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Businesses continuously strive to mark themselves out from their competitors in order to gain
a competitive advantage. Comparative advertising, where an advertiser identifies a
competitor or a competitors goods and services in its advertising, is an increasingly popular
way of doing this and it can be extremely successful in presenting the advertisers goods and
services as being more attractive than the competitors.
However, not all comparative advertisements are permissible. Recent developments in
European case law and legislation present an opportune moment to review this area of law,
and this article seeks to outline the current position.
1. The Trade Marks Directive has been implemented by national legislation in the EU
member states. In the UK, the implementing legislation is the Trade Marks Act 1994.
2. Trade marks are registered for particular goods and/or services; these are currently
divided into 45 classes.
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ii.
It must compare goods or services meeting the same needs or intended for the same
purpose;
iii.
iv.
It must not discredit or denigrate the trade marks, goods, services etc. of a competitor;
v.
vi.
vii.
viii.
It must not create confusion among traders, between the advertiser and a competitor
or between the advertisers trade marks, goods, services etc and those of a competitor.
as those of the proprietor or a licensee. But any such use otherwise than in accordance with
honest practices in industrial or commercial matters shall be treated as infringing the
registered trade mark if the use without due cause takes unfair advantage of, or is detrimental
to, the distinctive character or repute of the trade mark.
The effect of this has been to permit comparative advertising in the UK, but its status has
been unclear as the wording is not derived from the Trade Marks Directive. Given the
clarifications of the law set out below, this provision is now largely regarded as being
redundant in the UK (and indeed Jacob LJ expressed his strong belief that this should be so in
the O2 case discussed in more detail below).
Footnotes
3. Article 1.
4. Misleading advertising is separately defined and regulated in the same directive.
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O2 appealed in respect of the Article 5(1)(b) point, arguing that the 1997 Directive did not
provide a defence to trade mark infringement. Further, Recital 14 of the 1997 Directive
states:
Whereas it may, however, be indispensable, in order to make comparative advertising
effective, to identify the goods or services of a competitor, making reference to a trade mark
or trade name of which the latter is the proprietor6.
O2 therefore also argued that the recital added to the Comparative Advertising Conditions a
requirement that the use of the trade marks must be indispensable in order to make the
comparative advertisement, and that using its secondary trade marks (the bubbles) was not in
fact indispensable; the comparative effect was achieved by using O2 alone. Therefore H3G
had not in any event complied with the Comparative Advertising Conditions.
H3G, for its part, argued that the Judge had been wrong to find that its use of O2s marks fell
within Article 5(1) (b) Trade Marks Directive at all, as its use of the marks was purely
descriptive and was therefore not trade mark use. It also argued that it had a separate defence
to trade mark infringement under Article 6 Trade Marks Directive (with which the Court of
Appeal agreed), and that the Comparative Advertising Conditions did not on a proper
interpretation require indispensability.
It is worth exploring at this point the difference between purely descriptive use of a mark
and trade mark use. As mentioned above, in order to infringe, the mark must be used in
the course of trade. There has been substantial judicial and academic debate about the
precise meaning of this7 and it is now broadly accepted that use in the course of trade
means trade mark use, which in turn means use which is liable to affect the essential
function of the trade mark to guarantee the origin of the goods or services. Where a mark is
being used in a purely descriptive manner, it does not affect that function of the mark and
therefore is not regulated by the Trade Marks Directive. This reflects the fact that a registered
trade mark does not give a total monopoly over all uses of it even for the relevant goods and
services, but is intended instead to protect the proprietors legitimate business interests. It is
beyond the scope of this article to examine this issue in any depth; it is sufficient for current
purposes to say that the Court of Appeal was unsure whether or not the use in this case was
trade mark use and therefore whether it fell under the Trade Marks Directive. It therefore
referred a question on this to the ECJ:
Whether, where a trader, in an advertisement for his own goods or services used a registered
trade mark owned by a competitor for the purpose of comparing the characteristics (and in
particular the price) of goods or services marketed by him with the characteristics (and in
particular the price) of the goods or services marketed by the competitor under that mark in
such a way that it did not cause confusion or otherwise [jeopardise] the essential function of
the trade mark as an indication of origin, his use fell within either (a) or (b) of Art. 5 of
Directive 89/104 (the Trade Marks Directive).
In other words, does non-trade mark use in a comparative advertisement infringe a trade
mark? Jacob LJ, giving the lead judgment for the Court of Appeal, gave his own view on this:
he thought the answer was no, and that the use of a competitors trade mark in a
comparative advertisement was not trade mark use as it was not being used to indicate the
origin of the advertisers goods, as distinct from the proprietors goods. He therefore believed
that trade mark law had no role to play in regulating comparative advertisements.
Turning to the issue of indispensability, the Court of Appeal did not believe that it was clear
either way. Previous cases had asked the ECJ the same question 8, but the ECJ had declined to
answer the question directly. Accordingly, the Court of Appeal referred the following
questions, requesting the ECJ to answer them only if the answer to the first question was
yes:
i.
ii.
Again, Jacob LJ gave his own views on the questions, stating his belief that there was no
requirement of indispensability in answer to question 2, and that if that was wrong, then the
answer to question 3 was that the advertiser was not restricted only to using marks identical
to those registered. There is an obligation 9 to interpret comparative advertising in the sense
most favourable to it. Requiring indispensability would not comply with that obligation.
Footnotes
5. ECJ judgment: Case C-553/06, [2008] E.T.M.R. 55; Court of Appeal decision
referring questions to ECJ: [2006] EWCA Civ 1656.
6. The Recital is reproduced verbatim as Recital 14 of the Misleading and Comparative
Advertising Directive.
7. See, most pertinently, C-206/-1 Arsenal Football Club plc v Matthew Reed, [20O2]
ECR I-1O273.
8. See, for example, Case C-44/01 Pippig Augenoptik GmbH & Co KG v Hartlauer
Handelsgesellschaft mbH, [2004] E.T.M.R.5.
9. Imposed by C-l 12/99 Toshiba Europe GmbH v Katun Germany Gmbh. [20O2]
E.T.M.R. 26.
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This suggests that the ECJ maintains the traditional position that infringing use must be use in
respect of the infringers (rather than the proprietors) goods and services. However, on a
strict analysis, a comparative advertisement uses the competitors mark to identify the
competitors goods rather than those of the advertiser. This leads to a discrepancy regarding
what type of use is required for trade mark infringement, which was behind the Court of
Appeals question. The ECJ was not explicit about its reasoning on this; however, it took the
broad view that, even though the use of the competitors mark is to identify the competitors
goods and services, since the comparative advertisement generally seeks to promote the
advertisers goods and services, then that use is also use in respect of the advertisers goods
and services, and may therefore be prevented where appropriate by the Trade Marks
Directive.
The ECJ went on to reiterate that the Community legislature considered comparative
advertising to be a good thing and that the need to promote it meant that the trade mark
owners rights were necessarily limited. It therefore stated that Articles 5(1) and 5(2) of the
Trade Marks Directive were to be interpreted so that the trade mark proprietor could not
prevent a sign identical or similar to his mark being used in a comparative advertisement
which satisfied the Comparative Advertising Conditions. However, where there was
confusion sufficient to found an action under Article 5(1)(b) Trade Marks Directive, the
advertisement would not satisfy the Comparative Advertising Conditions and therefore
amounted to trade mark infringement. The latter point, it will be noted, is self-evident from
the relevant directives, and from a practical perspective, if a comparative advertisement
causes confusion between the goods or services of the compared businesses, then it has failed
as an advertisement.
On the other hand, where there was no confusion, the trade mark proprietor could not use
Article 5(1)(b) to stop the use of its marks in a comparative advertisement whether or not the
advertisement complied with the Comparative Advertising Conditions. The ECJs reasoning
seems to be that just because a sign identifies or brings to mind a particular entity; it is not
enough to show trade mark infringement given the rationale of the Misleading and
Comparative Advertising Directive.
As question 1 had been answered no, the ECJ did not go on to consider the issue of
indispensability. However, various cases including this one would suggest that
indispensability is not a requirement, and, therefore, that both word and logo trade marks, as
well as signs which are both identical and similar to those marks, can be used in comparative
advertising.
The case will now be remitted to the Court of Appeal for it to apply the clarified law to the
case (although the ECJ has gone rather further than it ought to have done in applying the law
to the facts). It would be surprising if the Court of Appeal now held that there had been
confusion and therefore trade mark infringement. O2 has accepted that there was no
suggestion of a trade connection between the two companies, and the ECJ has confirmed that
confusion is to be assessed in all the circumstances; the use will therefore be considered in
the advertisement as a whole rather than in the artificially narrow O2 section of the
advertisement.
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Practical implications
For advertisers
The ECJ stopped short of saying that when considering comparative advertisements, only the
comparative advertising regime should be considered to the exclusion of the trade marks
regime (thereby not adopting the Attorney General's Opinion). The trade marks regime is still
relevant, but there will be no trade mark infringement if the Comparative Advertising
Conditions are fulfilled. Therefore, for practical purposes, the Misleading and Comparative
Advertising Directive, where it is complied with, is to be viewed as a complete defence to
trade mark infringement.
Advertisers would therefore be well-advised to adhere strictly to the conditions set out in that
directive to avoid both trade mark infringement and falling foul of the Misleading and
Comparative Advertising Directive itself. They should also be careful to comply with the
provisions on misleading advertising set out in that Directive (an analysis of which is beyond
the scope of this article).
10. Where the comparative advertising provisions of the Misleading and Comparative
Advertising Directive have been implemented by the Business Protection from
Misleading Marketing Regulations 2008, which came into force on 26 May 2008.
Note that these regulations refer only to goods, and not to services.
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Conclusion
The position on comparative advertising, and in particular the interplay with trade mark
infringement, is certainly clearer in the UK after the O2 case, and this is to be welcomed.
Although the LOreal v Bellure questions have yet to be answered, it is likely that the clarity
already given by the O2 judgment will encourage advertisers to engage in comparative
advertising. This is particularly the case in Member States which have chosen to give
enforcement powers under the Misleading and Comparative Advertising Directive to
administrative authorities, thereby leaving the trade mark owner with no direct right of
redress. Trade mark owners are no doubt hopeful that the administrative enforcement
procedures will prove sufficiently robust to protect their interests.
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