India: Comparative Advertising And Disparagement Revisited: P&G v. Hindustan Unilever

Last Updated: 25 July 2017
Article by Swati Setia

Comparative advertisement and product disparagement are sensitive subjects to manufacturers of goods. The reason stems from the fact that consumer behavior can be influenced through comparative advertisements to a brand's advantage or disadvantage. In the past, such advertisements have had negative implications on the manufacturers; leading to consumer poaching, dip in sales or, at worst, product disparagement.

There is a thin line of difference between comparative advertising and disparagement. The former is legally permissible subject to certain conditions so as to prevent disparagement. Although there is no specific codified legislation in our country to govern disparagement, it is considered as a facet of defamation law. Recently, a single judge of the Hon'ble Delhi High Court delineated the position of law on comparative advertising and disparagement in three cross suits involving two giant consumer goods companies.

The dispute arose between FMCG majors Procter & Gamble (P&G) and Hindustan Unilever Limited (HUL) involving TV Commercials (TVC) of their respective shampoos, namely P&G's 'Head & Shoulders' shampoo sold in sachets, and HUL's 'Clinic Plus' shampoo sold in bottles and 'Dove' shampoo. Both brands compared each other's shampoo in their respective TVCs. Thereafter, P&G instituted a suit claiming injunction against HUL's TVCs that compared Clinic Plus with Head & Shoulders, comprising statements, viz. "mazbooti de leading anti-dandruff shampoo se behtar" and "teen rupaye wale anti-dandruff shampoo se baal zyada tootte hain". HUL was directed by the court to suspend airing of its alleged TVC vide an ad interim order. Aggrieved by the order, HUL approached the Advertisement Standard Council of India (ASCI) for relief, which rejected its complaint. Subsequently, two cross suits were instituted, one by HUL and other by P&G. The court directed all three suits to be decided together.

The suits alleged five TVCs publishing controversial statements like "ek rupaye wala shampoo dandruff nahin nikalta, ek, do, teen washes mein bhi", "zyada dandruff hataye" or "anti-dandruff shampoo can damage your hair", claiming to be disparaging in nature by respective plaintiffs. P&G contended that the suit against it was not maintainable as ASCI had rejected HUL's complaint after it was directed to suspend its impugned TVC. The single judge looked into the aspect of maintainability of the suit at length. It was held that the power to decide whether an advertisement is of disparaging nature or not, vested with the civil courts and not ASCI, as it was not a dispute resolution body to compel removal of advertisements, grant interim relief or award damages like civil courts. ASCI powers were only restricted to formulating certain rules for governing comparative advertisements, such as the Code of Self-Regulation in Advertising. At best it could recommend removal of any advertisement in adverse cases or forward the matter to an authorized officer under the Cable Television Network Act who can prohibit the advertisement from being broadcasted. Thus, the court rejected P&G's contention on maintainability due to difference in reliefs granted by ASCI and civil courts, and the common law recourse to be taken under Section 9 of Civil Procedure Code in absence of codified law on disparagement.

Then the court dealt with the main issue in the matter, i.e., disparagement of goods of the plaintiffs in each suit. Both parties had contended disparagement against each other, whereas in defense, stated that their commercials were informative in nature, to educate the public. HUL relied on the argument that its TVCs were truthful based on laboratory test results displayed in its TVCs. P&G, on the other hand, refuted the lab test to be controverted. HUL also contended that by comparing the anti-dandruff specialist shampoo 'Head & Shoulders' (sold in sachets) with HUL's non-anti-dandruff shampoo 'Clinic Plus' (sold in bottles), P&G was comparing apples with oranges. The court after considering a gamut of cases referred by both parties based its decision on the judgment in Marico Ltd. v. Adani Wilmar Ltd.1, which was decided by the same Bench.

The court affirmed that disparagement is a facet of defamation law. It held that puffing in comparative advertisement is permitted subject to certain conditions as held in cases that were referred in the Marico's case. The single judge referred to De Beers Abrasive v. International General Electric Co.2, a judgment that emphasized on false advertising causing injury to a rival's trade, to uphold that a trader can puff up or declare his own goods to be the best; he can also puff up to claim that his goods are better than his rival's, but such puffing should not denigrate, discredit or disgrace the products of his rival. Reference was also made to Pepsi Co., Inc. v. Hindustan Coca Cola Ltd.3, which had stated that "some amount of showing down is implicit but it should not be of 'slighting' or 'rubbishing' nature". The court looked into the following factors as laid down in Pepsi Co. for determining disparagement:

  1. Intent of the advertisement as evident from the storyline and message sought to be conveyed.
  2. Overall effect of the advertisement that whether it is promoting the trader's product or disparaging or denigrating product of its rival.
  3. Manner of advertising that whether the comparison made is truthful or falsely disparaging rival's product. Truthful disparagement is permitted whereas, untruthful disparagement is not.

In light of disparagement coming under the purview of defamation law, the court juxtaposed the reputation of a product with that of a person. It observed that reputation is one of the most valuable attributes common to both of them, which entitled them to the right of protection of such reputation against defamation. It defined defamation as "any word... which, either exposes the plaintiff to hatred, contempt, ridicule or tends to injure him in his profession or trade or cause him to be shunned or avoided by his neighbours". To determine defamation, the court held that the test is to examine whether the word, in its ordinary meaning, tends to lower the reputation of the plaintiff in the mind of an ordinary man/consumer. The court looked into the impact of the words on an ordinary person so as to change his opinion about the subject in issue. Referring to several scholarly articles, the court observed that the weightage attributed by the words of the speaker to whom they are addressed, is very little since the words of aggressive advertisers in such cases are less credible. It reasoned that only when the words or statements are authoritative and reliable in nature or published by a non-trade rival, other than as mere puffing or sales talk, then the opinion of an ordinary man/consumer can be altered.

In its opinion, the single judge stated that an ordinary consumer's opinion is less likely to be affected by comparative advertisement as it invites counter arguments. Hence, they are less acceptable than non-comparative advertisements. It also observed that these days consumers are more vigilant that comparative advertisements are mere strategies of persuasion. They assessed their own personal costs and benefits before changing opinion about a product or brand. The court also referred to Glaxosmithkline Consumer Healthcare Ltd. v. Heinz India4 to state that advertisements are not read word by word carefully, public expects some degree of hyperbole in advertisements and the test was to determine whether a reasonable man took it as a statement made seriously, with a large pinch of salt or not. Only then could a statement be called authoritative or reliable. The court further observed that claims made in comparative advertisements are considered to be less effective on the ordinary consumer than in a situation where the same information was offered in the news. So, HUL's reliance on its laboratory test results was held to be not authoritative or reliable in nature and couldn't potentially alter an ordinary consumer's opinion.

The court also relied on US laws to state that the statements made in the impugned advertisements were mere statements of opinion, experience or puffery and consumers do not rely on them because they are immeasurable, unquantifiable and unverifiable unlike false statement of facts. Moreover, the court observed that the claims, based on consumer behavior, were "search attributes" that may influence the consumer to consider qualities in the other product. However, ultimately, what prevail are "experience attributes" that result from use of such product by the consumer. In this case, the court addressed the products to be "single use low cost products" which were short-lived that lasted for weeks, if not days, allowing the consumers to experiment and held that their advertisements would barely affect their marketability in the long run.

For all the reasons stated above, the court held that the impugned statements made in the alleged TVCs were not disparaging in nature as they fell within the permissible boundaries of puffing up in comparative advertisement. Such advertisements, in the opinion of the court, should be encouraged "in the interest of vigorous competition and public enlightenment", preventing which would impede competition and "put fetters" on the right to commercial speech. There are no such fetters provided in our laws but, if any that exist, are only to prevent any likelihood of consumers being misled or unfairly denigrate, discredit or attack rival's products. Thus, the court rejected the contentions of the plaintiffs in each suit.

The ad interim injunction against HUL was vacated. And interestingly the Court disposed of the matter without having to go to trial stage based on the reasoning that the Court has to rely on its own experience and understanding of human nature while inferring consumer behavior to alleged advertisements. It also stated that the Court would be considered to laboratories if it went into the trial stage to decide upon the expert opinions and laboratory reports of the parties, which the Courts are not equipped to determine which of the two alleged products was better.

At present, the matter is lying on appeal before the Division Bench of the High Court filed by P&G as well as HUL. It would be interesting to know the grounds and the findings which will finally come out in this appeal proceeding.

Footnotes

1 2013 (199) DLT 663

2 (1975) FSR 323

3 2003 (27) PTC 305 (Del) (DB)

4 (2009) 156 DLT 330

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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