UK: ECJ On O2 Bubbles Case: Comparative Advertising Can Infringe Trade Mark Rights

Last Updated: 24 June 2008
Article by Isabel Davies, Susan Barty, Susie Carr and Tom Scourfield

Contrary to the Advocate General's opinion, the ECJ has ruled that a trade mark owner can bring a trade mark infringement action to prevent the use of its trade mark in comparative advertising, provided that it can show that there is a likelihood of confusion as to the origin of goods/services. If, however, use of the trade mark complies with all of the rules set down in the Comparative Advertising Directive this will be a defence to trade mark infringement and such use cannot be prevented. Although not express, the ruling also suggests that identical and similar marks may be used in comparative ads, even if such use is not indispensable in making the comparative ad effective.

Trade mark owners, particularly in the UK, will be relieved by the ECJ's departure from the AG's Opinion. The AG had expressed the opinion that trade mark law was not relevant in comparative advertising disputes and that disputes should be considered only by the advertising regulator (the ASA). The ECJ's decision means that trade mark owners will now have the option of bringing comparative advertising disputes before the courts if they can show a likelihood of confusion. The ECJ was not asked to consider other types of trade mark infringement, such as dilution.

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Contrary to the Advocate General's opinion, the ECJ has ruled that a trade mark owner can bring a trade mark infringement action to prevent the use of its trade mark in comparative advertising, provided that it can show that there is a likelihood of confusion as to the origin of goods/services. If, however, use of the trade mark complies with all of the rules set down in the Comparative Advertising Directive this will be a defence to trade mark infringement and such use cannot be prevented. Although not express, the ruling also suggests that identical and similar marks may be used in comparative ads, even if such use is not indispensable in making the comparative ad effective.

Trade mark owners, particularly in the UK, will be relieved by the ECJ's departure from the AG's Opinion. The AG had expressed the opinion that trade mark law was not relevant in comparative advertising disputes and that disputes should be considered only by the advertising regulator (the ASA). The ECJ's decision means that trade mark owners will now have the option of bringing comparative advertising disputes before the courts if they can show a likelihood of confusion. The ECJ was not asked to consider other types of trade mark infringement, such as dilution.

Background

In 2004, Hutchison 3G ("H3G") broadcast an advert which compared the price of its services with those of O2. The ad used the name 'O2' and moving black and white bubble imagery (similar to O2's trade mark registrations), together with a voiceover which stated that H3G's mobile telephone services were cheaper than O2's.

O2 brought proceedings against H3G for infringement of its bubbles trade marks. O2 accepted that the price comparison was accurate and that the ad was not misleading. In particular, they accepted that it did not suggest any connection between O2 and H3G.

The action was dismissed by the High Court. O2 then appealed to the Court of Appeal. The Court of Appeal decided to stay the proceedings and referred the following three questions to the ECJ:

1. Where a trader uses a registered trade mark owned by a competitor in a comparative advertisement in such a way that it does not cause confusion or otherwise jeopardise the essential function of the trade mark as an indication of origin, does this use fall within Article 5(1) (a) or (b) of the Trade Marks Directive 89/104?

2. Where a trader uses in a comparative advertisement the registered trade mark of a competitor, in order to comply with Article 3a(1) of the Comparative Advertising Directive 84/450, must that use be "indispensable" and if so what are the criteria by which indispensability is to be judged?

3. In particular, if there is a requirement of indispensability, does the requirement preclude any use of a sign which is not identical to the registered trade mark but is closely similar to it?

The Comparative Advertising Directive ("CAD") provides that comparative advertising is permitted provided certain criteria are met (as set out in Art 3(a)(1) of CAD), for example, it is not misleading, it does not create confusion in the market place between the advertiser and a competitor or between trade marks, it does not discredit or denigrate a trade mark, and it does not take unfair advantage of a trade mark.

In response to the above three questions, the AG had stated that trade mark law was not applicable to comparative advertising and that only the criteria set out in the CAD were relevant, and, further, that there was no need for indispensability. This effectively meant that all comparative advertising disputes in the UK would have to be dealt with by the ASA, rather than the courts. Please click here for our previous update on the AG's Opinion.

ECJ Ruling

The ECJ has found that, contrary to the AG's Opinion, trade mark law is applicable to comparative advertising disputes to an extent: use by an advertiser of a similar or identical mark may constitute trade mark use within the meaning of Article 5(1) and (2) of TMD. However, the satisfaction of the conditions set out in CAD will act as a defence against an action brought by the competitor against such use of his mark. If the use of the mark in the ad causes a likelihood of confusion, the ad will not have satisfied all the conditions laid down by CAD and the rights holder will then be entitled to use trade mark law to prevent the use of a sign identical with, or similar to, his mark.

The key distinction between the ECJ judgment and the AG's Opinion is the conclusion that the ECJ considered the use of a mark (or similar mark), in a comparative advertisement may be prevented under the TMD. However, it did note that the purpose of the CAD, as set out in the recitals, was to promote comparative advertising which acts as to limit the rights ordinarily conferred by the mark.

The ECJ took the unusual step of considering the facts in the case and giving its view that, in any event, O2 would not be able to establish a case for trade mark infringement as it did not consider that use of the bubbles caused a likelihood of confusion, and so the action would fail. Although it is now for the Court of Appeal to apply the ECJ's ruling, it would be difficult for the court of Appeal to depart from this conclusion.

The ECJ did not go on to assess Art 5(2) (use amounting to disparagement, unfair advantage or dilution of a mark) as it was not asked to do so. However, the ECJ did confirm that, as with claims relating to confusion of origin, infringing acts claimed under Art.5(2) type would not be actionable if that conduct falls within the scope of CAD. This leaves it open to the ECJ to consider the impact of Art 5(2) at a later stage.

In relation to indispensability, the ECJ had only been asked to answer the question if it found that use of an identical or similar mark which did not cause confusion in a comparative ad would be in breach of trade mark law. As it had answered "no" to the first question, it did not address the issue of indispensability. However, it would seem likely that, provided the use complies with the conditions laid out in the CAD, use of a trade mark does not need to be indispensable.

Comment

Although there is a public interest element in allowing comparative advertising, there is no express defence of comparative advertising in the TMD and therefore, it seems a correct interpretation that use, albeit in a comparative advertising context, should have to comply with the trade mark law requirements.

The reasoning of the ECJ is broadly similar to that applied by the UK High Court in November 2004. The ruling will provide some comfort for trade mark owners as it leaves open the option of pursuing a comparative advertising case through the courts, at least where there is a likelihood of confusion. Otherwise, the sole means of redress is through enforcement action of the advertising regulatory system. The former option is likely to be far more attractive to brand owners as it provides the option of seeking an injunction and damages where there has been an infringement.

It was unfortunate that the ECJ was not asked to consider infringement arising from detriment, dilution or unfair advantage, which by its very nature, is far more likely to be considered in the context of comparative advertising. It is likely that this aspect will be a future point of dispute.

For the full judgment please click here.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 16/06/2008.

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