Align comparative advertising strategy to avoid trademark infringement

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

Comparative advertising is a marketing strategy followed by companies around the world. Its use, however, requires careful consideration so as not to lead to trademark infringement or product disparagement. In this article, we will explore the concept of comparative advertising, trademark infringement in comparative advertising, case study example, Indian comparative advertising laws, etc.

Contents

What is comparative advertising?

Ads that compare a brand’s products or services to those offered by a competitor are called comparative advertising, aggressive advertising or striking copy. It helps the consumer to see the price, quality, value or other merits of different products, thus improving consumer awareness. These should not be confused with parody advertisements, where a fictitious product is advertised to mock an advertisement, or the use of a made-up brand name to compare the product without naming the competitor.

Additionally, an essential provision is attached to these advertisements to ensure that these advertisements curb misinformation. However, there is always a risk if consumer awareness is left to brands with vested interests. Also, an advertising war can arise when competing brands exchange comparative or combative advertisements mentioning each other.

Comparative ads often include competitor names or logos to help viewers identify the brands being compared. However, such names or logos may be trademarked and their improper use may result in trademark infringement. Before continuing our discussion of comparative advertising, let’s briefly explain the two concepts.

What are trademarks and their infringement?

It is a trademark that distinguishes the goods or services of one brand from those of others, and includes the shapes of the 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 Indian Law protects trademarks. It deals with protection, registration and sanctions against trademark infringement. Trademarks are essential to building and maintaining a brand’s identity and value. Thus, organizations, both international and national, strive to protect intellectual properties such as trademarks.

Trademark infringement is the unauthorized use of a trademark or similar in a deceptive manner. The term “deceptively similar” means that when an average consumer looks at the mark, it may confuse them as to the origin of the product or service.

Comparative advertising, trademark infringement and product disparagement

Comparative advertising is quite effective in conveying a memorable message to the audience. It can change the way a consumer perceives a product and drive sales. If the market for a product is well defined, comparative advertising can differentiate the product from the competition. However, it is just as risky.

If an advertiser uses a competitor’s mark 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 raise issues related to product disparagement, but would also raise trademark infringement issues.

Indian Comparative Advertising Laws

Section 29(8) of the Trade Marks Act 1999 deals with situations where the use of a trade mark in advertising may constitute infringement. It states that any advertisement that does not follow honest practices, undermines the uniqueness of a brand, or damages the reputation of a brand constitutes trademark infringement.

Further, Section 30(1) of the Act makes comparative advertising an exception to trademark infringement. It specifies that any advertising following honest practices and not detrimental to the distinct character and reputation of the mark does not constitute an infringement of the mark. Thus, comparative advertising using the brand of a third party is authorized; however, this does not entitle the advertiser to disparage another brand’s goods or services.

Any act that disparages the goods or services of others will not only be an act of trademark infringement, but will also be an act of product disparagement. Dishonest practices involve the use of derogatory statements or claims that mislead consumers. The understanding of a sensible reader or consumer helps determine whether the ad falls under the guise of being honest.

Proponents of comparative advertising often argue that business rivalries and economic battles should remain in markets, but the courts resist this proposition. Additionally, courts have also condemned acts of “generic bashing”, where an advertiser does not disparage products of a particular brand but the class of goods or service as a whole. Naturally, market forces and fierce competition give way to comparative advertising. However, this can not allow the denigration of the product.

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

Judiciary on comparative advertising

Court statements have also explained that it is harmless to compare products with competitors. But the comparison must be fair and not defame the competitor’s products or brand, i.e. comparative advertising is allowed. Yet comparative advertising leads to product denigration. This case is similar in almost all countries that allow the use of another’s trademark in comparative advertising.

Case study

In Duracell International Ltd. Vs. Ever Ready Ltd., an advertisement mentioned the company name of the competitor, Duracell Batteries Ltd., while describing the distinct appearance of a Duracell battery and did not mention the brand name. Therefore, the defendant was cleared of trademark infringement. Additionally, Duracell had trademarked the distinct appearance of its battery (copper and black colors). However, the plaintiff used white and black colors in the advertisement. Therefore, the defendant had not infringed that mark either.

Scope of comparative advertising

At first, comparative advertising was seen as parasitism on the customers of other traders and was therefore treated as an infringement of the owner’s rights. However, the current law allows comparative advertising with certain limits. The law can be summarized as follows:

  • Even if the statement is not infallible, a brand has the right to reasonably claim that its products or services are the best.
  • The brand can also say that its products and services are better than its competitors, although this is not an infallible statement.
  • The brand can compare its goods/services with another brand’s goods/services to prove the above claim.
  • However, while claiming that the products are better than those of competitors, the brand cannot say that the products of competitors are bad or harmful as this may constitute defamation.
  • In the event of defamation, the injured party has the right to take legal action against the advertiser and to claim damages. The court may also issue an injunctive order against the advertiser.

Key Elements to Establish Product Denigration

The following key elements are essential for success in product bashing cases:

  • A false or misleading statement of fact is made about the product.
  • The statement misleads or may mislead a substantial segment of the potential consumer.
  • Misleading material that may influence consumer purchasing decisions.

Conclusion

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