Tracing the Grey Lines Interim Relief in Case of Disparagement Claims in Comparative Advertising

With increased incidences of trade wars between business rivals through commercial advertising in print and electronic media, there is an apparent need to identify the threshold at which the publication of a certain advertisement becomes defamatory or disparaging to another’s product. The Apex Court has declared that the publication of commercial advertisements forms a part of ‘commercial speech’ protected under Article 19(1)(a) of the Constitution.[1]

The Madras High Court has observed that disparagement is the act of speaking slightingly, of undervaluing, of bringing discredit or dishonor, of deprecating or degrading or disgracing or unjust classing.[2] It is a settled position of law that whilst comparative advertising is permissible under Indian law, denigration or disparagement of another’s product in the process is forbidden.[3] While deciding on the issue of disparagement, the court inter alia has to apply the “reasonable man test”, that is, whether a reasonable man would take the claim being made as being a serious claim or not.[4] Further, an advertisement must be viewed from the perspective of an average person with imperfect recollection to determine whether disparagement has been caused or not.[5]

In the case of Pepsi Co. Inc. vs. Hindustan Coca Cola Limited, the Delhi High Court has observed that merely puffing one’s product by comparing it with another’s goods is not an actionable claim under law until this ‘puffing’ about advertisers’ own products or ‘poking fun’ at others’ products amount to denigration of the goods of the competitor.[6]

Thus, it is not uncommon for courts to encounter grey areas when faced with a claim for disparagement caused due to comparisons depicted in an advertisement between the products of trade rivals, wherein the advertiser may hype-up or glorify its product to assert its significance in the market. In such situations, the courts must see whether such assertions outstretch the limits of comparative advertising on a case by case basis. The concept of disparagement in the modern context may well be considered a form of tortious interference with business.

The Hon’ble Bombay High Court has inter alia given some guidance on deciding the question of disparagement. Courts ought to take into consideration the intent, manner along with  storyline and the ultimate message sought to be conveyed by the commercial.[7] The essential distinguishing factor to be considered by courts is to see whether the manner of the  commercial is  ridiculing  or condemning a competitor’s product  or it merely shows the advertiser’s product better or best without the same amounting to denigration.

The Calcutta High Court in its decision in Dabur India Limited vs. Shree Baidyanath Ayurved Bhawan Pvt. Ltd. has laid down key principles for deciding whether an offending advertisement is disparaging or is a mere puffery. The sum and substance of the principles laid down in that decision is that a comparison based on truthful claims is permitted but a comparison that gives an impression that the rival product has a defect or demerit is not. The comparative advertising campaign should be ‘comparison positive’. If the advertisements contain valuable information for the consumers and can promote healthy competition in the market, the courts should be resilient and allow the negative derivatives of such comparison. This is because the final outcome is positive. However, if it can be gauged that the message broadly demonstrates slanderous or indiscriminate negative comparison or insinuation, courts should not be slow in ensuring that such messages do not spread.[8]

Typically, the remedy available in situations wherein the limits of comparative advertising has been outstretched is inter alia the relief of permanent, mandatory and/ or perpetual injunction, in addition to a claim for damages. That being said, in a suit or a civil action against a disparaging advertisement, there are extremely high stakes for both the parties at the interim stage of the suit. Every advertisement has a shelf life and if a competitor is successful in obtaining an interim order for temporary injunction during the course of the anticipated lifeline of an advertisement, it may well entail magnanimous costs and losses for the party against which the interim injunction order is issued. Additionally, the life of a suit can ordinarily be estimated to be around two-four years, which may completely dissolve the significance of a running advertisement at that particular point of time.

In the context of interim or temporary injunctions, judicial precedents laid down by various High Courts non-exhaustively provide guidance on the factors to be weighed in for grant of an interim injunction in a disparagement suit.

An injunction is a relief found in equity. The power to grant or refuse an injunction essentially lies in the realm of discretion of the courts. Therefore, this power has to be exercised with the greatest care, caution and circumspection as the court is required to consider the question of grant or refusal of injunctions at the initial stage of the proceedings when the benefits of the statement made in the plaint and the injunction petition alone are available to the court.[9]

Typically, courts adopt the rudimentary principles of law to grant interim or temporary injunctions as inter alia contemplated under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure, 1908. Superior courts in India have time and again reiterated the basic conditions that must be fulfilled by a party claiming an interim injunction. It follows that the grant of temporary injunction is inter alia governed by three well-established principles: (a) whether a prima facie case has been made out; (b) whether balance of convenience is in the favour of the petitioner; and (c) whether the petitioner will suffer irreparable injury if the temporary injunction is not granted. The party who seeks the aid of injunction must show that the act complained of is in violation of his rights, there is a fair and substantial question to be decided by the parties and there is a bona fide contention between the parties. If such contentions are available, then relief needs to be granted. It then becomes the duty of the court to consider the material placed before granting or refusing to grant injunction and consider the documents if any, before an interim relief can be passed.[10]

Specifically, for disparagement claims in comparative advertising, the question of whether an injunction can be granted or not by the courts at the interim stage would ordinarily depend on whether the plaintiff is successful in establishing a prima facie case of disparagement against the defendant.

Interestingly, there have been various instances wherein the appellate courts have, whilst granting interim reliefs, altered the extent of injunction granted by a lower court in order to limit its application only to the disparaging portion of the commercial. For instance, the division bench of the Bombay High Court in its decision of Gujarat Co-operative Milk Marketing Federation Ltd. vs. Hindustan Unilever Ltd. have opined that a blanket injunction cannot be granted in the telecasting of an advertisement and only the disparaging portion of the advertisement ought to be restricted.[11] Many a times, an anomaly may arise in instances wherein during the course of interim relief, modifications or alterations undertaken by the defendants may effectively resolve the disparaging content in an advertisement. This implies that at the final stage, effectively nothing remains to be argued by the parties except maybe a claim for damages.

There is also the question of how to effectively determine the costs and damages at the final stage of a suit against a disparaging advertisement in a situation wherein the order of interim injunction granted by the court is reversed at the time of final adjudication of the suit. A substantial amount of money is spent in the development and telecast of commercial advertisements and there is no just method available for quantification of losses incurred by the party whose advertisement is restrained during the subsistence of such interim relief. Notably, the foregoing shall have to be nuanced by several factors.

It is also essential to note that advertisements in electronic audio-visual media leave an indelible impression in the minds of viewers. This medium of advertisement has a far greater impact on its viewers than a print advertisement as observed by the Delhi High Court in Glaxo Smithkline Consumer Healthcare Limited vs. Heinz India Private Limited.[12] When viewed repeatedly, a catchy phrase, a well enacted skit or storyline or distinctive collection of sound or even colors makes a lasting impact on viewers.[13] Additionally, a case by case assessment of facts becomes imperative in such cases because of differences in connotations associated with certain phrases or acts in different regions. What may be disparaging to viewers in New Delhi may not strike as offensive to those in Chennai. Put differently, there have been instances wherein parties in an adversarial action for disparagement in comparative advertising have contended in the context of the same advertisement, same commercial campaign and same product, that disparagement may have been caused in one geographic location and not in the other due to differences in terms of the language and semantics deployed by different versions of the same advertisement. This crystallizes the need for courts to apply the principles of temporary injunction by weighing in the peculiar facts and circumstances relevant to each advertisement in question.

In the absence of any conclusive test to determine whether disparagement has been caused or not by an advertisement or cogent guidelines on whether an injunction should be granted or not in a suit for disparaging advertisements by the Apex Court, reliance for grant of temporary injunctions in the context of disparaging advertisements may only be placed on the overlapping views of various High Courts.

* The authors in this piece have not exhaustively analysed the subject of disparagement claims in comparative advertising or the substantive law on injunctions.

[1] Para 28, Tata Press Limited vs. Mahanagar Telephone Nigam Limited and Others (1995) 5 SCC 139.

[2] Para 96, Gillette India Limited vs. Reckitt Benckiser (India) Pvt. Ltd, 2018 SCC OnLine Mad 1126.

[3] Reckitt & Colman of India vs. Kiwi TTK LTD., 1996 PTC (16) 393; Reckitt & Colman of India v. M.P. Ramachandran;  Pepsi Co. Inc. vs. Hindustan Coca Cola Limited, 2003 (27) PTC 305.

[4] Para 16, Dabur India Limited vs. Shree Baidyanath Ayurved Bhawan Pvt. Ltd., 2022 SCC OnLine Cal 234.

[5] Para 58, Colgate Palmolive Company and Anr. vs. Hindustan Unilever Ltd., 2013 SCC OnLine Del 4986.

[6] Para 18, Pepsi Co. Inc. vs. Hindustan Coca Cola Limited, 2003 (27) PTC 305.

[7] Para 27, Gujarat Co-operative Milk Marketing Federation Limited vs. Hindustan Unilever Limited, 2018 SCC OnLine Bom 7265.

[8] Para 16, Dabur India Limited vs. Shree Baidyanath Ayurved Bhawan Pvt. Ltd., 2022 SCC OnLine Cal 234.

[9] Sudipto Sarkar & V.R. Manohar,  Sarkar Code of Civil Procedure, 11th Edn., Volume II (LexisNexis Butterworths Wadhwa 2011) Pg. 2276.

[10] Para 76, Deshmukh & Co. vs. Avinash Vishnu Khandekar and Ors, 2006 (2) BomCR 321.

[11] Para 41-42, Gujarat Co-operative Milk Marketing Federation Limited vs. Hindustan Unilever Limited, 2018 SCC OnLine Bom 7265.

[12] Glaxo Smithkline Consumer Healthcare Limited vs. Heinz India Private Limited, 2010 Indlaw DEL 3044.

[13] Para 101, Gillette India Limited vs. Reckitt Benckiser (India) Pvt. Ltd, 2018 SCC OnLine Mad 1126.