The ECJ has delivered its judgment on the L’Oréal v Bellure case. This deals with whether imitation perfumes, which were sold by reference to the original L’Oréal SA (“L’Oréal”) products, infringed L’Oréal’s trade marks and if such comparisons were protected as permissible comparative advertising.
The Court of Appeal referred five questions to the ECJ in late 2007. These focused on whether unfair advantage could be taken of the distinctive character or repute of a mark without showing detriment to the distinctive character or reputation and if listing L’Oréal’s products in a price comparison list was an infringement.
The ECJ held that, following the public making a link, unfair advantage can be taken by a third party even if the use is not detrimental to the distinctive character or the repute of a mark or more generally, its proprietor, in accordance with Article 5(2) of Directive 89/104 (the “Trade Marks Directive”).
The ECJ also stated that a global assessment should be undertaken to determine whether the use of a sign takes unfair advantage of the distinctive character or repute of the mark. This may take into account, where necessary the fact that there is a likelihood of dilution or tarnishment.
It was also held that price comparison lists were a form of comparative advertising and that the proprietor of a registered trade mark is entitled to prevent the use of this by a third party, in a comparative advertisement if they do not satisfy all the conditions laid down in the Article 3a(1) of Directive 84/450 (the “Comparative Advertising Directive”). Under this Article, comparative advertising is permitted. An advertiser who states, explicitly or implicitly, in comparative advertising that the product marketed by him is an imitation of a product bearing a well-known trade mark presents ‘goods or services as imitations or replicas’ within the meaning of Article 3a(1) which is unlawful and accordingly takes unfair advantage of the reputation of that mark.
Background
L'Oréal and other related companies 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 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, priced between £2-£4. Although similar in fragrance, the bottles and packaging were clearly not identical, although Bellure had admitted that they were intended to give 'a wink of an eye' to L'Oréal's products.
The High Court initially found in favour of L'Oréal in relation to trade mark infringement but not for alleged passing off, the Defendants appealed. L'Oréal’s cross-appeal on passing off was dismissed by the Court of Appeal, where much of the High Court’s decision was upheld, while the defendants appeal was stayed pending answers from the ECJ. Upon referral of the questions to the ECJ the Advocate General published an opinion offering guidance.
For more information and commentary on the Advocate Generals opinion please click here.
There were five questions put to the ECJ by the Court of Appeal, which can be summarised as follows:
1. If a trader uses a competitor’s trade mark to advertise his own goods or services for the purpose of comparing characteristics of the goods marketed by the competitor and themselves, in such a way so as not to cause confusion or jeopardise the function of the mark as an indication of origin, does his use fall within either (a) or (b) of Article 5(1) of the Trade Marks Directive?
2. If a trader uses in the course of trade (particularly in a comparison list) a well-known registered trade mark for the purpose of indicating a characteristic of his own product in such a way that:
- it does not cause any likelihood of confusion of any sort; and
- it does not affect the sale of products under the well-known registered mark; and
- it does not jeopardise 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
- it plays a significant role in the promotion of the trader’s product
does that fall within Article 5(1)(a) of the Trade Marks Directive?
3. In the context of Article 3a[1](g) of the Comparative Advertising Directive 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. What is the meaning of “present[ing] goods or services as imitations or replicas” and in particular does this expression cover the case where, without any way causing confusion or deception, a party merely truthfully says that the product has a major characteristic like that of a well-known product which is protected by a trade mark, in the context of Article 3a[1](h) of the Comparative Advertising Directive?
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:
- the essential function of the registered trade mark of providing guarantee of origin is not impaired or put at risk;
- there is no tarnishing or blurring of the registered trade mark or its reputation or any risk of either of these;
- the trade mark owner’s sales are not impaired; and
- the trade mark owner is not deprived of any reward for promotion, maintenance or enhancement of his trade mark;
- but the trader gets a commercial advantage from the use of his sign by reason of its similarity to the registered trade 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 Marks Directive?
The Fifth Question – Unfair Advantage
The ECJ answered the fifth question first, as they believed that Article 5(2) could also be applied to the use of those marks in the comparison lists at issue. The ECJ pointed out that Article 5(2) was designed to protect against three kinds of injury that would arise when a degree of similarity between the mark with a reputation and the sign have the effect that the relevant section of the public establishes a link between the two. The three types of injury are; first, detriment to the distinctive character of the mark; secondly, detriment to the repute of the mark; and thirdly, unfair advantage taken of the distinctive character or the repute of the mark.
The ECJ ruled that for unfair advantage to be found it was not necessary to show detriment to the distinctive character or reputation of the mark. For Article 5(2) to apply only one of these types of injury has to be present. It is sufficient that advantage is taken by a third party as a result of the use of the identical or similar sign covering, in particular, cases where by reason of a transfer of the image of the mark or of the characteristics which it projects to the goods identified by the sign, there is a clear exploitation on the coat tails of the mark with the reputation. The three legs of the Article are to be viewed independently.
The ECJ stated that a global assessment should be carried out taking into account all the relevant factors and circumstances of the case to determine whether use of the sign does take unfair advantage of the mark. Any global assessment may also take into account, where necessary, the fact that there is a likelihood of dilution or tarnishment.
First and Second Questions – The Comparison Lists
The ECJ then chose to answer together the first and the second questions.
The ECJ referred to its case law relating to the essential function of the trade mark and re-iterated that using a mark for purely descriptive purposes is excluded from the scope of application of Article 5(1) of the Trade Mark Directive. However, they pointed out that, in this instance, the use of the marks belonging to L’Oréal were not used for purely descriptive purposes but for the purpose of advertising. With regard to this consideration, the ECJ held that Article 5(1)(a) of the Trade Mark Directive must be interpreted as meaning that the proprietor of a registered trade mark is entitled to prevent the use by a third party in a comparative advertisement which does not satisfy all the conditions laid down in Article 3a(1) of the Comparative Advertising Directive, under which comparative advertising is permitted, as long as certain conditions are met.
It is for the referring court to determine whether, the use of L’Oréal’s mark is likely to affect one of the functions of those marks, such as, in particular, their functions of communication, investment or advertising. If one of these is shown it is not necessary to show that the use jeopardises the essential function of the trade mark which is to indicate the origin of the goods or services.
Third and Fourth Questions – Comparative Advertising Directive
Finally, the ECJ answered together the third and fourth questions. Article 3a(1)(a) to (h) of the Comparative Advertising Directive list cumulative conditions which comparative advertising must satisfy and it was to these that the ECJ referred. It was highlighted that the Comparative Advertising Directive does allow for the use of a competitor’s trade mark where the comparison objectively highlights differences and the object or effect of such highlighting is not to give rise to situations of unfair competition. The comparisons in this instance attested to the fact that the perfumes were imitations of the fragrances marketed under certain marks belonging to L’Oréal and consequently they fell foul of Article 3a(1)(h), presenting the goods as being imitations of goods bearing a protected trade mark . As the Advocate General, in paragraph 88 pointed out, it does not matter whether the advertisement indicates that it relates to an imitation of the product bearing the protected mark or if it is an imitation of an essential characteristic of the product, in this case smell.
Article 3a(1)(g) of the Comparative Advertising Directive provides that comparative advertising must not take unfair advantage of the reputation of a trade mark and the Court held that “unfair advantage” must be given the same interpretation as Article 5(2) of the Trade Marks Directive. Given what was found in relation to Article 3a(1)(h), it must logically follow that an unfair advantage was gained. The ECJ held that Article 3a(1) of the Comparative Advertising Directive must be interpreted as meaning that an advertiser, who states explicitly or implicitly in comparative advertising that the product marketed by him is an imitation of a product bearing a well-known trade mark, presents ‘goods or services as imitations or replicas’ within the meaning of Article 3a(1)(h). The advantage gained by doing this must be considered unfair within the meaning of Article 3a(1)(g).
Conclusion
This is a robust and positive decision for trade mark owners recognising their investment in their brands and recognising the smell a like producers’ efforts to ride on their coat tails. There is clarity about the use of comparison charts as advertisements - not merely providing factual and descriptive material. There is clarity , not before time, that the provisions relating to marks with reputation are to be read separately – as they are drafted and intended – and not mingled in a manner which makes almost any claim under Article 5(2) virtually impossible to prove.
However, if detriment or likely detriment to the distinctive character or repute of the mark can be shown, why would the claimants have to be shoehorning these aspects into an ‘unfair advantage analysis’? There is still lack of clarity in some of the analysis. Some of what is said in inconsistent with other recent ECJ authority. The term “Marks with Reputation” still needs to be clearly defined. But overall a robust decision and one awaits with interest how this will be received by the Court of Appeal.
The full decision of the ECJ can be found here.
