3 bursts O2’s bubble

Topic: Comparative

Who: 02 and 3G UK 3

Where: The Chancery Division of the High Court, London

When: March 2006

What happened:

In last month's update, we reported on Judge Lewison's findings in relation to the various legal submissions made by each of the parties, O2 and 3, in the "Bubbles" case.  In this article, we look at how the Judge applied his findings to 3's TV ad and what impact the judgment is likely to have on the future of comparative advertising.

The judgment considered the following issues:

1. The validity of O2's bubble trade marks;

2. Whether 3's bubble "signs" were confusingly similar to O2's marks;

3. Whether 3's bubble "signs" tarnished the reputation of O2's marks; and

4. Whether 3 had a defence to a prima facie finding of infringement under section 10(2) of the Trade Marks Act 1994.

1. Validity of bubble trade marks

3 argued that the trade mark registrations granted in favour of O2's "bubbles" marks should be rendered invalid on the basis that the bubbles lacked distinctiveness and had generally been used by O2 in conjunction with other identifiers, such as the "O2" mark.  The test for validity of a trade mark is that a mark (alone) must be capable of enabling the relevant public to identify the origin of the goods or services in question and to distinguish them from those of other undertakings.  Judge Lewison concluded that the bubbles marks were distinctive and were a recognised badge of trade origin.  Accordingly, he concluded that the marks were validly registered.

2. Confusing similarity

The first strand of O2's complaint against 3 was that 3's use of bubbles in its TV ad amounted to an infringement of O2's trade marks pursuant to section 10(2) of the Trade Marks Act 1994 ("TMA"). 

The basis of the complaint was as follows: (1) 3's bubbles were similar in visual appearance to O2's trade marks; (2) the services being advertised by 3 were identical to those being advertised by O2; and (3) there was therefore a likelihood of confusion on the part of the public, including the likelihood of association with the trade mark.

Although Judge Lewison noted that there were some differences between the shape and size of 3's bubbles, as compared with O2's trade marks, he felt that the average consumer, who was likely to have an imperfect recollection of the registered trade mark, could be confused into believing that the services identified by 3's bubbles emanated from the same company as the services identified by the trade marks (which of course they did).  It was irrelevant that 3 were not passing off their own products or services by use of the bubbles; O2 had a legitimate interest in preserving the image and reputation of the trade mark.  Accordingly, subject to 3 making out a satisfactory case for derogation under section 10(6) (the "honest practices" exception), the Judge held that 3's actions were capable of constituting an infringement under this head of claim.

3. The bubble reputation

The second strand of O2's complaint, advanced pursuant to section 10(3) of the TMA, was that 3's bubbles took unfair advantage of, or were detrimental to, the distinctive character or repute of O2's trade marks.  To succeed in this claim, O2 needed to persuade the court of the following: (1) that the trade marks (as opposed to a visual representation of bubbles generally) had a reputation among a significant section of the target audience; and (2) that 3's bubbles were, in the mind of the average consumer, similar to the trade marks.

Judge Lewison found that only one of O2's trade marks (a large mushroom-shaped bubble named "Relax") was sufficiently distinctive to enjoy a reputation among the target audience.  Furthermore, as none of 3's bubbles were anything like Relax, he held that the TV ad would not have brought to mind that particular trade mark.  Accordingly, he held that O2's claim under this head was not made out.

4. Compliance with the Comparative Advertising Directive

As noted in last month's article on this subject, 3 made various submissions to the effect that it was not strictly necessary to comply with the Comparative Advertising Directive ("the Directive") in order to make out a defence under section 10(6) of the TMA.  However, following a review of a number of recent European Court rulings, in particular Pippig Augenoptik GmbH v Hartlauer, Judge Lewison rejected 3's submissions and concluded that, in order to avoid trade mark infringement, the ad had to comply with the Directive.

Nevertheless, as the Judge found that 3's ad was not misleading, did not cause confusion in the market place between 3 and O2, and did not discredit or take unfair advantage of O2's trade marks, he held that 3's ad did in fact comply with the Directive.  On that basis, he found that 3 had not infringed O2's rights either under the Trade Marks Directive or the TMA.

Why this matters:

This case matters for a number of reasons.

First, while recognising that brands are often extremely valuable to businesses, it emphasises that English Law will only protect the various component parts of brands such as goodwill, trade marks, sounds and images and shapes of articles.  Judge Lewison remarked: "To the extent that a brand is greater than the sum of the parts that English law will protect, it is defenceless against the chill wind of competition".

Secondly, it requires comparative advertisers to attach much greater significance to the Directive.  Prior to this case, while the provisions of the Directive had been adopted by the various advertising codes, it was widely believed that the Directive had little or no effect on the TMA.  What this case shows, however, is that the honest practices exception in section 10(6) of the TMA must be read and applied in the light of the provisions of the Directive.  In other words, a comparative advertisement will only be lawful insofar as it complies with the following:

• It is not misleading;
• It compares goods or services meeting the same needs or intended for the same purpose;
• It objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price;
• It does not create confusion in the market place between the advertiser and a competitor or between the advertiser's trade marks, trade names, other distinguishing marks, goods or services and those of a competitor; 
• It does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities or circumstances of a competitor;
• For products with a designation of origin, it relates in each case to products with the same designation;
• It does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products;
• It does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name.