Comparative Advertising and Disparagement vis-à-vis Freedom of Speech and Expression. Where to draw the line?

Introduction

The Constitution of India guarantees freedom of speech and expression to its citizens under Article 19. Clause (1) (a) of Article 19 states, "All citizens shall have the right to freedom of speech and expression." The exercise of this right is, however, subjected to reasonable restrictions being imposed under Article 19(2) of the Constitution of India.  Article 19 (1) (a) apart from guaranteeing freedom of speech and expression, also protects the right of an individual to listen, read and receive the speech and its fulfilment is inter alia guided by the information which spreads through advertisements.

Advertising is the attempt to influence the buying behaviour of customers or clients with a persuasive message about products and/or services. In other words, advertising is a means of introduction of a product or service to the users. In present times, advertisements play an important role in campaigning ones’ products and/ or services.

Comparative advertising

These days, the advertisers use comparison of their products or services with those of the rival brands as a tool to promote their sales. Any advertising, which explicitly or by implication, identifies a competitor or goods or services offered by a competitor is called comparative advertising. Comparative advertising is legal to the extent it does not tarnish or jeopardize the reputation of a competitor and is in accordance with the honest industrial practises.

Disparagement

Although there is no specific codified legislation in our country to govern disparagement, it is considered as a facet of defamation law. A person while advertising his goods, if portrays competitor's goods in bad light will result in disparagement of goods of the competitor.  In the absence of inadequate statutory provisions dealing with ‘disparaging advertising’, the concept came to be developed mainly from the judicial pronouncements.

Jurisprudence on product disparagement

One of the first and notably the most relevant judgment which laid down the detailed law on disparaging advertisement was of the Calcutta High Court in the matter of Reckitt and Colman of India v. M.P Ramachandran and Ors.[1]  The facts of the matter was that Petitioner was the manufacturer of whitener used in clothes under the name and style of “Robin Blue”. It was the case of the Petitioner that the Respondent, in its advertisement depicted the product of the Petitioner in bad light showing the container in which the product of the Petitioner was sold. It was further shown in the advertisement that the product contained in the container was priced at Rs.10/-. By giving the price, the Respondent had clearly identified the product of the Petitioner since it was the only blue whitener sold in the market at the relevant time priced at Rs.10/-. It was depicted in the advertisement that the Petitioner’s product was uneconomical and it was then contended that at Rs.10/-, the Petitioner’s product is the most expensive for the purposes of using it in clothes. It was in these circumstances, for the first time, the Hon’ble Calcutta High Court laid down five principles for granting an injunction in case of comparative advertising:

  • A tradesman is entitled to declare his goods to be best in the world even though the declaration is untrue;
  • He can also claim that his goods are better than his competitors, even though such statement is untrue;
  • For the purpose of saying that his goods are the best in the world or his goods are better than his competitors, he can even compare the advantages of his goods over the goods of others;
  • He however, cannot, say that his competitor’s goods are bad while saying that his goods are better than the competitors. If he says so, he really slanders the goods of his competitors, which is not permissible; and
  • If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the court is also competent to grant an order of injunction restraining repetition of such defamation.

Another important matter decided by the Delhi High Court which further illuminated the jurisprudence on disparagement was the Pepsi Co Inc. and Ors. v. Hindustan Coca Cola Ltd.[2] The advertisement in question was that of ‘Thumbs Up’ which portrayed a similar looking substitute of Pepsi named as ‘PAPPI’ as a “bachhon wali drink” while distorting Pepsi’s advertising slogan “Yeh Dil Mange More” and using “Yeh Dil Mange No More”. The Court laid down the following three factors to be considered while deciding the questions of disparagement:

  • Intent of the commercial;
  • Manner of the commercial;
  • Story line of the commercial and the message sought to be conveyed by the advertisement.

The true intention of the advertisement can be seen only when it is seen as a whole.  The Delhi High Court held Coca-Cola on the grounds of disparagement and depreciating the goodwill of the plaintiff’s products under Trade Marks Act, 1999 as the registered trade mark was been infringed by the use of a word “PAPPI” which is deceptively resembling to the trade mark PEPSI.

Whether Right of Commercial Speech is a fundamental right?

Advertisements/ Commercial Speech was not always protected under Article 19(1)(a) of the Constitution. Infact, the question came up for consideration before the Hon’ble Supreme Court in the matter of Hamdard Dawakhana (wakf) Lal Kuan v. Union of India.[3] The constitutionality of Ss. 3 and 8 of the Drugs and Magical Remedies (Objectionable Advertisement) Act, 1954 was under challenge before Hon’ble Supreme Court in the matter. The object of the aforementioned Act was to prohibit “misleading” advertisements that claimed certain drugs had magical or other remedies. It was argued that the legislation is unconstitutional as the same is in violation ofArticle 19(1)(a) of the Constitution of India. The Hon’ble Supreme Court though accepting that the advertisement is a form of speech, held as follows:

“…and had no relationship with what may be called the essential concept of the freedom of speech. It cannot be said that the right to publish and distribute commercial advertisements advertising an individual's personal business is a part of freedom of speech guaranteed by the Constitution.”

This position of law continued till about 1995 when the Hon’ble Supreme Court had the occasion to deal with the matter of Tata Press Limited vs. Mahanagar Telephone Nigam Limited and Ors.[4] In this case, Mahanagar Telephone Nagar Limited (‘MTNL’), a public sector company and a licensee within the meaning of Indian Telegraph Act, 1885 used to publish and circulate a telephone directory. The Tata Press Ltd also published the Tata Press Yellow Pages. MTNL and the Union Government filed a case in the Bombay High Court claiming that it has a monopoly in printing and publishing of list of telephone subscribers and that Tata Press Ltd. has no right to do the same. The Bombay High Court ruled in favor of MTNL, following which Tata Press Ltd challenged the High Court’s decision before the Supreme Court. The Court held that the Hamdard Dawakhana decision[5] was limited only to the specific type of advertisement, i.e. misleading advertisements for drugs and was not authority for a general proposition excluding commercial speech from constitutional protection. The Court observed that advertisements provide a crucial source of revenue to newspapers, and free media was the backbone of democracy. Maintaining the free flow of information, advertisements were necessary for consumers to make an informed choice and the Hon’ble Supreme Court, with the above observation reached the following conclusion:

“We, therefore, hold that "commercial speech" is a part of the freedom of speech and expression guaranteed under Article 19(1) (a) of the constitution.”

Case Studies in relation to Disparaging Advertisement vs. Freedom of Speech and Expression

The Delhi High Court, in the matter of Dabur India Limited vs. Wipro Limited[6] on the question that that advertising is 'commercial speech' and it is, therefore, protected by Article 19(1)(a) of the Constitution, went on to hold that while this may be the case, freedom of speech and expression does not permit defamation. The Court observed that it would be a little far-fetched to say that an advertiser has the liberty to disparage the product of its competitor without any check, under the garb of freedom of speech. It is only at such levels of disparagement would the court interfere with the marketing strategies employed.

In the case of Dabur India Ltd vs Colortek Meghlaya Pvt. Ltd. [7], an injunction under Order 39 Rule 1 and 2 of the Civil Procedure Code, 1908 in respect of telecast of Good Knight advertisement alleging that it disparages the advertisement for Odomos cream was sought. The defence under Article 19 was sought by the Defendant. The Delhi High Court observed that an advertisement is commercial speech and is protected by Article 19(1)(a) of the Constitution. Although, what constitutes "commercial speech" was not defined, it was stated that advertising as a "commercial speech" has two facets thereby postulating that an advertisement is a species of commercial speech. However, the Court was careful to further hold that if an advertisement extends beyond the grey areas and becomes a false, misleading, unfair or deceptive advertisement, it would certainly not have the benefit of any protection under Article 19.

A comparatively recent case decided by the Hon’ble Bombay High Court in the matter of Hindustan Unilever Limited vs Gujarat Cooperative Milk Marketing Federation[8] gathered much limelight. Amul aired two advertisements for its Amul brand of ice-creams that emphasized the difference between ice-creams (made from milk fat) and frozen desserts (made from vegetable oil). Amul’s ads urged customers to choose ice-creams over frozen desserts, claiming that the latter were made with vanaspati tel or vegetable oil. The Hon’ble Bombay High Court held that by indicating that all frozen desserts use only vanaspati/vanaspati oil, which is admittedly bad for health, Amul had disparaged the entire category of frozen desserts in general. Hindustan Unilver Limited (“HUL”) and Vadilal, being the market leaders for frozen desserts, had produced substantial evidence to assert that they did not in fact use vanaspati or vanaspati oil in making their products. Therefore, the Court held that the concept and intent of the commercials was disparaging in nature and granted an injunction to HUL and restrained AMUL from airing the TV commercials. On the question of whether Article 19 can come to the aid of the AMUL, the Court observed that it cannot be disputed that advertisements and/or commercial speech is a part of the fundamental right guaranteed under Article 19 (1) (a) of the Constitution of India, however, it cannot be said that the fundamental right so guaranteed under the Constitution can be abused by any individual and/or manufacturer of a product by maligning, discrediting and/or belittling the product of another manufacturer by way of negative campaign as is done in the present case.

With the changing time and technology, the mode and manner of promotion of products has also evolved and social media influencers are being approached by companies and manufacturers to promote their products. In a very interesting case, the Bombay High Court was recently called upon to adjudicate a matter involving a social media influencer in the matter of Marico Limited vs. Abhijeet Bhansali.[9] Marico Limited filed a Suit against the Defendant who had created and posted a video about the Plaintiff's Parachute Coconut Oil on his Youtube Channel. The suit was brought on the grounds inter alia that the content of the video was disparaging, denigrating and misleading in nature. The influencer took numerous defences for his conduct, including that he, as a citizen of India has a right to freedom of speech. The Court observed that since no freedom can be absolutely unlimited, Article 19(2) of the Constitution of India provides the grounds on which reasonable restrictions on the freedom of speech and expression can be imposed. The Court recognized that commercial speech is a part of the fundamental right guaranteed under Article 19(1)(a) of the Constitution of India, however, it cannot be that the fundamental right so guaranteed under the Constitution can be abused by any individual by maligning or disparaging the product of others as is done in the present case.

Analysis

No right can be absolute and without restrictions or else they might not act in the best interest of the public. Advertisement has been considered as an act of communication or expressing one’s views but the said right is vulnerable to exploitation by the advertisers if not guarded. The restrictions are essential as comparative advertising is frequently exploited in order to generate more money. In the absence of clear restrictions against disparagement, not only the market will be affected and sales of the rival product will be lowered, but at the same time goodwill and brand image of the product will also be severely affected.

As can be seen from the decisions of the Supreme Court and the various High Courts from time to time, it is safe to say that though comparative advertising is allowed as it helps the consumers in providing correct information of two similar products and make an informed choice, it has its limitations. While, it is a settled law that commercial speech is a part of the fundamental right guaranteed under Article19(1)(a) of the Constitution of India,  however, like other fundamental rights, the same is also not unfettered and the advertisers have to ensure that the commercial should not be false, misleading, unfair or deceptive, and should not derogate the competitor’s product.

  • [1] 1999 (19) PTC 741 (Cal)
  • [2] 2003 (27) PTC 305 (Del)
  • [3] AIR 1960 SC 554
  • [4] 1995 AIR 2438
  • [5] Supra 3
  • [6] 2006 (32) PTC 677 (Del)
  • [7] 2010 (42) PTC 88 (Del)
  • [8] 2017 Sconline 2572
  • [9] Notice of Motion No. 1094 of 2019 in Commercial IP Suit No. 596 of 2019 (Bombay High Court). Date of decision – 23.08.2019.

The author is a lawyer presently working with the dispute resolution of the Mumbai based law firm, M/s Crawford Bayley & Co. The author can be reached at bajpai.mantul@gmail.com. The author acknowledges inputs received from lawyer Ms. Nupur Rustagi in drafting this article.

 

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