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Follow UsThe Internet is an attractive means of advertisement, promotions, and other marketing communications to a significant and growing audience. This single largest distribution channel permits companies to be much more focused in their targeting and in responses to queries.
As an advertiser on the Net, at the outset you must know the answers to the two following questions.
| Misleading pricing can land you in jail |
| The Consumer Protection Act, 1986 deals with pricing issues and states that it is a criminal offence to give misleading indication of price of any goods, service, accommodation, or facility to consumers. A price is misleading if a consumer can infer from an advertisement (or from an omission from an advertisement) that the price is less than it actually is. The key problem areas, for example, are hidden extras (like, packaging and transport), not comparing like with like, failing to update prices that become out-of-date, and not quoting VAT-inclusive prices to consumers. Certain products, such as mobile phones and hi-fi upgrades, are notoriously problematic due to the amount of options available and related on-going contracts.
A breach of this Act is a criminal offence–not only does a company risk being fined on a corporate level, but also any “consenting or conniving” directors or managers, or any other persons in positions of responsibility involved, risk personal fines and/or imprisonment. |
Can ‘Indian’or national regulations be applied to the Internet?
According to Indian law, ‘webvertising’ and site content must comply with a range of marketing, consumer, privacy, and contract laws, regardless of whether those laws were conceived with Internet activity in mind. Advertisers in India, must consider liability in three major areas: censure for breach of a regulatory code, criminal liability for a statutory offence, and civil liability for infringing third-party rights.
Which laws apply, given global, multi-national accessibility in the new economy?
Advertising, in general, is regulated by complex legislation, case law, statutory law, and self-regulatory codes. Unfortunately, no uniform system applies. Deciding which laws are relevant may not be straightforward, given the Web’s global reach. Jurisdictional matters pose interesting problems for e-commerce (see Jurisdiction in Cyber Space, page 34).
Trademark infringement
Trademark infringement can arise if a website uses registered trademarks of third parties without consent, unless the trademark is being used honestly and simply for the purpose of identification and is not bringing the mark into disrepute. The Trademarks Act, 1999 has introduced some wide-ranging changes to Indian trademark law and essentially made it possible to apply for registration of any mark “capable of graphical representation”. This is in addition to the obvious word marks and logos, advertising straplines, slogans and shapes. Even if a mark is not registered there may still be liability for any use of a “well known” mark under the 1999 Act.
| Is caching a copyright offence? |
| The Internet-based caching is used by ISPs on a regular basis. It entails duplicating a popular site on an ‘as-it-is basis’ on the servers of the ISP. The advantage to the ISP is that its bandwidth requirement reduces, as now it does not have to go out of its network every time someone clicks the URL of that website. While the intention may be good, it still could be held as copying and may violate the copyright of the original website. It may also attract penalty, both civil and criminal under the law. The ISP license or the EC (Electronic Commerce) bill does not offer any respite to this effect. India may be required to enact copyright laws in line with the US’s Digital Millennium Copyright Act so as to allow caching. |
The ‘hype’ about hyperlinking
A particular concern in relation to Internet sites is the potential for infringement through hypertext links to a third-party site. By clicking on underlined or differently coloured text or images, a user is transported via linking to another location within the same site, the home of a completely different site or, in “deep linking”, to a particular page within another site without first accessing the home page.
Historically, sites have welcomed links from others. Recently, however, certain sites have
challenged the practice of linking without first seeking permission. Of this there are some notable international cases, though none so far in India. The most notable and widely publicised being the Shetland Times case. In the Scottish case, Shetland Times vs Dr Jonathan Wills & The Shetland News Ltd, Shetland Times moved the court against a direct link to news articles within the online publication of Shetland Times by an Internet-based news agency. The Internet-based new services published news headlines on their website and gave hyperlinks to the articles published by Shetland Times. Thus technically they were not violating any copyright material.
The pitfalls of comparative advertising
In comparative advertising, naming your competitors raises issues relating to various areas of intellectual property, like registered and unregistered trademarks, passing-offpassing off, copyright, defamation (through both libel and malicious falsehood), and the Regulatory Codes issued from time to time by the Government of India.
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A comparison, which is unfavourable to a competitor, does not necessarily mean that it is dishonest or unduly detrimental. Failure to point out your competitor’s advantages is not necessarily dishonest. The Trademarks Act also applies to references to “well known” unregistered marks. This gives the proprietor a statutory alternative to the common law action of passing off.
Passing off can often arise in comparative advertising disputes. The key essence of a passing-off action is confusion. The issue of copyright clearance and infringement is equally of concern to advertisers who use a competitor’s logo, label, graphics, etc, in their comparative advertising promotions. It is an infringement under the Copyright Act, 1957 to copy in material form the whole or substantial part of a copyright work. Care must be taken in using comparative advertising techniques to ensure that statements of comparison with competitors’ products are not defamatory or libellous. This can arise where an advertisement is factually incorrect and where the complainant/plaintiff can show in court that the words used, tend to lower its reputation in the eyes of the public. A statement can be libellous without necessarily being malicious (unless the defendant pleads fair comment or qualified privilege). And the plaintiff does not need prove special damage. The defendant advertiser in turn must prove that the allegations are true.
By contrast, where a comparative advertisement contains a false statement about a competitor’s goods or services, an action for “malicious falsehood” may lie against the ‘webvertiser’ if a false statement has been made with malice (some dishonest or improper motive) calculated to cause the plaintiff pecuniary loss. There is no requirement to show actual damage to reputation.
Financial advertisements on the Internet
The following relevant laws, guidelines and reports must be considered by companies (registered under the Indian Companies Act, 1956).
Guidelines on issue advertisement by Ministry of Finance, Government of India. These guidelines aim to curb the tendency of companies to depict too rosy a picture of their future prospects, which are not actually contained in the prospectus filed by them. Some companies, before announcing the closure of subscription lists, state that the issue has been over-subscribed. Such statements should be discouraged as far as possible and if they are made, then they should be based on documentary evidence, which should be available for verification. To sum up, the Ministry of Finance has advised the Stock Exchanges through various communications that any misleadingly bright picture of a project advertised to the general public/prospective investors should be curtailed as far as possible.
SEBI guidelines for issue advertisement. The restrictions to advertisement will only apply to financial advertisements issued by the company and not to corporate advertisements. “Financial advertisement” would include publication of accounts and presentations to prospective investors in the company/trading entity concerned and/or its group companies located in India, on a website accessed in India.
At present, ‘webvertising’ in India is governed by the same restrictions as other kinds of non-broadcast advertising. However, extra attention should be given to issues that are peculiar to the Internet as an advertising medium.
Rodney D Ryder Advocate, Supreme Court of India, is a
consultant on trade and technology laws. He is an author of the Indian IT Act, 2000 and advises the government on its implementation.