The issue of whether or not the use of a registered trade mark in a comparative advertisement is an infringement really shouldn't be as vexed as it is. After all, there is a European Directive on misleading and comparative advertising which says quite clearly that a comparative advertisement is lawful, provided that it doesn't do certain things like create confusion, denigrate the mark used for comparison, take unfair advantage of that mark's reputation, or present the advertiser's goods as replicas or imitations of the goods with which they are being compared.1
Then there's a recent European Court of Justice (ECJ) judgement in the O2 case, where the court said that the use of a registered trade mark in a comparative advertisement does not infringe the registration if the advert complies with the provisions of the directive.2 And, on top of that, the courts never tire of telling us that a registered trade mark is only infringed when it is being used in a way which affects the trade mark's essential function, which, we are told, is to provide consumers with a guarantee of the origin of the goods.
In other words, if a mark is not being used in a way which might cause consumers to wonder if those goods are connected with the owner of the registered trade mark, there is no infringement. And in most cases of comparative advertising the advertiser is not trying to suggest such a connection at all. On the contrary, what the advertiser is saying is this: 'these are my goods, they're not those of my rival, but they are the same as (or maybe even better, cheaper and faster than) those of my rival, so please buy them.' No one is confused. Yet the advertiser undoubtedly derives some benefit from using the registered trade mark.
One of the reasons why trade mark infringement causes such difficulties is because there are in fact three distinct types of infringement. The most common type occurs where a company uses a mark which is identical or similar (usually similar) to a registered trade mark, and uses it in relation to goods which are the same as or similar to those covered by the trade mark registration, in a manner which causes confusion, in the sense that consumers might wonder whether the goods on offer are connected with the owner of the registered trade mark. This type of infringement is found in section 10(2) of the UK Trade Marks Act and I'll refer to it as 'confusion infringement'. Another type of infringement is limited to trade marks with a reputation, and occurs when a company uses a mark which is identical or similar to a registered trade mark which has a reputation in relation to any goods, if that use 'without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of' the registered trade mark. This type of infringement, which is found in section 10(3) and which I'll refer to as 'extended infringement', covers, inter alia, dilution and tarnishing of well known marks. The last type of infringement occurs when a company uses a mark which is identical to a registered mark and in relation to goods which are covered by the trade mark registration. If this happens, nothing more needs to be established. Seemingly! This type of infringement is found in section 10(1) and I will refer to it as 'automatic infringement'.
So, when the courts say that there can only be infringement where the essential (origin guaranteeing) function of the registered trade mark is affected, which type of infringement are they talking about? Cleary they are talking about confusion (10(2)) infringement, because confusion about the origin of the goods lies at the heart of this type of infringement. Equally clearly, they're not talking about extended (10(3)) infringement, because in your average dilution case there's no confusion at all, simply a blurring or a loss of exclusivity. But what about automatic (10(1) infringement? Does this require that the essential (origin guaranteeing) function of the registered trade mark be affected? The law doesn't say so, but is it implicit? In other words, if a third party uses a registered trade mark in a way which doesn't cause confusion about the origin of the goods, such as in a comparative advertisement, does that amount to automatic (10(1)) infringement? Or to put it another way, assuming that a comparative advertisement doesn't comply with the advertising directive, what type of infringement can it be?
This is one of the questions which the ECJ was asked to resolve in the matter of L'Oreal SA and others v Bellure NV and others, a referral from the English Court of Appeal.3 The legal issues in this case may have been complex, but the facts were not. In short, Bellure sold perfumes under its own trade marks, using a comparison list which suggested that its perfumes were similar in smell to certain L'Oreal perfumes like Tresor and Anais Anais, names which are of course protected by trade mark registrations. Needless to say, the Bellure products were much cheaper than their L'Oreal counterparts. L'Oreal claimed that the comparison list fell outside the advertising directive and infringed its trade mark registrations. Bellure also sold certain perfumes in boxes or bottles which, although they resembled boxes and bottles used by L'Oreal and registered as trade marks, were in fact not likely to mislead consumers. L'Oreal claimed that these infringed its trade marks registrations under section 10(3) (extended infringement). Advocate General (AG) Mengozzi delivered his opinion on 10 February 2009, and it remains to be seen whether or nor this will be adopted by the ECJ.
Relying on earlier ECJ decisions, including the famous Arsenal case, the AG concluded that there will be no automatic (10(1)) infringement of a registered trade mark where the identical mark is used in a comparative advert, if the advert does not affect the functions (note the plural!) of a trade mark.4 This will be the case even where the advert plays a significant role in the promotion of the advertiser's goods and allows the advertiser to take unfair advantage of the mark's reputation, although the AG did go on to say that there might be extended (10(3))infringement in such a case. An important finding then – automatic (10(1)) infringement is, in fact, not automatic or absolute, because there is an implied requirement that the trade mark's functions must still be affected. And a comparative advertisement, which does not affect the trade mark's functions, is not automatic (10(1)) infringement.
So, by using the word 'functions' rather than 'function', did the AG accept that a trade mark has functions other than that of guaranteeing origin? Such as advertising and communications, in other words imparting information about the product! These are issues which are guaranteed to set the pulse of any trade mark nerd racing, and by seeing fit to even enter into a discussion on this topic, the AG did actually threaten to become interesting for a short while. After considering other famous ECJ judgements, including Adam Opel, the AG did seem to lean in favour of the broader view that a trade mark has a number of functions but, having peered over the cliff, he then stepped back and said that he didn't have to decide the issue.5 Why? Well, because what Bellure was doing neither confused anyone about their product's origins nor affected the reputation of L'Oreal's trade marks, so it didn't affect any of the functions of L'Oreal's trade marks.
The ECJ was also asked questions regarding the advertising directive, and, in particular, what considerations must be taken into account to determine when a comparative advertisement falls outside the directive, for example by taking unfair advantage of a trade mark's reputation, or by or presenting the advertiser's goods as replicas or imitations of the goods with which they are being compared. Did the fact that Bellure was, as the AG put it, 'free-riding on the coat tails' of L'Oreal's famous marks make the comparison list unfair? Did it matter that the comparison was unnecessary, in that Bellure could easily have described its perfumes by reference to flowers or whatever, without making any reference to L'Oreal's marks?
Dealing with the issue of taking unfair advantage, the AG said that, as any use of another's trade mark in a comparative advertisement will automatically take advantage of that trade mark, something more must be required to make it unfair. But what? Well, said the AG, factors to be considered would include the benefit which the consumer gets from the comparative advert, the fame of the competitor's mark, the image which the public has of the competitor's mark, the issue of whether or not it was actually necessary to use the competitor's mark, and the issue of whether the comparative advertising is sporadic or systematic. Issues like the benefit gained by the advertiser and the loss of custom suffered by the owner of the well-known mark are less important, however, because these things are inherent in comparative advertising.
Where the aim of the advertising is solely to distinguish the products of the advertiser and the competitor and to highlight differences objectively, however, the advantage cannot ever be regarded as unfair. Dealing with a question of when something is presented as a replica or imitation of a well-known product, the AG said that saying that a product is equivalent to, or has a same characteristic as, a well known product does not in itself amount to presenting it as an imitation or replica. More would be required, such as an explicit statement that the product has been copied (or at least an implication of copying), or the use of words like 'type' or 'style' after the mark.
The AG lastly dealt with a question regarding the alleged extended (10(3)) infringement of L'Oreal registrations for boxes and bottles (this had nothing to do with the comparison list). The AG said that the requirement of 'unfair advantage' focuses on the benefit to the mark used by the alleged infringer - the boost it gets from the association, as the AG put it - rather than the harm done to the registered trade mark. However, the section also requires that there was no 'due cause' for taking unfair advantage of the registered trade mark. So when will there be due cause? Well unfortunately the AG gave us no clues on this, although the scant case law which exists suggests that 'due cause' will be limited to situations where someone is either obliged to use a mark or has a specific right to use it. The AG did, however, conclude by saying that if a trade mark is used in circumstances where it doesn't affect the origin guaranteeing function of the registered trade mark, doesn't tarnish or blur the trade mark, does not have a negative impact on the trade mark owner's sales, but does confer a commercial advantage on the alleged infringer, this may be an unfair advantage, but it can only be prohibited if there was no due cause.
So where are we now? Well, assuming that the ECJ adopts the AG's opinion, extended (10(3)) infringement seems to become even messier than it was, because not only do we now need to consider the issue of due cause, but in the recent Intel case the ECJ introduced a new (and very hard to understand) requirement of a change in economic behaviour on the part of the consumer.6 And, as regards comparative advertising, the situation seems to be that:
- Most comparative adverts featuring registered trade marks will be quite lawful, as per the advertising directive.
- If the advertisement is particularly egregious, however, it might fall outside the directive.
- In such a case, there may be a case of trade mark infringement, but unless the advertisement actually confuses the public or besmirches the registered trade mark, the claim will have to be brought under section 10(3) (extended infringement).
- Bringing a case under this section will be no party - not only do you need to show that there has been a change in economic behaviour on the part of consumers, but also that there was no due cause.
Footnotes
1. Directive 2006/11/EC, repealing Directive 97/55/EC.
2. Case C553/06, not yet published in ECR.
3. Case C487/07.
4. Case C206/01 (2002) ECR I'10273. The ECJ reached a similar conclusion, namely that 10(1) infringement only occurs where the function of the trade mark is affected, in the less well known case of Context Cut, Case C-2/00
5. Case C48/05 (2007) ECR I'1017.
6. Intel Corporation Inc v CPM United Kingdom Ltd, judgement 27 November 2008
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