The use of comparative advertising was considered by the Court of Appeal in December 2006, when it handed down judgment in the ongoing trademark dispute between O2 and Hutchison 3G (“H3G”).

In 2004, H3G promoted its pay-as-you-go service (“Threepay”) with a series of comparative advertisements against each of the already well-established players in the market: Vodafone, Orange, T-mobile and O2. The advertisements started by using the competitor’s imagery and then introduced the Threepay brand, stating that it was cheaper in a specific way. The advertisement featuring O2 used the “bubble” imagery, for which it has several registered trademarks and it was for the infringement of thesemarks that O2 brought proceedings. It is worth noting that the parties agreed the price comparison was correct and that the advertisement did not suggest any trade connection between O2 and H3G.

The appeal addressed whether H3G’s use of the bubbles infringed O2’s trademarks under the TradeMarks Directive (“TMD”) and whether compliance with Article 3a(1) of the Misleading Advertising Directive as amended by the Comparative Advertising Directive (“CAD”) provided H3G with a defence to infringement.

O2 argued that an advertiser should only use a competitor’smark(s) to the extent necessary to identify the competitor’s products. Use of the name “O2” was obviously necessary to identify the company, but use of the bubbles was not essential and so took unfair advantage.

The Court of Appeal referred three questions to the European Court of Justice, but expressed its own opinion that: 

  • using a competitor’s trademark to compare themerits (including price) of your goods or services, in a way that does not jeopardise the essential function of the trademark as a guarantee of origin, is not an infringement under the TMD 
  • advertisers should not be restricted to using only the competitor’s trademarks that are “indispensable” in identifying that competitor. So, for example, it is not objectionable to use both the name “O2” and the bubble imagery.

Any ECJ ruling is several years away, but will help to clear up an oftenmisunderstood area of law. In themeantime, the Court of Appeal’s “opinion” demostrates an increasingly permissive attitude to comparative advertising. Advertisements that comply with the CAD are likely to be “safe”, but advertisers should err on the side of caution when identifying a competitor by using its graphic trademarks, rather than just its name.

Further, advertisers should always check that the claimsmade are demonstrably accurate or amount to pure advertising “puff” and do not denigrate a competitor.