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Thursday, 25 June 2009

Is the ruling in L'Oréal v Bellure against the law?

Swedish Advokat Mats Björkenfeldt (Hjalmar Petris Advokatbyrå HB) is one of the IPKat's favourite correspondents because he likes to use his brain in order to exercise the brains of others. He is very concerned about the recent ruling of the Court of Justice of the European Communities in Case C-487/07 L'Oréal v Bellure (discussed here by the IPKat and here, on the same blog, by another of the IPKat's favourite correspondents, Professor Dirk Visser). Writes Mats:

"I wonder if you can help me in this matter?

Concerning ECJ´s ruling in L'Oréal v Bellure I wonder if this decision is consistent with EC´s Directive 2005/29 on Unfair Commercial Practices (UCPD)?

In Wetherill and Bernitz, The Regulation of Unfair Commercial Practices under EC Directive 2005/29, New Rules and New Techniques, Hart, 2007, p. 42, you can read the following:

“The standard of assessment is touched upon in one of the Recitals (14), which declares that it is not the intention of the Directive to reduce consumer choice by prohibiting the promotion of products which look similar to other products unless this similarity confuses consumers as to the commercial origin of the product and is therefore misleading. This recital can be read as a pronouncement in favour of a rather restrictive view of the scope of protection offered… This would be more in line with the rather restrictive view on passing-off prevailing in English law than with the elaborate German case law”.

Professor Ulf Bernitz -- you may call him Mr IP in the north -- confirms in his chapter "Misleading Packaging, Copycats and Look-alikes: an Unfair Commercial Practices", in Ezrachi et al, Private Labels, Brands, and Competition Policy, Oxford 2009, p. 218:

“From a legal point of view, trade mark law constitutes the basis. However, trade mark protection is often not broad enough to catch the use of copycats and look-alikes. They often avoid being so confusingly similar that they would constitute trade mark infringement. In this regard, it is of fundamental importance to which extent there exist principles of unfair competition law suitable to the problems. On this point, the law is far from uniform. The possibility of taking successful legal action against the practice seems to be particularly restricted in the UK; English law on passing off tends to require proof of actual misleading. In other countries, e.g. Germany and the Nordic countries, unfair competition or marketing law offers wider possibilities for successful legal action in this kind of cases. However, the recent EC Directive 2005/29 on Unfair Commercial Practices has changes the basic legal perspective substantially”. And at p. 229: “This recital (14) can be read as a pronouncement in favour of a rather restrictive view on the scope of protection offered, indicating the priority of consumer perception and thus possibly reducing the application of the Directive to instances of clear deception of consumers looking for a particular brand or the like. This would be more in line with the rather restrictive view on passing-off prevailing in English law…”

The ECJ´s ruling in L'Oréal v Bellure is based, as I believe, on the notion of protection of investments, cf AG´s opinion in Case C-206/01 Arsenal v Reed. But is it consistent with the law?

I´m rather confused, and wonder if any IPKat friends, including Professor Visser, can bring order to all of this?"
Who would like to rise to this challenge, wonders the IPKat. Merpel reminds readers that there are still a couple of days in which to cast your vote on the poll (you can find it at the top of the side-bar) as to whether L'Oréal v Bellure is the best thing since sliced bread or an unmitigated evil, or something in between.


Dr Schoen said...

some selective reading of recital 14 perhaps. If you read on: "...This Directive should be without prejudice to existing Community law
which expressly affords Member States the choice between several regulatory options for the protection of consumers in the field of commercial practices."

Not that I don't have sympathy with those who are concerned by the judgment, particularly the "non-definition" of imitations and replicas. Doesn't an advert comparing say mobile phone tariffs refer to imitation or replica services? Against this you might say that the Misleading and Comparative Advertising Code should be read in the way most favourable to comparative advertising and that mobile phone services are obviously not intended to be caught by the provision: you know an imitation or replica when you see one. Hardly a satisfactory why to interpret EU legislation and an approach condemned by Jacob LJ in Aerotel in relation to the identification of computer programs as such.

Aaron Wood said...

Indeed. Whilst I agree with the sentiment of the case, the general principles do seem to sweep the way clean in an unsatisfactory way.

The "cloning" of perfumes in the UK is not of itself an infringement. There is an interest in providing choice and competition by allowing such products to compete with the brand owner. Such competition can really only be done by way of a reference to the name of the scents of others.

I think that the problem in this case is that the same effect could have been reached without the ECJ being so brand-friendly. The facts suggest that there was enough to ensure that Bellure could not argue that the use was "honest".

I guess that the issue is that where a product is so basic in its characteristics, any comparison of that essential characteristic implies that the advertiser's product is an imitation. Arguably, that implication is only displaced in the mind when the advertiser's product is known. If I said "if you like COCA-COLA, you'll like PEPSI" few people would think I meant that PEPSI is an imitation of COCA-COLA. If I said "if you like COCA-COLA, you'll like ROLA-COLA" perhaps the view would be different.

But if competition is to be encouraged, surely the new entrant should be welcomed. Unless more is done by the competitor to suggest imitation, I think that the statements mentioned above suggest that the ECJ's finding on the lists is somewhat harsh.

Cornelis Lehment said...

Don´t worry dear Mats, the evil will not return through the back door of the UCP. The ECJ-decision is based on Article 5 (2) TM-Directive 89/104/EEC and Art. 3a(1)(g) Comparative advertising Directive 84/450/EEC. In both
provisions the relevant term is to "take unfair advantage of the reputation of a (trade) mark". The great achievement of the ECJ ruling is to make clear that this has nothing to do with misleading commercial practises. The UCP directive is simply not applicable for this constellation. The UCP directive deals only with B-to-C-relations whereas Trademark law and the Comparative advertising Directive follow a general approach. Thus recital 6 of the UGP directive expressly claims "Nor does this Directive cover or affect the provisions of Directive 84/450 on advertising which misleads
business but which is not misleading for consumers AND on comparative advertising." Accordingly Recital 14 deals only with the aspect of misleading practices but does not cover or exclude other reasons for look
alikes to be considered as trademark infringement or unfair competition.

Thanks to the ECJ it is now totally clear that unfair competition law is more than just consumer protection and that it serves to protect innovative industries from unjustified free-riding as well.

Anonymous said...

I´m still worry dear Cornelius.

In Recital 14 the EC-lawmaker says that the consumers choice should not be reduced if not the promotion of products which look similar to other products confuses consumers as to the commercial origin.

ECJ´s decision means that the consumers choice is reduced to zero.

How can this be in line with the law?

Mats Björkenfeldt

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