Aligning Comparative Advertising Strategy to Avoid Trademark Infringement

Consumer behavior is often influenced by the use of comparative advertising. It works by comparing the features of the advertiser’s product or service with those of a competitor. While the Indian legislation is silent on its definition, the UK law describes comparative advertising as any ad that “explicitly or by implication, identifies a competitor or goods or services offered by a competitor.” This allows an honest comparison of product features with those of a competitor. However, it also opens doors to potential trademark infringement.

Comparative advertising is a marketing strategy that is followed by businesses the world over. Its usage, though, needs careful deliberation so as not to lead to any trademark-related infringement or product disparagement. In this article, we will explore the concept of comparative advertising, trademark infringement in comparative advertising, case study example, Indian laws on comparative advertising, etc.

What is Comparative Advertisement?

Advertisements that compare a brand’s products or services with those offered by a competitor are known as comparative advertising, aggressive advertising, or knocking copy. It helps the consumer see different products’ price, quality, value, or other merits, enhancing consumer awareness. These should not be confused with parody advertisements, where a fictional product is advertised to make fun of an ad, nor should it be confused with using a coined brand name to compare the product without naming the competitor.

Moreover, a critical provision is attached to such advertisements to ensure that these ads curb misinformation. However, there is always a risk if consumer awareness is entrusted to brands with vested interests. Also, an advertising war can occur when competing brands exchange comparative or combative advertisements mentioning each other.

Comparative advertisements often include competitor names or logos to help viewers identify brands being compared. However, such names or logos might be protected through trademark, and their improper use can result in trademark infringement. Before continuing our discussion on a comparative advertisement, let us explain the two concepts briefly.

What are Trademarks and their Infringement?

It is a mark that can distinguish the goods or services of one brand from those of others, and includes shapes of goods, their packaging, and a combination of colors. A trademark can be any word, name, device, symbol, or combination adopted for this purpose.

The Trademarks Act, 1999 of the Indian legislation protects trademarks. It deals with protection, registration, and penalties against trademark infringement. Trademarks are critical in building and maintaining the identity and value of a brand. Thus, organizations, both international and national, endeavor to protect intellectual properties such as trademarks.

Trademark infringement is an unauthorized usage of a registered or deceptively similar trademark. The term ‘deceptively similar’ means when an average consumer looks at the mark, it can confuse them about the origin of the product or service.

Comparative Advertising, Trademark Infringement and Product Disparagement

Comparative advertising is quite effective in delivering a memorable message to the audience. It can change how a consumer views a product and generate sales. If the market for a product is well-defined, then comparative advertising can differentiate the product from the competition. However, it is equally risky.

If an advertiser uses a trademark of a competitor to make a comparison between its products/services and those of its competitors’, and in the process disparages them, then such an act would not only invoke issues related to product disparagement but would also invoke issues related to trademark infringement.

Indian Laws on Comparative Advertisement

Section 29 (8) of the Trademark Act, 1999 discusses situations when the use of a trademark in advertising can constitute infringement. It says that any advertising not following honest practices, damaging the unique character of a trademark, or harming the reputation of a trademark, constitutes trademark infringement.

In addition, Section 30 (1) of the act makes comparative advertising an exception to trademark infringement. It says that any advertising following honest practices and not harming the distinct character and reputation of the trademark does not amount to infringement of the mark. Thus, comparative advertising utilizing another’s trademark is permissible; however, that does not give the advertiser the right to disparage the goods or services of another brand.

Any such act disparaging the goods or services of another shall not only be an act of trademark infringement but shall also be an act of product disparagement. Dishonest practice entails the use of derogatory statements or claims that mislead consumers. The understanding of a sensible reader or consumer helps determine if the ad falls under the pretense of being honest.

Comparative advertising advocates often argue that trade rivalries and economic battles should remain in marketplaces, but the courts are resistant to this proposition. Moreover, the courts have also condemned the acts of ‘generic disparagement,’ where an advertiser does not disparage the products of a particular brand but the class of the products or service altogether. Understandably, market forces and fierce competition make way for comparative advertising. However, this cannot allow product disparagement.

Apart from trademark laws, the Advertising Standard Council of India (ASCI), also allows for competitive advertising that does not violate confidentiality, is based on facts, and does not confuse potential buyers.

Judiciary on Comparative Advertisements

Judicial statements have also explained that it is harmless to compare products with competitors. But the comparison should be fair and not defame the competitor’s products or trademark, i.e., comparative advertising is permissible. Still, comparative advertising is leading to product disparagement. This case is similar in almost all the countries that permit using another’s trademark in comparative advertising.

Case Study

In Duracell International Ltd. Vs. Ever Ready Ltd., an advertisement mentioned the corporate name of the competitor, Duracell Batteries Ltd., while depicting the distinct appearance of a Duracell battery and did not mention the brand name. Hence, the defendant was cleared of infringing on the brand name. Moreover, Duracell had registered the distinct appearance of its battery as a trademark (copper and black colors). However, the plaintiff used white and black colors in the advertisement. Hence, the defendant had also not infringed that trademark.

Scope of Comparative Advertising

At first, comparative advertising was considered as free-riding on other traders’ goodwill and thus was treated as an infringement upon the owner’s rights. Yet, the current law allows for comparative advertising with certain limitations. The law can be summarized as follows:

  • Even if the declaration is not foolproof, a brand has the right to reasonably declare its products or services to be the best.
  • The brand can also say that its products and services are better than its competitors, even if it is not a foolproof declaration.
  • The brand can compare its products/services with another brand’s products/services to prove the above statement.
  • However, while stating the products are better than the competitors, the brand cannot say that the competitors’ products are bad or harmful as it may amount to defamation.
  • In case of defamation, the aggrieved party has the right to initiate legal action against the advertiser and seek recovery of damages. The Court may also pass an injunction order against the advertiser.

Key Elements to Establish Product Disparagement

The following key elements are essential to succeed in case of product disparagement:

key-elements-establish-product-disparagement-plaintiff
Figure 1: Key elements to establish product disparagement by the plaintiff
  • A false or misleading factual statement is made about the product.
  • The statement either deceives or can deceive a substantial segment of the potential consumer.
  • Deceptive material that is likely to influence consumers’ purchasing decisions.

Conclusion

Comparative advertising is undoubtedly beneficial as it boosts consumer awareness and enables an advertiser to establish a brand in the market by stating its superiority over existing brands. However, there are regulations to check exploitations. Even if courts accept the proposition that trademark rivalries should be settled in the market, their inability to decide which product is better will cause massive prejudice to the public interest. Since the question is about public awareness and not about the product.

To save trademarks from being infringed and misused, experts suggest availing trademark monitoring service. Sagacious IP, one of the leading providers of IP consulting and research services, offers trademark monitoring services to help brands protect their value. Its team of IP experts serves clients from all over the world. Visit the service page to know more.

– Sameeksha Shukla (IP Filing and Prosecution) and the Editorial Team

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