Comparative Advertising: Where lies the “Lakshman Rekha”?

Comparative advertising is an age-old marketing technique that brands often resort to in order to make a statement to consumers that their product is better in comparison to their competitor’s or to portray their competitor’s product as being of an inferior quality. While it is perfectly legal to extol and point out the advantages of using one’s product, it cannot be conveyed by disparaging a competitor’s products. The difference between the two is akin to treading a fine line, or the Lakhsman Rekha of yore.

Before going through the judgments laid down by various fora in India, it would be helpful to take a look at the statutory law governing comparative advertisement. While the right to commercial speech, such as to compare products with those of competitors, by way of an advertisement, is protected under Article 19(1)(a) of the Constitution of India, such speech must not be disparaging/deprecatory in nature. What constitutes deprecatory/disparaging speech, however, is dependent on the facts and circumstances of each case.

Section 29(8) of the Trade Marks Act, 1999 (“Act”) provides that a registered trademark is infringed by an advertisement when such advertisement takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; or is detrimental to the distinctive character of the registered trademark; or is against the reputation of a registered trade mark. However, Section 30(1) of the Act provides a safeguard for comparative advertisement, whereby if the identifiers of a competitor’s products used in an advertisement could be termed as honest, then such an advertisement would not be considered disparaging.

Apart from statutes, the Advertising Standards Council of India (ASCI) has also laid down guidelines, as per which, comparative advertising is only permissible in cases where the products compared are clear, factual, and substantial, if such comparison does not confer artificial advantages on the advertiser, there is no unfair denigration of the competing product, and if it is unlikely to mislead consumers.

In order to determine a safe path to tread in comparative advertising, it is imperative to understand the principles laid down by various courts in India over the years. The seminal case, which laid down broad guidelines to determine the Lakshman Rekha is the classic Cola war case where the protagonist calls the competitor’s beverage, a “bachon wali drink” (a child’s drink).

The court, in this case, laid down that in order to examine whether a commercial is disparaging, the court is required to see (a) the intent of the commercial; (b) the manner of the commercial – is the comparison by and large truthful or does it falsely denigrate or disparage a rival product?; and (c) the storyline of the commercial, and the message that it seeks to convey. The court at the same time observed that advertisers should be provided the leeway to puff up or exaggerate the virtues of their own products. In this case, it was ultimately held that the impugned commercial disparages the plaintiff’s products.

Pertinently, brands have also knocked on the doors of courts stating that a competitor has generically disparaged their product by virtue of their product being a market leader. One such case was Dabur India Ltd. v. M/s Colortek Meghalaya Pvt. Ltd., where the advertiser made vague references to other products in the market causing skin rashes and allergies. The court observed that the defendant’s statement may be an idle boast of puffery and does not constitute disparagement. The court further observed that the advertiser walks a tight rope, as he has to keep in mind the impression that the advertisement would carry on the average consumer. The court held that extolling the virtues of the plaintiff’s product as containing natural ingredients, absent in other products, was not disparaging.

Courts have also carved out an exception of claiming a competitor’s products as inferior, provided it is backed by some research or study. One such case was Havells India Ltd & Anr. v. Amritanshu Khaitan & Ors., where the advertiser compared the rival products based on lumens which is the standard of brightness. The relevant part of the advertisement is shown below:

The court held that the impugned advertisement is not disparaging and observed that there can be no disparagement when the comparison is factual, accurate and capable of substantiation. In particular, in this case, the court noted that the advertisement does not unfairly denigrate, attack or discredit other products, advertisers or advertisements directly or by implication.

What follows from this judgment is that in case an advertisement alludes to the statements of fact; such facts must necessarily be truthful. Further, the advertiser is not required to compare all the features of the products, but only the relevant features of the products.

Even though the advertiser makes a statement of fact, if the overall message delivered is misleading, then such advertisement crosses the Lakshman Rekha and are deemed as disparaging.

In the case of Hindustan Unilever Ltd. v.  Reckitt Benckiser (India) Private Limited, the court stated that honest comparative advertisements are permissible if the statements of fact made in the advertisements are accurate and true, and the overall message delivered by the said statements of fact is not misleading.

Thus, if the overall effect of the advertisement is misleading, which as one may recall was one of the important factors laid down in the Pepsi case for determining whether an advertisement disparages the competitor’s products, then such advertisement ought to be restrained.

Further, the overall impact of the advertisement has to be considered from the point of view of an ordinary consumer and it is immaterial that the competitors’ products featured only for a fleeting moment in the advertisement. What is to be seen is the context in which the product is shown.

All in all, to determine whether a particular advertiser crosses the Lakshman Rekha, the overall effect, story line and manner of the commercial must be scrutinized. While an advertiser is allowed to extol the benefits of its products and puff its products to be best in the world, it is impermissible for an advertiser to state that a competitor's products are in any manner inferior. Therefore, an advertiser must constantly tread a fine-line and ensure that it does not in any manner disparage/ denigrate/ disparage its competitors’ products. Applying the principles laid down by courts over the years as stated hereinabove, a sort of Lakshman Rekha of what is and is not acceptable in comparative advertising can be broadly set out, and it would be advisable that an advertiser tread with caution, to find itself on the right side of the Lakshman Rekha.

About the authors: Urfee Roomi is a Partner, Anubhav Chhabra and Janaki Arun are Senior Associates at Sujata Chaudhri IP Attorneys.