O2's bubbles burst in trademark dispute
Article Type: Corporate law outlook From: Strategic Direction, Volume 24, Issue 10
In the summer of 2004 Hutchison 3G UK Limited (“3”) ran a series of adverts promoting its prepaid mobile telephone services. Those adverts sought to make comparisons with other mobile telephone providers and their prepay services. “3”’s adverts expressly made comparisons with the O2 services and in doing so included content of figurative bubbles in the background.
O2 own registered trademarks for the bubble marks and issued a claim of registered trademark infringement against Hutchison alleging that the appearance of the bubbles in the “3” adverts were similar to its own registered trademark and consequently was likely to cause confusion on the part of the public and amounted to trademark infringement.
Governing legislation
Trademark legislation in the UK is governed by EC Trade Marks Directive(89/104/EEC). This provides that the owner of a registered trademark can prevent other people using in the course of trade any sign that it is identical or similar to that trademark in respect of similar or identical goods (or services)for which it is registered and, where there exists a likelihood of confusion on the part of the public (which includes a likelihood of association between the sign and the registered mark).
There is a defense under the Trade Marks Directive however which permits“infringing” use if the Defendant is using the sign or mark merely to indicate the kind, quality or other characteristic of the goods if such use is in accordance with honest practice.
When a competitor’s trademark is being used in comparative adverts there are specific EC Directives designed to regulate such advertising to ensure that it is not misleading. At the time of the “3” advertising campaign it was Council Directive 84/450/EEC (as amended by Council Directive 97/55/EC and implemented in the UK by the Control of Misleading Advertisements (Amendment)Regulations 2000).
That regime was in force until December 2007 and has now been consolidated by a further Council Directive (2006/114/EC) on misleading and comparative advertising (implemented by the Business Protection From Misleading Marketing Regulations 2008) which came into force in May this year.
The 2000 Regulations in place at the time of the “3” advert permitted comparative advertising using another’s registered trademark for the purpose of making comparisons provided certain conditions were complied with. Those conditions included, amongst other things, a requirement that such a comparison did not create confusion in the marketplace between the advertiser and a competitor or between the advertiser’s trademarks, trade names or other distinguishing marks, goods or services and those of the competitor.
The dispute between O2 and Hutchinson involved a review of which Directive(the Trade Mark Directive or the Misleading and Comparative Advertising Directive) governed the use of trademarks in adverts and whether there was a conflict between the two regimes.
The claim
O2’s complaint was that the use of bubbles in the “3”advertisement was an infringement of its registered trademark under the Trade Marks Directive and that such use was likely to cause confusion. At the first instance judgment, the Court ruled that there had in fact been registered trademark infringement under the Trade Marks Directive but that the use of the bubbles by “3” fell within the permitted use under the 2000 Regulations governing comparative advertising and that this afforded “3”a full defense to the claim.
O2 appealed that decision arguing that the 2000 Regulations implementing the EC Directive should not be a defense to registered trademark infringement. The question to be addressed was which regime had primacy – trademark infringement laws, or comparative advertising laws? Could you use a registered trademark of a third party with impunity if you complied with the Regulations on comparative advertising?
This was the subject of the referral to the European Court of Justice which has now provided guidelines as to which regime prevails.
The ruling of the ECJ is clear:
The use of another party’s registered trademark in a comparative advert is trademark use/use in the course of trade by the advertiser and could be the subject of an infringement claim.
If the advertisement complies with the conditions under the relevant comparative advertising directive, a trademark owner will not be able to use its trademark rights to prevent the use of its marks in such an advert. Any complaint must be brought under the relevant comparative advertising directive and not the trademark laws.
However where the comparative advert creates a likelihood of confusion in the use of that registered trademark, this would represent a breach of the prevailing comparative advertising directive (which requires that there should be no confusion as a result of use) and consequently would entitle a trademark owner to pursue a claim for registered trademark infringement.
Impact of the decision
Unless the advert causes confusion in the use of the registered trademark then the use will be governed by the prevailing comparative advertising regulations.
A trademark owner cannot pursue a claim personally under the 2008 Regulations, they must make a regulatory complaint and persuade the OFT or Trading Standards Officers to pursue any enforcement action. This means that they would not retain control of the dispute. However if the use does create confusion then the trademark owner has the right to pursue an action for trademark infringement and retain control of that claim.
It is questionable whether such confusion is likely to arise in a comparative advert, as the key driver is to make a comparison and so to avoid confusion. In the O2 case, the ECJ held that there was no confusion and so no infringement claim could be brought. Where there is a likelihood of confusion a trademark owner will retain the choice to pursue a claim for infringement, or to make a complaint and seek enforcement action under the Regulations. The choice will have implications of cost and control but will only be available in these limited circumstances.
Gordons regularly advises on trademark issues. For further information contact Matthew Howarth on 0113 227 0100 or email: matthew.howarth@gordonsllp.com
Acknowledgements
Issued on behalf of Gordons LLP by fuse8 Public Relations. For further information please contact Rob Smith (Tel: 0113 260 4600, Mobile: 07840 677534,E-mail: rob.smith@fuse8.com)or Fran Longley (Tel: 0113 260 4600, Mobile: 07534 225184, E-mail: frances.longley@fuse8.com).
Matthew HowarthHead of intellectual property at Leeds and Bradford-based law firm Gordons LLP.
