India: Colortek’s Advertisement Found Not Disparaging- Delhi High Court.

Last Updated: 1 July 2011
Article by Sonam Lhamu Bhutia

In Dabur India Ltd (Appellant) v Colortek Meghalaya Pvt.Ltd & Anr (Respondents) the question before the Delhi High Court was whether the advertisement/commercial broadcast by Colortek disparaged the product of Dabur. Both Dabur and Colortek manufacture, among other things, a mosquito repellant cream under their respective brand names "Odomos and Odomos Naturals" and "Good Knight Naturals".

It was contended by Dabur that its product Odomos enjoys over 80% of the market share all over India and in some parts of the country it even enjoys a 100% market share,. It was further contended that even though Colortek's commercial did not make a direct or overt reference to Dabur's product , it could be easily concluded that since Dabur's product enjoys a huge market share, Colortek's commercial is therefore unquestionably targeting it. Based on these facts, Dabur preffered an Injunction Application, seeking to restrain Colortek from broadcasting the advertisement. A Single Judge heard this application and held that the commercial did not fall within the tort of "malicious falsehood" and also that it was not directed against Dabur. The injunction application was thus rejected. Aggrieved by such order Dabur appealed before the Delhi High Court.

The High Court observed that according to the law laid down by the Supreme Court, the following guiding principles could be highlighted:

  1. that "commercial speech" is a part of freedom of speech and expression guaranteed under Article 19 (1) (a) of the Constitution. Although, what constitutes "commercial speech" was not defined, it was stated that advertising as a "commercial speech" has two facets thereby postulating that an advertisement is a species of commercial speech [Tata Press Ltd v MTNL & Ors]
  2. The Supreme Court had earlier referred to and had observed that it is settled law in United States that the Government was completely free to recall "commercial speech" which is false, misleading, unfair, deceptive and that which proposes illegal transactions, even though it is entitled to First Amendment protection. [Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council Inc]
  3. That there would of course be some gray areas but these need not necessarily be taken as serious representations of fact but only as glorifying one's product [Colgate Palmolive (India) Ltd v. Hindustan Lever Ltd.].The High Court opined that if an advertisement extends beyond the grey areas and becomes a false, misleading, unfair or deceptive advertisement, it would certainly not have the benefit of any protection.
  4. While glorifying its product, an advertiser may not denigrate or disparage a rival product[ Pepsi Co. Ind & Ors v. Hindustan Coca Cola Ltd & Another]

Further, the High Court, although agreeing with the factors laid down in Pepsico while deciding the question of disparagement, restated them in the following manner:

  1. The intent of the advertisement- this can be understood form its story line and the message sought to be conveyed.
  2. The overall effect of the advertisement – does it promote the advertiser's product or does it disparage a rival product? In this context it must be borne in mind that while promoting its product, the advertiser may compare and in so doing make an unfavorable comparison which may however not affect the story line and message of the advertised product or have that as its overall effect.
  3. The manner of advertising- Is the comparison truthful or does it disparage a rival product? While truthful disparagement is permissible, untruthful disparagement is not.

The High Court opined that it is also important to consider the medium of advertisement, as an advertisement in the electronic medium would have a far greater impact than one in the print media. After a perusal of the advertisement not only in its text but also after watching it in DVD the High Court found that there was nothing in the advertisement to disparage Dabur's product. The commercial merely stated the virtues of Colortek's product, which could not be construed to mean that there was disparagement of Dabur's product.

In Reckitt &Colman of India Ltd v. M.P. Ramchandram and Anr laid down the following propositions relating to comparative advertising:

  1. A tradesman is entitled to declare his goods to be the best in the world, even though such 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 above stated purposes, he can compare the advantages of his goods over the goods of others.
  4. While stating that his goods are better than his competitor's, he cannot however say that his competitor's goods are bad. In so doing he defames the competitor's goods which is not permissible.
  5. An action lies for such defamation, and if such 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 Delhi High Court, stated that although, the abovementioned propositions have been accepted before, in view of the law laid down by the Supreme Court in Tata Press, that false, misleading, unfair, or deceptive advertising is not protected commercial speech, propositions I and ii) and the first half of iii) are not good law.

While hyped-up advertising may be permissible, it cannot transgress the grey areas of permissible assertion, and if it does so, the advertiser must have some reasonable factual basis for the assertion made.

Having found no disparagement in the advertisement in question, the Court held that there was no merit in Dabur's appeal and thus did not interfere with the impugned order of the Learned Single Judge.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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