INTRODUCTION
Today, while all companies try to find a way to tap into the largest consumer base, advertising has been integrated so effectively into the business plan that it can determine the success or failure of a business. Advertising is considered the best marketing scheme used to increase sales, make consumers aware of goods and services over those that are already existing in the market and create brand loyalty. It is also used as a strategy to influence the minds of consumers by displaying attractive and competitive content.
Sometimes, such content tends to ride too close to displaying or depicting a competing brand as an inferior one. This is where the concept of ‘Comparative Advertising’ or ‘Combative Advertising’ comes in. Comparative advertising can be seen as a “Battle of Brands” wherein the company’s product or services is presented in a manner that depicts that it is superior compared to its competitor’s products or services. However, this marketing strategy also helps consumers make a more informed decisions.
While the spirit of competition and consumer awareness increases with combative advertising, Trademark owners are the ones who have had to bear the brunt of the same. It is a well-settled rule that one cannot harm or taint the reputation and goodwill of another’s Trademark, while through the Trademarks Act, 1999 (the Act) comparative advertising is permitted as long as it does not hamper the well-being of the impugned mark.
Therefore, this Article attempts to analyze the extent of Trademark infringement through the adoption of Comparative advertising.
UNDERSTANDING COMPARATIVE ADVERTISING AND ITS SCOPE
Comparative advertising is seen as a type of marketing strategy that is used by businesses in order to promote and create a superior value for their brand while simultaneously creating an inferior brand value for their competitors. The promotion of one brand is done by the demotion of the other in terms of quality, services, specifications, and other particulars of the product.
With the advent of digitalization, digital marketing makes it easier for one brand to directly compare its product to another brand in an open market by primarily focusing on the shortcomings and disadvantages of the products of the competing brand.
Comparative advertising is a common tool used by companies in order to establish their dominant position in the market amongst other brands as well. This type of advertising has been used by several established companies as a marketing strategy. Samsung adopted this strategy in 2015, which thereafter brought the company to the limelight for several reasons. The advertisement displayed all the features of a Samsung mobile while downplaying an iPhone- which was a product of Apple, by clearly displaying the phone and calling it out for not having the same features without explicitly mentioning the brand name.
However, when such big brands are compared openly in advertisements, it may lead to further “advertising wars” as over the years Apple has also displayed Samsung’s models in its commercials several times post Samsung’s advertisement. This is usually done by the leading companies in order to establish dominance and control in the market and threaten the position of the other brand by convincing consumers that their brand is of superior value.
Another method that is adopted under the strategy of comparative advertising in order to evade blame is when brands use similar-looking or fake products to represent the competition brand. Here, there is no exclusive mention of the name of the opponent brand or the exact product, rather a parody is used. This kind of strategy leaves it up to consumers to make the association with that of the competing brand.
A consumer’s mind can be deeply influenced by digital marketing as consumers have easy access to information through electronic means. This is the reason why big brands across sectors are opting for combative marketing, as it enables them to create a comparison in the subconscious of the consumer. Such influential marketing leads to a reduction in the time and effort spent in testing various brands. However, one may argue that such marketing is actually an unfair trade practice and tends to mislead consumers, thereby preventing them from making a fully informed decision about their purchase. A major challenge that is faced by the adoption of a comparative advertising strategy is that it might attract litigation.
BLURRED LINES BETWEEN COMPARATIVE ADVERTISEMENT AND TRADEMARK INFRINGEMENT
As identified above, in today’s dynamic and competitive environment, companies aim to outperform their competitors in terms of product quality, operation and price. Companies in the same industry that sell similar goods often criticize and ridicule their competitors’ products through comparative advertising.
However, in the midst of this purely competitive business strategy, some companies have been attracting legal consequences in terms of infringement and passing off for their advertisements. What companies tend to miss out on when indulging in such practices is that comparative advertising is beneficial only to the extent that it provides information about its product with the view of helping consumers make a rational decision; but when such advertisements are accompanied by deceptive or false information about the competing brand, legal battles tend to arise.
Once companies blur the line between permissible and legal comparative advertising and move on to ruthless and illegal strategies to diminish the goodwill of the other brand, a negative environment is created and leads to a rather opposite effect of what the company initially sought to achieve.
In India, there is no specific legislation that deals with the concept of comparative advertising, its regulation, permissible and impermissible limits. However, the Act bags such responsibility along with a few precedents to set the tone for such a strategy.
Section 29 of the Act deals with “Infringement of registered Trademarks”. This provision explains the ambit of infringement of a Trademark and states that it amounts to infringement when a person who is not the registered proprietor of the mark uses it in the course of trade or a mark deceptively similar/identical to it, for goods and services which the Trademark is registered for.
Here, the concept of an indirect comparative advertisement can be brought in where the company uses a fake or a parody product that looks so similar that consumers tend to assume it is a product of the opponent brand. This would amount to Trademark infringement if the advertisement hampers the reputation and goodwill of the opponent brand. Even though the name of the product has not been explicitly mentioned, a case for deceptive similarity can be attracted under the ambit of infringement.
Section 29(8) however directly addresses advertising and what would amount to Trademark infringement in the same regard. The provision states that:
“Registered Trademark will be considered infringed by advertising if such advertising-
(a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters,
(b) is detrimental to its distinctive character or
(c) is against the reputation of the trade mark”.
This clearly stipulates the legality of comparative advertising and limits it to only be informative about the company’s product and advantages as compared to other brands in the market. Businesses do not have the freedom or autonomy to negate the position and reputation of another brand just to boot them out of the competitive stream. One cannot benefit by way of profits by using the mark of another, negatively or positively.
The concept of ‘Disparagement of Goods’ can be applied in cases of Trademark infringement due to comparative advertising. This is a well-known tort in commercial law. This happens when a comparative advertisement while comparing products, tends to reach a point of derogation and misleads the consumers as well. It recognizes the act of businesses releasing or making derogatory statements about other businesses with the pure intention to harm the reputation and put them in a bad light so as to discourage consumers from opting for their goods or services.
This is clearly linked to unfair trade practices and even attracts provisions from other legislations such as from the Consumer Protection Act, wherein under the very definition of the term ‘unfair trade practices’, deceptive and unfair methods of trade are shunned upon.
Section 30 of the Act however is the other side of the coin, wherein the Act justifies the strategy of comparative advertising to bring it under the purview of legal limits. Section 30(1) states that a person cannot be said to be infringing the Trademark of another if they use it just to “identify” the goods and services as that of the registered proprietors as long as:
- is in accordance with honest practices in industrial or commercial matters, and
- is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark.
AMLEGALS REMARKS
While companies are free to decide the marketing strategy they want to adopt, the comparative advertisement may be tricky in terms of ensuring that a line is not crossed. A company may be allowed to declare all advantages and features of its product as compared to that of another brand while also respecting the Trademark and goodwill of the other brand. As long as the advertising strategy does not lead to product disparagement, the line between honest as compared to infringement remains intact.
It is noted that in the eyes of law, advertisements are rather self-regulated as long as the difference between permissible and impermissible advertisement is adhered to. Comparative advertisement done in the spirit of competition or within limits of honest trade practices does not result in Trademark infringement. However, once these lines erode and the reputation, sales, and goodwill of the impugned mark is at stake, the comparative advertisement is seen as an infringement and violation of the rights of the Trademark owner.
Due to the lack of legislation directly addressing advertising concerns and specifically in relation to Trademark infringement, Courts have viewed advertisement as a liberal concept but have also imposed restrictions and injunctions on violators as and when required.
Therefore, the key aspect in the concept of practicing comparative advertising is to strike a balance between what is legitimate and rightfully done, and what amounts to defamation and might attract infringement, which therefore should not be practiced.
For any query or feedback, please feel free to connect with arushi.vyas@amlegals.com or mridusha.guha@amlegals.com
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