Beiersdorf AG vs. HUL Case; Delhi HC Says While Puffery Is Fine, Disparagement Impermissible 

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Early last month, the Delhi High Court passed an order condemning the alleged disparaging marketing and advertising practices by a leading FMCG brand and granted injunction prohibiting disparaging comparative marketing campaigns.

This article captures the court’s analysis on the legal battle between Beiersdorf AG and Hindustan Unilever Ltd., the brief facts, key issues, critical conparative analysis between disparagement and puffery and lastly, the future implications that shall be used to scrutinize the intent of marketing campaigns.

Background and Context

Beiersdorf owns the brand ‘NIVEA’, recognized for its distinctive blue packaging (Pantone 280C). In 2021, Beiersdorf noticed that the sales representatives of HUL were actively engaging in disparaging marketing activities in malls across Delhi and Gurgaon. These activities involved comparing Nivea’s crème in a distinctive blue tub with HUL’s Ponds Superlight Gel. The sales representatives would apply Nivea crème on one hand of the customers and Ponds gel on the other, using a magnifying glass to show that Nivea left an oily residue. Beiersdorf saw this as a direct attempt to disparage their product. Thereafter, Beiersdorf issued a cease-and-desist notice and subsequently filed a suit when the activities continued.

Arguments of the Case

Beiersdorf stressed the importance of the distinctive blue colour packaging, which is associated with ‘Nivea’ brand.

Although the trade dress is not registered in India, it is protected under the German Patent and Trade Mark Office. They argued that the blue colour and trade dress of Nivea had been used extensively and advertised globally, incurring significant promotional expenses. Beiersdorf’s main grievance was that the comparison was inherently unfair and misleading, as it compared two different categories of crèmes—Nivea’s heavier crème with 25% fatty matter and Ponds’ lighter gel with 10% fatty matter.

HUL based their arguments on the fact that there was no disparagement while comparing the product with a blue tub, moreover, it stated that Nivea doesn’t have exclusive rights over the colour as Nivea also sells moisturizers in different colour packaging. The defendant argued that the comparison was fair and aimed at allowing customers to feel the difference between products. The defendant acknowledged the differences in product categories and fatty matter content, arguing the comparisons were justified. The defendant also relied upon many cases, such as Colgate Palmolive Company & Anr. v. Hindustan Unilever Ltd., where injunction in the case of comparative advertisements were not granted by the courts.

Legal Framework and Court’s Decision

The court relied on the jurisprudence of comparative advertising in India, particularly referencing the case of Reckitt Benckiser (India) Pvt. Ltd. v. Wipro Enterprises (P) Limited, which established that comparative advertising, as a form of commercial speech, is protected under Article 19(1)(a) of the Constitution. However, it also stipulated that while some level of disparagement is implicit in comparative advertising, outright denigration of a competitor’s product is impermissible. Mere puffery, or exaggeration, is not actionable, but misleading or false comparisons are.

Key Issues and Court’s Analysis

1. Association of the Blue Cream Tub with Nivea: The court noted that Beiersdorf used the blue colour not just decoratively but as a ‘source identifier.’

2. Intent and Objective of Using the Blue Tub: The court examined the intent behind HUL’s use of an unlabelled blue tub for comparison with an attempt at deception and misstatement to target Nivea..

3. HUL’s Knowledge of Nivea’s Blue Colour: The court stated that HUL’s knowledge of the blue colour’s distinctiveness was evident from the instances cited by Beiersdorf wherein past HUL’s involvement in multiple litigations on this issue in different countries.

4. Comparative Advertising and Consumer Perception: The court criticized HUL’s choice to compare their lightest product with Beiersdorf’s heaviest product as inherently misleading.

Determining Disparagement or Puffery

The court reiterated that while puffery is allowed, disparagement is not. It emphasized that comparisons must be fair and between similar products. HUL’s attempt to show an oily residue on Nivea’s crème was seen as an unfair tactic to create a negative perception and lead customers to view Nivea unfavourably.

The court emphasised on the above-mentioned judgement of the Wipro Enterprises case to determine the distinction between disparagement and puffery and to state:

“Denigration of a rival’s or a competitor’s product is completely impermissible. While it is permissible, therefore, to state that the advertised product is superior to the competitor’s, it is not permissible to attribute this superiority to some failing, or fault, in the product of the competitor. An advertisement cannot claim that a competitor’s goods are bad, undesirable or inferior. The subtle distinction between claiming one’s goods to be superior to the others’, and the other’s goods to be inferior to one’s, has to be borne in mind.”

Judgement & Conclusion

The court acknowledged the distinctive trade dress and colour associated with ‘NIVEA’ and its global recognition. The court concluded that HUL’s marketing activities were prima facie misleading and disparaging towards Beiersdorf’s products. The decision to restrain HUL from conducting such activities was based on the understanding that these actions caused irreversible prejudice to Beiersdorf.

Implications for Future Cases

In future, Courts are likely to scrutinize the intent and execution of marketing campaigns to determine whether they constitute fair competition or unfair disparagement. On one hand, the order highlights the necessity for brands to respect established brand identities and avoid deceptive practices that can mislead consumers. Whereas, on the other hand, this order underscores the importance of fair trade practices and the protection of distinctive trademarks and trade dresses.

In conclusion, this case illustrates the delicate balance between permissible competitive advertising and unlawful disparagement. It serves as a critical reminder for companies to carefully design their marketing strategies to stay within legal boundaries while effectively promoting their products.

The outcome will have significant implications for marketing strategies and brand protection in the competitive FMCG sector.

 

Authors: Shalini Bajpai & Ananya Chakraborty


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