In a recent copycat case, the European Court of Justice handed L'Oreal a positive decision against cosmetic company Bellure

The European Court of Justice (ECJ) delivered a positive decision for L'Oreal in their trademark infringement action against Bellure. The defendants had produced 'smell-alike' perfumes, with fragrances similar to a number of designer brands in the UK. Although similar in fragrance, the bottles and packaging were clearly not identical, although Bellure admitted that they were intended to give 'a wink of an eye' to L'Oreal's products.

L'Oreal were successful in their High Court action for trademark infringement, which the defendants appealed. The Court of Appeal stayed the appeal, pending answers from the ECJ. Five questions were referred to the ECJ, focusing on Article 5(1) of the Trademark Directive (TMD) and Article 3a(1) of the Comparative Advertising Directive (CAD).

Unfair advantage
The ECJ answered the fifth question first, deciding that Article 5(2) of the TMD could also be applied to the use of those marks in the comparison lists at issue. The fifth question concerned whether a trader would get an unfair advantage from using a registered mark without causing any detriment to the owner. Article 5(2) protects against three kinds of injury: detriment to the distinctive character of the mark; detriment to the repute of the mark; and unfair advantage taken of the distinctive character or the repute of the mark. As an initial step there has to be a degree of similarity between the mark with a reputation and the sign, resulting in the relevant section of the public establishing a link between the two.

Only one type of injury has to be present for Article 5(2) to apply. It is sufficient that a third party takes advantage by use of the identical or similar sign to ride on the coat tails of the mark with the reputation. There does not have to be a detrimental effect on the original brand.

The comparison lists
The first and second questions concerned whether using a registered mark to compare characteristics of a product could fall under Article 5(1) of the TMD.
The ECJ reiterated that using a mark for purely descriptive purposes is excluded from the scope of application of Article 5(1). However, in this instance, L'Oreal's marks were used for the purpose of advertising. The ECJ held that Article 5(1)(a) must be interpreted as meaning that the proprietor of a registered trademark is entitled to prevent the use by a third party in a comparative advertisement which does not satisfy the conditions laid down in Article 3a(1) of the CAD.

The referring court has to determine whether the use of L'Oreal's marks is likely to affect one of the functions of those marks, such as communication, investment or advertising. If one of these is shown, it is not necessary to show that the use jeopardises the essential function of the trademark, which is to indicate the origin of the goods or services.

Comparative advertising directive
The remaining questions sought clarification on the meaning of 'take unfair advantage of' in the context of Article 3a(1)(g) of the CAD and what was the meaning of "present[ing] goods or services as imitations or replicas" in the context of Article 3a(1)(h) of the CAD.

The CAD does allow the use of a competitor's trademark where the comparison objectively highlights differences and the object or effect of such highlighting is not to give rise to situations of unfair competition. The comparisons highlighted that the perfumes were imitations of the fragrances marketed under certain marks belonging to L'Oreal and consequently they fell foul of Article 3a(1)(h), presenting the goods as being imitations of goods bearing a protected trademark.

Article 3a(1)(g) provides that comparative advertising must not take unfair advantage of the reputation of a trademark and the Court held that unfair advantage must be given the same interpretation as Article 5(2) of the TMD. The ECJ held that Article 3a(1) means that an advertiser that states explicitly or implicitly in comparative advertising that the product marketed is an imitation of a product bearing a well-known trademark presents 'goods or services as imitations or replicas' within the meaning of Article 3a(1)(h). The advantage gained by doing this is unfair within the meaning of Article 3a(1)(g).

This is a positive decision for trademark owners and recognises their investment in their brands. There is clarity about the use of comparison charts as advertisements – not merely providing factual and descriptive material. The decision clarifies that the provisions relating to marks with reputation are to be read separately – as they are drafted and intended – and not mingled in a manner which makes almost any claim under Article 5(2) virtually impossible to prove.

However, if detriment or likely detriment to the distinctive character or repute of the mark can be shown, why would the claimants be shoehorning these aspects into an 'unfair advantage analysis'? There is still lack of clarity in some of the analysis. Some of the decision is in inconsistent with other recent ECJ authority. Also, the term "marks with reputation" still needs clearer definition. However, overall this is a robust decision. How the Court of Appeal will receive it is awaited with interest.

Isabel Davies is head of the technology, media and telecoms sector group at CMS Cameron McKenna.