The court battle over Hutchison’s ‘3’ comparative ad of summer 2005 is not over. Now the Court of Appeal has referred key issues over use of competitors’ trade marks in ads to the European Court of Justice.
Who: O2 Holdings Ltd & Anor v Hutchison 3G Ltd
Where: The Court of Appeal
When: December 2006
The case, as they say, continued into the next round of the battle between mobile network providers O2 and 3 over 3's summer 2005 TV commercial knocking O2.
The commercial has long since sunk from the airwaves (though not due to a court injunction as O2 failed when they tried for one soon after the commercial first aired ) but the dispute goes on.
In the last round, the first instance Chancery Judge threw out O2's claims that the commercial, featuring swirls of bubbles with a voiceover mentioning O2 in not too favourable terms, infringed various trade mark registrations O2 had of images of bubbles.
In a first for UK advertising law, the Judge held that a comparative advertisement could not infringe a competitor's trade mark if it complied with the requirements of the EU Comparative Advertising Directive 97/55 ("CAD").
Since the commercial in question did comply with that directive in the Judge's view, the O2 claim had to be dismissed.
O2 appealed this verdict and asked the Court of Appeal to determine whether certain live questions in the case ought, since they related to interpretation of EU Directives, to be referred to the European Court of Justice ("ECJ").
In December 2006, the Court of Appeal issued its findings and for the first time almost in the case, O2 won on most points.
We say "most points" because the Appeal judges did decline to refer one question to the ECJ. This was the very question which we highlighted above, namely whether comparative advertising which used a competitor's trade mark but complied with the CAD could infringe that trade mark.
Key point not going to ECJ
On this point Lord Justices Mummery, Jacob and Staughton were of the firm view that if a comparative advertisement complied with the CAD then this should indeed be a defence to a trade mark infringement claim.
The CAD was implemented in the UK by way of the Control of Misleading Advertisements (Amendment) Regulations 2000. These amended the Control of Misleading Advertisements Regulations 1988 so as to extend their ambit to comparative advertising.
Three points referred
There were three points which the Appeal Lords did refer to the ECJ.
These were as follows:
Question for ECJ #1
If an advertiser uses a sign that is similar to his competitor's registered trade mark purely to compare the merits of his own products with those of his competitor, does this in fact jeopardise the essential function of the competitor's mark, namely to guarantee the trade mark as an indication of origin?
O2's radical proposition here was that trade mark law should not apply at all to cases where an advertiser is simply using his competitor's trade mark to distinguish non confusingly between his own products and those of his competitor.
Questions for ECJ #2
A recital to the CAD states
"Whereas it may, however, be indispensable, in order to make comparative advertising, to identify the goods or services of a competitor, making reference to a trade mark or trade name of which the latter is the proprietor."
Did this mean that in this case, in order to comply with the CAD, 3 had to prove that the use of bubbles imagery was essential in order to make the comparison with O2's services?
If it did, then the commercial in question would clearly not comply with the CAD as the comparison could have been made perfectly easily without showing bubbles at all.
Questions for the ECJ #3
Assuming the use in the comparative ad of the competitor's trade mark had to be indispensable, does this mean that only the competitor's mark as registered can be used?
If the answer to this was "Yes" then the 3 ad could not call in aid the CAD for the simple reason that it did not use bubbles imagery which was exactly the same as the images registered as trade marks by O2.
Why this matters
It is fortunate that we have clarity from this decision on one aspect. This is the importance of compliance with the CAD to trade mark infringement litigation over comparative ads.
On the other key issues, our suspicion is that all will be answered by the ECJ in 3's favour, but frustratingly we will now have to await the ECJ's findings in many months' time, assuming the matter is not settled in the meantime.