Comparative advertising questions referred to ECJ

In the latest episode of a long-running dispute between telecoms giants O2 and Hutchison 3G Limited (Hutchison), the Court of Appeal of England and Wales has referred three questions about comparative advertising to the European Court of Justice (ECJ).

O2 and Hutchison both provide telecommunications services and specialize in mobile phones. In 2004 Hutchison ran a television advert as part of a larger price comparison campaign against the major mobile phone companies, which was designed to increase its share of the lucrative pay-as-you-go market.

The advert at the centre of the dispute began with a concentrated mass of white bubbles on a black screen, the bubbles expanding to fill the screen. The bubbles were similar, but not identical, to O2's registered 'bubbles' trademarks. A voiceover explained the price of a phone call on the O2 tariff and text at the bottom of the screen referred to O2. Later in the advert, a different voice was used to detail the price of a phone call on Hutchison's network.

Where bubbles were the chosen imagery for the comparison campaign against O2, for the Orange campaign it was a spinning orange square, for Vodafone it was flying abstract shapes resembling commas and for T-Mobile it was a pink triangle.

O2 alleged that Hutchison had infringed its trademarks by using similar bubble imagery in the campaign, contrary to Sections 10(2) and 10(3) of the Trademarks Act 1994.

The High Court found that there was prima facie infringement of O2's 'bubble' marks, but Hutchison had a valid defence under the Comparative Advertising Directive 97/55 (the directive) because the advert was a fair and objective price comparison that did not take unfair advantage of, or denigrate, O2's mark or brand. The court remarked that comparative advertising was by its very nature necessarily robust and that within the confines of the directive, advertisers were permitted to do what was needed to make those adverts effective.

O2 appealed against the finding of a defence to the Court of Appeal, which has stayed proceedings and made a preliminary reference to the ECJ. In making the reference, Lord Justice Jacob suggested that those responsible for drafting the directive did not fully appreciate which IP rights could apply to comparative advertising and it was now time for the ECJ to rule on how far European law allows comparative advertising to go. The court commented that the ECJ would have to consider the underlying philosophy of how competitive the law allows European industry to be.

The three questions referred were as follows:

• Can use of a registered trademark in comparative advertising ever infringe where the essential function of the mark, to indicate origin, is not compromised?
  
  
• Must use of the registered trademark be indispensable for the advertisement?
  
  
• Does the requirement of indispensability preclude use of a confusingly similar mark?

In posing those questions, the court offered its opinion on the response "in case it might be of assistance" to the ECJ and, in each instance, the answer was no.

The case gives the ECJ the opportunity to assess the policy considerations which underpin this particular piece of legislation and to clarify the rules of engagement for future reference so that both industry and the consumer benefit.

Mark A Lubbock, Ashurst, London