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ECJ rules that trade mark law does apply to comparative advertising
The European Court of Justice ("ECJ") has ruled in the O2 v Hutchison 3G reference that protection for brand owners under the Trade Mark Directive 89/104 ("TM Directive") does apply to use of trade marks in comparative advertising. Advertisers who use identical or similar signs in comparative advertising will need to meet the conditions set out in the Misleading and Comparative Advertising Directive 84/450 ("CA Directive").
The ruling will be greeted with relief by brand owners after the earlier Advocate General Opinion had appeared to indicate that such use in comparative advertising was not subject to the TM Directive even if the conditions under the CA Directive were not met.
The decision provides useful guidance where an advertisement uses a sign similar to that of a competitor's mark by, so-called, comparative advertising. However, the ECJ has left open the position in relation to identical use of a competitor's mark and situations where non-confusing infringement such as taking unfair advantage are at issue. These matters will come to be addressed in the L'Oréal v Bellure reference C-487/07 currently pending before the ECJ involving use of comparison lists to advertise smell-alike fragrances.
Facts
Hutchison 3G ("3G") had used O2's bubble imagery in a comparative advertisement which compared O2's prices to those of 3G. The parties agreed that the price comparison was true and that no trade connection between O2 and 3G was being suggested in the advertisement. O2's complaint was with the extent to which 3G made use of its bubble imagery, in relation to which O2 held registered trade marks, as well as using signs which were not exact depictions of the actual registered trade marks.
3G were successful at trial and, on appeal, the Court of Appeal referred three questions to the ECJ. The first concerned whether a comparative advertisement which does not cause confusion or jeopardise the essential function of a trade mark as an indicator of origin could fall foul of either of Article 5(1)(a) or (b) of the TM Directive - i.e. infringement through use of an identical sign or a similar sign which is likely to cause confusion. Two further questions were also referred on the question of the need for "indispensability" for such use of a trade mark to comply with the comparative advertising "conditions" of Art 3a(1) of the CA Directive (the "CAD Conditions").
Is comparative advertising use covered by Article 5 of the TM Directive?
Under Article 5(1) and (2) of the TM Directive a registered trade mark owner has exclusive rights, under certain conditions, to prevent third parties from using in the course of trade without consent any sign which is identical with, or similar to, his trade mark. Therefore, it follows that use by an advertiser, in a comparative advertisement, of an identical or similar sign to the mark of a competitor to identify the goods and services offered by that competitor, can amount to use under Article 5(1) and (2) and so be an infringement.
However, 3G argued that as comparative advertising used a sign only to indicate the goods or services of the third party trade mark owner, the essential function of the trade mark (i.e. as a guarantee of origin) was not affected by such use by a competitor and thus Article 5 was not "engaged".
The ECJ concluded on this issue that the use by an advertiser in a comparative advertisement of a sign identical with or similar to the mark of a competitor for the purposes of identifying the goods and services offered by that competitor can be regarded as use for the advertiser's own goods and services within Article 5(1) and (2) of the TM Directive. Therefore, comparative advertising use can fall within the ambit of Article 5.
How can the TM Directive and CA Directive be reconciled?
The earlier Advocate General Opinion, which is usually followed by the ECJ, set alarm bells ringing for trade mark owners as he suggested that use of third party trade marks which fell within the CA Directive was governed exclusively by the CA Directive and rendered consideration of the TM Directive redundant.
The ECJ however did not follow the Advocate General's approach. It stated that, while the TM Directive did apply, it could not be relied on to stop use of a sign in comparative advertising which complied with the CAD Conditions. These CAD Conditions (set out in more detail at the end of this alert), include four specific provisions to protect the interests of trade mark owners. In summary these are that the advertisement does not:
· create confusion between the advertiser and a competitor;
· discredit or denigrate the trade marks, or other aspects of trade of a competitor;
· take unfair advantage of the reputation of a trade mark; or
· present goods or services as imitations or replicas of goods or services bearing a protected trade mark.
When can comparative advertising use of a sign similar to a competitor's mark infringe?
Turning to the specific questions referred, the ECJ did not provide a response regarding the question in so far as it related to Article 5(1)(a) protection for identical marks in comparative advertising. The question it chose to answer was restricted to whether Article 5(1)(b) of the TM Directive is to be interpreted to prevent the use in a comparative advertisement of a sign similar to a third party's mark in relation to goods or services identical or similar to those for which that mark was registered, where such use does not give rise to a likelihood of confusion on the part of the public.
It will be apparent that this question answers itself. In the absence of a likelihood of confusion, the ECJ stated that there can be no infringement under Article 5(1)(b) and therefore the advertisement cannot be prevented by the trade mark owner. Further, the CAD Conditions are irrelevant in these circumstances. The ECJ made it clear that each instance of use must be assessed in its own specific context without the need to consider if use of the same sign in different circumstances might give rise to a likelihood of confusion.
The further questions regarding indispensability were not answered as they were no longer relevant given the ECJ's conclusions on the first question.
Conclusions
The ECJ's decision to pull back from the position in the Advocate General's Opinion regarding the relationship between the TM Directive and CA Directive will be welcomed by brand owners. The concern that unscrupulous advertisers might have been able to exploit a loophole in trade mark protection through comparative advertising is now allayed.
The situation now is essentially as it was prior to the Advocate General Opinion. Aggrieved brand owners will need to make out their case regarding trade mark infringement and comparative advertisers will need to ensure that they comply with all of the CAD Conditions to escape liability. These conditions have been consolidated in a new Directive, the Misleading and Comparative Advertising Directive 2006/114, at Article 4. These conditions are set out in full below.
As regards this particular case, the matter now returns to the Court of Appeal for a decision on the facts which the ECJ opined on specifically.
Now all eyes turn to the L'Oréal v Bellure reference which includes questions which raise the relationship of the CA Directive to trade mark protection under Article 5(1)(a) of the TM Directive, and also seeks guidance on specific CAD Conditions which require comparative advertisers to:
· not take unfair advantage of the competitor's mark; and
· not present the advertiser's goods or services as imitations or replicas of goods or services bearing a protected trade mark.
These concepts are very much part of the fabric of trade mark law, providing the ECJ with an ideal opportunity to qualify the scope of permitted "comparative advertising" when, for example, there is an "unfair advantage" being taken and providing guidance on when that
is present.
Case: O2 Holdings Limited and Anor v Hutchison 3G UK Limited (Case C-533/06)
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CAD Conditions
The CAD Conditions referred to by the ECJ are now consolidated in the Misleading and Comparative Advertising Directive 2006/114, at Article 4. The conditions are as follows:
· The advert is not misleading according to Articles 2(b), 3 and 8(1) of this Directive and Articles 6 and 7 of the Unfair Commercial Practices Directive 2005/29
· It compares goods or services meeting the same needs or intended for the same purpose
· It objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price
· It does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities, or circumstances of a competitor
· For products with designation of origin, it relates in each case to products with the same designation
· It does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products
· It does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name
· It does not create confusion amongst traders between the advertiser and a competitor or between the advertiser's trade marks, trade names, other distinguishing marks, goods or services and those of a competitor |
For further information on this alert please contact Paul Rawlinson or Peter O'Byrne.
Paul Rawlinson
Partner Partner
Tel: +44 (0)20 7919
Email: paul.rawlinson@bakernet.com
Peter O'Byrne
Senior Associate
Tel: +44 (0)20 7919 1382
Email: peter.o'byrne@bakernet.com
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