Comparative Advertising and Trade Marks: Smells like another reference to the ECJ

Facts and Background

L’Oréal SA and other related companies (L’Oréal) manufacture and sell high-quality perfumes and cosmetics, aimed at the luxury market. L’Oréal had registered a number of trade marks in class 3 to protect their products, Trésor and Miracle, including stylised word marks and several device and shape marks, and a 3D shape mark for Miracle based upon the shape and get-up of the commercial products.

Three defendants in the action produced “smell-alike” perfumes with fragrances similar to a number of designer brands, and imported them into the UK. The remaining defendants had distributed or sold such products in the UK. The discount range was sold through low value supermarkets, discount stores, street markets and via the Internet. Although similar in perfume, the bottles and packaging were clearly not identical, although Bellure had admitted that they were intended to give “a wink of an eye to the existing product.” L’Oréal issued proceedings for both trade mark infringement and passing off. In the High Court, Lewison J found in favour of L’Oréal in relation to the trade mark infringement claim for some of the defendant’s products, concluding that Bellure had taken a “free ride” on the back of L’Oréal’s fine fragrances by using the word marks on comparison lists or in response to customers’ queries. However, L’Oréal’s claim in relation to alleged passing off failed. The decision also held that certain of L’Oréal’s shape marks were marks with a reputation. Both the defendants and claimants appealed.

Some free-riding ought to be allowed

In the Court of Appeal, a great deal of the judgment focused upon the use of L’Oréal’s trade marks in the price comparison lists. Jacob LJ (giving the lead judgment) upheld the decision of the lower court. Following his detailed analysis of the case and its issues, L’Oréal’s cross-appeal was dismissed, whilst the defendant’s appeal was stayed pending the referral of a number of questions (which are subject to argument and have not yet been finalised) to the European Court of Justice (ECJ). The current (draft) questions are set out below.

The majority of issues addressed by Lewison J at trial were upheld. His assessment of a link between the defendant’s historical products and the claimant’s goods was deemed correct, as was his rejection of the allegation that the words Pink Wonder infringe the registered word mark Miracle. The only significant criticism of Lewison J’s reasoning is noted in paragraph 73, with Jacob LJ suggesting that the trial judge “failed sufficiently to appreciate that the comparison list point is wholly divorced from the points about the get-up of the goods and is of much wider significance”.

Whilst Jacob LJ accepted that the use of comparison lists is a form of “free riding”, he stated that determining where to draw the line to distinguish when this becomes impermissible requires clarification from the ECJ. On this point, he also suggested that such lists should be lawful (Blackburne LJ notably disagreed with this proposal) and European trade mark law should resist becoming overprotective as “neither the image nor the essential function of the trade marks for the originals is adversely affected by the lists” (paragraph 46).

What is unfair?

In addition to the references to the ECJ on the subject of comparison lists, Jacob LJ also sought guidance from the ECJ in relation to unfair advantage, both in relation to the Comparative Advertising Directive and the Trade Marks Directive and in particular what amounts to unfair advantage in practice. There is a clear need for clarification of this area to provide trade mark owners and traders with certainty regarding what they can and can’t do and to determine whether any advantage is automatically unfair.

No law of unfair competition

The Court of Appeal also rejected the opportunity to extend the law of passing off to include unfair competition, thereby asserting that if it is to be introduced in the UK this should be done via the legislature rather than the judiciary. Indeed, Jacob LJ objected to any moves to create a law of unfair competition, arguing that due to its uncertain scope it would effectively “let the genie out of the bottle.” It would therefore appear that the divergence between the UK and other jurisdictions on this point will remain, at least for the time being.

Questions to the ECJ

1. Where a trader, in an advertisement for his own goods or services uses a registered trade mark owned by a competitor for the purpose of comparing the characteristics (and in particular the smell) of goods marketed by him with the characteristics (and in particular the smell) of the goods marketed by the competitor under that mark 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 his use fall within either (a) or (b) of Article 5 of Directive 89/104?

2. Where a trader in the course of trade uses (particularly in a comparison list) a well-known registered trade mark for the purpose of indicating a characteristic (particularly a smell of a fragrance product) of his own product (particularly its smell) in such a way that:

(a) it does not cause any likelihood of confusion of any sort; and

(b) it does not affect the sale of the products under the well-known registered mark; and

(c) it does not jeopardize the essential function of the registered trade mark as a guarantee of origin and does not harm the reputation of that mark whether by tarnishment of its image, or dilution or in any other way; and

(d) it plays a significant role in the promotion of the defendant's product

does that use fall within Article 5(1)(a) of Directive 89/104?

3. In the context of Article 3a(g) of the Misleading Advertising Directive (84/240) as amended by the Comparative Advertising Directive (97/55), what is the meaning of “take unfair advantage of” and in particular where a trader in a comparison list compares his product with a product under a well-known trade mark, does he thereby take unfair advantage of the reputation of the well-known mark?

4. In the context of Article 3a(h) of the said Directive what is the meaning of “presenting goods or services as imitations or replicas” and in particular does this expression cover the case where, without in any way causing confusion or deception, a party merely truthfully says that his product has a major characteristic (smell) like that of a well-known product which is protected by a trade mark?

5.Where a trader uses a sign which is 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:

(a) the essential function of the registered trade mark of providing a guarantee of origin is not impaired or put at risk;

(b) there is no tarnishing or blurring of the registered trade mark or its reputation or any risk of either of these;

(c) the trade mark owner's sales are not impaired; and

(d) the trade mark owner is not deprived of any of the reward for promotion, maintenance or enhancement of his trade mark.

(e) But the trader gets a commercial advantage from the use of his sign by reason of its similarity to the registered mark

does that use amount to the taking of “an unfair advantage” of the reputation of the registered mark within the meaning of Article 5(2) of the Trade Mark Directive?

Comment

As in the decision of Jacob LJ in

O2

, the Court of Appeal has recommended a robust approach to trade marks and comparative advertising, focusing solely on whether such use affects the essential function of the mark. Clearly, the English courts are currently taking a relatively narrow view of such issues and recommending that most trade marks ought to be sufficiently robust to withstand such use from competitors. As in the decision in the

Air Wick

case, the scheme of protection for trade mark proprietors is being narrowed, not extended.