Comparative advertising is a marketing strategy in which a company shows how their competitors’ products are inferior to their product by comparing it with theirs through advertisements.
For instance, Apple Inc. had compared their MacBook with other computers in their advertisements as part of their marketing strategy in order to increase sales.
The Trademarks Act, 1999 has incorporated the provisions related to this concept in Sections 29(8) and 30(1). According to the Act, Comparative Advertising is permissible, with certain limitations with regard to unfair trade practices.
The Delhi High Court in Reckitt Benckiser v. Hindustan Lever Limited listed out a few essential principles of the law on disparagement as follows:
1. A tradesman is entitled to declare his goods to be the best in the world, even though the declaration is untrue.
2. He can state that his goods are better than his competitors.
3. He can even compare the advantages of the two goods. He, however, cannot, while saying that his goods are better than his competitor’s, say that his competitor’s goods are bad. If he says so, he really slanders the goods of his competitors and their goods, which is not permissible in law.
4. If there is no defamation to the goods or the manufacture of such goods, no action lies; but if there is such defamation, an action lies for recovery of damages for defamation, then the court is also competent to grant an order of injunction restraining them to perform such acts.
When a producer is using the method of comparative advertisement for promoting his/her goods or services, it might lead to dilution, tarnishing or blurring of the trademarks of the competitors. However, as per the Trademarks Act, comparative advertising is legal only to the extent where it does not hamper the reputation of the competitor’s mark. That is, a person while advertising his goods over the goods of his competitor, cannot say that his competitor’s goods are bad as this may lead to disparagement of goods of his competitor.
Section 29(8) of the Trademarks Act (“Act”) provides for an action of infringement to lie in case an advertisement containing a registered mark: (a) takes unfair advantage of, and is contrary to honest practices in industrial and commercial matters; or (b) is detrimental to its distinctive character; or (c) is against the reputation of the mark.
In a very recent judgment it was held by the Mumbai High Court that whilst considering television advertisements, a frame by frame and/or elaborate analysis of the advertisement is to be avoided. Advertisements (more particularly, competitive ones) are to be seen from the perspective of an aware and alert consumer. As long as the advertisement is by and large truthful, the advertiser must be given enough latitude and room to play around in the grey areas of advertisement and the plaintiff ought not to be hypersensitive.
It cannot be denied that Comparative advertising is coupled with negativity, and has damaged the honour and credibility of advertising in many cases. Also, as negative advertisements can be stored more effectively, such advertisements are a common marketing strategy for brand building.
Is this the right way forward?