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Advertising code applies to trademarks too, regulator ASCI says

NEW DELHI : The Advertising Standards Council of India (ASCI) on Thursday said its code applies to trademarks, too, in a bid to protect consumers from misleading claims made by companies with descriptive or laudatory words and slogans in their trademarks.

Descriptive trademarks are often false and dishonest and must follow the ASCI advertising code, it said in a report it unveiled jointly with intellectual property firm K&S Partners.

ASCI is a non-profit, self-regulating body under the Companies Act.

Business entities often register descriptive words as trademarks, which may be incorrect or misleading. But when the regulator objects to such claims, they cite their statutory rights conferred by registered trademarks, the report said.

The report, Misleading Ads and Trademarks: A registration conundrum, said it’s not uncommon for the Trade Marks Office to allow registration of such descriptive or laudatory marks.

For instance, a descriptive mark like ‘All Wool” in clothing connotes that the product comprises only wool.

Since the Trade Marks Office does not scrutinize its veracity, goods sold under the trademark ‘All Wool” may not in fact be made of only wool.

When cases of such misleading claims are taken up by ASCI’s Consumer Complaints Council (CCC), advertisers who have secured registrations for descriptive trademarks often rely on their registrations to claim that the registration of the trade mark is prima facie evidence of its validity and that the ASCI Code cannot restrict the use of registered trademarks.

“These defences are devoid of any merits and, therefore, ought to be rejected. Just like registration of a company’s name incorporating a trade mark does not serve as a defence in a trade mark infringement or passing off action, registration of a trade mark cannot serve as a defence to make untrue or dishonest claims,” ASCI said.

Though the ASCI Code does not specifically prohibit the use of registered trademarks, there is an express prohibition on the use of statements or visual presentations which directly or indirectly, make untrue or dishonest claims.

“So the ASCI Code would certainly apply to trademarks, which are characteristically unverified or are untrue,” it said.

“The issue concerning false, unsubstantiated, and dishonest advertisements, under the guise of descriptive or laudatory trademarks, is grave. Protecting consumers from deception is one of the principal tenets of the ASCI Code, the Trade Marks Act, and the Consumer Protection Act,” said Prashant Gupta, partner, K&S Partners.

“The Trademark Office needs to raise the threshold for descriptive or laudatory trademarks, failing which, protecting consumers’ rights from fraudulent marks and making informed choices would be severely compromised,” he said.

To resolve the issue, the Registrar (of Trade Marks) must employ greater degree of restraint in permitting registration of descriptive trademarks. Judicious exercise of the discretion vested with the Trade Marks Office would largely reduce the number of untrue claims, the report said.

Manisha Kapoor, chief executive officer and secretary general, ASCI, said, “At ASCI, we see cases where the advertiser uses a trademark registration to defend their direct or implied claims, asserting that a trademark registration means that the claim is good in law.

This is not true, and we would ask brands to be cautious in using untrue, exaggerated or misleading phrases to describe their products, whether trademarks or not.”

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