O2 sued H3G for trade mark infringement over a TV commercial comparing H3G’s prices with O2’s which included animated bubbles similar to bubble trade marks registered by O2. O2’s infringement claims were rejected by the High Court, as reported in our April 2006 bulletin. O2 appealed (as did H3G on one element of the High Court’s judgment). The Court of Appeal last week handed down its judgment.
Neither Lord Justice Jacob nor his fellow judges were of the opinion that H3G’s advertising infringed O2’s trade marks. However, three difficult issues of fundamental importance in the context of comparative advertising have been raised and the court therefore decided to refer these issues to the European Court of Justice, whose decisions are applied across Europe.
To recap on the issues, O2 are not claiming that H3G’s price comparison was misleading. What O2 object to is H3G’s use of bubble imagery in the commercial as a way of referring to O2.
1. “Where a defendant in the course of trade uses a sign in a context purely for the purpose of comparing the merits (including price) of his goods or services with those of the trade mark owner and in such a way that it cannot be suggested that the essential function of the trade mark to guarantee the trade mark as an indication of origin is in any way jeopardised, can his use fall within either (a) or (b) of Art. 5.1 of [the Trade Marks] Directive?”
In other words, is it possible to infringe a competitor’s trade mark at all when you use it simply to compare your own goods or services with those covered by the competitor’s trade mark? (The High Court thought it was and found in O2’s favour on this point, which H3G appealed.
2. Where a defendant uses, in a comparative advertisement, the registered trade mark of another, in order to comply with Art. 3a of [the Misleading Advertising] Directive as amended [by the Comparative Advertising Directive], must that use be “indispensable” and if so what are the criteria by which indispensability is to be judged?”
In other words, can a comparative advertiser only use competitors’ registered trade marks to the extent that this is necessary? (O2 didn’t object to H3G’s use of their “O2” word mark, but argue that there was no need for H3G to include bubbles in their commercial.)
3. “In particular, if there is a requirement of indispensability, does that requirement preclude any use of a sign so similar to the registered trade [mark] as to be confusingly similar to it?”
In other words, are you only allowed to use your competitor’s trade mark exactly as registered, or can you use material which is similar but different? (The bubbles in H3G’s commercial were not identical to the bubbles registered by O2.)
The questions the Court of Appeal has referred to the ECJ will be as follows (subject to any slight amendments in “post-judgment discussion”):
The UK court has a general tendency to interpret trade mark law liberally. The UK court is also generally well disposed towards comparative advertising, which has a longer tradition in the UK than in other countries such as Germany which until recently regarded it as unfair competition. The Court of Appeal’s answer to all three questions above was “No”. It remains to be seen whether the ECJ will confirm the liberal approach adopted by the UK court or whether the IP rights of brand owners which O2 is asserting will be found to have been infringed by H3G’s bubbles.