Comparative advertising decision opens the door to civil remedies

In Kingspan Group Plc v Rockwool Ltd ([2011] EWHC 250 (Ch), February 21 2011), the Chancery Division of the High Court of England and Wales has examined the scope of permissible comparative advertising and, in particular, how misleading statements can deprive a defendant of a potentially valuable defence to trademark infringement.   

When finalised, the relief granted may assist in plugging a gap caused by the manner in which the United Kingdom has implemented EU directives concerning unfair business-to-consumer commercial practices and misleading and comparative advertising (Directives 2005/29/EC and 2006/114/EC, respectively).

Defendant Rockwool Ltd manufactures a type of mineral wool used in insulation products. In 2007 Rockwool developed a range of promotional materials, aimed at showcasing certain attributes of its mineral wool products, in particular the fire-resistant nature of its products when compared with other insulation products made with plastic foams. 

A leading laboratory performed certain tests on Rockwool's products and those of Kingspan Group Plc in accordance with technical standard ISO 9705. The tests were conducted with the aim of comparing the performance of Rockwool's incombustible 'fire safe' products, and Kingspan's combustible products (some, but not all, of which were labelled 'fire safe' in accordance with applicable EU and local law requirements for its products).

These test results were developed as videos, shown to potential customers at road shows in two forms. One video identified Kingspan's products by reference to Kingspan's UK and Community trademarks in the voiceover. A later video was produced with all reference to Kingspan's trademarks removed (together with footage showing a product that was likely to be recognised as one of Kingspan's products). These videos all showed Kingspan's products catching fire rapidly, with the resulting fire spreading uncontrollably, while Rockwool's products performed significantly better in the test scenario. The accompanying commentary (and print material) gave the impression that like had been compared with like in these tests, with Rockwool's products outperforming Kingspan's (often to dramatic effect).

In defence of the trademark infringement claims on the earlier video and associated road shows, Rockwool relied on the permission to advertise comparatively under Directive 2006/114/EC. This applies only where the advertising complies with its terms, including the requirement that the comparison be not misleading and compare objectively material, relevant, verifiable and representative features.

Having heard expert evidence, the court concluded that the choice of test and manner of installation of Kingspan's products for testing combined to give a misleading impression as to the relative risks dangers in a fire and, therefore, was not permissible under the directive. Among other findings of fact, it found that Rockwool had made misleading statements to the effect that the tests:

In addition to finding trademark infringement pursuant to Article 5(1)(a) of the EU Trademarks Directive (2008/95/EC) and Article 9(1)(a) of the Community Trademark Regulation (207/2009), it found for Kingspan on its contention that the use of its trademarks was without due cause and took unfair advantage of, or was detrimental to, the distinctive character or repute of its marks, contrary to Article 5(2) of the Trademarks Directive and Article 9(1)(c) of the Community Trademark Regulation. In finding this, it noted the sensational nature of the materials and their impact on people who saw the demonstrations and/or video.

The court concluded that, notwithstanding the judgment of the Court of Justice of the European Union in Intel Corp Inc v CPM United Kingdom Limited (Case C-252/07) (requiring evidence of a change in the economic behaviour of the average consumer to support a claim that detriment to distinctiveness or repute has occurred), Kingspan did not need to demonstrate "actual and present injury; it is enough that the proprietor... demonstrates that there is a serious risk that such injury will occur in the future". This suggests that the English courts at least will consider Article 5(2)/Article 9(1)(c) arguments based on risk of future harm, rather than requiring a claimant to identify a change in economic behaviour at the time a claim is issued.  
       

On the other hand, Kingspan's English law malicious falsehood claim failed. It was unable to show that "the words were calculated to cause damage and that the defendant knew, when he published the words, that they were false or was reckless as to whether they were false or not". The documents disclosed evidenced Rockwool's efforts to obtain objective tests. The failure to achieve the necessary objectivity (and set up sufficiently rigorous test parameters) was not the same as malice.  

Kingspan has requested that the relief granted include declaratory relief. UK practitioners and brand owners will be particularly interested in the terms of any declaratory relief granted and whether this will enable aggrieved parties such as Kingspan effectively to prevent activities which breach Directives 2005/29/EC or 2006/114/EC. This is of significant interest because the United Kingdom has not provided any direct civil remedies for breach of these two directives. Powers of enforcement are largely reserved to law enforcement agencies and there is a widespread perception that there is insufficient interest or resource on the part of these agencies to enforce the UK regulations which implement these directives.