This paper has been submitted by

ANIRUDH GOYAL
215063
IV YEAR

MONSOON SEMESTER 2018

14-10-2018

CONSUMER LAW PROJECT

TOPIC- Comparative Advertisement and
Consumer Rights
Table of Contents

Introduction ................................................................................................................................ 3
Scope .......................................................................................................................................... 4
Hypothesis.................................................................................................................................. 4
Research Question ..................................................................................................................... 4
Statutory Position & Legal Status .............................................................................................. 5
Landmark Case Laws and Judicial trends .................................................................................. 7
Conclusion ............................................................................................................................... 12
 Comparative Advertisement and Consumer Rights

Introduction

In the competitive world of business, with the tremendous increase in the demand of goods and
services, the choices available to the users / consumers is growing exponentially. Each
manufacturer / trader attempts to attract the consumer towards its product on several grounds
such as quality, utility, price, etc. Hence, advertisement has established itself as a part and
parcel of any business activity, wherein the promoter is required to advertise the product in
order to widen its sales figures. Briefly, advertisement plays the role of bridging the
information gap between the manufacturers and the ultimate users. It can be logically deduced
that there might be several sellers for homogenous products given that it is a free market. The
problem arises when the two or more sellers engage in comparing each other products or
services in order to provide the best to the consumers. A consumer on its part get swayed by
portrayal of an advertisement which compares two products and claims one to be better than
the other.

The comparison could be through several methods such as banners, placards, pamphlets motion
picture, etc. Comparative Advertisement is done with an intent to strike the attention of the
consumer towards one goods from a plethora of options. Comparative Advertisement can be
direct as well as indirect. In the former, the names of other brand are used whereas in the latter,
an impression is created towards a particular brand by indirectly referring towards it.

Although this might confuse them, legally speaking comparative advertisement is valid
provided it limits itself to Simple Puffery and does not engage in damaging or harming other
manufacturer’s product. Simple Puffery is claiming / declaring that one’s good is superior than
the rest, however an advertiser commits denigration when it belittles / rubbishes another
manufacturer’s goods. The former is permissible whereas in the latter cases relief is granted by
the courts. The consumers can approach the Consumer Forum if the manufacturer engages in
unfair trade practice by way of misleading or untruthful advertising.

Thus, saying that NUJS is better than NLSIU is a simple puffery, wherein NUJS is making a
declaration which cannot be proved or disproved. This statement may not be entirely true, but
there are certain areas where NUJS is better than NLS. It also largely depends upon one’s
opinion. The declaration also does not refer to any specific area/ category while comparing the
two institutes. However, if NUJS claims that is better than NLSIU in infrastructure, it will have
to substantiate its claim by showing legitimate proof, or else the claim shall amount to
denigration. The reason is that in the latter statement, NUJS is not only claiming that it is better
than NLSIU, but it is in fact rubbishing and belittling the infrastructure apparatus of NLSIU.
In the former statement, although NUJS might have exaggerated on its claim, it is permissible
as long as it does not denigrate another institute while comparing. Moreover, it is NUJS’s own
opinion which it is not looking to impose on anyone. However, in the latter statement, you are
showing the infrastructure of NLSIU in bad light, thus defeating the very object of puffery
which is to grab the attention of the consumers.

Scope

The author intends to cover the statutory position of Comparative Advertisement in India and
the judicial trends and subsequent development in the jurisprudence since the mid-1990s to the
present years. In the last part of the research paper, I have opinionated on how the consumer
interest should take precedence over competitor’s interest in an advertisement competitive
world with a huge potential to mislead gullible consumers.

Hypothesis

The underlying hypothesis of the paper is that comparative advertisement is permissible in

India provided it does not extend in the territory of denigration and further does violate any of
the condition mentioned to qualify as an unfair trade practice under the Consumer Protection
Act, 1986. The paper also established the thin line of difference between puffery and
denigration and how the Indian Courts has over the years developed the jurisprudence on the
position of law on Comparative Advertisement.

Research Question

The author has considered the following questions within the scope of this paper: -

1. What is meant by Comparative Advertisement and its statutory position in India?

2. How is puffery different denigration, and till what extent it enjoys permissibility in
India?
 Statutory Position & Legal Status

The position of law on Comparative Advertisement in India is both regulatory and self-
regulatory. In layman terms, when one trader while advertising its product compares it with a
product of another trader, the latter might call the former’s act of comparison as unfair trade
practice or atleast unfair and unreasonable. However, at the same time comparative
advertisement is imperative from the perspective of both business needs and giving more
choices to the consumers. Hence, a line is required to be drawn.

Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 (‘MRTP Act’)
defined unfair trade practice as adoption of “unfair and deceptive methods with an object of
increasing the sales of goods and products”1. As per the section, furnishing false information
or issuing misleading statements about quality, quantity and utility of a product constituted
unfair trade practice. This was India’s first attempt at regulating Comparative Advertisement,
for which a statutory commission known as MRTP Commission was established to look into
untrue, false and misleading advertisements. The MRTP Act tried to cover almost everything
starting from misrepresentation, false and untrue promises about guarantee / assurance of
products to disparagement and defaming other manufacturer’s product. However, in the year
2002, with the enactment of Competition Act, MRTP Act was repealed.

In the year 1986, Consumer Protection Act (‘CPA, 1986’) was enacted with a sole intent and
legislative wisdom to secure consumer interest over anything else. This can also be inferred
from the scope of the act which limits the ability to provide recourse only to the consumers,
and doesn’t cover sellers, manufacturers or traders. The definition of ‘unfair trade practice’ was
incorporated in section 2(1)(r) of the CPA, 1986. As per the UN Guidelines for Consumer
Protection, 20032, consumer protection laws should have eight objectives. The CPA, 1986
considered those guidelines and further have explicit provisions recognizing the right of the
consumers to make an informed choice3, to information about a particular product / good4 and
lastly, to safety from harmful and hazardous goods and services5. Having stated that only the
consumers can take recourse under the CPA, 1986, the manufacturers and the traders have to
resort to common law remedies to seek injunctive relief or monetary payments for damages.

1
Section 36A, MRTP Act, 1969
2
Available at http://www.un.org/esa/sustdev/publications/consumption_en.pdf, last accessed on 05/10/2018
3
Section 6, Consumer Protection Act, 1986
4
ibid
5
ibid
Mostly, the manufacturers and the sellers file suits underlying infringement of its intellectual
property rights (Trademarks) by way broadcast of such advertisements.

Advertisement has been held to be a part of commercial free speech under Article 19(1)(a) of
the Indian Constitution and any restriction on it will be tested on the grounds mentioned in
Article 19(2). After the switch to LPG economic policy, the Supreme Court in the case of Tata
Press6 held that advertisement serves several purposes of public interest such as communicating
information, generating public awareness, etc. and plays an important and crucial role in free
economic society. The court completely reversed it earlier position of advertisement
broadcasted for commercial gain is not covered under Article 19, as held in Hamdard Dawa
khana and others vs Union of India7. Further in Tata Press, the court was cautious to add that
advertisers cannot be permitted to have a free run and there will be a check on deceptive, false
and misleading statements in the ads.

The Trademarks Act, 1999 (‘act’) was enacted with a purpose and clear intent to extend
adequate protection to domestic and international companies from exploitation of their
intellectual property rights. It repealed the earlier Trade Merchandise Act ,1958. This act is
relevant for the present paper in the sense that it balanced the legitimate rights of trademark
owner’s vis a vis consumer’s stake in informative advertisement. Section 30 of the act8 allows
comparative advertisement by way of allowing one party to use the trademark rights of another
party. “The conditions imposed is that it must be honest use, the party should take unfair
advantage and that it must not harm the goodwill connected with the concerned trademark.”9

Lastly, the author would shed some light on the self-regulatory mechanism for advertisement
in India. Unlike the print media, the electronic media to a large extent in India is regulated by
non-statutory self-regulatory bodies. The Advertising Council of India (‘ASCI’) was
established in the year 1985 to ensure that the advertisement is undertaken in a legal, clear,
reasonable, truthful and fair manner. The body has its own code which prescribes guidelines
on comparative advertisement.10 It also says that if questioned the comparison made could be
justified and should be factually accurate. Further, it must not be denigrative or slanderous in
nature. The drawbacks can be seen from the absence of an effective and operative compliance
system, the directions from ASCI has been largely recommendable in nature. However, the

6
Tata Press vs MTNL 1995 (6) SCC 649
7
1960 2 SCR 671
8
Available at http://www.wipo.int/wipolex/en/text.jsp?file_id=128107, last accessed on 06/10/2018
9
ibid.
10
Chapter 4 of ASCI’s Code on Self-Regulation in Advertisements
body has fairly effective and successful with respect to actions and decisions towards its
members, the obstacle arises when it comes to enforcement of the Code on the non-members.

Landmark Case Laws and Judicial trends

Having explained in detail the concept of comparative advertisements, its types, the statutory
position in India, the author would now explain how the courts in India interpreted the law
keeping in mind the consumer interest.

Before we delve into the judicial trends and landmark case laws in India, the author would
discuss the case of De Beers Abrasive Products Limited v. International General Electric
Company of New York11 which is a UK case law on Comparative Advertisement. It has been
majorly followed by the India courts, thus making it imperative to discuss it. Here, both the
parties were manufacturer of diamonds. The plaintiff’s contention was that the defendant has
disparaged and diminished the plaintiff’s natural diamonds by comparing it with its synthetic
quality diamonds. The alleged act was done by way of distribution of leaflets which cited a lab
experiment report comparing the quality of the two products. Hence, the plaintiff manufacturer
filed a case alleging that the act of the defendant shows its product in an adverse and
unfavourable position. However, the court held that the defendant has merely claimed that its
diamonds are superior and it is legitimate to exaggerate the quality of one’s own goods. The
act of simple puffery would implicitly include in itself the logical comparison with a rival’s /
competitor’s goods. Until and unless the advertiser engages in disparaging and belittle the
goods of the other manufacturer, it cannot be said that the concerned advertiser is on the wrong
side of the law. The court drawing an analogy said that a group of tailors claiming that they are
best in the city, in the district or in the entire state, would not be subject to any sort of legal
action, since it is at best simple puffery, i.e., praising one’s ability / goods, without denigrating
or diminishing any other tailor or its ability. However, it is to be noted that in this case, the
court refused to go into the intention or actual motive of the defendant. Further, the court also
observed that comparative advertisement is the kingdom shall be construed to be a part of
professional and business liberty and the trader / manufacture enters into business with an
object to capture market share. As long as the advertiser is merely puffing its own good and is
further prevented from actively diminishing or disparaging a product of its rival, no legal action

11
1975 (3) All England Report 599
shall hold in a court of law. The author would like to point here that the court deferred from
making any observation on consumer’s interest or the impact of comparative advertisement on
gullible consumers and the consequences if the advertisement makes false claims. The court
restricted itself to the question of denigration of rival manufacturer’s product and competitor’s
interest.

The judiciary in India for the very first discussed in detail the issue of Comparative
Advertisement, Puffery and Denigration. In the case of Reckit & Colman India Limited vs MP
Ramachandra and another12, the Calcutta High Court relied upon the ratio of the UK case law
of De Beers, and held that a trader / manufacturer can announce that its goods are the best in
the market, or rather superior to that of its nearest competitors, even at the cost of the statement
being untrue or not entirely true. The facts here was that the two parties were involved in
manufacturing detergent powder. The plaintiff manufactured it under the brand name of ‘Robin
Blu’ and the defendant did it under the name of ‘Ujala’. The impugned advertisement by the
defendant used a bottle which was closely similar to the one manufactured by the plaintiff and
showed that it was “uneconomical”13, “inferior quality”14 and further based on “primitive
technology”. The defendant resorted to the usual explanation that its intention was to merely
show that its product Ujala is superior and not to denigrate or defame the product of the
plaintiff. The Calcutta High Court then referred to the principles laid down in the case of White
v Mellin15 and De Beers vs International General Electric Company16 and summarized the
position of law in the following words:

“a. A trader/manufacturer can claim his product is the best across all the countries,
irrespective of the fact that the statement is not true.”17

“b. A trader/manufacturer can declare his product to better than its nearest
competitor, even if such a declaration is not true.”18

“c. For the above two purposes, the trader/manufacturer is legitimately entitled to
compare the benefits and advantageous qualities of its product.”19

12
1999 19 PTC 741 (Calcutta)
13
ibid
14
ibid
15
1896 AC 154 House of Lords
16
1975 (3) All England Report 599
17
supra note 2
18
ibid
19
ibid
 “d. However, while comparing the products, the manufacturer is debarred from
disparaging or denigrating or defaming the goods of its competitor/ rival. Such a
puffery would amount to denigration and is not permissible.”20

“e. If the comparison results in slanderous in nature and subsequently defames the
product of the rival manufacturer / trade, the court is empowered to grant injunctive
relief.”21

Concluding the reasoning, the court held that the above advertisement cannot be said to
simple puffery. It has extended itself to denigration and as such is diminishing and belittling
the product Robin Blue. Hence, the court granted an injunctive relief by way of staying the
broadcast of the impugned advertisement.

In the landmark case of Reckitt & Colman India Limited vs Kiwi TTK Limited22, the Delhi High
court reiterated the principle and gave a judgement at par with international position. Here, the
petitioner company was involved in the manufacture and sale of liquid shoe polish under the
name “Cherry Blossom Premium Liquid Wax Polish”23. The defendant company was also in
the business of liquid polish under the name “Kiwi”24. It is apparent that the plaintiff and the
defendant company are rivals in this field. The defendant company came out with an
advertisement which showed that a bottle of “Kiwi” does not drip whereas “others” drip. The
“others” bottle allegedly resembled the product of the plaintiff company. It also gave an
impression that the defendant’s product is superior in terms of natural wax, and other qualities.
The advertisement was circulated in the electronic TV media as well in the print media giving
it a wide publicity. It was clear to the plaintiff company that the above-mentioned act was done
to malign its product and was a completely false claim which in their opinion could have
harmed their reputation and goodwill in the public. Hence, a suit was filed with a prayer for an
injunctive relief against the advertisement in question. The initial question which was decided
that whether the “others” product resembled the plaintiff’s product or not. The court concluded
in affirmative and proceeded to adjudicate the case. The court then referred to the above-
mentioned principles as enunciated in the case of MP Ramachandran25. Having mentioned the
above principles, the court said that the red blob on the surface of “others” bottle was similar

20
ibid
21
ibid
22
1996 PTC (16) 393
23
Para 1, ibid
24
ibid
25
1999 19 PTC 741 (Calcutta)
to the cherry on “kiwi” liquid polish bottle, which might give a false impression to the public.
Hence, the High Court ordered the removal of the red blob from the surface of the “others”
bottle, so that the consumer might not get the impression of the plaintiff’s product when it
watches the advertisement. The court again reiterated the settled law, that comparative
advertisement is permitted but the advertiser is not authorized by law to denigrate or disparage
a product of its competitor company.

The case of Havells India Limited vs Amritanshu Khaitan26 is an important one in the
development and furtherance of position of comparative advertisement in India. This was a
case of Simple Puffery which is permitted and authorized by law. Here, in the advertisement
by “Everready LED Bulbs”, two products were compared and the viewers were asked to switch
to their bulbs since it’s the brightest and further to check lumens and price before purchasing
it. The plaintiff contended that the defendant company has committed misrepresentation by
way of misleading advertisement and also disparaged its product. The Delhi Court referred to
the test of misleading advertisement and said that the following two conditions should be
satisfied before an advertisement is considered as misleading –

“a. a misleading advertisement might deceive the person to who it is director, or should
at least have the ability to deceive.”27

“b. Further, as a result of its deceptive and misleading nature, such advertisement in
all likelihood might harm the economic behavior of the public, or damage the
reputation of a rival competitor.”28

The Court was of the view that the advertiser did not satisfy any of the two conditions. Further,
the advertiser here highlighted a special characteristic or quality of its product, which according
to its subjective opinion distinguishes it from a competitor’s product. The court held that it is
not necessary to compare all the features of two products and failure to do so will not amount
to misleading the consumers or disparagement and denigration of other products. Moreover,
the advertisement in question did not even mention the plaintiffs’ product, leave alone the
possibility of even minutely resembling it.

The author agrees with the reasoning of the court. Hypothetically, if Company X advertises its
strawberry cake manufacturer comparatively advertises its product highlighting that it has the

26
2015 (62) PTC 64 (Delhi); MANU/DE/0791/2015
27
Para 40, ibid
28
Para 40, ibid
highest strawberry content and a reasonable price, then other manufacturers cannot come up
with arguments such as size, nutrition value, etc. weren’t not compared. As long as the
advertiser believes that its product contains the factors mentioned in the advertisement and it
does not denigrate other products, it remains within the realms of law.

In the case Glaxosmithkline Consumer Healthcare v. Heinz India29, two parties were engaged
in manufacturing of nutrition drinks. The plaintiff manufactures the drink under the brand name
of ‘Horlicks’ whereas the defendant does the same in the name of ‘Complan’. The contention
of the plaintiff was that the defendant broadcasted an advertisement a boy who desperately
wanted to grow tall and gain height was advised by another boy to consumer the Complan
drink with milk. The plaintiff alleged that such an advertisement is false, untrue and misleads
the consumers, who might get an impression that to gain height one has to drink Complan. The
defendant company pleaded that it was nothing more but an act of puffery. The Delhi High
Court relied on the ratio of Ramachandra case30 and held that since the advertisement does not
denigrate or damage the reputation of the competitor Horlicks in any manner, it is legally valid.

The Madras High Court in the landmark and important case of Colgate Pamolive Limited vs
Anchor Health31, considered the consumer interest while deciding a dispute of comparative
advertisement. The plaintiff and the defendant herein are multinational companies engaged in
oral healthcare and manufacturing toothpaste. The case of the plaintiff here is that the defendant
company broadcasted an advertisement with the tagline that its toothpaste ‘Anchor’ is the
‘only’ one in entire India with the following chemical ingredients, viz., “Calcium, Fluoride and
Triclosan”32 which can successfully provide all round protection to its users. Although, the
defendant did not compare or mention the name of any product, the contention of the plaintiff
Colgate was the usage the term ‘only’. They argued that such a claim/assertion is misleading
and further denigrates Colgate, as any reasonable person will be under the false impression of
the absence of those ingredients in other products. The Madras HC rejected the arguments put
forward by the defendants that term ‘only’ was used since it referred to only to selected range
of toothpastes and the ‘all-round protection’ was only a slogan and not a claim. The Court held
that although the plaintiffs’ product was not specifically disparaged or denigrated, but the
advertisement in itself was misleading and created a false impression in minds of consumer
that only Anchor’s toothpaste has those three ingredients and that only it can provide an all-

29
MANU/DE/3273/2010; MIPR 2010 (4) 324
30
supra note 10
31
2009 40 MTC 654 (Madras)
32
ibid.
round protection. Hence, it was considered an unfair trade practice under the Section 2 of the
Consumer Protection Act of 1969.

It is to be noted that in this case, the Madras High Court followed the ratio laid down in Reckitt
vs MP Ramachandran case which was based on UK De Beers case. However, the court added
that after the De Beers case, the UK Consumer law has evolved and developed. Now the
consumer’s interest is the superior concern of the courts than whether the competitor’s
reputation was denigrated or not. And with the enactment of Consumer Law in 1986, the
Parliament in its wisdom has sought to put the consumer’s interest at a higher pedestal.

Under the Trademark Act, the landmark case is of Godrej Sara Limited v. Reckitt Benckiser
Limited33. In this case, the defendant advertised its product ‘Mortein’ and claimed that it works
effectively against both mosquitoes and cockroaches. The plaintiff alleged that it was unfair
use of their trademark right, since they had two separate products of ‘Hit’ for an effective
elimination of cockroaches and mosquitoes. The court held that the plaintiff was on the right
of the law by declaring that its technology is superior to that of the competitor, and that the
consumer that buy one product to eliminate two different insects unlike the competitor. Further,
in the case of Dabur India Limited v. Wipro Limited34, the court held that for holding
infringement of trademarks, the plaintiff needs to show that there was disparagement of the
brand and the disparagement amounted to defamation. Thus, the degree was set at higher levels
for the courts to intervene. However, the principle is somewhat similar that until and unless the
advertiser engages in denigration, the act of puffery would be permitted by the courts.

Conclusion

To conclude it can be said that the jurisprudence on Comparative Advertisement in India has
developed considerably over the past three decades. In India, before a consumer could file a
case of unfair trade practice of comparative advertisement, the nearest competitor would have
already taken the lead in filing a suit for unfair and dishonest use of trademark. Nevertheless,
the actionable claim is ultimately for the benefit of the consumer. The author has discussed and
elaborated the reasoning of the major decision of courts in UK and India. However, the question
still remains in my opinion that whether even puffery should be permitted in comparative
advertisement. Permitting puffery has its own disadvantages. The manufacturer and the

33
2006 30 PTC 306
34
2006 30 PTC 678
companies can legitimately sell a complete lie to the consumer, which can essentially be
inferred as playing with gullible consumer’s mind. The author believes that although this might
be on the right of the law, but it is in no manner on the right side of ethics and morality. It is
true that the concept and very basis of puffery is that it is not completely real, but in today’s
time, the consumer and the end user have high chances of getting influenced by the ‘best’,
‘healthiest’, ‘most effective’, etc. claims of the companies and its products. The author is of
the opinion that the brands themselves should make claims on the basis of verifiable data, lab
reports, engage in healthy competition, not to delve into discrediting other products or brands.
Nonetheless, there is hope from the judiciary as it can be seen in the Colgate vs Anchor case
wherein the court recognized the consumer interest as utmost important.