ECJ issues decision in 'bubbles' comparative advertising case

European Union
In O2 Holdings Limited v Hutchison 3G UK Limited (Case C-533/06, June 12 2008), the European Court of Justice (ECJ) has given judgment in a reference for a preliminary ruling from the Court of Appeal of England and Wales. The case concerned the interpretation of Article 5(1) of the First Trademarks Directive (89/104/EEC) and Article 3(a)(1) of the Comparative Advertising Directive (97/55/EC), as well as their interaction.
The reference arose from a dispute between, on the one hand, O2 Holdings Ltd and O2 (UK) Ltd (together O2) and, on the other, Hutchison 3G UK Limited, each suppliers of mobile telephone services in the United Kingdom. O2 owned a trademark registration for a 'bubbles' device. Hutchison used a sign similar to O2's trademark to identify O2's services in an advertisement comparing Hutchison's services to those of O2. 
O2 commenced infringement proceedings against Hutchison. For the purposes of the reference, the advertisement was agreed not to be confusing or likely to mislead consumers into believing that Hutchison's services were connected with those of O2.
The questions referred to the ECJ were as follows:
  • Where a trader, in an advertisement for its own goods or services, uses a registered trademark owned by a competitor for the purpose of comparing the characteristics (and in particular the price) of goods or services marketed by it with the characteristics (and in particular the price) of the goods or services marketed by the competitor under that mark in such a way that it does not cause confusion or otherwise jeopardize the essential function of the trademark as an indication of origin, does such use fall within either Paragraph (a) or (b) of Article 5(1) of the First Trademarks Directive?
  • Where a trader uses the registered trademark of a competitor in a comparative advertisement, in order to comply with Article 3(a)(1) of the Comparative Advertising Directive, must that use be indispensable and, if so, what are the criteria by which indispensability is to be judged?
  • In particular, if there is a requirement of indispensability, does the requirement preclude any use of a sign which is not identical to the registered trademark, but is closely similar to it?
Following its decision in Adam Opel (Case C-48/05), the ECJ held that use of a sign identical or similar to another's trademark to identify that party's goods or services in comparative advertising does constitute use of that sign for the advertiser's own goods within the meaning of Article 5 of the First Trademarks Directive. However, the ECJ also held that if there is no confusion as to the source of the defendant's goods and/or services, there is no infringement. The ECJ stated that the assessment of a likelihood of confusion should consider only the actual circumstances, and not any possible circumstances (in contrast to oppositions, where the owner of the earlier right can rely on any possible uses that the registration covers). On this basis, there was no infringement of O2's trademark, as there was no confusion.
The ECJ declined to answer the question in respect of infringement of the mark under Article 5(1)(a). However, the reasoning should logically be the same.
The ECJ also confirmed that trademark rights may be limited to permit comparative advertising. This limitation is expressed in Recitals 13 and 14 of the Comparative Advertising Directive. Compliance with the directive was held to provide a defence to trademark infringement, but only as long as all the conditions set out in Article 3(a)(1) of the directive were met.
Article 3(a)(1)(d) of the directive includes a requirement that the advertising:
 "does not create confusion in the marketplace between the advertiser and a competitor or between the advertiser’s trademarks, trade names, other distinguishing marks, goods or services, and those of a competitor."
The term 'confusion', as used in this provision and in Article 5(1)(b) of the First Trademarks Directive, is to be interpreted in the same way. Under the latter article, a sign similar to a trademark will infringe that mark only where "there exists a likelihood of confusion on the part of the public". Consequently, any use in comparative advertising of a sign that infringes a similar trademark pursuant to Article 5(1)(b) of the First Trademarks Directive will fail to meet the requirements of Article 3(a)(1) of the Comparative Advertising Directive, as there will be a likelihood of confusion. The defence provided by that directive will therefore not apply, even though the other requirements are met.
In light of these findings, the ECJ found it unnecessary to address the second and third questions referred to it.
For background discussion of this case see "Trademark law still relevant to comparative advertising, says ECJ".
Ian Starr and Paul Johns, Ashurst LLP, London

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