ECJ clarifies the meaning of 'unfair advantage' in smell-alike case

European Union
The European Court of Justice (ECJ) has handed down a landmark judgment in L’Oréal SA v Bellure NV (Case C-487/07, June 18 2009), which concerned the importation and distribution in the United Kingdom of perfumes which looked and smelled similar to L’Oréal SA’s fragrances. 

The Court of Appeal of England and Wales referred five questions to the ECJ relating to the interpretation of the First Trademarks Directive (89/104/EEC) and the Comparative Advertising Directive (97/55/EC) which addressed:
The ECJ confirmed that unfair advantage does not require a likelihood of confusion or detriment to the mark and covers cases where:

"by reason of a transfer of the image of the mark or of the characteristics which it projects to the goods identified by the identical or similar sign, there is clear exploitation on the coat-tails of the mark with a reputation."

To determine whether use of a sign takes unfair advantage of the distinctive character or repute of the mark, it is necessary to undertake a global assessment, taking into account all relevant factors, including:
  • the strength of the mark’s reputation;
  • the degree of distinctive character of the mark;
  • the degree of similarity between the marks;
  • the nature and degree of proximity of the goods or services; and
  • whether there was a likelihood of dilution or tarnishment of the mark.
Specifically, the ECJ stated that unfair advantage was taken:

"where that party sought by that use to ride 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."

Further, the stricter trademark protection provided for identical goods and/or services and for well-known marks does not require damage to the essential function of a trademark (ie, guaranteeing the origin of the goods and/or services), provided that one of the other functions of the mark was affected. Those other functions included, in particular, "that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising".

Finally, the ECJ considered the extent to which the Comparative Advertising Directive provides a defence to trademark infringement. It pointed out that the directive provided cumulative conditions which advertisements must meet to be permissible under the directive. The ECJ also indicated that:
  • an advertisement need not explicitly state that the product is an imitation; and
  • the statement of imitation can relate only to “an essential characteristic” of that product (eg, the smell of the goods in question).
The decision will be warmly welcomed by owners of well-known brands, as it strengthens and clarifies the requirements for 'unfair advantage' infringement of marks with a reputation. Whereas dilution and tarnishment have recently been held to require a "change in economic behaviour" of consumers, no such requirement is mentioned in cases of unfair advantage. It is now explicit that no confusion or other detriment to the mark or its owner is required and that transfer of the image of the mark can suffice. However, the judgment may also restrict the extent to which comparative advertisements can refer to individual elements of the characteristics of a competitor’s goods.

Hiroshi Sheraton and Désirée Fields, McDermott Will & Emery UK LLP, London

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