Advocate General delivers opinion on comparative advertising

Advocate General Mengozzi has delivered his opinion on questions on comparative advertising referred to the European Court of Justice (ECJ) by the Court of Appeal of England and Wales in O2 Holdings Limited v Hutchison 3G Limited ([2006] EWCA Civ 1656). The case concerned the use by Hutchison 3G Limited of 'bubble' imagery similar to O2 Holdings Limited's registered mark in an advertisement comparing Hutchison's mobile phone services (particularly the tariff) with those of O2.

The Court of Appeal concluded that the scope of permitted comparative advertising under EU law - in particular, the interplay between the trademark infringement provisions of Article 5(1) of the First Trademarks Directive (89/104/EEC) and the Comparative Advertising Directive (97/55/EC) - was unclear and referred questions to the ECJ for a preliminary ruling.

First, the Court of Appeal asked whether the use by a trader of a competitor's registered trademark in comparative advertising in such a way that it does not cause confusion or otherwise jeopardize the essential function of the trademark as an indication of origin falls within the infringement provisions of Article 5(1) of the First Trademarks Directive.

The Court of Appeal also asked whether, in order to comply with Article 3(a) of the Comparative Advertising Directive, the use of the registered trademark of a competitor in comparative advertising must be "indispensable" and, if so, whether this requirement would preclude any use of a sign which is not identical to the registered trademark but is closely similar to it. O2 argued that there was no need for Hutchison to use the bubble imagery in the advertisement in order to make a price comparison.

In response to the first question, Mengozzi concluded that the question could "easily be answered in the negative". In the case of comparative advertising, there is no confusion as to the origin of the goods or services carrying the mark. Therefore, use should not be considered as trademark infringement under Article 5(1) of the First Trademarks Directive.

According to Mengozzi, the relevant legislation for comparative advertising is the Comparative Advertising Directive, which was intended to harmonize the conditions of use of comparative advertising in the member states. Mengozzi concluded that Article 3(a) of the Comparative Advertising Directive sets out "specifically and exhaustively" the conditions under which a competitor's trademark can be used in comparative advertising. Use of both similar and identical marks will be prohibited only if such use fails to comply with the conditions of Article 3(a). Article 5(1) of the First Trademarks Directive is not a consideration.

As to the Court of Appeal's remaining questions, Mengozzi concluded that there was no requirement for indispensability, whether the sign is identical or merely similar to the competitor's trademark. Mengozzi again stressed that Article 3(a) of the Comparative Advertising Directive sets out an exhaustive list of conditions under which comparative advertising might be lawful, and none of its provisions lays down a requirement of indispensability.

Should the ECJ decide to follow Mengozzi's opinion, disputes about the use of trademarks in comparative advertising will be considered in light of the Comparative Advertising Directive, rather than trademark infringement principles. In the United Kingdom, disputes about the use of trademarks in comparative advertising would thus be dealt with by the advertising regulator, the Advertising Standards Authority, rather than the courts. The remedies available to the authority are principally limited to fines and do not include damages or injunctions. This would benefit advertisers, but is likely to concern trademark owners.

Nick Rose, Field Fisher Waterhouse LLP, London