Sunday, October 9, 2011

Representing oneself as No.1- Unfair trade Practice or not?

As my tryst with the much loved world of audio-visual communication world continues, there is a thought that resonates every once in a while- The world of advertising and trademarks share a symbiotic sort of relationship, feeding on each other - While advertising facilitates the use of trademarks, it is the viable and undefied use in the course of trade and marketing that urges the registration of marks.

To me this seems like a vicious cycle, which shall only expand with the world of communication and electronics.

I recently saw an advertisement, claiming its product to be No.1. Obviously, the product wasn’t a leader in its segment, yet the confidence in the eyes of its models was worth appreciation. Not to blame them, they were playing their part, and in a commendable fashion.

As this stuck in my head, I skimmed through the Trademarks Act, 1999 to see if there was any recourse to such a representation. The Trade Marks Act, under S. 2 (1)(i) describes false trade description as:

“(I) a trade description which is untrue or misleading in a material respect as regards the goods or services to which it is applied, or…”

From a further reading of the Act,S. 2(1) (za) defines “trade description means any description, statement or other indication, direct or indirect,-…
… (ii) as to the standard of quality of any goods or services according to a classification commonly used or recognised in the trade; or…”

What I am unable to comprehend is, whether the representation of a brand or product as something as staunch as No. 1, without being backed by proper statistical verification by a government body, is in fact “material” or not?

Further on, the Consumer Protection Act of 1986 defines unfair trade practice as
(q)“unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely;—
(1)the practice of making any statement, whether orally or in writing or by visible representation which,—
(i)falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;…

However, in the light of the fact that one is allowed to puff and use superlatives to describe one’s products, does expressing oneself as No.1 really attract a cause of action?

I am not sure. While there are multiple facets on which a brand may “consider” itself as the leader, the fact is that such representation, without proper corroboration as to the source, aspect etc., to my mind is indeed misleading. In fact to my eyes, this does not qualify as puffing or even misleading, but in fact can be termed as literal falsehood.

Another facet that seems interesting to me is that while unfair trade practices are barred by legislation, the Act is carefully worded to use the phrase “promoting the sale, use or supply of any goods or for the provision of any service”. Obviously, advertising does fall in this ambit, although not having been expressly included.

This makes me eager to find out, if in fact, any action for such representation has been taken, or has scope to face issues in court. Would Courts consider a proposition similar to that of comparative advertising cases? My guess would be not, since the question of disparagement of another may be absent, at least in a direct fashion. To me, the Courts should consider flagarant misrepresentation as an unfair trade practice.

While my research on case law is pending, a cursory view of the Trademarks Act, 1999 brings to notice Chapter XII which deals in penalties for false trade descriptions. Section 103 under the same imposes penalties for “applying false trademarks, trade descriptions, etc.”. The provision talks about false application, but there seems to be no false representation of the quality, status etc. of a mark.

However, a flip side to such an argument would be that rankings and claims so being made, is also a manner of self-appreciation! To my mind, however, the use of rankings should be differentiated from the use superlatives to describe oneself, sheerly to give consumers the opportunity to statistically verify the claim.

As I say this, the irony is that hardly ever do the large brand owners portray themselves as No.1. Perhaps, they never need to.

That having been said, would a large brand owner move against a smaller player for such a representation, or would they consider such a move a wasteful exercise? Would it be more fruitful to invest the time and money in more aggressive marketing, especially when there is no direct reference or disparagement of the product?

This I guess is an answer for marketing strategists to consider.. Perhaps, we will hear from one of you here..

1 comment:

  1. I had written "elsewhere":

    "In another case of Colgate v. Hindustan Lever (1999), the Court explained that although a seller has the latitude to represent his product in such a manner that he attracts more customers than he normally would have, such latitude would translate into description and “reasonable assertion” of the product, but not to misrepresentation. In other words, factual representations are perfectly legitimate.

    The Apex Court went a step further to state that “commendatory expressions” are not dealt with as serious representations of fact. (On SpicyIP, we have dealt with “commendatory expressions” as “puffing”. Mihir’s brilliant post on the relation between commercial disparagement and puffing is a must read)

    When the SC says that “commendatory expressions” are not dealt with as serious representations of fact, it does not mean that such representations are untrue or misleading. On the contrary, what it means is that such representations cannot be taken seriously and that there is no obligation on the part of the seller to the customer with regard to the true quality, rather standing of goods merely because the seller has resorted to puffing.

    To support this, the Apex Court relied on a rule of civil law, "simplex commendatio non obligat" , which means simple commendation can only be regarded as a mere invitation to a customer without any obligation as regards the quality of goods. In other words, every seller is entitled to call his goods “world’s best”, “Indian’s no.1”, “world-class quality” and so on.

    However, the Supreme Court also cautioned that these principles are by no means conclusive since, by and large, cases of puffing are borderline cases, and that there exists a very thin line which separates puffing from falsehood.

    In a nutshell, although commercial speech is available under the Indian Constitution to every seller, if the advertisement is false, unfair, misleading or deceptive, the seller is not entitled to seek protection behind “commercial speech”."