libelous or confusing or misleading. A comparison, which is unfavourable to a competitor, does not necessarily mean that it is dishonest or unduly detrimental.
WHAT IS COMPARATIVE ADVERTISING (IN BRIEF)
Article 2(2a) of the Advertising Directives of the European Economic Community defines comparative as “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.”
In simple words, in a Comparative Advertising, good / services of one manufacture / proprietor are compared with its competitor with or without specifically naming the competitor / competitor’s products. Competitors use comparative advertising to promote their product at the expense of another in terms of price, quality, features, performance etc.
While comparative advertising is beneficial for consumer as it helps them in making rational purchase decisions, such advertising may sometimes disparage the competitor‘s products on distorted and misleading facts and consequently injure the goodwill and reputation of the competitor(s).
In India, the law on comparative advertising has developed through judicial precedents in which the Courts have allowed “puffing” so long as it is not defamatory, or confusing or misleading or rubbishing the products of a competitor.
STANDARDS RELATING TO COMPARATIVE ADVERTISING PRESCRIBED UNDER THE ADVERTISING STANDARDS COUNCIL OF INDIA CODE (“ASCI CODE”)
“CHAPTER IV To ensure that Advertisements observe fairness in competition such that the Consumer’s need to be informed on choice in the Market-Place and the Canons of generally accepted competitive behaviour in Business are both served.
1. Advertisements containing comparisons with other manufacturers or suppliers or with other products including those where a competitor is named, are permissible in the interest of vigorous competition and public enlightenment provided: (a) It is clear what aspects of the advertiser’s product are being compared with what aspects of the competitor’s product. (b) The subject matter of comparison is not chosen in such a way as to confer an artificial advantage upon the advertiser or so as to suggest that a better bargain is offered than is truly the case. (c) The comparison are factual, accurate and capable of substantiation. (d) There is no likelihood of the consumer being misled as a result of the comparison, whether about the product advertised or that with which is compared. (e) The advertisement does not unfairly denigrate, attack or discredit other products, advertisers or advertisements directly or by implication. ”
PROVISIONS OF TRADE MARKS ACT, 1999 WITH RESPECT TO COMPARATIVE ADVERTISING
Section 29(8) – 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.
Section 30 (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.
FACTS OF THE CASE (IN BRIEF)
The defendants (owners of the “Everready LED Bulbs”) had done a promotional campaign / advertising of their product Everready LED Bulb, in which the defendants had compared their product with the Havells LED Bulb and other competitors’ LED Bulbs only on the basis of two attributes of the bulb, namely lumens and price and not other attributes such as power factor, life of bulb etc.
Plaintiffs’ Submissions (In Brief)
The impugned advertisement that “check lumens and price before you buy” was an invitation to consumers to compare only two attributes of a Bulb, i.e. lumens and price, as if they were the only two attributes relevant for determining the value of an LED Bulb. The impugned advertisement was a comparison of two products using selective and mischievous means to compare as it conveyed an impression that it offered better value for lesser price, without comparing all the relevant parameters of a LED Bulb.
Even if the defendants’ product was superior in lumens, yet it was inferior in power factor (0.5 vs. 0.9) and over-all-life (15 vs. 25 years). Information of superiority in one area and inferiority in two other areas had been cleverly portrayed to give an overall impression that defendants’ product was superior to the plaintiffs’.
The price comparison was portrayed in such a manner as if the Plaintiffs’ product was inferior on all fronts and yet was more expensive.
All attributes connected to the value of the Bulb had to be fairly disclosed and not presented in a tricky manner or misleading way.
As per Sections 29(8) and 30(1) of the Trademarks Act, 1999 commercial advertising have to be in accordance with honest practices in industrial or commercial matters and not take unfair advantage or be detrimental to the distinctive character or repute of the trademark. Plaintiffs had better technology in terms of providing optimal brightness along with optimal consumption of power and maximum life of the bulb. The defendants’ advertisement completely destroyed the honest and bonafide claims of the plaintiffs by use of tricky and manipulative comparison.
Defendants’ Submissions (In Brief)
The comparison of the rival products of lumens per watt, lumens and price was justified as the packaging of all the rival products did not contain all the parameters suggested by the Plaintiffs and as such the defendants did not have the requisite data for comparison. The common features in all packaging had been mentioned in the comparative table mentioned in the advertisement. Therefore, not only was the representation made in the impugned advertisement true but the same was also justified.
“Lumens” alone was the measure of brightness and therefore defendants were completely justified in making the representation of brightness on the basis of lumens which is the most important feature of a bulb.
There was no requirement in law to disclose each and every factor in comparative advertisement. As long as the relevant factors had been disclosed and compared, no action for disparagement would lie.
Glorifying one’s product was permissible provided the rival’s product was not denigrated. In the present case, there was no denigration of the competitors products and relevant features were compared by the defendants. There was no negative comment with respect to the goods of the rivals.
Plaintiffs had not approached the Court with clean hands because while accusing the defendants of making a lopsided and misleading representation (by highlighting only the brightness in a blub/LED), the plaintiffs had not disclosed their own representation in print and television commercials where they highlighted the attributes of their CFL Bulbs only by its brightness.
COURT’S JUDGEMENT
Placing reliance on several Indian as well as foreign judgments, the Delhi High Court held as under:
Comparative advertising is permitted when the following conditions are met:-
- goods or services meeting the same needs or intended for the same purpose;
- one or more material, relevant, verifiable and representative features (which may include price);
- and products with the same designation of origin (where applicable)
The test of honest use is an objective test which depends on whether the use is considered honest by members of a reasonable audience.
Failure to point out a competitor’s advantages is not necessarily dishonest. However, care must be taken in ensuring that statements of comparison with the competitors’ products are not defamatory or libelous or confusing or misleading.
In Indian law, there is no rule which requires that all the features of a product have to be necessarily compared in an advertisement.
A comparison, which is unfavourable to a competitor, does not necessarily mean that it is dishonest or unduly detrimental.
For any advertisement to be considered misleading, 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.
Lumens is a measure of brightness and one of the essential functions of a bulb is to dispel darkness. No one can deny that some of the old and aged consumers may buy an LED bulb only on account of its brightness as it is common knowledge that old people due to cataract complications prefer bulbs which give maximum light. For these consumers, the power factor and over all life may not be material or decisive factor. Consequently, the advertisement deals with one of the important characteristics/functions of an LED light. It is also not possible to lay down an exhaustive list of features which should be mentioned in a comparative advertising as such features differ from proprietor/manufacturer to proprietor/manufacturer and also from consumer to consumer.
It is open to an advertiser to highlight a special feature/characteristic of his product which sets it apart from its competitors and to make a comparison as long as it is true. Citing an example, the Court said that if a chocolate biscuit manufacturer issues a comparative advertising highlighting that his product has the highest chocolate content and the lowest price, then in the opinion of this Court the rival manufacturer cannot seek an injunction on the ground that fibre content or calorific value or protein content had not been compared.
It was open to an advertiser to objectively compare one or more material, relevant, verifiable and representative feature of the goods and services in question which may include price. There is no requirement in law to disclose each and every factor/characteristic in comparative advertisement. No reasonable observer would expect one trader to point to all the advantages of its competitor’s business and failure to do so does not per se take the advertising outside what reasonable people would regard as ‘honest’.
if plaintiffs in response to defendant’s advertising campaign, launch a comparative advertising highlighting its alleged salient features like power factor, life of bulb, it cannot be injuncted on the ground that the factor of brightness/lumens has not been mentioned.
Mere trade puffery, even if uncomfortable to the registered proprietor, does not bring the advertising within the scope of trade mark infringement. Much advertising copy is recognised by the public as hyperbole. The Trade Marks Act, 1999 does not impose on the courts an obligation to try to enforce, through the back door of trade mark legislation, a very strict moral standard of comparative advertising.
OUR ANALYSIS AND COMMENTS
It is perhaps the first time where a Court in India was required to adjudicate on a case of comparative advertising of like products which is not disputed on the grounds of false / distorted facts but specifically upon the issue that if in a comparative advertising all features of the rivals’ products are not compared then will it tantamount to a trade mark infringement? Answering in negative, the Court has clearly held that in Indian law, there is no rule which requires that all the features of a product have to be necessarily compared in an advertisement. It was open to an advertiser to objectively compare one or more material, relevant, verifiable and representative feature of the goods and services in question which may include price. There is no requirement in law to disclose each and every factor/characteristic in comparative advertisement.
The judgment in the discussed case is a well considered as the same has been given after understanding the essence of comparative advertising, provisions of ASCI Code in relation thereto and most importantly after considering various precedents in this regard of not only the Supreme Court of India but also foreign courts.
It would be welcomed by the advertising industry and manufacturers who may have hesitated resorting to aggressive but honest comparative advertising in the fear of being sued by the competitors.
While the judgment is given after careful thought and consideration as elucidated above, however, considering that the advertisement of the plaintiffs Havells LED Bulbs compared only two attributes of a Bulb, i.e. lumens and price and urges the customer to “check lumens and price before you buy”; the same may tantamount to be in violation of the following standard of ASCI Code: (i.) “the subject matter of comparison is not chosen in such a way as to confer an artificial advantage upon the advertiser or so as to suggest that a better bargain is offered than is truly the case. (ii.) There is no likelihood of the consumer being misled as a result of the comparison, whether about the product advertised or that with which is compared.
The words “truly the case” as highlighted above seem to give an impression that a manufacturer should not advertise its products as superior over its rivals’ products unless it is truly so when compared on all the essential parameters and not just a few of them (like lumens and price in this case in exclusion to power factor and longevity).
Further, the words “no likelihood” as highlighted above seem to indicate the strictness level that in no ways the consumers should be misled whether directly or indirectly.
Additionally, while agreeing that the brightness (expressed in “lumens”) and price are important factors while purchasing a bulb, we believe that consumers also enquire whether or not the bulb provides optimal brightness along with optimal consumption of power and maximum life. In absence of the latter 2 parameters, the price may not be worth it. The Court’s observation in this regard that for aged customers brightness is a prime factor seems to be one sided approach as it fails to take into consideration the other sections of consumers who look out for optimal power and maximum life as well.
Last, but not the least, and as silly it may seem, nonetheless, we would wonder whether the omission to specifically mention the phrase “check lumens and price before you buy” (while retaining the comparative table) in the impugned advertisement now would make any difference to the case (whether from trade mark infringement point of view or disparagement) particularly when the plaintiffs are unable to make out their case of special damages and the next date of hearing is in September, 2015 (as displayed on the website of Delhi High Court)?
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