Products such as alcohol and tobacco which are heavily regulated, are as a rule not allowed to be advertised in India. This is in stark contrast to the super bowl ad spots seen in America for say, some famous beer brands. However, we often see advertisements plugging unrelated and unrestricted products such as mineral water, club soda etc., under brand names universally associated with such alcohol or tobacco brands. This so called “surrogate advertising” is prohibited in television and print media, sponsoring of sporting, lifestyle and cultural events.

Surrogate advertising in India garnered attention in 1999, when Voluntary Health Association of India filed a petition before the Delhi High Court seeking a ban on the sponsorship of the Indian cricket team by the brand “Wills” of cigarettes, manufactured by Indian tobacco major ITC Ltd. The petitioners were of the view that the constant appearance of the “Wills” logo on the apparel of the cricketers would have a detrimental effect in the minds of the viewers. ITC, however, withdrew its sponsorship stating that it did not want to derail the genuine efforts of the government and that it did not want to take undue advantage of its position in the Indian Economy.

Over a period of time, a string of legislations and regulations have come into place which prohibit the direct or indirect advertisement of tobacco and alcohol. Section 5 of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 prohibits the direct and indirect advertisement and promotion of “Tobacco Products” and its consumption. Further, one of the most distinct rules is Rule 7 (2) (viii) (a) of the Cable Television Networks Rules, 1994 which provides that, “No advertisement shall be permitted which promotes directly or indirectly production, sale or consumption of cigarettes, tobacco products, wine, alcohol, liquor or other intoxicants”. Policy makers however quickly realised that the restrictions against surrogate advertising also unfairly ousted genuine instances of brand extension namely where brand initially associated with a restricted product subsequently came to be associated with unrestricted other goods/ services. Consequently, in early 2009, the Ministry of Information & Broadcasting issued a notification amending Rule 7 (2) (viii) (a) by allowing advertisements of certain products bearing the same brand as a prohibited product subject to certain conditions:

• The story board or visual of the advertisement must depict only the product being advertised and not the prohibited products in any form or manner;
• The advertisement must not make any direct or indirect reference to the prohibited products;
• The advertisement must not contain any nuances or phrases promoting prohibited products;
• The advertisement must not use particular colours and layout or presentations associated with prohibited products;
• The advertisement must not use situations typical for promotion of prohibited products when advertising the other products.

The said Rule also requires advertisers to seek a clearance from the Ministry of Information and Broadcasting before exhibiting the advertisement for a product or service using a brand name of prohibited products with the advertiser being required to submit a certificate of a chartered accountant confirming the following:

• That the product intended to be advertised is available in commercial quantity and in substantial number of outlets.
• That the proposed expense on such advertising would not be disproportionate to the actual sales turnover of the product or service.

Theoretically speaking, once the I&B Ministry approves the advertisement as being a case of genuine brand extension, an advertiser would also be required to seek certification from the Central Board of Film Certification confirming that the proposed advertisement complies with the brand extension parameters as set out in the said Rules.

In addition to the above, the Advertising Standard Council of India (‘ASCI’), a voluntary self-regulatory body, has also formulated a Code which provides guidelines and is applicable to all forms of advertisement (print, television, film, radio, etc.). Clause 6 of the code cautions against circumvention of extant laws prohibiting the advertisement of restricted products by purporting to be advertisements for other unrestricted products. In essence, the Code prohibits advertisements which ae evocative of prohibited products through it clarifies that genuine brand extension is allowed. In comparison with the rules notified under the CTN Act, the ASCI Rules provide more clarity as to which cases of brand extension would be permissible as the Guidelines issued under the ASCI Rules pegs such advertisements to concrete criteria such as:

• Brand Extension Product or Service should be registered with appropriate Government authority e.g. CENVAT / VAT/FDA/FSSAI/TM etc.,
• In store availability of the product must be at least 10% of the leading brand in category the product competes as measured in the Metro Cities where the product is advertised.
• Sales Turnover of the product or Service on should exceed Rs.5 cr per annum nationally or Rs 1 cr per annum per state where distribution has been established.
• A valid certificate from independent organization such as ACNielsen or category specific industry association (for distribution and sales turnover) would be required to prove the concerned criteria.

Interestingly, the Supreme Court in 2008, dismissed a Public Interest Litigation which objected to the UB Group’s cricket IPL team being named “Royal Challengers” due to its association with the liquor brand “Royal Challenge” which was owned by the UB Group. The apex court however, provided a liberal interpretation to the concept of surrogate advertising and stated that the team was named “Royal Challengers” and not “Royal Challenge” and only those people who are consume alcohol will be attracted by it and non-drinkers will not be affected.

In the context of trade mark law, there is clearly an argument in favour of brand extension- trade marks initially associated with a particular goods of service could and would (invariably depending on their success and inclination of the brand owner), be associated with other related or even unrelated product or service classes. As a consequence of such ‘extension’ the reputation and goodwill arising in favour of such trade mark would straddle multiple classes of goods and services allowing for the said trade mark to credibly be associated across a wide variety of sectors, goods or services etc. A good example of a mark which spans a wide variety of goods, industries and sectors is the TATA trade mark. Although to be clear, the TATA trade mark has never been associated with restricted or prohibited goods, this example is relevant to show that a brand initially associated with say Steel manufacturing or Hotels is today associated with salt, tea, coffee, software/IT services, automobiles, DTH broadcasting services, Telecom, Defence, aviation etc. Another more contextual example of brand extension is WILLS LIFESTYLE the clothing and lifestyle business promoted by Tobacco Company ITC Ltd., originally drawn from ITC’s famous WILLS cigarette brand. This thus reflects the natural ability of trade marks to straddle diverse industries, goods and services significantly without the initial association being diluted or defrayed. There is thus a compelling argument in favour of brand extension even if the initial association is with an alcohol or tobacco brand. Over regulating genuine brand extension cases will only impede business and further dampen the ability of businesses to diversify their businesses beyond the so called restricted product categories.