Crossing lines in advertising

By Varvara Riasnaia Trademark Paralegal Ipsilon Benelux | Ipsilon Group

Advertising is the engine of trade and progress. One of the core aspects of contemporary advertising is comparison. The manufacturers and suppliers strive to make their products stand out, showing their advantages by comparing them to the products of the competitors. This type of advertising first appeared in the 1970s in the United States. Since that time, this marketing strategy has progressively developed, and various legislative measures were adopted in different countries to regulate comparative advertising. This blogpost briefly outlines the legal framework surrounding comparative advertising in the European Union (EU) and famous case law regarding comparative advertising and trademark infringement.

Comparative Advertising: Definition and Legal Basis in the European Union

The main legal instrument governing comparative advertising in the EU is Directive 2006/114/EC on misleading and comparative advertising (hereinafter – Comparative Advertising Directive). According to its Article 2 comparative advertising is any advertising “which explicitly or by implication identifies a competitor or goods or services offered by a competitor”. The Comparative Advertising Directive sets out the conditions under which comparative advertising is permitted and ensures that such advertisements do not mislead consumers or harm the reputation of competitors. The key requirements are as follows:

Objective Comparison: The comparison must be based on objective characteristics, such as price, quality, or other measurable attributes, and it should not distort the factual basis of the comparison.

Homogeneity: The goods or services compared must have the same purpose or satisfy the same needs.

Non-misleading: The advertisement should not mislead or confuse consumers regarding the nature, properties, or legal status of the products or services being compared.

No Risk of Disparagement: The comparison should not discredit or unfairly attack the trademarks, trade names, or other distinguishing marks of a competitor.

Fair Competition: The comparison must not unfairly take advantage of a competitor’s reputation or trademark.

No parasitic use: It is prohibited to present goods or services as imitations or replicas of other goods or services to which a protected trademark or trade name is applied.

No Confusion: The advertisement should not create confusion between the advertiser’s product and that of the competitor, especially when it comes to brand identity.

Comparative advertising and Trademark infringement

From the recitals of the Comparative Advertising Directive, it may be judged that the attitude of the European legislator towards comparative advertising is rather favorable as it can enhance the competition between suppliers to the consumer’s advantage, which is one of the aims of the internal market.

The recitals 13 – 15 state that the measure to identify the goods or services of a competitor through referring to a trademark of which the latter is the proprietor may be indispensable to make comparative advertising effective, despite the fact that the proprietor has the exclusive rights to prevent all third parties not having his consent from using its trademark. However, such use of a third party’s trademark in comparative advertising shall comply with all the relevant conditions provided by the Comparative Advertising Directive.

The question of whether comparative advertising still may infringe on exclusive trademark rights even when it meets all the cumulative conditions set out in the Comparative Advertising Directive was addressed in the landmark cases O2 Holdings v. Hutchison in 2008 and L’Oréal v. Bellure in 2009.

O2 Holdings Limited (O2), a UK mobile provider, filed a lawsuit against its competitor, Hutchinson 3G Limited (H3G), over an advertisement comparing H3G’s mobile service to O2’s. The advertisement featured images of bubbles, a symbol closely associated with O2’s products, for which O2 held multiple registered trademarks. As a result, O2 initiated legal proceedings against H3G for infringing its “bubbles trademarks.”

The case eventually reached the European Court of Justice (ECJ), who answered the following question, should Article 5(1)(b) of Trademarks Directive 89/104 be interpreted as allowing the owner of a registered trademark to prohibit a third party from using a sign similar to the trademark in a comparative advertisement for goods or services that are identical or similar to those covered by the trademark, even when such use does not create a likelihood of confusion among the public. In the case under discussion, the use of this bubble imagery by H3G did not confuse consumers about the origin of the services. The advertisement, in its entirety, did not create any commercial link between the parties involved in the litigation.

The ECJ answered this question negatively, as the use of a similar sign did not result in confusion on the part of the public. The advertisement met the requirement set out in Article 3a(1)(d) of Misleading and Comparative Advertising Directive 84/450, as amended by Directive 97/55 – namely, it did not create confusion in the marketplace – under which comparative advertising was permitted.

Another key case related to trademark use in comparative advertising is L’Oréal v. Bellure. In this case, Bellure sold replica perfumes and compared them to L’Oréal’s fragrances in its advertising. As Bellure’s packaging closely resembled L’Oréal’s, they provided comparison lists showing which Bellure perfumes corresponded to the ones by L’Oréal. L’Oréal sued Bellure for trademark infringement. The case reached the Court of Appeal, which referred several questions to the ECJ.

Under Article 3a(1)(g) of Misleading and Comparative Advertising Directive 84/450, as amended by Directive 97/55, advertising is prohibited when it “takes unfair advantage of the reputation of a trademark.” The ECJ clarified that this occurs when a third party uses a sign similar to a well-known trademark to “ride on the coat-tails” of the mark, seeking to gain from its reputation and public appeal, and to benefit from the trademark proprietor’s marketing efforts invested in building and sustaining the brand’s image, without offering any financial compensation.

The ECJ also clarified that the requirement for comparative advertising not to present goods as imitations or replicas applied to any imitation, not just counterfeit goods. Besides, this condition applied not only to advertisements that directly promoted imitation but also to those that indirectly suggested it through overall presentation and economic context.

Since Bellure aimed to exploit L’Oréal’s reputation to attract consumers and marketed their perfumes as replicas of the well-known L’Oréal’s fragrances for this purpose, the court concluded that the advantage gained in this case was considered unfair within the meaning of Article 3a(1)(g). As a result, the Bellure’s advertising did not meet the required conditions for permissible comparative advertising under Article 3a(1) of Misleading and Comparative Advertising Directive 84/450, as amended by Directive 97/55.

Conclusion
To sum up, trademark infringement can occur if comparative advertising fails to meet the legitimacy requirements set out in the Comparative Advertising Directive. As a result, the permissibility of comparative advertising is determined by the legitimacy conditions set forth in Art.4 of the current Comparative Advertising Directive 2006/114/EC. Only if those conditions are not met can trademark infringement under Art.10(2) of the current Trademarks Directive 2015/2436 be found. Conversely, lawful comparative advertising under the Comparative Advertising Directive cannot result in trademark infringement.

The author’s opinion

The L’Oreal vs Bellure case specifically had a noticeable impact on advertising practices. It was a positive ruling primarily for the major brand owners with a strong reputation as it made it more difficult for the smaller companies to use comparison lists to advertise their products as alternatives for the well-known products. However, this decision could have had a negative effect on competition in the internal market of the European Union. Therefore, considering that the attitude of the European legislator towards comparative advertising is rather favorable, finding an appropriate and fair balance between the comparative advertising marketing strategy and the trademark protection is extremely significant for all the parties involved, including well-known brand owners, smaller manufacturers and consumers in order to make the internal market function properly and in accordance with its aims.

Sources:

Judgment of the Court (First Chamber) of 12 June 2008. O2 Holdings Limited and O2 (UK) Limited v Hutchison 3G UK Limited.  https://curia.europa.eu/juris/liste.jsf?num=C-533/06

Judgment of the Court (First Chamber) of 18 June 2009. L’Oréal SA, Lancôme parfums et beauté & Cie SNC and Laboratoire Garnier & Cie v Bellure NV, Malaika Investments Ltd and Starion International Ltd. https://curia.europa.eu/juris/liste.jsf?num=C-487/07

Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising OJ L 250, 19.9.1984.

Directive 97/55/EC of European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concerning misleading advertising so as to include comparative advertising, OJ L 290, 23.10.1997.

Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising, OJ L 376, 27.12.2006.

Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks, OJ L 299, 8.11.2008Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trademarks, OJ L 336, 23.12.2015.

Vasiliki Papanikolaou, “Comparative Advertising in relation to Trademark Rights and Consumer Protection”, 2021. https://pergamos.lib.uoa.gr/uoa/dl/frontend/file/lib/default/data/2969563/theFile

Lazaros Grigoriadis, “Comparing the Trademark Protections in Comparative and Keyword Advertising in the United States and European Union“, California Western International Law Journal, Vol. 44, No. 2 [2014], Art. 3. https://www.academia.edu/79541405/Comparing_the_Trademark_Protections_in_Comparative_and_Keyword_Advertising_in_the_United_States_and_European_Union

L’Oreal smells success in ‘smell-alike’ case. https://marketinglaw.osborneclarke.com/media-and-ip/loreal-smells-success-in-smell-alike-case/

Smell-alike/look-alike perfume case a sniff closer to resolution as Advocate General releases his opinion. https://www.lexology.com/library/detail.aspx?g=da0604ad-e539-4a74-a45b-91c0a11b33fc