INTRODUCTION
Advertisements are made for a simple reason to market the product in a way attracts and lures the consumers. There is no room for harsh facts or objective realities wherein the only aim is to obtain profit.
Besides the stereotypical television commercials and advertisements, recently another kind of advertisement has found its way on the small screens i.e., surrogate advertisements. Essentially, surrogate advertisements mean advertising the products under the umbrella of another product of the same brand, which cannot be advertised in the mainstream media in its individual basis. Such advertisements promote the product under the name of the brand instead of explicitly talking about the product. Surrogate advertising is also known as indirect advertising or trademark diversification.
Surrogate advertising was introduced in Britain as a result of women’s protests against liquor advertisements, which only grew to the point that the advertisements had to be prohibited. The proprietors were left with little choice except to promote juices and sodas under the brand name, which later became known as surrogate advertising.
In India, surrogate advertising surfaced post the ban on commercials pertaining to alcohol, cigarettes and other such tobacco-based products which was introduced by the Cable Television Networks (Regulation) Act, 1995 and the Cable Television Networks Rules, 1994.
Surrogate advertising is used to launch new or re-launch the existing products. Instead of simply marketing the goods, it promotes the brand image which in turn strengthens the brand’s value, quality, reliability and appeal in the eyes of the consumers. Thereafter, the commercial establishes a ‘branding umbrella strategy’ for promoting the other products of the same brand.
Typically, surrogate advertisements are used for advertising tobacco and alcohol products, as their direct advertising is banned. For example, alcohol is advertised with products from a similar category, such as club soda or mineral water. However, sometimes such commercials leverage products from completely different categories, such as CD players, music, or even playing cards, to get the brand name out to customers. Many companies in India use this technique of advertising, such as Bacardi blast music CDs and Bagpiper club soda.
NATIONAL AND INTERNATIONAL REGULATIONS LEADING TO THE INCEPTION OF SURROGATE ADVERTISING
Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (“COTPA”)
Section 5 of COTPA prohibits the direct and indirect promotion of cigarettes and other tobacco products. The use of a name or brand of tobacco products for marketing, promotion, or advertisement of other products is specifically defined in Rule 2 (e) of the COTPA Rules, 2004 as “Indirect advertisement”.
The Cable Television Networks Rules, 1994
The Cable Television Networks Rules, 1994 expressly forbids the direct or indirect promotion and advertisement of “cigarettes, tobacco products, wine, alcohol, liquid, or other intoxicants” as per Rule 7 (2) (viii). Nevertheless, the provision also states that a product having the same brand or logo as the prohibited products can advertise their product on the television by following certain conditions. Therefore, this implies the primary recognition of surrogate advertising under the guise of brand expansions by the Indian Legislation.
The Advertising Standards Council of India (“ASCI”)
ASCI was established as a safeguard against the unfair use of advertising to promote products that are recognized as hazardous to society or to individuals. Section 3.5 and 3.6 of the Code for Self-Regulation of Advertising Content in India stipulates that the products whose advertising is prohibited by law, should not explicitly evade such prohibition by marketing the restricted products under the guise of other products.
In order to understand the ambit of such disguise, the parameters mentioned hereunder shall be followed:
- Whether or not the advertisement depicts enough and obvious clues or cues about the restricted product, directly or indirectly;
- Whether or not the unrestricted product which is apparently being promoted through the commercial has enough distribution and sales as compared to the scale of the commercial in question, and
- Wherein the advertising is necessary, whether or not mere use of the name of the brand amounts to the entire advertisement being objectionable with regards to the two aforementioned parameters.
World Health Organization Framework Convention on Tobacco Control (“WHO FCTC”)
India ratified the WHO FCTC on February 5th, 2004, and it entered into force on February 27th, 2005. By establishing tobacco control measures, this convention is seen as protecting current and future generations from the harmful health, social, environmental, and economic consequences of tobacco consumption and exposure to tobacco smoke.
SURROGATE ADVERTISING AND INTELLECTUAL PROPERTY RIGHTS
As discussed before, surrogate advertising is typically associated with banned or restricted products such as tobacco, alcohol, etc. The Government has formulated a number of legislations and policies against direct advertising of certain products with a view to promote public health. However, the advertisers have found a loophole in such restriction i.e., surrogate advertising.
There are many underlying aspects in the world of advertising that must be moderated. In most countries, there are publicity guidelines that address unfair business practices, false associations, unauthorized use, parody and surrogate advertising. Advertising guidelines are issued in many countries as specific guidelines pertaining to business practices. The companies need to comply with not only the guidelines specified by the competent authorities, but also those in other countries where the advertisements may appear due to the effect of advertising over the Internet, mobile networks or satellite television.
The elements of a successful advertising may be duplicated or infringed by others. Businesses must therefore be cognizant of different Intellectual Property Rights (IPR) while developing content for surrogate advertisements or launching a publicity campaign. The several aspects of surrogate advertisements may be protected in the light of trade mark legislation, while the totality of the advertisement may be covered by copyright legislation.
Usually, the advertisers defend the concept of surrogate advertising through trademark diversification and growing significance of IPR in this commercial era.
Section 5 (1)(a) of the COTPA explicitly provides sanctions against indirect advertising and marketing of tobacco products with the brand name or even the trademark of the manufacturing company. Such restrictions clearly imply the non-acceptance of the concept of surrogate advertising in India. Similar other legislations have led to a debate around surrogate advertisements and IPR where it is contended that such laws against the usage of trademarks tend to diminish the legitimate rights of a trademark holder to use his trademark.
While addressing such speculations, it is pertinent to note that the IPR vested in a trademark holder confers in him a negative right and Article 16 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) stipulates the same. IPR gives the holder a right to use his trademark to the exclusion of others. Since trademark is not a positive right, the trademark holder cannot exercise his right of usage in any manner he wishes to. The trademark holder must adhere to the statute that confers such rights.
Additionally, the basic purpose of trademarks is to serve as an indicator of the source or origin of the product that carries such trademark. While reasoning surrogate advertisements, the trademark holders often use the defense of the other function of trademarks, i.e., a marketing tool. However, the marketing or promotional utility of trademarks is only a subordinate purpose, and is not recognized by international agreements such as TRIPS.
Trademarks plays a secondary role as a “silent salesman”, i.e., to market a company’s logo and brand markings on packaging etc. Although not recognized by TRIPS, this purpose is what corporations use in surrogate advertising. Companies advertise those products that they might otherwise not be allowed to by showcasing their trademarks within the right context.
In general understanding, the right to use a trademark being a negative right is not an absolute liberty of usage that the trademark holder enjoys. Also, when the choice is between the commercial rights of the trademark holder and the right to life and health of the citizens, the latter shall always weigh heavier. Therefore, so far as surrogate advertising is towards promoting liquor, tobacco and other health hazards, the IPR of the holder shall give way to public interest.
SURROGATE ADVERTISING IN INDIA: A JUDICIAL PERSPECTIVE
In the case of United Breweries Limited v. Mumbai Grahak Panchayat [I (2007) CPJ 102 NC], the Mumbai Grahak Panchayat lodged a complaint against United Breweries Limited as well as Western Railway for engaging in unfair trade practices by prevalently displaying/ exhibiting false, misleading, and surrogate liquor advertisements on the coaches of Western Railway trains and thereby seeking abolishment of the same.
Alcoholic drinks such as Bagpiper, London Pilsner, and Derby Special Whisky and Beer were all produced by United Breweries. According to the commercial, the tag line for Bagpiper was “India’s No. 1 and the World’s No. 3”. It was observed by the National Consumer Disputes Redressal Commission (the Commission) that the said tag line used in the commercial matches with the description Bagpiper whisky and not Bagpiper soda. Furthermore, it was found that there was no Bagpiper soda available in the market.
The second advertisement in question was for “London Pilsner soda” which advertised that a 250 ml bottle of soda was available for Rs. 16. However, later it was confirmed by the company that instead, a 250 ml bottle of beer has been launched in the market. Besides, Mumbai Grahak Panchayat’s volunteers also bought a bottle of 250 ml London Pilsner soda beer for Rs. 16. It is pertinent to note that on a train, a London Pilsner advertisement read, “Ab Cold Drink Out” which was considered to be an attempt to get the youth to consume alcoholic drinks such as beer rather than soft drinks.
Moving onto the third advertisement, the “Derby Special Soda”, it came to the notice of the Commission that while there was no Derby Special soda available in the market, on the other hand, “Derby Special whisky” was available through Wine Dealers.
The Railway Authorities were notified of the complaint, but they refused to stop the advertisement, stating that Agreements had already been signed. Dissatisfied with the explanation, a complaint was filed with the State Commission against United Breweries Limited and Western Railways, seeking the discontinuance of the allegedly deceptive advertisements for Bagpiper, London, Pilsner, and Derby Special on Western Railway trains.
That the ASCI was also approached by the complainant regarding the Bagpiper soda and London Pilsner advertisements. ASCI sustained the complaints ruling that the advertisement is misleading due to ambiguity, serves as a surrogate advertisement for an alcoholic beverage brand, and violates the Code for Self-Regulation of Advertising Content in India. A written request was issued to the advertiser to remove the advertisements at the earliest.
In the case of Re: Mcdowelland Co. Ltd. vs. Unknown, 1997, the Monopolies and Restrictive Trade Practices Commission (the MRTPC) called for an investigation into an advertisement that appeared on the Illustrated Weekly of India on 23.11.1986. Despite the fact that the advertisement appeared to be of cologne, McDowell & Co., a company that manufactures whiskey, cologne, and other products, was accused of advertising alcoholic drinks under the guise of cologne to increase the sale of the whisky it produces.
A bottle bearing the words “McDowell’s Diplomat Cologne” was featured in the said commercial. The MRTPC came to the preliminary opinion that, while the advertisement appeared to be about cologne, it misled the consumers into perceiving that it was about the excellent quality and utility of whisky produced under the brand name “Diplomat” by the company. The MRTPC held that the alleged advertising was not deceptive, but rather “puffing up”.
In the year 1991, the Voluntary Health Association of India filed a PIL before the Delhi High Court seeking a sponsorship ban on the Indian cricket team from the cigarette brand Wills produced by ITC. It was alleged that as 2001 World Cup was round the corner, millions of viewers of the said event would be inspired and inclined towards using smoking products due to such advertisements. In the year of 2001, with a view of taking responsibility and a goodwill gesture, ITC voluntarily withdrew its sponsorship from all sporting and cultural events.
In 2008, when the first tournament of the Indian Premier League (IPL) was scheduled to take place, a PIL was brought before the Supreme Court to prevent Vijay Mallya from naming his team as “Royal Challengers Bangalore” on the grounds that the United Breweries Group of Mallya indirectly sought to promote its whiskey “Royal Challenge” brand under the guise of that name. During the first hearing before the Supreme Court, the Bench rejected the claim stating that the Royal Challengers differed from the Royal Challenge and that the petition itself resulted in unreasonable advertising of the brand of the liquor.
Personnel from the television and media industry called into question various provisions of COPTA on the ground that the ban on the use of tobacco products in advertisements and films violated Article 19(1)(a) of the Constitution of India (the Constitution) i.e., Freedom of Speech and Expression. It was stated that such a ban stifled a filmmaker’s artistic freedom to depict societal realities.
However, the landmark judgment of Hamdard Dawakhana v Union of India [1960 AIR 554] held that freedom of speech may only be considered when advertising concerns the expressing or promotion of ideas. The Supreme Court observed that advertisements cannot be granted the same pedestal as the press.
It was categorically noted that a commercial advertisement has a commercial component and does not fit within the ambit of Freedom of Expression. The Supreme Court held that while commercial advertisements are entitled to limited protection as referred to in Article 19(1)(a) of the Constitution, the protection shall not be applicable to commercial advertisements for tobacco products, including direct and indirect advertisements of the same. The COTPA was therefore found to be fair and non-violative in view of Article 19 of the Constitution.
However, the aforementioned stance deviates notably from Tata Press Ltd. v MTNL [1995 AIR 2438; 1995 SCC (5) 139] wherein full protection for advertising under Article 19(1)(a) on the basis that consumer choice and a reduction of prices in the economy were important to enlighten consumers.
AMLEGALS REMARKS
On several occasions, the ASCI has condemned advertisers for even the slightest references to prohibited products in surrogate advertisements. As a result, following the standards set forth in the aforementioned Rules, Codes, and guidelines/notifications released from time to time may be the best approach to ensure that such advertisements are not subject to strict scrutiny and censoring by the competent authorities,
As the ASCI is a self-regulatory organization, it does not have the authority to penalize advertisers; instead, it may only request that they amend or remove their advertisements if they do not follow the stipulated parameters and guidelines.
Advertisers should take due care while developing any such commercials that amount to surrogate advertisements as it is not widely accepted on the national front and may attract penal consequences.
– Team AMLEGALS, assisted by Mr. Janmejay Goswami and Ms. Anumeha Smiti (Interns)
For any query or feedback, please feel free to get in touch with chaitali.sadayet@amlegals.com or mridusha.guha@amlegals.com.
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