Comparative advertising will be trade mark infringement if there is a likelihood of confusion. Law firm Wragge & Co reports on a recent ECJ case.

The European Court of Justice (ECJ) has declined to follow the opinion of Advocate General Mengozzi issued on 31 January 2008. In answer to questions referred from the UK Court of Appeal the ECJ has said that, in line with O2's reasoning but contrary to Hutchison 3G's submissions, the views of the Court of Appeal, the Commission and the Advocate General, the Trade Marks Directive is engaged in the context of comparative advertising. However, the ECJ has indicated that the test for likelihood of confusion under Art 5(1)(b) of the Trade Marks Directive and the test for confusion under Art 3a(1)(d) of the Comparative Advertising Directive (as amended) are one and the same and a "real world" test. This departure from the more academic comparison of "mark for sign" means that extraneous matter is relevant when considering similarity and likelihood of confusion in the context of a pure trade mark infringement case.

Background

In the summer of 2004, a new telecoms network provider Hutchison 3G (H3G) ran a comparative advertising campaign against a number of established network providers, including O2, using signs similar to each of the brands' visual imagery. In O2's case, its bubbles trade marks. Following an attempt to get an early reference to the ECJ, which was rejected by the Vice-Chancellor, the case went to trial.

The High Court found that O2 had made out a prima facie case of Art 5(1)(b) infringement under the Trade Marks Directive (TMD) as there was a likelihood of confusion but that H3G had complied with Article 3a of the Comparative Advertising Directive (as amended) (CAD) which leave afforded it a defence. H3G appealed the finding of Art 5(1)(b) infringement arguing that the only relevant legislation was CAD in the context of comparative advertising. O2 appealed the decision that H3G had a defence under CAD.

Questions referred to the ECJ

In the Court of Appeal, Jacob LJ agreed with the parties that the law was not acte clair and decided to refer three questions to the ECJ:

1. 'Where a trader, in an advertisement for his own goods or services, uses a registered trade mark owned by a competitor for the purpose of comparing the characteristics (and in particular the price) of goods or services marketed by him with the characteristics (and in particular the price) of the goods or services marketed by the competitor under that mark in such a way that it does not cause confusion or otherwise jeopardise the essential function of the trade mark as an indication of origin, does his use fall within either (a) or (b) of Article 5 [(1)] of Directive 89/104?
2. Where a trader uses, in a comparative advertisement, the registered trade mark of a competitor, in order to comply with Article 3a [(1)] of Directive 84/450… must that use be "indispensable" and if so what are the criteria by which indispensability is to be judged?
3. In particular, if there is a requirement of indispensability, does the requirement preclude any use of a sign which is not identical to the registered trade mark but is closely similar to it?'

In making the reference the Court of Appeal clearly set out its views on the way those questions should be answered. It thought the answer to the first question should be no because "there is simply no reasonable need for trade mark law to cover this kind of use [ie. use which does not jeopardise the function of the mark as an indicator of origin and where there is no confusion]." Jacob LJ went on to say that it is artificial to consider the mark for sign comparison devoid of the context in which it is used. In relation to the second question the Court of Appeal considered that there was no requirement of indispensability given the finding in Pippig which allowed a shop front and logo to be used in a comparative advert and the fact that the word "indispensable" is lifted from recitals to CAD and was not a basis for a restrictive interpretation. As to Question 3, the Court of Appeal heard that even if there was a requirement of indispensability, it would be permissible to use signs similar to and not identical to the mark as to find otherwise would be impractical.

The Advocate General considered that the conditions on which Article 5(1)(a) and (b) apply were "bristling with difficulties" but in answering the first question in the negative he sought to sidestep these by indicating that only CAD applied in the circumstances of a comparative advertisement. In considering the question regarding "indispensability" he gave the opinion that such a criteria should be excluded as even where use was not indispensable it was not possible to assume that unfair advantage had been taken and further, that it should also be excluded because of the requirement that the conditions needed for comparative advertising should be interpreted in the sense that would be most favourable to such advertising.

Outcome

The ECJ decided not to follow the opinion provided by the Advocate General and differed from the Court of Appeal in holding that CAD was not the only piece of legislation to be considered in the context of a comparative advertisement.

The TMD is engaged in the context of comparative advertising

In making its decision on the question of the interaction of the TMD and CAD, the ECJ held that Article 5(1)(a) and (b) could not be used to prevent comparative advertising as long as the advert in question complied with the conditions set out in Article 3a of CAD. However it went on to say that the TMD was engaged and where there was a likelihood of confusion under Article 5(1)(b) then it would not be possible to comply with the requirement that there be no confusion under Article 3a(1)(d) of CAD so the latter directive could not provide a defence to infringement.

Use of a competitor's sign in comparative advertising is use in relation to the third party's goods/services

The ECJ held that Articles 5(1) and (2) were to be interpreted as referring to use of a similar or identical sign in respect of the third party's goods or services and that use of such a sign in the context of a comparative advertisement could be construed in that sense. This is despite the contortion involved in trying to construe use of a sign similar to a competitor's trade mark as being in relation to the third party in circumstances where that third party was clearly using the sign to refer to its competitor's brand. The ECJ seems happy to create a fictional use of the sign in relation to third party goods in order to allow the TMD to apply to comparative advertising.