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January 14, 2013

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Comparative Advertisements: The Legal Pitfalls


- Vaishali Mittal, Partner [ Anand And Anand ]
- Ayushi Kiran, Associate, Litigation Department [ Anand And Anand ]

Comparative-Advertisements

This article focusses on the current as well as prospective legal trends in India in the area of comparative and parody advertisements. Also, the article attempts to analyse the uncharted legal principles by the Indian Courts in the field of comparative advertisements

The Genus of Comparative Advertisements

The Comparative Advertisements consist of various sub species. The sub species which generally steal the legal limelight are Puffery, disparaging advertisements and parody advertisements.

To the aforesaid test, the High Court of Delhi added that puffery even if untrue is permissible, however, if there is defamation, an action lies for recovery of damages for defamation and an injunction restraining repetition of such defamation.

Medium of Comparative Advertisements

The medium used to convey the comparative advertisement is crucial as its impact varies with the change of the medium of communication. Since, visuals have a more lasting impact on man’s memory than mere words, such advertisements in television have a stronger impact than the ones in print media (newspaper, billboards).

The medium of the advertisement was for the first time taken into account in the Horlicks-Complan Ad-Battle by Justice Bhat. He opined that television advertisements unlike print advertisements make an instant impact across consumer classes and the level of impact of such advertisements on the consumer is much greater than a print advertisement where each word has to be read, analysed and understood and therefore, require a higher level of judicial scrutiny.

The impact of the electronic media (internet) with advertisements going viral on YouTube is yet to be tested in the Indian Courts of Law.

Radio predates all the abovementioned mediums, however, surprisingly comparative advertisement disputes have till date not been agitated before the Indian Courts. The All India Radio is governed by “Code for Commercial Advertising over All India Radio”.

The Advertising Standards Council of India

Currently, the Advertising Standards Council of India (ASCI) is the only Government recognised code but, it does not have a legal standing of its own. It governs all mediums of communication.

The ASCI & its CCC (Consumer Complaints Council) deal with Complaints received from consumers and industry, against advertisements which are contravention of the ASCI Code for Self-Regulation in Advertising and the Programme and Advertising Codes prescribed under the Cable Television Network Rules, 1994.

Some of the most publicised ads which have reached ASCI are mostly against objectionable content such as the Tuff ad with the Milind Soman-Madhu Sapre for its overt nudity. One of the reason why ASCI is yet to be actively used for comparative advertisements is that the time taken for its decision and eventual pulling down of the complained advertisement, exceed the shelf life of the advertisement.

The Uncharted Legal Principles

01  Difference between Parody and Disparaging Advertisements

Although, the Indian Courts have drawn a bright line demarcation between permissible comparative advertising or puffery and commercial disparagement4, the distinction between parodies and disparagement still remains murky.

Despite the fact that the courts in India have given a more nuanced interpretation of “reasonable man” in the context of the peculiar nature of the Indian audience6, they have failed to foray into the aspect that whether certain parody advertisements can never be taken seriously by among a reasonable Indian audience and therefore, need not be condemned as disparaging.

The success of the parody advertisement lies in the fact that the parody is able to remind the audience of the logos/advertisements associated of the brand being parodied. Therefore, this inevitably involves legal impediments like copyright and trademark infringement. The Delhi High Court lost the opportunity to explore this aspect in Pepsi Co. Inc. and Ors. v. Hindustan Coca Cola Ltd. and An7r. The Delhi High Court failed to appreciate that Parody is recognised as a form of criticism and commentary and is squarely covered under fair use doctrine8 of copyright and fundamental rights to free speech and practice trade/business.

Fundamental Rights - Article 19

Unfortunately, Indian Courts have not yet appreciated the fundamental rights like the freedom of speech and expression and freedom to practice one’s trade/business disturbed when comparative advertisements are injuncted on grounds of disparagement. The courts while defining the tort of “malicious falsehood” in the Odomos-Goodnight debacle9, for the first time recognised that an advertisement is constitutive of commercial speech and is protected by Art. 19(1)(a) of the Constitution. However, the Madras High Court went to the regressive extreme while balancing the right to freedom under Article 19 of the Constitution along with reasonable restrictions on that right in the form of consumer laws, when it held that “that false claims by traders about the superiority of their products, either directly or by comparing them against the products of their rivals, were not permissible”.

The issue of freedom to practice one’s trade/business is yet to be debated in the Indian Courts as far as comparative advertisements are concerned.

Unfair Competition under The Consumer Protection Act, 1986

Section 36 A11 of the MRTP Act listed several actions to be an “unfair trade practice” and aided in setting the standard for Comparative Advertisements12. However, the MRTP Act has been repealed. Unfair trade practices are now governed under The Consumer Protection Act, 198613. However, within the Consumer Protection Act, the complaint can be lodged by consumer, registered consumer association, Central Government or State Government but not by a competitor. Thus, within the existing law, a manufacturer whose product is disparaged has no locus standi to seek a remedy or any compensation for loss of profit.

The Curious Case of Copyright Amendments Act, 2012

Section 14(d)(i)(A) prohibits reproduction of Film stills and therefore, pose a palpable threat to parody advertisements.

Proviso to Section 17:Keeps the copyright of the author intact for works incorporated in a cinematograph film (defined under Section 2(f) of the Act; an ad film qualifies as one) in spite of the author of such a work, working under a contract of employment.

The effect of reading the Proviso to Sections 17, 1816 and Section 19(9)17  together leads to the conclusion that the maker of the Comparative Advertisement in any medium whatsoever (Future Technologies) can also be subject to the claims of infringement of the authors of the works (literary, dramatic, artistic, musical, sound recording) incorporated in the advertisement and not only the producer of the advertisement film. The original authors after the amendments will always have a live copyright infringement claim at their “right to receive equal share of royalties” can never be extinguished. However, the “right to receive royalties” is never mentioned as a separate right anywhere else in the Copyright Act.

Exclusive right of performers: Proviso to Section 38A(2)18 read with Section 2(qq)19 of the Copyright Act provides that all film actors, ad-jingle singers (who are mentioned in film credits) would have a continuing right to royalty for the commercial use of their performances. However, the definition of a performance under Section 2(qq) of the Act includes only live performances. Therefore, the comparative ad-film maker should be careful of using substantive portions from the first ad-film without requisite permission as they can be subject to infringement of copyright and moral rights20 of the performer. Infringement of moral rights claims are particularly risked by a Parody Ad-film maker.

Personality/Publicity Rights

Parodies of advertisements involving a public personality lies in the grave danger of violating the Fundamental Right to personality guaranteed under Article 21 of the Constitution21 which is available to everyone and not only citizens of India and the Trademark law22 and also performance rights provided under Section 38 of the Copyright Act.

However, these legal principle are yet to see the light of the day in the courts. Maybe if the Pepsi’s ad mocking Hrithik Roshan in the Coke commercial, by showing a Hrithik clone being made fun of by his archrival Shahrukh Khan would have reached the Court of Law, we would have witnessed the Indian Court’s spin on these legal principles.

Disparagement vis-à-vis Dilution

Although the Courts here have constantly done the tightrope walk between puffery and disparagement but they are yet to adjudicate whether the alleged disparagement has resulted in dilution of the disparaged Brand. The courts have failed to appreciate that if the Brand being disparaged is outrageously strong and well reputed chances of a parody advertisement disparaging it are very slim.

Parody Domain Names

While many of them shared a chuckle during the PETA domain name controversy where “People for Ethical Treatment of Animals” was parodied as “People for Eating Tasty Animals”, such cases have not been experienced in India.

So Near Yet So Far…

The Indian Courts have come a long way with respect to adjudicating comparative advertisements, however, its decisions are yet lacking in sophistication especially when it comes to addressing issues dealing with parody advertisements and fundamental rights of the advertisement film maker and the concerned manufacturer. The Copyright Amendment Act 2012 as well is yet to test the water.

Footnote: 1 Reckitt & Colman of India Ltd. v. Kiwi T.T.K. Ltd, 1996 PTC (16) 393, 2 See GlaxoSmithKline Consumer Healthcare Ltd. vs. Heinz India (P) Ltd., Delhi High Court, 20 Nov 2010, I.A. No.15233/2008 (O-39, R-1&2 CPC) in CS (OS) 2577/2008, I.A. Nos.15647/2008 (O-39, R-1&2 CPC) in CS (OS) 2646/2008, I.A. No.(un-numbered) (O-39, R-1&2 CPC) in CS(OS) 547/2010, 3 Rule 6 Programme Code. – (1) No programme should be carried in the cable service which:- (d) Contains anything obscene, defamatory, deliberate, false and suggestive innuendos and half truths, 4 See Lakhanpal National Ltd. v. MRTP Commission, 1989 AIR (SC) 1692, 5 See Pepsi Co. Inc. and Ors. v. Hindustan Coca Cola Ltd. and Anr., 2003 (27) PTC 305 (Del)(DB), 6 See Palmolive (India) Ltd. v. Vicco Labs, 1997 (5) CTJ 488 7 See Pepsi Co. Inc. and Ors. v. Hindustan Coca Cola Ltd. and Anr., 2003 (27) PTC 305 (Del)(DB), 8 Section 52: Certain acts not to be infringement of copyright. (1) The following acts shall not constitute an infringement of copyright, namely: (a) a fair dealing with any work, not being a computer programme, for the purposes of-— (ii) criticism or review, whether of that work or of any other work, 9 See Dabur India Ltd. v. M/s. Colortek Meghalaya Pvt. Ltd, 2010 (42) PTC 88, 10 See Colgate-Palmolive (India) Limited v. Anchor Health & Beauty Care Private Limited, (2008) 7 MLJ 1119, 11 The provision of Section 36A(1)(x) reads as: Unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provisions of any services, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely, (1) The practice of making any statement, whether orally or in writing or by visible representation which (x) gives false or misleading facts disparaging the goods, services or trade of another person, 12 See Lakhanpal National Ltd. v. MRTP Commission, 1989 AIR (SC) 1692 and Hindustan Lever Ltd. v. Colgate Palmolive (India) Ltd., AIR1998SC526, 13 Section 2(1)(r) of the Consumer Protection Act categorises four types of representation as actionable “unfair trade practices”, namely: false representations falling under subclauses (i), (ii) and (iii); representations which may not necessarily be false but are nevertheless incorrect under subclauses (iv) and (v); warranty or guarantee under sub-clauses (vii) and (viii); and false or misleading representations that fall under subclauses (vi), (ix) and (x), 14 14 Meaning of copyright. For the purposes of this Act, “copyright” means the exclusive right subject to the provisions of this Act, to do or authorise the doing of any of the following acts in respect of a work or any substantial part thereof, namely (d) In the case of cinematograph film,—(i) to make a copy of the film, including—(A) a photograph of any image forming part thereof, 15 17. First owner of copyright. Subject to the provisions of this Act, the author of a work shall be the first owner of the copyright therein Provided that in case of any work incorporated in a cinematograph work, nothing contained in clauses (b) and (c) shall affect the right of the author in the work referred to in clause (a) of subsection (1) of section 13, 16 First proviso to Section 18 of the Copyright Act: Provided also that the author of the literary or musical work included in a cinematograph film shall not assign or waive the right to receive royalties to be shared on an equal basis with the assignee of copyright for the utilisation of such work in any form other than for the communication to the public of the work along with the cinematograph film in a cinema hall, except to the legal heirs of the authors or to a copy right society for collection and distribution and any agreement to contrary shall be void. 17 Section 19(9): No assignment of copyright in any work to make a cinematograph film shall affect the right of the author of the work to claim an equal share of royalties and consideration payable in case of utilisation of the work in any form other than for the communication to the public of the work, along with the cinematograph film in a cinema hall. 18 Section 38A(2): Once a performer has, by written agreement, consented to the incorporation of his performance in a cinematograph film he shall not, in the absence of any contract to the contrary, object to the enjoyment by the producer of the film of the performer’s right in the same film: Provided that, notwithstanding anything contained in this sub-section, the performer shall be entitled for royalties in case of making of the performances for commercial use. 19 Section 2(qq): “Performer” includes an actor, singer, musician, dancer, acrobat, juggler, conjurer, snake charmer, a person delivering a lecture or any other person who makes a performance. Provided that in a cinematograph film a person whose performance is casual or incidental in nature and, in the normal course of the practice of the industry, is not acknowledged anywhere including in the credits of the film shall not be treated as a performer except for the purpose of clause (b) of Section 38B. 20 38B. Moral rights of the performer: The performer of a performance shall, independently of his right after assignment, either wholly or partially of his right, have the right,—(a) to claim to be identified as the performer of his performance except where omission is dictated by the manner of the use of the performance; and (b) to restrain or claim damages in respect of any distortion, mutilation or other modification of his performance that would be prejudicial to his reputation. 21 See ICC Development (International) v. Arvee Enterprises, 2003 (26) PTC 245 Del, 22 See DM Entertainment v Baby Gift House and others, MANU/DE/2043/2010

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.

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