Trade mark holders cannot stop honest comparative advertising, rules ECJ

Out-Law News | 12 Jun 2008 | 6:29 pm | 2 min. read

Mobile phone firm O2 looks likely to fail to stop competing mobile firm 3 from using its name and trade-marked bubble motifs in its adverts. The competing company had used graphics similar to O2's in ads comparing the two companies' prices.

O2 had lost its original case and appealed, and the Court of Appeal had asked the European Court of Justice (ECJ) to rule on whether 3's use of the motifs was illegal under trade mark law.

The ECJ, Europe's highest court, ruled today that 3 was entitled to use the symbols as long as it did not confuse the public into thinking that the ad was from O2 itself.

Telefonica-owned O2 holds registered trade marks for its name and for images of bubbles in relation to telecoms services, and claimed that the use of its name and of bubbles similar to its own in the 3 price comparison ad violated its trade marks.

The ECJ said that violation would only occur if the use was in the course of trade; was without the trade mark owner's consent; was in relation to the same kinds of goods or services as that for which the trade mark is registered; and confuses consumers as to the origin of the goods or services.

The ECJ said that since the fourth condition was not met, O2 could not oppose the use of the bubbles or its name.

"The Court notes that the first three conditions are satisfied in the case in the main proceedings. By contrast, in accordance with the referring court’s own findings, the use by H3G of bubble images similar to the trade marks did not give rise to a likelihood of confusion on the part of consumers," said an ECJ statement.

"The advertisement, as a whole, was not misleading and, in particular, did not suggest that there was any form of commercial link between O2 and H3G [3]. Consequently, the fourth condition is not satisfied in the case in the main proceedings," it said.

"The Court finds that the proprietor of a registered trade mark is not entitled to rely on his trade mark rights to prevent the use, by a third party, in a comparative advertisement, of a sign similar to that mark in relation to goods or services identical with, or similar to, those for which that mark is registered where such use does not give rise to a likelihood of confusion on the part of the public," said the ECJ.

Comparative advertising is allowed, but the ECJ ruling makes it slightly clearer how much of a competitor's corporate identity can be used in an advert. Trade mark law expert Judith Tonner of Pinsent Masons, the law firm behind OUT-LAW, said, though, that the decision still left some grounds for confusion.

"It can be inferred from the ECJ's finding in favour of H3G that their use of more than one of O2's marks wasn't viewed as increasing the likelihood of consumer confusion in any way," she said. "It's difficult to predict where the line would be drawn with this. For example, would it be within the terms of the comparative advertising directive to overload a comparative advert with your competitor's brand assets? From a brand owner's perspective, it would be reasonable to view such an action as the advertiser pushing their luck."

The ECJ's ruling is in answer to questions from the Court of Appeal, which must finally rule in the case, but the opinion from the ECJ will set the standard for future advertising. Tonner said that it could well benefit consumers.

"From a consumer's viewpoint, clear comparison of features like prices will be welcomed as encouraging a competitive marketplace. For those whose brands are being used in adverts, it will obviously be frustrating that they are unable to prevent a competitor's use of their mark, or even multiple marks, provided the comparative advertising directive's conditions of honest and objective use are deemed to have been met," she said.