Budweiser recently filed a suit before the Delhi High Court against the defendants on grounds such as infringement of its trademark, unfair competition and commercial disparagement, and dilution and tarnishment of its goodwill and reputation. In an ex parte proceeding, the court held in Budweiser’s favour finding a prima facie ‘infringement of plaintiff’s registered mark ‘Budweiser’ and also amounting to commercial disparagement of the plaintiff’s products’. In this piece, I dissect this interim order and argue that it is completely untenable in law.
Incorrect Factual Reporting
Originally, a post was published on a website named ‘Foolish Humour’ which mentioned that a Budweiser employee with the alias Walter Powell had been pissing in Budweiser beer tanks for 12 years. Foolish Humour later also put up a post stating that Budweiser had admitted that ‘several employees have been pissing into their beer tanks for years’. These, however, were fictional reports as can clearly be seen even from the description of the website at the bottom of the page which reads as follows: “This website is a humorous page whose sole purpose is entertainment. The content of Foolish Humor is fiction and does not correspond to reality.” However, certain media channels such as Hans India mistook it to be credible news and released a report based on this story. This fictitious news also went viral on social media, drawing several memes against Budweiser and also trending the #Budweiser. A detailed fact check can be accessed here.
The defendants in the instant case are also a satire website with the disclaimer at the bottom of their webpage reading: “The Fauxy is a Satire Web Portal. The content of this website is a work of fiction. Readers are advised not to confuse the articles of The Fauxy as genuine and true.” In light of the viral news concerning a Budweiser employee pissing in the beer tanks, the defendants came up with a video to ascertain its veracity. The video shows a person tasting Budweiser and urine sample and concludes that the news of Budweiser containing urine is fake as Budweiser tasted worse than the urine.
One of the biggest errors in the order appears to stem from an incorrect understanding of this fact scenario. The court has noted the plaintiff’s submissions that the defendants have been perpetrating “fake news stating that the employees of the plaintiff have been urinating in the beer sold to its customers”. Moreover, the plaintiff submitted that the video was responsible for “the publication of several hundred defamatory posts and videos across social media”, “caused “#Budweiser” to trend as the no. 1 hashtag on twitter in India as on July 02, 2020”, and “caused even legitimate news publications such as The Hans India to report the fictitious news as being a legitimate fact”. Moreover, the plaintiff also pointed to a tweet by NDTV referring to a “news item ‘Budweiser admits several employees have been pissing into their beer tanks for years’”. Hence, it is clear that all outcomes of the original article by Foolish Humour have been wrongly attributed to the defendants in the instant case. The court failed to take note of this incorrect fact situation. It even failed to note that while the plaintiff highlights #Budweiser to trend on July 2, the defendants’ video was released only on July 8.
As has been explained by the Bombay High Court in Hindustan Unilever Limited v. Gujarat Co-operative Milk Marketing Federation, the claim on commercial disparagement requires that the statement concerning a plaintiff’s goods must (a) be false; (b) be made with malice; and (c) cause special damage to the plaintiff. In the instant case, there is no doubt about the first factor since it is an admitted position that the statements in the video were fictitious. The concern then turns to the other two factors.
There appears nothing from the facts mentioned in the order that indicates any element of malice on the part of the defendants to harm the plaintiff. As is the case with other videos and posts released by The Fauxy, this video was also purely a satire/ parody for entertainment purposes without any intended targeting of the plaintiff. This is quite apparent even by watching the video with headlines carrying news such as a patient preferring Rajma therapy over plasma therapy, and plot themes such as stealing the urine sample from a nearby pathology lab. As was noted by the Delhi High Court in Ashutosh Dubey v. Netflix (‘Ashutosh Dubey’), satire “ridicules its subject through the use of techniques like as exaggeration”, and freedom to engage in such commenting, ridiculing, or parodying of even registered trademarks was considered to be persuasive in Tata Sons Limited v. Greenpeace International. Unfortunately, despite “having watched the video” the court did not reach this conclusion.
As far as the final element is concerned, it might be argued that since the video compares Budweiser to taste worse than urine, it might cause special damage to the plaintiff. Although the plaintiff’s case on this point was primarily based on the incorrect fact situation examined above, and hence stands refuted, the plaintiff raises some objections against the video as well. This includes the video garnering over 5900 views and the absence of disclaimer concerning ‘fake news’ on the defendants’ Youtube page. Incidentally, apart from the Youtube link, the other three links mentioned in the order clearly indicate the fictitious nature of the news and its nature as a meme. The reactions on these posts have largely been with laugh emoticons and the videos being considered hilarious. Even with the Youtube video, all the comments have similar responses appreciating the comic work. Similar observation was noted by the court in Ashutosh Dubey wherein it noted that statements of comedians are not taken “as statements of truth but … with a pinch of salt with the understanding that it is an exaggeration”. Hence, as against the Parachute saga, there is no damage caused to Budweiser due to the defendant’s video and thus the disparagement claim does not stand. Interestingly, those actually responsible for the propagation of the fake news, as per the plaintiff’s averments, such as Hans India or NDTV that passed a fictional piece as ‘news’ have not been made parties by the plaintiff.
As per Section 29 of the Trademarks Act, 1999, for a claim for trademark infringement it is required that the defendant uses the mark. This is applicable even for the specific claim of trademark dilution or tarnishment as is captured in Section 29(4). The ‘use’ of the mark is further defined in Section 29(6) to constitute when a person does the following:
“(a) affixes it to goods or the packaging thereof;
(b) offers or exposes goods for sale, puts them on the market, or stocks them for those purposes under the registered trade mark, or offers or supplies services under the registered trade mark;
(c) imports or exports goods under the mark; or
(d) uses the registered trade mark on business papers or in advertising”
As has been discussed previously on SpicyIP here, a mere reference to a mark would not qualify as ‘use’. This is the position in the instant case as well since the defendants’ video does not fall within any of these categories. Hence, the infringement or dilution claims of the plaintiff do not stand. The court, however, holds prima facie trademark infringement without indicating any rationale for the same.
While the court purported to hold in favour of Budweiser, the direction passed by it is incomprehensible to have any substantive effect. It essentially restrained the defendants “from reproducing, broadcasting, communicating to the public, screening, publishing and distributing the impugned video or any other video on any media or platform and promoting the impugned video on various social media”. This seems to suggest that court has only prohibited prospective promotion, publication, or distribution of the uploaded video/ social media posts, without explicitly requiring the uploaded content to be removed. This appears to be the case given that all the concerned URLs are accessible even presently. It, thus, implicitly ignored Budweiser’s prayer to take down these URLs which, although a correct approach in my opinion, goes against the blanket agreement of the court with Budweiser’s claims.
This order reflects an occasion where the court seems to have taken one party at its word regarding the factual matrix, perhaps simply because it is a well established party. Moreover, it also points out to the general lack of engagement of courts with the substantive law while granting interim reliefs. A bare minimum perusal of the applicable provisions indicates that Budweiser’s claims do not have the support of law. If such reliefs are granted, that too in ex parte proceedings, it creates a substantial hindrance in exercise of freedom of expression. As Prashant has discussed in relation to the Parachute orders (here and here), it is important to shield individual opinions from powerful entities, else it would jeopardise the value of the fundamental freedoms granted by the constitution.