In a significant ruling, the European Court of Justice (ECJ) has ruled that a company is entitled to use a competitor's trademark in its own advertisements in order to draw comparisons with that competitor's products or services. This judgment is an important development in this area of the law and is certain to be at the centre of debate over trademarks and advertising for some time to come.

The case arose from a series of advertisements run by Hutchison 3G Limited (3G) that drew comparisons between its services and those of its competitors. The advertising campaign included several advertisements, each drawing comparisons between 3G's service and the cost of similar services provided by other major UK mobile phone operators.

O2 Holdings (O2) took issue with one advertisement in particular which made use of several moving images of bubbles – similar in style to O2's well-known bubble design trademark. O2 argued that 3G's use of the moving bubble images fell within the terms of Article 5(1) of the Trade Marks Directive which gives owners of registered trademarks the right to prevent other parties from using the trademark where there is a danger of confusion in the minds of consumers between the mark used and the product being marketed.

In countering the action brought by O2, 3G argued that their advertisement did not fall within the terms of Article 5(1) and that, further, the Misleading and Comparative Advertising Directive gave it the right to use O2's trademark for the purposes of objectively comparing its service with that of competitors. 3G argued that there was no risk of confusion to consumers in its use of a bubble sequence similar to O2's trademark.

While at first instance O2's claim was rejected, O2 appealed that judgment and 3G also contested the judge's finding that, although its use of the trademark had been justified as comparative advertising, it had fallen within the Article 5(1) infringement under the Trade Marks Directive.

The question of whether use of a trademark in a piece of comparative advertising should be considered under the Trade Marks Directive at all was referred to the ECJ which has now found that any such advertisements should be considered only in terms of the Misleading and Comparative Advertising Directive.

The ECJ found that if the use of a competitor's sign in an advertisement is not confusing for consumers then there is no question of considering the advertisement under the terms of the Trade Marks Directive. If, however, there is the risk of some element of confusion then the advertisement will be open to being considered as an infringement under the Trade Marks Directive, even if the advert might appear on the face of it to be a comparative one.

While this judgment is clearly not a great result for O2 in this instance, it does provide trademark owners with a fairly clear set of criteria to guide them on when they might consider a company's use of their trademark in an advertisement as an infringement.

One factor that was given some consideration in the guide was the likelihood of confusion between trademarks arising in the course of a comparative advertisement. By their nature, it is difficult to see how most advertisements that compare one company's products with those of competitors could give rise to confusion, as the intention is usually to make distinctions between the two. Nevertheless, the judgment from the ECJ provides some welcome guidance to both trademark owners and company's using comparative advertising as to how to work within the rules. Whether this judgment means the end of arguments over comparative advertising is, of course, a different matter altogether.

02 July 2008

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