UK: Comparative Advertising And Look-Alikes - The Smell Of Success For Brand Owners?

Following our previous briefings on comparative advertising, the Advocate General (whose opinion is non-binding but intended as guidance for the European Court of Justice) has recently thrown a much needed lifeline to brand owners following his decision in the 'smell-alike and look-alike' perfume case of L'Oréal v Bellure.

What Is All The Fuss About Comparative Advertising?

The crux of the issue is whether a brand owner can use its registered trade mark to stop its competitor(s) making (unfavourable) comparisons between its goods or services and those of the advertiser. The decision of European Court of Justice (ECJ) last year in O2 v 3G held that there had to be confusion in order for a brand owner to have an actionable claim for trade mark infringement. Absent confusion, the law of trade marks did not apply to comparative advertisements. The effect of the ECJ's ruling when taken together with the Court of Appeal's earlier comments meant trade mark infringement actions for comparative advertising were dead in the water. Brand owners would have to look to the Misleading and Comparative Advertising Directive instead, which provides a far less rigorous mechanism of enforcement and redress.

In the recent case of L'Oréal v Bellure, questions concerning the interpretation of the Trade Marks Directive and the Misleading and Comparative Advertising Directive were referred to the European Court of Justice. These questions related to the use by an advertiser of a brand owner's trade mark to identify goods which are those of the brand owner rather than the advertiser.

The Advocate General's opinion in L'Oréal v Bellure has given a boost to brand owners as it has opened the door to a trade mark infringement claim for comparative advertising in respect of those trade marks that enjoy a particular reputation.

The Background To The Dispute

L'Oréal is the owner of various trade marks relating to luxury perfumes, including the words Tresor, Miracle, Anaïs-Anaïs and Noa Noa together with the design of the Tresor perfume bottle and Miracle perfume box.

Bellure marketed and sold cheap perfumes throughout Europe that imitated the visual appearance of L'Oréal perfumes, including Tresor, Miracle, Anaïs-Anaïs and Noa Noa, but were sold at a fraction of the cost of L'Oreal's perfumes (often less than £4). In particular, Bellure made use of comparison lists that it supplied to retailers comparing its perfumes which "smelt like" the corresponding L'Oréal perfume. Furthermore, several perfumes marketed by Bellure were sold in bottles and boxes that were similar to the packaging and shape of L'Oreal's Tresor, Miracle, Anaïs-Anaïs and Noa perfumes.

The parties' products were not in direct competition with each other as they were in different price and market sectors. However, it was acknowledged in the proceedings that there was a competitive relationship at an intermediate level in the distribution chain (for example with wholesalers).

The Decision Of The UK Courts

L'Oréal issued trade mark infringement proceedings in the UK. L'Oréal claimed that Bellure had made use of an identical trade mark in respect of L'Oreal's perfume names that appeared on Bellure's comparison lists. L'Oréal also claimed that, by virtue of Bellure's imitation of the names, bottles and boxes of L'Oréal's perfumes, Bellure had taken unfair advantage of L'Oréal's various trade marks.

The High Court held that Bellure had infringed L'Oréal's trade marks in respect of the perfume names that appeared on its comparison lists and that there had also been trade mark infringement in respect Bellure's look-a-like products that imitated L'Oréal's registrations for the design of its Tresor box and the appearance of its Miracle bottle.

Bellure appealed. When the case came before the Court of Appeal, the Court sought clarification from the ECJ on a number of issues. The questions posed by the Court of Appeal are summarised below together with the Advocate General's responses.

The Opinion Of The Advocate General

In an Opinion that is in places confusing, the Advocate General has ruled (amongst other things) that, for those trade marks that have particular reputation, if a third party cannot show 'due cause' for using another person's registered trade mark, then it is taking unfair advantage of that mark and the trade mark owner can stop the use of its trade mark.

The decision is of application to all trade mark owners, as it goes to the heart of whether a brand owner can prevent another person 'free-riding' off its mark, even if the brand owner suffers no loss from the use of its mark.

The questions referred by the UK Court of Appeal and the Advocate General's responses are as follows.

1. In relation to the use of identical/similar marks for identical/similar goods and services, can there be trade mark infringement if there is no confusion caused by the comparative advertisement or if the essential function of the trade mark is unaffected?

The short answer was "no". The Advocate General said that there could only be infringement of an identical mark for identical goods and services where the use of the offending mark affected or was liable to affect the trade mark's essential function as a guarantee of origin, or any of the mark's other functions. Unfortunately, the Advocate General did not say what these other functions might be.

The Advocate General went on to say that there would be no infringement even if the use of the registered trade mark played a significant role in the promotion of the advertiser's goods, however, such use could be prevented under the Trade Marks Directive and the Misleading and Comparative Advertising Directive (see below).

2. Can there be unfair advantage (within the meaning of the Trade Mark Directive) where a trader uses a sign similar to a registered trade mark which has a reputation, and that sign is not confusingly similar to the trade mark, in such a way that:

  1. the essential function of the trade mark in guaranteeing origin is not impaired;
  2. there is no tarnishing or blurring of the registered trade mark or its reputation or any risk of either of these;
  3. the trade mark owner's sales are not impaired; and
  4. the trade mark owner is not deprived of any of the reward for promotion, maintenance or enhancement of his trade mark;
  5. but the trader gets a commercial advantage from the use of his sign by reason of its similarity to the registered mark

The short answer was "maybe". The notion of unfair advantage is set out in the Trade Marks Directive, which provides that a trade mark is infringed where an identical or similar mark is used for similar goods or services where "the use of that sign without due cause takes unfair advantage of ... the distinctive character or repute of the trade mark".

The Advocate General said the key to determining unfair advantage is ascertaining what benefit the advertiser has gained through using the brand owner's registered trade mark, rather than the harm caused to the well-known mark. In order for there to be an advantage, there must be some sort of 'boost' given to the advertiser by virtue of its use of the registered trade mark. However, it would still be necessary to determine whether the advantage was unfair.

The absence of any of the factors listed at (a) – (d) above would not prevent such a finding. Crucially, the Advocate General said that the use of a brand owner's trade mark could still be unfair even if it had no effect on sales or on the trade mark's essential function of guaranteeing origin if the advertiser could not establish 'due cause' in respect of its use of the trade mark. Unfortunately, the Advocate General did not provide any guidance or other clarity on what constituted 'due cause' but rather unsatisfactorily said this was a matter to be determined by the national courts.

3. Under the Misleading and Comparative Advertising Directive, what is the meaning of unfair advantage? Does the use of a trade mark in comparison lists constitute taking unfair advantage

The Advocate General recognised that any kind of advertisement making a comparison with a well-known product entailed a significant element of 'free-riding'. However, the use of a trade mark in a comparison list would not necessarily fall foul of the Misleading and Comparative Advertising Directive unless the comparison was unfair.

The concept of unfair advantage did not lend itself to a general definition but had to be applied in a flexible manner on a case by case basis and it was for the national courts to determine whether the advantage gained by the advertiser was unfair in light of the circumstances of the case.

4. Under the Misleading and Comparative Advertising Directive, what is meant by "presenting goods or services as imitations or replicas" and does this expression cover circumstances where, without causing any confusion or deception, a party truthfully says his product has a major characteristic like that of a well-known product which happens to be protected as a trade mark

The Advocate General said that the Misleading and Comparative Advertising Directive does not prohibit an advertiser saying that a product is equivalent to, or has the characteristics of a well known product. However, if the advertiser uses words such as 'type' or 'style' after the registered trade mark, then this is likely to fall foul of the Misleading and Comparative Advertising Directive.

What This Decision Means For Brand Owners

Assuming that the ECJ follows the Advocate General's opinion (which is not always the case), a brand owner can still bring a claim for trade mark infringement in respect of comparative advertising if the advert causes confusion or affects the essential function of the trade mark as a guarantee of origin. However, in practice this will be unlikely given the context of most comparative advertisements.

The door has, however, been left firmly open for trade mark infringement claims in respect of those trade mark owners who can establish that their trade marks enjoy a particular reputation and the advertisers use of its mark is unfair, even if no loss has been suffered. If the advertiser cannot show that it has 'due cause' for using the trade mark then a prima facie case is established. Of course, crucial to this is what is meant by 'due cause' and how this will be interpreted by the ECJ and the national courts.

The ECJ's decision is expected later this year so please watch out for future commentaries as to how this area of law continues to develop.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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