A recent trade mark case heard by the European Court of Justice (“ECJ”) between L’Oréal and Bellure [L’Oréal SA and others v Bellure NV and others [2010] EWCA Civ 535] appears to have given brand owners wide scope to prevent comparative advertising, even if comparisons are truthful. Both brand and trade mark owners, as well as those using their trade marks to compare their goods and services against them, should pay close attention.

Comparative advertising: the existing framework

Both UK and European Community trade mark legislation already recognise that it is permissible to use another’s registered trade mark without consent in limited circumstances; for example, where the mark constitutes an individual or business’ own name or address, or is merely being used to indicate the kind, quality or purpose of goods, products or services, provided always that such use is, generally, “in accordance with honest practices in industrial or commercial matters”. The policy is clear; certain uses should be kept free for basic moral or free-market purposes, such as the ability to honestly use one’s own name or address, or to honestly indicate that a trade-marked product must be used for certain purposes, like a repair.

In addition, under UK law a registered mark may be also used to simply identify goods or services as “those of the proprietor”, providing, again, that such use is generally in accordance with honest practices. And, again, the policy goal is obvious: advertisers, and in particular competitors, should be free to honestly compare one anothers’ goods and services by reference to one anothers’ trading names and / or brands, either or both of which will frequently be registered as trade marks. Think of supermarket price wars: “…X number of our products were cheaper than Y’s last week…”

However, further European legislation, such as the Comparative Advertising Directive (“CAD”) has tried to define “honesty” by requiring that advertisements comply with a checklist of characteristics if a registered mark is to be used without risk. Under the CAD, any comparative advertisement must basically be true, accurate and above all “fair”.

L’Oréal v Bellure

Exactly what “fair” means came under scrutiny in what has become known as the “smell-alike” litigation between L’Oréal and Bellure. L’Oréal (or its group) held registered trade marks which included the product names and packaging of several luxury fragrances, “Trésor”, “Miracle”, “Anaïs Anaïs” and “Noa”. The smells themselves were not registered. (NB: it is actually possible, although not common, to register a smell as a trade mark in the UK and wider European Community)

Bellure imported and sold much (much!) cheaper “smell-alikes” of L’Oréal’s fragrances, including, “Coffret D’Or”, “La Valeur”,Pink Wonder”, “Sweet Pearls” and “Nice Flower”.

The packaging “winked” at L’Oréal‘s luxury fragrances. Importantly, however, the imitation fragrances were sold with lists identifying which of the L’Oréal fragrances each was supposed to smell like by reference to L’Oréal’s trade-marked names (“X smells like Y”).

L’Oréal considered that the “smell-alike” products were similar if not identical to their trade-marked fragrances in terms of name and packaging, and generally took unfair advantage of their brands. They therefore brought proceedings in the UK for trade mark infringement and passing off. (Passing off being, basically, a misrepresentation made to the market alleged to damage trading goodwill.)

Battle eventually intensified over the comparison lists. Bellure accepted that it was openly selling “imitations”, but argued a defence as it was merely indicating the characteristics (i.e. the smell) of L’Oréal’s goods in accordance with “honest practices”, as permitted by the legislation. In fact, it argued, it was necessary to use L’Oréal’s registered marks to describe its own fragrances, given their “smell-alike” nature. L’Oréal countered that Bellure’s use went beyond “mere comparison” and amounted to “free-riding”.

By the time the case reached the UK Court of Appeal, the passing off claim had been firmly dismissed. The judge also agreed with Bellure that the only real way to describe its fragrances was to compare them to L’Oréal’s by name, and that neither L’Oréal’s brand nor sales were, in reality, impacted… no-one would ever confuse the two on the shelves! However, the Court asked the ECJ for its view before ruling on trade mark infringement. Surely, use of a mark so as not to jeopardise its “essential function” - i.e. indicating trade origin – and merely so as to tell the truth (“X smells like Y”) was perfectly acceptable?

Unfortunately for Bellure, the ECJ considered that this sort of use potentially impacted on the “secondary functions” of a trade mark, i.e. those of allowing the owner unimpeded rights to communicate the mark, invest in it and advertise it – basically, to build a brand around it. The ECJ also held that presenting products as imitations was expressly prohibited under the CAD checklist, so was automatically “unfair” and potentially an infringement.

The ECJ is not a Court of fact, but only of law. Its judgments are therefore handed back down to national Courts for application to the facts. However, when the Court of Appeal got the judgment back, the leading judge, Lord Justice Jacob, was deeply unimpressed. He had real difficulty with the idea of splitting out the secondary functions of a mark, noting that any small trader jostling for position in the market will impact in some way on one or more of the communication, investment or advertising functions; but surely that would just be healthy competition? On the CAD and “imitations”, he remarked that it surely must be acceptable for lawful imitations, as here (remember - there was no passing off or infringement in the smells themselves) to be advertised as precisely that (“imitations”) and for Bellure to simply tell the truth, i.e. that “…My imitation X smells like Y…” However, as a national judge, he had no choice but to apply the ECJ’s judgment and hold that Bellure had infringed.

Impact

The ECJ’s judgment is clearly positive news for trade mark and brand owners in emphasising that the protectable functions of a registered mark extend not only to the “classic”, core function of protecting the mark as a badge of trade origin, but more widely to what were perhaps previously seen as unstoppable intrusions into the “secondary” functions of communication, investment and advertising. In light of the judgment, it may now be worth reviewing others’ comparative advertisements to see if they can be stopped!

Conversely, for those routinely engaged in (or considering) comparative advertising campaigns, the message is equally clear. Careful thought will need to be given, and advice taken, before launch in order to minimise potential exposure to trade mark litigation.

Brand owner or not, all traders should note that the ECJ’s judgment is by no means confined to “smell-alikes”, or indeed the fragrance or luxury brands industries. Anyone engaging in or seeking to challenge comparative advertisements should be mindful of these latest developments, regardless of industry sector and the format of the advertisements involved.