Trade Mark Infringement and Comparative Advertising - Advocate-General's Opinion in L'Oreal v Bellure

Advocate-General Mengozzi has now delivered his Opinion in L'Oreal v Bellure. This case concerns the marketing of "smell-alikes" by Bellure. They were marketed using comparison lists which referenced the scent in Bellure's perfume products by reference to well-known L'Oreal perfume brands. Bellure also marketed their scents in packaging which, as was admitted by a witness at trial, gave a "wink" to L'Oreal's brand and packaging.

The Advocate-General was of the opinion that in a comparative advertisement, where use of the competitor's mark is not liable to affect the essential function of the competitor's mark, then an action for infringement based on Art.5(1)(a) (identical mark/identical goods) could not succeed. He said that was the case even if use of the competitor's mark was prominent in the advertisement. It is very rare that use of a competitor's mark in a comparative advertisement will affect the essential function of that mark because of course, the whole purpose of such advertisments is to contrast two brands and not to confuse two brands. It is of significance that in O2 v Hutchinson, the ECJ had held that Art.5(1)(b) could only be relied upon in comparative advertisements where the trade mark proprietor could establish a likelihood of confusion (see para. 69). Yet, it also said that the context of use of a sign could be taken into account. Of course, if the context can be taken into account, a comparative advertisement will never create confusion between two brands. Thus, if the Advocate-General is followed, such would suggest the death-knell for trade mark infringement proceedings in comparative advertisements based on Art.5(1)(a) & (b).

The Advocate-General then considered what needed to be established to make out a case of taking unfair advantage under Art.3a(1)(g) of the comparative advertising directive (CAD). This mirrors the provision in Art.5(2) of the Trade Mark Directive. The Advocate-General realised that there this was a difficult area because all comparative advertisements are intended to increase the sales of the advertisor at the expense of the competitor. Thus, he said that reference to such expressions as free-riding on the competitor's reputation was of little assistance in comparative advertisements. He held that it was necessary to establish that the advertisement caused an association to be made between the reputation of the competitor's brand and that of the advertisor. If such was established, it was then necessary to consider whether such an advantage was unfair. The Advocate-General considered that this depended on the facts of the circumstances. An important factor appeared to be whether the competitor's brand was much better known than the advertisor. However, luring away customers of the competitor to the advertisor was not so important because such was inherent in the phenomenon of comparative advertising.The Advocate-General essentially was suggesting that the more informational the advertisement, the less likely it was taking unfair advantage of but that even genuinely informational comparative advertisements could take unfair advantage of a competitor's brand where such information was of limited value.

The Advocate-General also considered the provisions of Art.3a(1)(h) CAD which outlaws the comparative advertisements which present goods or services as "imitations" or "replicas" of goods sold under a competitor's brand. He distinguished between the comparison of characteristics of the goods which was allowable and statements which suggest that the advertisor's goods were manufactured in the same way as the competitor's goods sold under the competitor's trade mark.

Finally, the Advocate-General considered the meaning of "unfair advantage" within the context of Art.5(2). In effect, he held that where an advantage is obtained from using the competitor's mark, such would be unfair if it was without due cause or, if it was with due cause, would have to be shown to be unfair. An immediate difficulty with this interpretation is that if it was with due cause, then Art.5(2) does not apply regardless whether the advantage was unfair or not. It remains to be seen how much of this aspect of the Opinion survives.

Finally, in an interesting discussion, the Advocate-General considers what functions of a trade mark should be considered when considering infringement under Art.5(1)(a) & (b). Although he came to no particular view (it being unnecessary for the purpose of deciding the case), his view appeared to favour that the essential function was the only function to be considered under Art.5(1)(a)/(b) and that the "communication" function was only relevant to Art.5(2). That view accords with this author's view. It must be remembered that Art.5(1)(a)/(b) is applicable even if the mark has no reputation whereas Art.5(2) is only applicable if the mark has a reputation. Furthermore, damage to "communication function" does not per se result in a likelihood of confusion. Indeed, the case law recognises that Art.5(2) applies even in the absence of confusion. Conversely, it is difficult to see how there can be a likelihood of confusion as to trade origin (as required under Art.5(1)(b)) merely by damage to the communication function of a brand.With regard to Art.5(1)(a), although it is not necessary to show likelihood of confusion, it is necessary to show that the use is liable to affect the essential function of the mark. This is difficult in the context of comparative advertisements.

It remains to be seen whether the ECJ follow Mengozzi's Opinion. It should be remembered that in O2 v Hutchinson, he held that the Trade Mark Directive was not applicable to comparative advertisements. The ECJ did not expressly endorse that opinion but held that a likelihood of confusion would need to be proven (which of course will be virtually impossible if the context is allowed to be taken into account i.e. the fact that it is a comparative advertisement - which the ECJ expressly ruled that it should be so taken into account). In L'Oreal v Bellure, the same Advocate-General has held that an action for trade mark infringement based on Art.5(1)(a) will not succeed in comparative advertisement because such does not affect the essential function of a trade mark.

If he is followed, then in almost all comparative advertising cases, the trade mark proprietor would need to establish a case under Art.5(2) before such becomes actionable under trade mark law. The real question is whether there is a lacuna in the law such that there exists a comparative advertising case where a trade mark proprietor can establish that the conditions of Art.3a of the CAD have not been satisfied but yet has no cause of action under Art.5(2) of the Trade Mark Directive. It is the author's view that it will be a rare case where non-compliance with Art.3a(1) of CAD does not lead to a finding of taking unfair advantage of/tarnishment or detriment to the repute of the mark. Thus, it can be imagined that tarnishment would apply if it was suggested wrongly that the prices of a particular brand are less than they really are. However, if there is, for those countries where no free-standing cause of action under the Comparative Advertising Directive exists (such as the UK), this will cause a substantial disharmony in the European Community compared to those countries where individuals have a private cause of action under the CAD.