O2's unfair comparative advertising claim put on hold

In O2 Limited v Hutchison 3G UK Limited ([2004] EWHC 2571 (Ch), November 9 2004), the High Court of England and Wales has dismissed the plaintiff's request for interim injunctive relief against the defendant's use of the plaintiff's marks in comparative advertising.

Comparative advertising, explicitly or by implication, identifies a competitor or the goods and services of a competitor. Such advertising commonly features the trademark of a competitor and has the intention of providing the consumer with greater information enabling him or her to make a more informed purchase decision.

Section 10(6) of the UK Trademarks Act 1994 provides that registered trademarks may be used by persons seeking to identify a competitor's goods or services. The provision, however, also contains a qualification, which effectively outlaws comparative advertisements that are dishonest and take unfair advantage of or are detrimental to the trademark.

Mobile telephone company O2 Limited sought to restrain by interim injunction the use of comparative advertisements by Hutchison 3G UK Limited. Hutchison, a relative newcomer to the market, was advertising on television and radio, as well as in the press.

Hutchison's 3G brand promotes a third generation of mobile telephone services. The advertisements used by Hutchison suggested that 3G's pre-pay (or pay-as-you-go) product tariffs were substantially cheaper than the comparative services of O2. O2 argued that the price comparison was misleading, and that the advertisements infringed its series of 'Bubbles' marks and its O2 mark (also protected as a Community trademark).

In defence of this action, Hutchison made the following arguments:

• The price comparison was accurate or in the alternative fair.
  
  
• There was no infringement of the 'Bubble' marks because the bubbles used in the advertisements were insufficiently similar to O2's registered trademarks. In addition or in the alternative such use was entitled to protection under Section 10(6) of the Trademarks Act because it was in accordance with honest business practices.
  
  
• The use of the Community trademark was protected by Article 12(b) of the Community Trademark Regulation, which provides protection for the use of trademarks in comparative advertising provided they are used in accordance with honest commercial practices.

At the interlocutory stage of proceedings, Justice Pumfrey of the High Court of England and Wales declared that the comparisons were not misleading, stating: "the underlying message [of the advertisements] is strongly arguable to be generally true to the intended targets of the comparison".

Despite the above finding, Pumfrey took the opportunity to examine the question of 'honest practices'. He referred in his judgment to British Airways Plc v Ryanair Limited, a case of trademark infringement dealing with, among other things, the issue of the accuracy of advertisements. In this case, the High Court set out an objective test to determine whether the use of another party's trademark is not in accordance with honest practices: would a reasonable reader be likely to say, upon being given the full facts, that the advertisement is not honest?

Applying the test to the case at hand, Pumfrey held that on the current state of evidence the advertisements were not misleading, Hutchison had not been dishonest in its use of the marks and the potential damage to O2 would be minimal. Accordingly, he declined to grant an injunction.

Both UK and EU legislators have considered trademark use infringement in this context and have agreed as a matter of policy that the right to make accurate comparative advertisements should not be interfered with by an allegation of trademark infringement when such trademarks need to be used to identify the services with which the advertiser wishes to compare prices.

Nick Rose, Field Fisher Waterhouse, London