Partly allowed

Itc Ltd., v. M/S.Nutrine Confectionery Co.

Madras HC25 Jan 2018CS/51/2009

Case brief

AI extract

What is this about?

This judgment held that a defendant's advertisement claiming exclusivity for 'Real Lacto' while disparaging the plaintiff's product constituted an unfair trade practice warranting an injunction. The court dismissed the claim for damages due to lack of proof.

What did the court decide?

Permanent injunction granting prayers for restraint on disparaging advertisements and surrender of materials; damages dismissed.

Itc Ltd., Vs M/S.Nutrine Confectionery Co. — Intellectual Property | Madras HC (2018)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 25.01.2018

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CORAM

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THE HONOURABLE MR.JUSTICE R.SUBRAMANIAN

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C.S.No.51 of 2009
ITC Ltd.,
37, J.L.Nehru Road,
Kolkata – 700071
and also at
No.760, Anna Salai,
Chennai – 600002.
Represented by its Branch Manager
Mr.Nitin K.Asthana
... Plaintiff
Versus
M/s.Nutrine Confectionery Co., Ltd.,
at New No.102 (Old No.81),
Chamiers Road, Chennai – 600 028.
... Defendant

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Plaint filed under Order VII Rule 1 of Civil Procedure Code read with Order IV Rule 1 of Original Side Rules praying to pass a judgment and decree for:

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(a) a permanent injunction restraining the defendant, by themselves, their advertisers, their marketing agents legal representatives, assigns, successors in business, distributors

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representatives or any of them from in any manner publishing or causing to publish, telecast, broadcast or in any manner make available to the public the impugned advertisement or any other advertisement which disparages and defames plaintiff’s Candyman Lacto Crème Center products, using/ depicting plaintiff’s Lacto Crème center products, either directly or indirectly or in any other manner whatsoever;

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(b) a permanent injunction restraining the defendant, by themselves, their advertisers, their marketing agents, legal representatives, assigns, successors in business, distributors, representatives claiming under them or any of them from in any manner disparaging, denigrating, tarnishing the goodwill and reputation of the plaintiff in its Lacto Crème Center products by telecast, broadcast, publishing or in any other manner make available to the public the impugned advertisement or any other advertisement depicting directly or indirectly plaintiff’s Lacto Crème Center product or in any other manner whatsoever;

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(c) a permanent injunction restraining the defendant, by themselves, their advertisers, their marketing agents, legal representatives, assigns, successors in business, distributors, representatives claiming under them or any of them from telecast, broadcast, publish, make available to the public the impugned advertisement or any other advertisement claiming defendant’s products as the only True Lacto or Asli Lacto or in any other manner whatsoever;

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(d) the defendant be ordered to surrender to the plaintiff for destruction, the production Master copy, CDs, DVDs, video and audio cassettes and the Artworks/ advertisement material of the impugned advertisements;

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(e) damages to the tune of Rs.10,05,000/- for the loss of sale and revenue or such higher amount as may be claimed by the plaintiff at a later date and as may be determined by this

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Court upon enquiry and

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(f) for costs.
For Plaintiff : Miss.Durga Bhatt
for M/s.Arun C.Mohan
J U D G M E N T

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The suit is for a permanent injunction restraining the defendant from publishing and telecasting the advertisement which according to the plaintiff disparages and defames plaintiff’s Candyman Lacto Crème Center products, using/ depicting plaintiff’s Lacto Crème center products, either directly or indirectly or in any other manner, for a permanent injunction restraining the defendant from disparaging, denigrating, tarnishing the goodwill and reputation of the plaintiff in its Lacto Crème Center products by telecast, broadcast, publishing or in any other manner make available to the public the impugned advertisement or any other advertisement depicting directly or indirectly plaintiff’s Lacto Crème Center product or in

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any other manner, for a permanent injunction restraining the defendant from telecast, broadcast, publish, make available to the public the impugned advertisement or any other advertisement claiming defendant’s products as the only True Lacto or Asli Lacto or in any other manner, the defendant be ordered to surrender to the plaintiff for destruction, the production Master copy, CDs, DVDs, video and audio cassettes and the Artworks/ advertisement material of the impugned advertisements, for damages to the tune of Rs.10,05,000/- for the loss of sale and revenue or such higher amount as may be claimed by the plaintiff at a later date and as

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may be determined by this Court upon enquiry and for costs.

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The case of the plaintiff is that, it entered the confectionery market during the year 2002 and has developed a very wide market and

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high turnover during the years. It is claimed that the defendant Company is also engaged in production of confectionery items. The plaintiff's toffees

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include Candyman Fruitee Fun, Candyman Eclairs, Candyman Cofitino, Candyman Licks, Candyman Choco Double Eclairs, Candyman Mango Licks, Candyman Natkhat Gowawa and Candyman Lacto Crème centre.

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During the year 2009, according to the plaintiff, the defendant

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which is also a major confectionery came up with an advertisement, wherein, apart from claiming that their Nutrine Maha Lacto is only “Asli Lacto” meaning “real lacto”, the advertisement further disparages the product of the plaintiff in as much as the picture of the toffee in the defendant's advertisement matches the colour scheme of the plaintiff's toffee Lacto Crème Center and the same is depicted as fake toffee or a dupe.

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According to the plaintiff, the defendant is not entitled to claim

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that their product alone is a true product and the others are fake in an advertisement. It is also contended that the defendant cannot disparage the product of the plaintiff by using a toffee which is substantially similar to that of the plaintiff’s toffee and claim that it is a fake Lacto Toffee. On the above contentions the plaintiff would seek for relief of injunction set out in the suit.

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Though, upon service, the defendant appeared through counsel, it

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is found that no written statement was filed and the defendant was set exparte on 14.02.2017. Thereafter, the matter was referred to the learned

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Additional Master for recording evidence. Before the learned Additional Master one Ashutosh Modi, an Employee of the Plaintiff was examined as PW1, he had produced the documents referred to in the plaint as Exs.P1 to P8. The print out depicting the frame by frame advertisement of the defendant is filed as Ex.P2. The print out depicting the advertisement of the plaintiff in respect of its Candyman Lacto Crème Centre toffee frame by frame is filed as Ex.P3. The plaintiff’s toffee wrapper has been filed as Ex.P4. The Compact Disk containing the disparaging advertisement has been filed as Ex.P7. The Compact Disk containing the advertisement of the plaintiff in respect of its Candyman Lacto Crème centre toffee is filed as Ex.P8.

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A perusal of the above documents as well as the evidence of the plaintiff would show that the claim of the plaintiff that there is an attempt

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by the defendant to disparage the plaintiff’s product as fake and also to claim that its lacto toffee is only the real lacto toffee.

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Miss.Durga Bhatt, learned counsel appearing for Mr.Arun C.Mohan, learned counsel for the plaintiff would rely upon the judgment of this Court

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in Colgate-Palmolive (India) Limited Vs. Anchor Health & Beauty Care Private Ltd., reported in 2009 (40) PTC 653 (Mad.), wherein it was held that the usage of the words ‘Only’ and ‘First’ actually falls within the meaning of unfair trade practice under the provisions of the Consumer Protection Act,1986. It was concluded that such an act would tantamount to a false representation. After considering the law relating to disparaging

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advertisement in India, this Court had summed up the law as follows:

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“(a) Publication of advertisements being free commercial speech, is protected by Article 19(1) (a) of the Constitution, as per the dictum of the Apex Court in Tata Press case.

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(b) There are a few restrictions on the aforesaid right, which would satisfy the test of reasonableness under Article 19(2).These restrictions could be traced to the definition of the term "unfair trade practice" in section 36 A of the Monopolies and Restrictive Trade Practices Act, 1969 and section 2 of the Consumer Protection Act, 1986.

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(c) Therefore, only if a case of disparaging advertisement falls within the definition of the term "unfair trade practice", an action may lie. It would lie before a Consumer Forum, at the instance of a consumer or a group of consumers or a voluntary consumer association or even the

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Central or the State Government (see the definition of the word "complainant" under section 2 of the Consumer Protection Act). It may even lie before the MRTP Commission. (or the Competition Commission after it is constituted).

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(d) An action may lie against such an advertisement before a civil court both at the instance of a manufacturer or marketer and at the instance of a consumer (since section 3 makes the Consumer Protection Act an additional law and not a law in derogation of any other law), provided that the advertisement in question contains a false representation coming within the 4 corners of sub-clauses (i) to (x) of clause (1) of section 2(1)(r) of the Consumer Protection Act.

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(e) A careful scrutiny of all the sub-clauses in section 2(1)(r) of the Consumer Protection Act would show that 4 types of representations are categorised as "unfair trade practices" namely (1) false representations falling under sub-clauses (i), (ii) and (iii); (2) representations which may not necessarily be false but are nevertheless incorrect coming under sub-clauses (iv) and (v); (3) warranty or guarantee coming under sub-clauses (vii) and (viii); and (4) false or misleading representations falling under subclauses (vi), (ix) and (x). If an advertisement contains a false representation within the meaning of sub clauses (i)

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to (iii) or an incorrect representation within the meaning of sub clauses (iv) and (v) or a warranty or guarantee within the meaning of sub clauses (vii) and (viii) or a false or misleading representation or fact within the meaning of sub clauses (vii), (ix) and (x) of clause (1) of section 2(1)(r) of the Consumer Protection Act, then an action may lie.

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(f) In the light of the above statutory prescription, it is doubtful if false claims by traders, about the superiority of their products, either simplicitor or in comparison with the products of their rivals, is permissible in law. In other words, the law as it stands today, does not appear to tolerate puffery anymore. I do not know if "Puffing" which is only a twin sister of "bluffing", permitted by English courts in the past, still has the sanction of law even in England, after the advent of 'legacy regulators' such as CAP, Oftel, Ofcom, Clearcast etc., and the issue of The Control of Misleading Advertisement Regulations,1988 (as amended by Regulations of 2000) and the enactment of the Communications Act, 2003.

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(g) An advertisement which tends to enlighten the consumer either by exposing the falsity or misleading nature of the claim made by the trade rival or by presenting a comparison of the merits (or demerits) of their respective products, is for the public good and hence cannot be taken to be an actionable wrong, unless 2 tests

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are satisfied namely (i) that it is motivated by malice and (ii) that it is also false. This is on account of the fact that a competitor is more well equipped to make such an exposure than anyone else and hence the benefit that would flow to the society at large on account of such exposure, would always outweigh the loss of business for the person affected. If 2 trade rivals indulge in puffery without hitting each other, the consumer is misled by both, unless there is increased awareness or Governmental intervention. On the other hand, if both are restrained from either making false representations/incorrect representations/ misleading representations or issuing unintended warranties (as defined as unfair trade practice under the Consumer Protection Act), then the consumer stands to gain. Similarly, permitting 2 trade rivals to expose each other in a truthful manner, will also result in consumer education.”

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If we are to examine the advertisement, subject matter of the present suit, I am of the opinion that this advertisement would be infact an unfair trade practice on the the part of the defendant and the plaintiff is entitled to injunction as prayed for.

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On the question of damages, though a claim is made as the plaintiff has suffered damages to the tune of Rs.10,05,000/-. I find that the

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same is not proved through tangible and acceptable evidence. Hence, I am of the opinion that the plaintiff is not entitled to damages as claimed in

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prayer (e) of the plaint.

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10. In fine, the suit is decreed as prayed for granting prayers (a), (b),

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(c), (d) and (f). In respect of prayer (e), the suit will stand dismissed.

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25.01.2018
dsa
Index : No
Internet : Yes
Speaking Order
List of the witnesses examined on the side of the plaintiff :
PW1 - Mr.Ashutosh Modi

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List of Exhibits marked on the side of the plaintiff:

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*Sl.* *No.*	*Exhibits*	*Description*	*Dated*
1	Ex.P1	Authorisation letter	27.03.2017
2	Ex.P2	Printout depicting the disparaging advertisement telecast by the defendant frame-by-frame	--
3	Ex.P3	Printout depicting the disparaging advertisement telecast by the plaintiff in respect of their Candyman Lacto crème center frame-by-frame.	--
4	Ex.P4	Original specimen of plaintiff's Candyman	--

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*Sl.* *No.*	*Exhibits*	*Description* *Dated*
		Lacto crème Center toffee wrapper and defendant's Nutrine Maha Lacto toffee wrapper.
5	Ex.P5	Website printouts/ pictures of harboiled sugar toffees/ confectioneries manufactured by various manufacturers using the mark LACTO. --
6	Ex.P6 Series	Trademark Search report for the mark LACCTO conducted on the official websites of Indian Trademark registry, the United States Patents and Trademark office and European Union Intellectual property office. --
7	Ex.P7	CD containing the disparaging advertisement issued/ telecast by the defendant. --
8	Ex.P8	CD containing the advertisement published/ issued by the plaintiff in respect of the Candyman Lacto crème Center --
dsa		25.01.2018