Companies are now able to use the trade marks of their competitors in comparative advertising campaigns with more confidence following a recent case in which the European Court of Justice (ECJ) took a pragmatic approach to the interpretation of the European Directives on Trade Marks and Comparative Advertising (the "Directives").

In the case of O2 Holdings Limited and Another v Hutchison 3G UK Limited (2008), the ECJ clarified a potential conflict between the provisions of the Directives. O2 Holdings Limited ("O2"), a provider of mobile telephone services is the registered proprietor of two UK trade marks for telecommunications goods and services. Each trade mark consists of an image of a bubble. Hutchison 3G UK Limited ("H3G"), also a provider of mobile telephone services, uses the registered trade marks "3" and "ThreePay" to advertise its goods and services.

In a television commercial for ThreePay, a pay-as-you-go mobile telephone service, H3G showed images of bubbles and the word "O2" together with the number "3" and the word "ThreePay". In the same commercial, H3G claimed that its services were cheaper than those of O2.

O2 brought proceedings for trade mark infringement under Article 5(1)(b) of the European Trade Mark Directive.

H3G claimed a defence under Article 4(h) of the European Directive on Comparative Advertising.

The European Directive on Comparative Advertising is intended to promote "fair" comparative advertising between competitors. "Fair" comparative advertisments must:

(i) not mislead; 

(ii) not lead to confusion; 

(iii) not denigrate or discredit a competitor's trade mark;

 (iv) not take unfair advantage of the goodwill or reputation in that trade mark; and 

(v) not hold out goods and services as imitations of the goods or services of the trade mark owner. 

The ECJ found in favour of H3G. The court held that provided that an advertisement meets all of the conditions set out in the European Directive on Comparative Advertising then an advertiser is able to use a competitor's trade mark, or a mark similar to it, without infringing the rights of the trade mark owner.

While this decision is clearly aimed at benefiting the customer by encouraging comparisons between the specifications and prices of competing products, the decision does appear to dilute the rights of the trade mark owner. There is a very fine and at times indecipherable distinction between fair comparison and confusion in the minds of the public and therefore, in light of this decision, trade mark owners are likely to be much more vigilant in the policing of their brand and their trade mark portfolios while corporate advertisers may be taking their gloves off and planning ever more aggressive campaigns. Watch this space!