The morning the ECJ delivered its judgment in L'Oreal v Bellure, on whether 'knock off' imitation perfumes which clearly weren't the trade marked goods, but were marketed in a way that 'winked at' L'Oreal's famous perfume brands, infringed L'Oreal's trade marks and were protected as permissible comparative advertising.
Is harm needed for unfair advantage?
The court answered the 5th question first. This boiled down to whether there could be unfair advantage under Art.5(2) without (a) confusion or (b) detriment to the earlier mark.
Since only one of the types of harm mentioned in Art.5(2) is needed for there to be infringement, there could be no need for detriment to repute or distinctiveness for unfair advantage to be made out. [IPKat comment: quite right. The IPKat can see why the UK Courts might have wanted to introduce a harm to trade mark function requirement in here, but there was no basis for it on the face of the Directive].
How can unfair advantage be proved?
The ECJ's words bear repeating in full, since the IPKat reckons they're going to be the subject of much close textual analysis by legions of lawyers:
In order to determine whether the use of a sign takes unfair advantage of the distinctive character or the repute of the mark, it is necessary to undertake a global assessment, taking into account all factors relevant to the circumstances of the case, which include the strength of the mark’s reputation and the degree of distinctive character of the mark, the degree of similarity between the marks at issue and the nature and degree of proximity of the goods or services concerned. As regards the strength of the reputation and the degree of distinctive character of the mark, the Court has already held that, the stronger that mark’s distinctive character and reputation are, the easier it will be to accept that detriment has been caused to it. It is also clear from the case-law that, the more immediately and strongly the mark is brought to mind by the sign, the greater the likelihood that the current or future use of the sign is taking, or will take, unfair advantage of the distinctive character or the repute of the mark or is, or will be, detrimental to them (see, to that effect, Intel Corporation, paragraphs 67 to 69).
[IPKat comment: 2 huge problems with this - (1) all these factors go towards showing that there's a link between the marks, but they don't really show that the link has 'rubbed off' on the later mark to give its owner an unfair advantage; (2) these are the factors that were used in relation to detriment to distinctive character, but the court has just said that these are two different types of harm; (3) the ECJ in Intel v CPM said such factors are insufficient for showing unfair advantage. ]
The ECJ also said: ' In addition, it must be stated that any such global assessment may also take into account, where necessary, the fact that there is a likelihood of dilution or tarnishment of the mark.'
[IPKat comment: aaargghhh - you just said that the various types of harm are different. Anyway, if there is likely dilution or tarnishment, why do you need unfair advantage on top? Also, note the use of the word 'likely'.]
On the facts
The defendants had created a link, they had done so for commercial advantage and had done so with the intention of creating a link. Thus, there was unfair advantage.
[Let the IPKat be the first to welcome the law of unfair competition to the whole of the EU, even if you do need a registered trade mark to qualify for it (but how hard is that now - you could just apply your distinctive word/device mark to your relatively straightforward product shape, register the whole bangshoot as a CTM a la Whirlpool v Kenwood and hey presto, you qualify for protection.]
The harm in a nutshell
The ECJ sums up:
'The advantage arising from the use by a third party of a sign similar to a mark with a reputation is an advantage taken unfairly by that third party of the distinctive character or the repute of the mark where that party seeks by that use to ride on the coat-tails of the mark with a reputation in order to benefit from the power of attraction, the reputation and the prestige of that mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark’s image.'
The comparison lists
Here the question was whether the use of the names of L'Oreal's perfumes in price comparison lists could amount to infringement under Art.5(1)(a), seeing as the ability of L'Oreal's marks to idenify the origin of L'Oreal's goods (the essential function) wasn't harmed.
The ECJ noted that price comparison lists were a form of comparative advertising, and it had already held in O2 that the use of a mark in comparative advertising could infringement, but also had Art.3a(1) of the Comparative Advertising Directive to save it.
The court revisited its line of case law on the scope of Art.5(1)(a), noting that it encompassed not only harm to the essential function, but also to the other functions of a trade mark which are 'in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising'. Art.5(1)(a) is wider than Art.5(1)(b) [thus confusion isn't required] and while descriptive use, e.g. Holterhoff, isn't covered, price comparisons aren't purely descriptive as they are for the purposes of advertising. The court noted that Art.5(2) might also apply in price comparison cases.
[IPKat comment: this sounds very nice in theory, but the court doesn't give us a clear understanding of what sorts of activities can harm the other functions of a mark. It seems though that the Court of Appeal in Arsenal got it right when it said that the effect of Holterhoff was to exclude descriptive use only.]
The Compartive Advertising Directive
In relation to Art.3a(1)(h) (comparative advertising must not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name), this didn't require the goods to be counterfeit, nor did it require the advert to be misleading for it to be prohibited. The imitation could be implicit or explicit. Moreover, the imitation didn't have to be of the product as a whole, and could be of one aspect, e.g. its smell. In this case ' It is not in dispute that the object and effect of the comparison lists at issue in the main proceedings are to draw the attention of the relevant public to the original fragrance of which the perfumes marketed by Malaika and Starion are purportedly an imitation. Those lists thus attest to the fact that those perfumes are imitations of the fragrances marketed under certain marks belonging to L’Oréal and Others, and they consequently present the goods marketed by the advertiser as being imitations of goods bearing a protected trade mark within the meaning of Article 3a(1)(h) of Directive 84/450.'
In relation to Art.3a(1)(g) (omparative advertising must not take unfair advantage of the reputation of a trade mark), unfair advantage appeared both here and in Art.5(2), and had to be interpreted in the same way in both. in this case, in the words of the court: '... since, under Directive 84/450, comparative advertising which presents the advertiser’s products as an imitation of a product bearing a trade mark is inconsistent with fair competition and thus unlawful, any advantage gained by the advertiser through such advertising will have been achieved as the result of unfair competition and must, accordingly, be regarded as taking unfair advantage of the reputation of that mark.'
[IPKat comment: some circular reasoning going on here. Because the advertising was contrary to Art.3a(1)(h), it was unfair under Art.3a(1)(g). At least though this is an attempt to articulate the unfairness, rather than just stopping at the fact that there has been an advantage. Generally though, this makes it very hard for people to tell consumers that their products are like trade marked products in some respect.]
IPKat concluding comment
If Intel was the low point of Art.5(2) protection for trade mark owners then this has got to be the high point, particularly when taken in conjunction with the approach to comparative advertising. Although the ECJ didn't explicitly adopt the Advocate General's position that any advantage is unfair, in bascially stopping once the link has been established if there is a commercial motivation for making that link, it may as well have. It looks like we're stuck with something which looks rather like a tort of unfair competition. The escape route is that only marks with a reputation will qualify. This makes it crucial for us to have a clear understanding of the standard for establishing when marks have a reputation - something which so far has been rather imprecise.