Advertisements protected as freedom of speech

By Deepak Sabharwal, Deepak Sabharwal & Associates
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The Delhi High Court, in a 17 November 2018 interim order (subject to the final outcome of the case) in Horlicks and Anr v Heinz India, held that advertisements are protected under article 19(1) (a) of the Constitution as facets of commercial speech and can only be restricted in accordance with the provisions of article 19(2). The protection given to an advertisement is a necessary concomitant of the right of the public to receive the information. It also clarified that right to privacy cannot be asserted against information that is already in the public domain and that in a democratic country. The free flow of commercial information is indispensable and the public has a right to receive commercial speech.

Deepak-Sabharwal-Deepak-Sabharwal-&-Associates
Deepak Sabharwal
Deepak Sabharwal & Associates

In view of this order companies need to realign their advertising strategies and take advantage of the order while advertising their products and gaining distinct advantages, as against the competitions.

The court held that “a comparison which is unfavourable to a competitor does not necessarily mean that it is dishonest or unduly detrimental”. It held that the main objective of sections 29(8) and 30(1) of the Trademarks Act and the code made by the Advertising Standards Council of India was “to stimulate competition between suppliers of goods and services to the consumer’s advantage, by allowing competitors to highlight objectively the merits of various comparative products, at the same time, prohibiting practices which may distort competition, be detrimental to competitors and have an adverse effect on consumer choice”. Thus, the intent of the legislature was to allow comparative advertising while at the same time ensuring that consumers are always protected from possibly misleading advertisements.

It held that failure to point out the advantages of one’s product was not necessarily dishonest. The advertiser was not obliged to make a comparison of all the parameters of the products in his advertisement with that of his competitor, so long as it was true and that “it is open to an advertiser to objectively compare one or more material, relevant, verifiable and representative features of the goods and services in question which may include price”.

The court, however, acknowledged that there was a certain degree of disparagement that was implicit in comparative advertising but it was legal and permissible and the competitor was well within its rights as long as it was honest and not misleading. The court also laid down the test for determining “misleading advertisement” and stated:

1. An advertisement said to be misleading must deceive the target customers, or should at least have the potential to deceive; and

2. Due to its deceptive nature, the advertisement should be likely to affect the economic behaviour of the target customers, in such a way as to cause harm to the competitors of the advertiser.

The court held that the same has to be harmonized with competitive interests and that in the present case, the features being compared were not misleading as the said issues have to be seen not from a hyper-sensitive viewpoint, but from the eyes of an average consumer who is used to a certain rhetoric.

The court rejected the defendant’s argument that the information used in the impugned advertisement was protected by the Supreme Court’s verdict on right to privacy and held that the judgement was inapplicable to the facts of the present case observing that a right to privacy cannot be asserted against information that is already in the public domain. The court also specified that the Supreme Court, in the said judgment, did not ban or prohibit comparative advertisements.

The court, relying on various judgments, observed that advertisements are not to be read as if they are some testamentary provision in a will or a clause in some agreement with every word being carefully considered and the words as a whole being compared. In determining the meaning of an advertisement, the court has to take into account the fact that public expects a certain amount of hyperbole in advertising and the test to be applied is whether a reasonable man would take the claim being made as one made seriously.

The judgment has widened the scope of comparative advertising in India and has also tried to bring clarity as to which advertisements will be misleading according to sections 29(8) and 30(1) of the Trademarks Act. The judgment is a much-needed elucidation that will help companies in disseminating greater information about their products or services and by keeping comparative advertisements out of the purview of right to privacy. It has ensured that the customers get as much information as possible while purchasing a specific product.

Deepak Sabharwal is the managing partner of Deepak Sabharwal & Associates.

Deepak-Sabharwal-&-Associates

Contact details

Deepak Sabharwal & Associates

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Tel: +91 11 2923 0232 / +91 11 2924 0232

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