The European Court of Justice ("ECJ") recently issued an important judgment on comparative advertising and trademark infringement in L'Oréal SA v. Bellure NV. This decision, which is sure to please trade mark owners, expresses a more protective position than some earlier judgments and associates the scope of protection of a trade mark with its economic function.

Three reputable French perfumers - L'Oréal SA, Lancôme and Laboratoire Garnier - brought trade mark infringement proceedings against downmarket companies specialising in knock-offs of certain of their perfumes, namely the well-known brands Trésor, Miracle, Anaïs-Anaïs and Noa. The defendants, Bellure and others, sold knock-offs of these perfumes, along with a comparative list for retailers using the word mark of the fine fragrance being imitated.

Proceedings were brought before the High Court of Justice of England and Wales (Chancery Division), which upheld most of the claims. Bellure appealed to the Court of Appeal (England and Wales), which referred a series of preliminary questions to the ECJ seeking clarification of the Trade Marks Directive (89/104/EEC) and the Comparative Advertising Directive (84/450/EEC).

The Court of Appeal was not sure whether the proprietor of a trade mark could take action where the use of its trade mark by a third party was not capable of jeopardising the essential function of the mark.

The ECJ, which had previously expressed different positions on the scope of protection of a trade mark, issued a judgment which may shape the case law for years to come and will be lauded by companies that have invested in developing their image and protecting their intellectual property rights.

In earlier judgments, the Court had held that the exclusive rights of the proprietor of a trade mark were conferred in order to protect the proprietor’s specific interests as such, namely to ensure that the trade mark can fulfil its essential function (i.e., providing a guarantee as to the origin of goods). Therefore, the exercise of these rights must be reserved for cases in which a third party’s use of a sign affects or is liable to affect the essential function of the trade mark. In L’Oréal v. Bellure, the ECJ clarified the scope of protection of a trade mark and ruled that not only is the essential function protected but also other functions as well (e.g., communication, investments and advertising).

The inclusion of trade marks on a comparative list of imitation perfumes may not affect the essential function of the trade marks in question, but it could affect other functions, thus allowing the trade mark proprietors to take action.

According to this new judgment, unfair advantage can be established more easily. Action can be taken against any unlawful use of a reputed trade mark, if the use is made in order to benefit from the power of attraction of the mark, its reputation and prestige and to exploit, without paying any financial compensation in return, the marketing efforts made by the proprietor of the mark in order to create and maintain the mark’s image.

The stronger the mark and the more similar the offending sign, the more likely an unfair advantage will be found.

Moreover comparative lists of imitation perfumes constitute comparative advertising and violate the Comparative Advertising Directive in that they present goods as imitations or replicas of goods services bearing a protected trade mark and take unfair advantage of the reputation of a trade mark.

This new approach of the European Court of Justice provides support for companies that have invested time and money in establishing and protecting their image and trade marks. The Court has indeed extended the scope of protection of trade marks to better reflect economic reality.