the-legal-pitfalls
1 April 2014CopyrightPravin Anand and Vaishali Mittal

The legal pitfalls of making comparisons

Comparative advertisements come in many forms but there are three that generally steal the legal limelight: puffery, disparaging advertisements and parodies.

The High Court of Delhi has ruled that puffery, even if untrue, is permissible. However, if there is defamation, action can be taken for the recovery of damages and an injunction restraining the repetition of the defamation.

The medium and the message

The medium used to convey the comparative advertisement’s message is crucial as its impact will vary, depending on the medium used. As visuals have a longer-lasting impact on the viewer’s memory than words, television advertisements have a stronger impact than those published in print media such as newspapers and billboards.

The medium of the advertisement was taken into account for the first time by Justice Ravinder Bhat in the Horlicks v Complan advertisement battle. His opinion was that television advertisements, unlike print advertisements, have an instant impact across consumer classes, and the impact of such advertisements on the consumer is much greater than a print advertisement where each word has to be read, analysed and understood and therefore requires a higher level of judicial scrutiny.

The impact of electronic media, with advertisements that go viral on YouTube, for example, is yet to be tested in the Indian courts of law.

Radio predates all the media mentioned above, but no comparative advertisement dispute has yet been ruled on in the Indian courts. All India Radio is governed by the Code for Commercial Advertising over All India Radio.

Advertising standards

The Advertising Standards Council of India (ASCI) is currently the only code recognised by the government and, although it has no legal standing of its own, it governs all the communications media.

The ASCI and its consumer complaints council (CCC) deal with complaints received from consumers and from industry about advertisements that are alleged to contravene the ASCI Code for Self-Regulation in Advertising and the programme and advertising codes prescribed under the Cable Television Network Rules 1994.

Some of the most publicised cases that have reached the ASCI have concerned content seen as objectionable, such as a Tuff Shoes advertisement in which models Milind Soman and Madhu Sapre posed nude. One of the reasons why the ASCI is not yet used widely in the area of comparative advertisements is that the time taken for it to reach a decision and for the advertisement complained about to be pulled down can exceed the advertisement’s shelf life.

Uncharted legal principles

1. The difference between parody and disparaging advertisements

Although the Indian courts have drawn a line between permissible comparative advertising or puffery, and commercial disparagement, the distinction between parodies and disparagement remains unclear.

Despite the fact that the courts in India have given a more nuanced interpretation of ‘a reasonable person’ in the context of the peculiar nature of the Indian audience, they have failed to foray into the area of whether certain parody advertisements can never be taken seriously by a reasonable Indian audience and, therefore, need not be condemned as disparaging.

The success of a parody advertisement lies in the fact that the parody can remind the audience of the logos and advertisements associated with the brand being parodied. Therefore, this inevitably involves legal impediments such as copyright and trademark infringement. The Delhi High Court lost the opportunity to explore this aspect in Pepsi Co Inc and Ors v Hindustan Coca-Cola Ltd and Anr. The Delhi High Court failed to appreciate that parody is recognised as a form of criticism and commentary and is squarely covered under the fair-use doctrine of copyright and fundamental rights to free speech and practice in trade and business.

2. Fundamental rights guaranteed

Unfortunately, Indian courts have not yet appreciated fundamental rights such as freedom of speech and expression and the freedom to practise one’s trade or business undisturbed when comparative advertisements are injuncted on the grounds of disparagement. The courts, while defining the tort of ‘malicious falsehood’ in the Odomos-Goodnight debacle, for the first time recognised that an advertisement is an element of commercial speech and is protected by Article 19 (1) (a) of the Constitution.

Indeed, the Madras High Court went to the regressive extreme when balancing the right to freedom under Article 19 and the reasonable restrictions on that right in the form of consumer laws when it held that “false claims by traders about the superiority of their products, either directly or by comparing them against the products of their rivals, were not permissible”.

The issue of freedom to practise one’s trade or business is yet to be debated in the Indian courts as far as comparative advertisements are concerned.

3. Unfair competition

Section 36A of the Monopolies and Restrictive Trade Practices (MRTP) Act listed several actions to ban “unfair trade practice” and helped to set standards for comparative advertisements. However, the MRTP Act has been repealed. Unfair trade practices are now governed by the Consumer Protection Act, 1986. Still, within the act, a complaint can be lodged by a consumer, a registered consumer association, the central government or a state government but not by a competitor.

Thus, within the existing law, a manufacturer whose product is disparaged has no locus standi to seek a remedy or any compensation for loss of profit.

4. The curious case of the Copyright Amendments Act 2012

Section 14(d)(i)(A) prohibits the reproduction of film stills and, therefore, poses a palpable threat to parody advertisements.

The proviso to Section 17 keeps the copyright of the author intact for works incorporated in a cinematograph film—defined under Section 2(f) of the act; an advertising film qualifies as one, in spite of the author of such a work having a contract of employment.

Reading the proviso to Sections 17 and 18 and Section 19(9) together leads to the conclusion that a maker of a comparative advertisement in any medium whatsoever, including future technologies, can also be subject to claims of infringement by the authors of the works—literary, dramatic, artistic, musical, sound recording—incorporated in the advertisement and not only by the producer of the advertisement film.

The original authors, after the amendments, will always have a live copyright infringement claim, as their “right to receive equal share of royalties” can never be extinguished. However, the “right to receive royalties” is never mentioned as a separate right anywhere else in the Copyright Act.

5. Exclusive rights of performers

The proviso to Section 38A(2) read with Section 2(qq) of the Copyright Act provides that all film actors and ad-jingle singers—who are mentioned in film credits—have a continuing right to royalties from the commercial use of their performances. However, the definition of a performance under Section 2(qq) of the act includes only live performances.

Therefore, the maker of the comparative ad should be careful about using substantive portions of the first ad film without the requisite permission as they can be accused of infringing the copyright and moral rights of the performer. Infringement of moral rights claims are a particularly risk for a parody ad filmmaker.

6. Personality and publicity rights

Parodies of advertisements involving a public personality lie in grave danger of violating the fundamental right to personality guaranteed under Article 21 of the Constitution, which applies to everyone and not only citizens of India, the trademark law and also performance rights provided under Section 38 of the Copyright Act.

However, these legal principles are yet to see the light of day in the courts. Maybe if Pepsi’s ad mocking actor Hrithik Roshan in a Coca-Cola commercial, by showing a Hrithik double being made fun of by his arch-rival Shahrukh Khan, had reached a court of law, we would have witnessed the Indian courts’ spin on these legal principles.

7. Disparagement vis-à-vis dilution

Although the courts have constantly walked the tightrope between puffery and disparagement, they have yet to adjudicate on whether the alleged disparagement has resulted in dilution of the disparaged brand. The courts have failed to appreciate that if the brand being disparaged is outrageously strong and well reputed the chances of a parody advertisement disparaging it are very slim.

8. Parody domain names

While many chuckled during the PETA domain name controversy in the US, where People for the Ethical Treatment of Animals was parodied as People for Eating Tasty Animals, such cases have not been experienced in India.

So near yet so far …

The Indian courts have come a long way with respect to adjudicating on comparative advertisements. However, their decisions so far have lacked sophistication, especially when it comes to addressing issues dealing with parody advertisements and the fundamental rights of the advertisement filmmaker and the concerned manufacturer. The Copyright Amendment Act 2012 is also yet to be tested.

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