Trademark Violations in Comparative Advertising
This post was first published on December 2nd, 2012.
Comparative Advertising is, as the name suggests, advertising that compares one product or service with another. Comparison is made with the intention of increasing the sales of the advertiser either by suggesting that the advertiser’s product is of the same or better quality to that of the compared product. The aim of such advertisement is to bring to public knowledge an honest comparison of one’s products with those of competitors. Promotion of market transparency is intended but has other advantages such as regulation of prices and stimulating competition for improvement in products.
Comparative advertising is defined in EU Directive 97/55/EC2 as “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.” No Indian statute defines the term “Comparative Advertising” though the Delhi High Court has defined characteristics of Comparative Advertisement in Reckitt & Colman v. Kiwi TTK[1996 PTC (16) 393]. A tradesman can make an untrue declaration that his goods are the best in the world. He can also state that his goods are better than his competitor’s, even though such a statement is untrue. Comparing the advantages of his goods over the goods of others is allowed, however, disparagement isn’t. 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 and legal action can be pursued against the slanderer. If there is no defamation to the goods or to the manufacturer of such goods then 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.
According to The Monopolies and Restrictive Trade Practices, 1984 (herein after “MRTP Act”) and the Trade Marks Act, 1999, Comparative Advertising is permissible, with certain limitations with respect to unfair trade practices.
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) of the same act provides an exception to the above rule stating that such advertisement would not amount to infringement if the use of such mark falls within the purview of ‘honest practices’. This implies that honest practices are mandatory for comparative advertising without which it would amount to trademark infringement.
The Trademarks Act also provides protection to “well known” unregistered marks. This gives the proprietor a statutory alternative to the common law action of passing off. Passing off generally results from confusion or deception caused by “unfair trade practices” pursued/followed by competitors.
Legitimate marketing strategies in the form of publicity and advertisement of products are employed to boost sales. Unidentifiable disparaged products are allowed to be used by a person comparing his products. When comparative advertisements are truthful and non-deceptive and are a source of important information to consumers in order assist them in making rational purchase decisions, the impeding effect it might have on competitors and their image in the market is justified by the upfront effect of increasing information about product specifications, leading to enhanced market transparency. Special care must be taken in the use of a design trademark in a comparative advertisement. In a comparative advertising campaign which involves the use of a competitor’s trademark, the emphasis should be on promoting the product based on the differences, not the similarities, between the two products.