The fine fragrance brand owners who sued over ads and packs for cheap and cheerful smellalikes may have had a point. But has the ECJ gone too far in its recent judgment in the case and will legitimate commercial speech suffer as a result? Nick Johnson picks up the scent.
Who: L'Oréal, Lancome, Garnier, Bellure, Malaika, Starion
Where: European Court of Justice
When: 18 June 2009
Law stated as at: 2 July 2009
The recent ECJ judgment in the L'Oréal v Bellure copycat perfumes case impacts significantly on a range of trade mark issues, and not least in the area of comparative advertising.
The test as to whether an advertiser is taking "undue advantage" of a competitor's trade mark in a piece of comparative advertising is now much clearer, and will make comparative advertising a much riskier tool for new "challenger brands" going forward.
The case began in the English High Court, where L'Oréal and others brought trade mark infringement proceedings against various companies marketing and selling smell-alike perfume products. Those companies had used a comparison list to market their copycat fragrances by reference to the claimants' own famous brands Trésor, Miracle, Noa Noa and Anaïs-Anaïs.
Certain of those perfumes had similar packaging to the get-up used by the claimants. Bellure claimed that its comparison list was a form of comparative advertising permitted by the Comparative Advertising Directive. The High Court found limited infringement and both parties appealed, giving rise to a reference to the ECJ.
Aspects of the judgment relevant to comparative advertising
The ECJ's answers to the questions raised by the UK court have some wide-ranging impacts, including in the area of product packaging (particularly where a leading brand has defined the look and feel associated with a particular product category) and in the context of parody of third party brands in advertising.
In relation to comparative advertising, the key take-out points from the case are as follows:
– Just because use of a third party trade mark in advertising does not jeopardise that mark's function as an indicator of origin does not mean there cannot be trade mark infringement. Trade mark law is engaged if the use "is liable to affect one of the functions [of trade marks], such as, in particular, their functions of communication, investment or advertising" (para 64).
This suggests it will generally be hard going forward to argue that use of a third party mark in comparative advertising is not "use in a trade mark sense".
– "Unfair advantage" in this context is to be construed relatively broadly:
"Where a third party attempts… to ride on the coat-tails of [a] mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard, the marketing effort expended by proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark." (para 49)
– In an infringement claim in which it is claimed that an advertiser has taken unfair advantage of the distinctive character or repute of a third party mark, there is no requirement "that there be a likelihood of confusion or a likelihood of detriment to the distinctive character or repute of the mark or, more generally, to its proprietor" (para 50).
– The test for "unfair advantage" under the Misleading and Comparative Advertising Directive is the same as under Article 5.2 of the Trade Marks Directive.
Why this matters:
The down-side of making express comparative claims when you are an established brand is that you necessarily give your competitor an element of publicity, even if you are knocking them in the process. Further, the very act of comparing your brand with theirs can reinforce consumer perceptions that the competitor's proposition is essentially a strong one – why else are you comparing yourself with them?
It is this rationale that underlies the traditional wisdom that comparative advertising is a tool best used by so-called "challenger brands" – new entrants into an established market, who need to establish their credentials and gain brand reputation in the face of competition from recognised and trusted existing brands.
But the L'Oréal ECJ judgment means that, for that class of advertiser, this technique will now be fraught with risks:
– As a challenger brand comparing yourself against an established market player, you may inevitably struggle to show that you are not "riding on the coat-tails" of the other brand's reputation.
– This applies regardless of the fact that the basis for comparison may be entirely fair, transparent and substantiated, and with no scope for confusion between the two brands.
From now on, those seeking to make comparative claims will need to assess their and their named competitor's relative brand strengths and reputations. If the advertiser's brand is of broadly similar or greater strength than the named competitor brand, then use of the competitor's trade mark will be less likely to amount to "unfair advantage", and the advertiser will then just have to be sure to comply with the other comparative advertising rules under the Misleading and Comparative Advertising Directive. But if the advertiser's brand is weaker, then it would be advisable to avoid using the competitor's registered trade mark in any comparative advertising.
Will we now see the return of anonymous references to "Brand X" and "a leading cola" in comparative ads?