In a recent case the European Court of Justice (ECJ) outlined the circumstances in which trade mark owners who have built up a reputation are entitled to protect their mark against unfair advantage by another party in the context of comparative advertising. In the case of L’Oréal SA v Bellure NV, L’Oréal took an infringement action against companies that sold and marketed imitations of L’Oréal’s well-known perfumery collection. Some of the imitations were being sold in bottles and packaging similar to those of L’Oréal and also possessed a similar scent. These imitations were sold for less than the L’Oréal equivalent and were advertised using a comparative list, which indicated the trade mark of the L’Oréal product it sought to imitate.
L’Oréal claimed that imitation of its bottles and packaging and the sale of perfumes in such packaging took unfair advantage of the distinctive character and repute of its trade marks and constituted trade mark infringement. Neither party disputed that the similarity was unlikely to mislead the public. L’Oréal also claimed that use of its trade marks in the comparison lists infringed its rights vis-à-vis its trade marks.
ECJ preliminary ruling
The ECJ stated that Article 5(2) of the Trade Marks Directive envisaged three types of injury, namely detriment to distinctive character, detriment to repute and taking unfair advantage of the distinctive character or repute of the mark. It clarified that just one of three types of injury was sufficient for an infringement action and that trade mark owners who have built up a reputation are entitled to protect their mark against unfair advantage without having to show a likelihood of confusion or a likelihood of detriment to the distinctive character or repute of the mark.
Unfair advantage is taken where one party, in using a sign similar to a renowned mark of another party, seeks to ride on the coat tails of that mark in order to benefit from the power of attraction, the reputation and the prestige of that mark. The ECJ elaborated that for an unfair advantage to be taken there needs to be a connection in the minds of the public between the renowned mark and the later mark, factors such as the strength of the trade mark’s reputation and similarities between the marks and their goods and services are relevant in considering whether such a link exists.
The ECJ found that a trade mark owner is entitled to prevent a third party from using an identical sign in relation to identical goods in a comparative advertisement, which does not satisfy the conditions necessary under the Comparative Advertising Directive, even where such use does not jeopardise the essential function of the mark provided it affects or is liable to affect one of the other functions of the mark. It further found that a party who in a comparative advertisement presents its products as an imitation or replica of a product bearing a well-known trade mark is not acting in accordance with fair competition and any advantage gained by the advertiser must be considered to be an advantage unfairly taken of the reputation of the mark.
L’Oréal principles applied
The ruling offers further guidance for national courts. The English courts have already applied the L’Oréal principles in subsequent cases. The English Court of Appeal in Whirlpool Corporation v Kenwood Ltd referred to the L’Oréal case but found that the facts in Whirlpool were different since the necessary element of commercial advantage had not been established. In Daimler AG v Sany Group Company Limited the English High Court found that Sany had not infringed the well known Mercedes-Benz mark. It found that the average consumer would not make a link between the two logos which would lead to exploitation of the well-known mark; even if it did, it was decided that there was little evidence that Sany had taken unfair advantage of the Mercedes-Benz mark.
Conclusion
The L’Oréal ruling has widened the scope of protection for trade mark owners. It is only necessary to prove one type of injury to evidence infringement of Article 5(2) of the Trade Marks Directive. However the case is applicable only to the owners of trade marks which are well-known or have an established reputation. The case also offers greater protection for trade mark owners against imitation of their brands. Advertisers should ensure that any comparative advertising practices adhere to the relevant rules and that any comparisons used do not unfairly leverage the reputation of a third party’s mark.
For further information, please contact Leo Moore or Marie McGinley of our Technology & Commercial Contracts Department.
