The European Court of Justice (ECJ) has published the Advocate General’s Opinion on the questions referred by the English Court of Appeal in O2 v Hutchison 3G.
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. O2 appealed and the Court of Appeal referred three questions to the ECJ.
The unusual feature of these proceedings is that O2 had accepted that the use of the mark “O2” in the advertisement complied with the Comparative Advertising Directive (“CAD”) and in particular that the advertisement was not misleading. What O2 objected to was H3G’s use of bubbles as a visual reference to O2.
The questions referred to the ECJ were in essence as follows:
- Does the use of a competitor’s trade mark in a comparative advertisement fall within the scope of the infringement provisions in the Trade Marks Directive?
- Can a comparative advertiser only use competitors’ trade marks if this is essential for identifying the competitor?
- Is a comparative advertiser only allowed to use its competitor’s trade mark exactly as registered, or can it use similar but different material?
The Court of Appeal’s answer was No in each case and the Advocate General agreed.
Assuming, as is likely, that the Opinion is now adopted by the ECJ, the use of competitors’ trade marks in comparative advertising will no longer be covered by European trade mark law. Only the CAD will be relevant.
UK brand owners will now have little direct legal recourse when their trade marks are used in comparative advertising, even if the advertising doesn’t comply with the CAD.
The CAD has been replaced by the Misleading and Comparative Advertising Directive (“MCAD”) which came into force in December 2007 and is shortly to be implemented in the UK by the Business Protection from Misleading Marketing Regulations 2007. The draft UK regulations do not give any private rights of action to individuals or companies.
Enforcement of the MCAD will be the duty of the OFT, of Trading Standards departments in England, Wales and Scotland and of the Department of Enterprise, Trade and Investment in Northern Ireland. These bodies will have powers to apply for injunctions (and the courts can also order corrective statements to be published) but they are likely in practice to leave most complaints to be resolved by “established means”. As the BERR website explains: “Action by the OFT therefore usually results only from a referral from the ASA where the self-regulatory system has not had the required impact.” Ofcom also has a statutory duty to consider complaints.
Brand owners looking for immediate and direct legal recourse will face a number of obstacles:
- An action for trade mark infringement is no longer possible.
- The courts may still be willing to hear claims for malicious falsehood (trade libel) if an advertisement is factually misleading. However, malicious falsehood claims are difficult to bring except in clear cases, and interim injunctions will be all but impossible to obtain in cases where the advertiser states that it intends to justify (ie substantiate) the claims made in the advertising.
- Many visual trade marks (“device marks” such as the O2 bubbles) are also protected by copyright, as artistic works. A case 10 years ago (IPC Magazines v MGN) held that copyright logos could be infringed in comparative advertising. This principle is now in doubt, given the clear signal given by the ECJ that comparative advertising should be controlled by the MCAD and not by intellectual property law.
The MCAD comparative advertising restrictions are not directly enforceable by companies in the UK, but some other member states (Ireland for example) have implemented the Directive in such a way as to give private rights of action to companies. Brand owners who want to take direct action may be advised to forum shop where comparative advertising campaigns are running internationally.
The ECJ’s judgment is likely to be published shortly and the case will then return to the Court of Appeal. We will report in due course, but the final outcome is unlikely to involve much good news for European brand owners.