L'Oreal, a well-known cosmetics and perfume maker, recently won a ruling from the European Union's highest court that will allow it to block a group of perfume makers from marketing "look-alike" versions of its fragrances. The ruling, handed down by the European Court of Justice on June 18, is seen as a victory for brand owners and an important precedent in cases of unfair advantage.
Bellure, a Belgian producer together with another two companies that marketed imitations of fine fragrances, offered a range of products, some of whose bottles and packaging were generally similar to those of L'Oreal's products. Bellure was providing retailers with comparison lists indicating which luxury trademark their products were designed to replace, although it was common ground that the similarity was unlikely to mislead professionals or the public.
The proceedings instituted by L'Oreal for trade mark infringement related to the interpretation of trademarks and applicable legislation on misleading and comparative advertising. EU law stipulates that the proprietor of a registered trade mark is entitled to prevent all third parties not having its consent from using in the course of trade signs that are identical with those for which the trademark is registered. However, comparative advertising is, as far as the comparison is concerned, permitted when it does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name.
The court, in this case, ruled that the taking of unfair advantage of the distinctive character or the repute of a mark did not necessarily require that there be a likelihood of confusion or a likelihood of detriment to the distinctive character or the repute of the mark. The advantage arising from the use by a third party of a sign similar to a mark with a reputation was unfair 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, reputation and 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.
The proprietor of a registered trade mark was entitled to prevent the use by a third party, in a comparative advertisement if an advertiser presented goods or services as imitations or replicas since the advantage gained by the advertiser as a result of such unlawful comparative advertising was unfair.
In conclusion, the court held that Bellure, which used perfume bottles and packaging resembling L'Oreal's designs and trademark, was "riding on the coat-tails" of L'Oreal. This gave Bellure unfair advantage in breach of EU rules on misleading and comparative advertising, whether the public was confused by the similarities or not, and even if L'Oreal had suffered no financial loss.
This ruling means that any advert that goes beyond a straightforward comparison on objective and factual criteria could now fall foul of the law and leave advertisers open to a claim for trademark infringement. New entrants to the market must be wary of comparing their products or their products' characteristics to those of established brands.
In all cases, however, the trademark owner still has to show that one of the essential functions of the trademark has been interfered with. All in all, this judgment represents a significant shift in the interpretation of EU law on comparative advertising.
Dr Grech is an associate with Guido de Marco & Associates and heads its European Law Division.
jgrech@demarcoassociates.com