On June 12 2008 the European Court of Justice issued judgment in O2 Holdings Limited and O2 (UK) Limited v Hutchinson 3G UK Limited  C-533/06 and set out some interpretative principles on the questions of trademark protection and comparative advertising for identical or similar products.
O2 Holdings Limited and O2 (UK) Limited carry out business as suppliers of mobile telephone services and advertise their products using bubble images. They own two national figurative trademarks, each consisting of a static picture of bubbles.
In 2004 Hutchinson 3G UK Limited, which is also a provider of mobile telephone services, launched an advertising campaign in which it compared the prices of its services to those rendered by O2 and O2 UK. The television advertisement began by using the name O2 and moving black-and-white bubble images, followed by imagery relating to H3G and a message about H3G's comparatively cheaper services.
The question for the court was whether a competitor can use another party's registered trademark in comparative advertising.
The court analyzed the nexus between the EU Trademark Directive (89/104/EEC) and the EU Misleading Advertising Directive (84/450/EEC).
According to Articles 5(1) and (2) of the Trademark Directive, the owner of a registered trademark is entitled to prevent third parties from using a sign which is identical or similar to its trademark in the course of trade, provided that certain conditions are met. Among other things, Article 5(3) provides that the trademark owner may prevent third parties from using such a sign in advertising. The use in comparative advertising of a sign that is identical or similar to that of a competitor may constitute use within the meaning of the Article 5 of the directive.
However, Recitals 2 to 6 in the preamble to the EU Comparative Advertising Directive (97/55/EC) demonstrate a legislative intention to promote comparative advertising, stating that "comparative advertising can... stimulate competition between suppliers of goods and services to the consumer's advantage" (Recital 5), and that it "may be a legitimate means of informing consumers of their advantage".
Therefore, in order to reconcile the protection of registered trademarks with the use of comparative advertising, Articles 5(1) and (2) of the Trademark Directive and Article (3)(2)(1) of the Misleading Advertising Directive must be interpreted to mean that the owner of a registered trademark is not entitled to prevent third-party use of an identical or similar sign in comparative advertising, subject to the conditions in Article (3)(2)(1) under which comparative advertising is permitted.
However, according to Article 5(1)(b) of the Trademark Directive and Article (3)(2)(1)(d) of the Misleading Advertising Directive, comparative advertising is not permitted if there is a likelihood of a confusion between the advertiser and a competitor or between the advertiser's trademarks, goods or services and those of a competitor.
The court drafted a checklist of conditions for the prevention of third-party use in advertising. It specifies that such use must:
- be in the course of trade;
- be without the trademark owner's consent;
- be in respect of goods or services which are identical or
similar to those for which the mark is registered; and
- affect or be capable of affecting the fundamental purpose of
the trademark (ie, to inform consumers of the origin of the goods
or services in question) by being likely to cause confusion on the
part of the public.
With specific reference to the case at issue, the court held that H3G's use met the first three conditions, but not the last, as H3G's use of bubble images similar to the claimants' bubble trademarks was not likely to cause confusion on the part of consumers - the advertisement did not imply a commercial link between the claimants and H3G.
The court's decision is favourable to comparative advertising, allowing the use of another party's registered trademark in such advertising, provided that there is no risk of confusion between the products in question.
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