Yesterday Advocate General Mengozzi (the "AG") provided his opinion on the questions on comparative advertising referred to the European Court of Justice (the "ECJ") by the Court of Appeal in O2 Holdings Limited and O2 (UK) Limited v Hutchison 3G Limited  EWCA Civ 1656. In particular, the AG opined that trade mark infringement is not relevant in assessing the legality of a third party's use of an identical trade mark or similar sign in comparative advertising. Rather, such advertising is governed exhaustively by Article 3a of the Misleading Advertising Directive (84/450), as amended by the Comparative Advertising Directive (97/55) (the "CAD").
This is the opinion of the AG not the full ECJ, but if followed by the ECJ, then this decision should lead to a simpler assessment of comparative adverts, under one instrument, the CAD. Also, if there is no element of indispensability required, then comparative advertisers would appear to benefit from a freer rein to use others' trade marks.
In 2004, Hutchison 3G ("H3G") promoted its pay-as-you-go mobile phone service ("Threepay") with a series of comparative advertisements against well-established competitors in the market, including O2. The advertisements used the competitor's "bubble" imagery followed by the Threepay brand, stating that Threepay was less expensive. The "bubble" imagery was protected by a number of registered marks and O2 brought proceedings against H3G for infringement of those marks.
At first instance Lewison J. made a number of findings of which the following were appealed: (i) H3G's use of the bubbles fell within Article 5(1)(b) of the Trade Marks Directive (89/104) (the "TMD"); (ii) the advertisement complied with Article 3a(1); and (iii) such compliance provided H3G with a defence under Article 6(1)(b) of the TMD (see our newsflash "Comparative Advertising – Jacob LJ's "Rhetorical" Questions" of 7 December 2006).
In summary, Jacob LJ in the Court of Appeal concluded that it was "clear that the position was not clear". He sought guidance from the ECJ on the inter-play between the TMD and the CAD in the context of comparative advertising, referring the following three questions to the ECJ (in each case, stating that, in his opinion, the answer to each question was "no"). The AG dealt with each question in turn.
Applicability of the TMD to comparative advertising
"Where a defendant in the course of trade uses a sign in the context purely for the purpose of comparing the merits (including price) of his goods or services with those of the trade mark owner and in such a way that it cannot be suggested that the essential function of the trade mark as an indication of origin is in any way jeopardised, can his use fall within either (a) or (b) of Article 5(1) of TMD?"
H3G contended that the advertisement did not fall within Article 5(1)(b).
The AG agreed, and was of the opinion that the use of a sign identical or similar to a registered trade mark of a competitor in comparative advertising is covered "specifically and exhaustively by Article 3a of [CAD]". It is not subject to the application of Article 5(1)(a) or (b).
Article 3a introduced conditions under which comparative advertising is permitted. Following the Court in Pippig Augenoptik , the harmonisation of comparative advertising under the CDA implies that such advertising "is to be assessed solely in the light of [those provisions]".
Further, within the list of conditions, Article 3(a) provides rules intended to protect trade marks, trade names and other distinguishing marks of a competitor in the context of comparative advertising.
This has the effect that a proprietor of a trade mark seeking to contest the use in comparative advertising of a sign similar to that trade mark, must base his claim on the breach of one of the conditions laid down in Article 3(a). An analysis under the TMD is not relevant. Although the AG acknowledged that, had trade mark infringement been relevant, the ECJ jurisprudence on such trade mark use is contradictory.
(a) "Where a defendant uses, in a comparative advertisement, the registered trade mark of another, in order to comply with Article 3a of the CAD, must that use be "indispensable" and if so what are the criteria by which indispensability is to be judged?
(b) In particular, if there is a requirement of indispensability, does that requirement preclude any use of a sign so similar to the registered trade as to be confusingly similar to it?"
O2 had claimed the Article 3a(1) conditions included a requirement of "indispensability". They argued that an advertiser should only use a competitor's mark to the extent necessary to identify the competitors product. They claimed use of the name "O2" was necessary to identify the company, but use of the bubbles was not essential and took unfair advantage, contrary to Article 3a(1)(g). H3G submitted that Article 3a conditions did not require such "indispensability".
The AG agreed with H3G's view. Article 3(a) provides conditions under which comparative advertising is lawful and none of the other provisions of the CAD expressly lays down a requirement of indispensability. Indispensability cannot be implied under the CAD simply because of the prohibition on taking unfair advantage of the reputation of a trade mark.
Whilst the recitals in the pre amble to the CAD make reference to "indispensability," this is to make it clear that, for comparative advertising to be effective, reference will inevitably be made to a competitor's trade mark or trade name. It does not prescribe an additional condition subject to which such a reference might be lawful.
On the basis that the AG did not find an additional requirement of "indispensability" under Article 3(a), there was no need to examine the second limb of this question ((b) above).
The AG's opinion agrees with the negative answers offered by Jacob LJ to his referred questions. If followed by the ECJ in due course, then a trade mark proprietor would not have the option to sue for infringement of his trade mark by a comparative advert under the TMD. Rather, the trade mark owner's route to remedy (if any) would be based on the comparative advertiser's non-compliance with the terms of CAD.
Further, if the ECJ were to follow the AG's opinion, then it seems unlikely that O2's continued claim against H3G could succeed. As regards would-be comparative advertisers, they would need to look to the CAD for guidance rather than the TMD. Since use need not be indispensable, the AG's opinion, if followed by the ECJ, may also allow greater freedom to use marks for this purpose.
We look forward to the ECJ's decision with great interest.