In a dispute concerning downmarket fragrances intended to be smell-a-likes for several of L'Oreal's famous perfumes, the European Court of Justice (ECJ) has provided guidance to the UK Court of Appeal which will be welcomed by many brand owners. Indeed this guidance may finally bring the legal position into line with the modern concept of a "brand" where the image function of trade marks is of huge financial importance.

The UK High Court had found that the use by the defendants (Bellure NV, Malaika Investments Ltd and Starion International Ltd) of several of L'Oreal's word marks for its perfumes in comparison lists (designed to let consumers know which of its perfumes smelt like a particular L'Oreal perfume) were infringements under Article 5(1)(a) of the Trade Marks Directive. Bellure produced the allegedly infringing products which the other defendants marketed in the UK. Further, L'Oreal's claims based on Article 5(2) of the Directive relating to Bellure's bottle/packaging (that they took unfair advantage of the corresponding L'Oreal bottle/packaging marks) were also upheld but only in relation to L'Oreal's Trésor box trade mark and the Miracle perfume bottle trade mark. L'Oreal's claim was made under the Trade Marks Directive 89/104 which has now been replaced by Directive 2008/95 but the substance of the relevant provisions remains the same.

Malaika and Starion appealed and the Court of Appeal referred several questions to the ECJ. These questions related to whether the defendants' use of look-a-like packaging had taken unfair advantage of the reputation of the relevant L'Oreal marks even though it did 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". Additionally did the defendants' use of L'Oreal perfume name marks in comparison lists benefit from a defence under the Comparative Advertising Directive 84/450? Again this Directive has been replaced but the relevant substantive provisions remain the same.

In essence the ECJ has made it clear that taking unfair advantage can be established where there is no likelihood of confusion and even where the allegedly offending use of the similar sign "is not detrimental either to the distinctive character or to the repute of the mark or, more generally, to its proprietor...".

A global assessment is required to determine whether taking unfair advantage has occurred; the stronger the mark and the more similar the allegedly offending sign the more likely this is to be established. The intention behind the choice of the similar sign is a relevant factor. Here it had already been established that Bellure had intended its packaging to give a "wink" to L'Oreal's relevant packaging marks.

In relation to the comparison lists, the ECJ noted that it was "not in dispute that the object and effect of the comparison lists [was]... to draw the attention of the relevant public to the original fragrance of which the perfumes marketed ...are purportedly an imitation". It therefore noted that the defendants' use of the identical marks in such lists had been designed to implicitly present the products in issue as "imitation[s]" of L'Oreal's fragrances and hence did not fulfil one of the conditions for fair and lawful use of another's trade mark in comparative advertising because it fell within Article 3 a (1)(h) of Directive 84/450. In the light of this, such use also took unfair advantage of the marks under Article 3 a (1)(h) of that Directive.

Furthermore the ECJ confirmed that the rights conferred by Article 5(1)(a) of the Trade Mark Directive "entitle the proprietor to prevent all third parties not having his consent from using, in the course of trade, any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered... in order to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfil its functions... These functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services, but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising [emphasis added]."

Thus the Court of Appeal's doubts that Article 5(1)(a) could apply where the use "is not capable of jeopardising the essential function of the mark" have been shown to be unfounded.

The guidance provided will now need to be applied by the Court of Appeal if the case does not settle beforehand.

Partner and trade mark law expert, Cerryg Jones, observes that "this decision will be very much welcomed by trade mark owners, particularly in view of earlier decisions which appeared to restrict the scope of Article 5(2) claims based on detriment. It looks like Europe may have finally forced the UK courts to modernise their approach to trade mark protection."