India: Comparative Advertising And Product Disparagement: Horlicks vs. Heinz

Last Updated: 8 January 2019
Article by Meetali Agarwal

Comparative advertisement and product disparagement are sensitive subjects to manufacturers of goods and services. Comparative advertising is a strategy used by companies to represent their product as superior in comparison to that of a competitor. When a comparative advertisement makes a comparison that is misleading and/ or derogatory, it crosses over into what is referred to as product disparagement. Clearly, there is a fine line to be drawn between the two concepts, and one that invites considerable attention from trademark owners, especially because consumer behaviour can be easily influenced through such advertisements to a brand’s advantage or disadvantage. With advertising being a largely self-regulated industry in India, there is limited vigilance on the manner in which corporate entities market their brands. The law on trademarks makes reference to when comparative advertisements can be regarded as infringement, and when disputes get out of control, the courts step in. This happened recently in the case between two health food drinks, where the Delhi High Court discusses the difference between the concepts of comparative advertising and disparagement (Horlicks Ltd. vs Heinz India Private Limited, [CS(COMM) 808/2017], Delhi High Court, delivered on 17 December 2018).

BRIEF FACTS

The Defendant (HEINZ INDIA PRIVATE LIMITED) on 11th November 2017, published an advertisement for its "COMPLAN" branded health food drink in the newspaper "The Telegraph" (in its Kolkata and Patna editions). The advertisement compared one cup of COMPLAN with two cups of a competing brand, "HORLICKS", with a disclaimer at the bottom of the page, that read, “One cup of Complan (33g) gives 5.94g of protein while two cups of Horlicks (27*2=54g) gives 5.94g of protein basis recommended pack dosage….”. The Defendant also used a tagline which states "From Now On, Only Complan". The Plaintiffs (HORLICKS LIMITED) claimed that the Defendant's advertisement was intentionally and deliberately disparaging its health food drink product HORLICKS.

COMPARATIVE ADVERTISING

Comparative advertising is ordinarily legal and permissible if it meets certain basic conditions. The Advertising Standard Council of India (ASCI) in its Code for Self Regulation of Advertising content in India (see: ), offers a few thumb rules for making comparative claims. For example, so long as advertisements are evidently "in the interests of vigorous competition and public enlightenment", and there is clarity regarding the aspects being compared, there is likely to be limited or no problem. Additionally, comparative advertising is usually to be resorted to in relation to like products that meet the same needs and are intended for the same purpose. The comparison between rival products must also be factual and accurate, in a manner that can be substantiated. Most importantly, the comparison between the products should not mislead consumers either about the advertised product or that with which it is compared; and the advertisement must not unfairly malign, attack or discredit other products.

The Trademarks Act, 1999, lists the circumstances when the use of a registered trademark in advertisements may be considered infringing. Section 29(8) of the Act states that infringement takes place if the advertisement in question, (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) offers a defence for the use of trademarks in comparative advertisements, effectively reiterating key terms from Section 29(8), stating that advertisements would not be considered infringing if they are (a) in accordance with honest practices in industrial or commercial matters, and (b) do not take unfair advantage of or are detrimental to the distinctive character or repute of the trade mark.

WHAT IS DISPARAGEMENT IN COMPARATIVE ADVERTISING?

While the ASCI Code offers some guidelines, the legal test of when comparative advertising leads to disparagement has been left to the courts to decide. A Division Bench of the Delhi High Court in Colgate Palmolive Company & Anr. vs. Hindustan Unilever Ltd., 2014 (57) PTC 47 [Del](DB] held that in comparative advertising, a certain degree of trade puffery is acceptable which does not show the competitor's product in bad light, and thus there could be no actionable claim against the same. In Havells India Ltd. Vs. Amritanshu Khaitan, [2015 (62) PTC 64 (Del)], the High Court declared that "It is settled law that an advertiser can call his product the best, but at the same time, cannot rubbish the products of a competitor."

WHAT IS A MISLEADING ADVERTISEMENT?

A key test for determining if an advertisement making comparisons has switched over to being disparaging is whether it contains misleading information. As per the European trademark decision in Lidl SNC v Vierzon Distribution [SA [2011] E.T.M.R.], a misleading advertisement should satisfy two essential elements: (a) the misleading advertising must deceive or have the potential to deceive the persons to whom it is addressed to; and (b) as a consequence of its deceptive nature, the misleading advertising must be likely to affect the economic behaviour of the persons to whom it is addressed or harm a competitor. This test was referred to by the Delhi High Court in its decision in Havells India Ltd. Vs. Amritanshu Khaitan, [2015 (62) PTC 64 (Del)].

SHOULD ALL PARAMETERS OF RIVAL PRODUCTS BE COMPARED?

Comparative advertisements tend to pick on specific features of rival products and place them beside each other for the consumer. As was also the case in the present matter of Horlicks v. Heinz, competitors get peeved that other features that would have ordinarily shown them in better light are not revealed. The Delhi High Court in the present case was fairly clear that there was no obligation to show all parameters, and that it was "open to an advertiser to highlight a special feature/characteristic ... which would set its product apart from its competitors… as long as it is true." There are no guidelines about the minimum number of parameters that should be compared in a comparative advertisement, as the court observed, and there is no mandate in law to disclose each and every factor/characteristic in comparative advertisement.

ARE THERE CONSTITUTIONAL PROTECTIONS FOR COMPARATIVE ADVERTISEMENTS?

There were attempts by the Plaintiffs to argue that the fundamental right to freedom of speech under Article 19(1)(a) of the Indian Constitution was only available to a citizen of India, and not to a corporate entity. Similarly, they tried to argue that under Article 21 of the Constitution, the Plaintiffs could rightfully restrict any commercial use of its mark which denigrated its goodwill and reputation. These arguments were categorically rejected by the Court. It said that advertisements are a facet of commercial speech that is covered under Article 19(1)(a) and could be restricted only in accordance with law enacted under Article 19(2) of the Constitution. It further observed, "In a democratic country, free flow of commercial information is indispensable, and the public has a right to receive the commercial speech. In fact, the protection given to an advertisement under Article 19(1)(a) of the Constitution is a necessary concomitant of the right of the public to receive the information in the advertisement."

CONCLUSION: WAS THE HORLICKS TRADEMARK INFRINGED?

In the present case, the Court was clear that there was no distortion of the distinctive character of the HORLICKS mark, as there was a clear distinction between the two products. HORLICKS was also clearly the source indicator of the Plaintiffs and COMPLAN is the source indicator of the Defendant. The Court further said that the Plaintiffs could not prevent the use of their trademark for the purpose of identification of their product.

Finally, it noted that the law allows comparative advertising as long as the use of a competitor’s mark is "honest." The Court said that the test of honest use was an objective test which depends on whether the use is considered honest by members of a reasonable audience. In this context, the failure to point out a competitor’s advantages is not necessarily dishonest, and by corollary, highlighting the advantages of the competitor's product by the advertiser in the advertisement is not a dishonest practice either.

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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