article
Clarity given on copycat brands
17 July 2009
The saga of L’Oréal v. Bellure, which commenced in January 2005,
has rolled through both the English and the European courts. The
long-awaited decision of the European Court of Justice (ECJ) has
now been delivered, and brand owners will breathe a sigh of
relief.
L’Oréal brought proceedings in the English courts against three
companies that, together, produced perfumes that smelt similar to
some of L’Oréal’s well-known perfumes: Trésor, Miracle, Noa and
Anaïs-Anaïs. The global cost of developing a fragrance such as
these is between €60 million and €120 million. Typically, €50
million to €100 million of this is spent on the launch campaign.
L’Oréal’s perfumes sell for as much as £70 per bottle.
The defendants’ perfumes were sold in packaging that was
reminiscent of L’Oréal’s, though not to the extent that customers
would be confused into thinking they were buying goods made by
L’Oréal. In addition, retailers of the defendants’ products were
supplied with a comparison list that stated which of L’Oréal’s
perfumes the defendants’ perfumes smelt like. The defendants’
replica perfumes were sold for between £1.00 and £3.99.
The Court of Appeal asked for guidance on the Trade Mark
Directive 89/104 and the Comparative Advertising Directive 84/450.
The ECJ’s ruling is summarised below.
An unfair advantage?
In the first part of its judgment, the ECJ ruled on Article 5(2)
of the Trade Mark Directive. This states that a trademark owner
with a reputation in its brand may stop others using a sign
identical or similar to its mark if that other person’s use of the
sign takes “unfair advantage of, or is detrimental to, the
distinctive character or the repute of the trademark”.
The ECJ ruled that a brand owner does not have to show that the
character or repute of its trademark is being damaged to show that
unfair advantage is being taken of its trademark. The ECJ explains
that a party takes unfair advantage of a mark when it rides “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”.
In essence, this means that products that leverage the
reputation of famous brands may be taking unfair advantage of those
brands and so may be infringing their trademarks.
Advertisements for imitations
The ECJ also ruled that the proprietor of a registered trademark
can prevent a third party from using a sign identical to its mark
in a comparative advertisement if that comparative advertisement
does not satisfy the criteria in the Comparative Advertising
Directive 84/450. This is the case even where such use is not
capable of “jeopardising the essential function of the mark” (which
is to indicate the origin of the goods or services) as long as this
use affects or is liable to affect one of the other functions of
the mark.
Article 2(1) of the Comparative Advertising Directive states
that advertising means: “The making of a representation in any form
in connection with a trade, business, craft or profession in order
to promote the supply of goods or services, including immovable
property, rights and obligations.”
Article 2(2a) states that comparative advertising means: “Any
advertising which explicitly or by implication identifies a
competitor or goods or services offered by a competitor.” This
definition is very wide and can include comparison lists.
Article 3a(1) of the Comparative Advertising Directive lists
requirements that must be met for comparative advertising to be
permitted. One such requirement is that an advertiser may not state
explicitly or implicitly in comparative advertising that the
product marketed by him is an imitation of a product bearing a
well-known trade trademark. The defendants fell foul of this
section of the article.
Conclusion
This decision makes brand protection considerably easier for
trademark owners and is a marked shift from the Intel decision
(reported in WIPR January/February 2009). The wide meaning given to
“unfair advantage” recognises the value of big brands and, in
effect, creates a law of unfair competition for them.
In light of this, promoters of generic products and own-label or
look-alike brands will need to review their marketing and packaging
policies. In addition, companies should be wary about making any
reference to other companies’ trademarks in their promotional
materials. This decision makes it clear that the stronger a brand
is, the easier it will be for the owner of that brand to bring a
claim of unfair advantage.
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