Brands Bulletin - July 2010

This month's email is all about the recent ground breaking decision of the English Court of Appeal in the L'Oreal and Others v Bellure NV and Others case.  In summary, the Court has held that EU trade mark law can be used to suppress truthful advertising of lawful products.

'SMELLS GOOD' for brand owners - the English Court of Appeal holds that EU trade mark law can muzzle defendants from telling the truth

Have you ever walked into a discount store and come across a cheap perfume being promoted and sold on the basis that it 'smells-like' a famous, luxury branded perfume?

There is nothing unlawful about making and selling such a product.  However, following guidance from the European Court of Justice, the English Court of Appeal ("CoA") recently held that a trade mark owner can prevent a third party from using the trade mark owner's registered trade mark to promote the 'smell-alike' goods.  In summary, the third party cannot say "my perfume smells like [name of luxury branded perfume]" - even if that is the truth.

In the case in issue, L'Oreal were unhappy that the defendants were using comparison lists for each of the defendants' ranges of product, showing which products corresponded to which L'Oreal perfumes.  L'Oreal alleged that such use of the comparison lists infringed its trade marks for its perfumes, in particular as it allegedly gave the defendants a major promotional advantage.

Somewhat reluctantly, the CoA agreed.  EU trade mark law can be used to suppress truthful advertising of this type.   The use of a registered trade mark in this manner affects, or is liable to affect, one of the functions of the trade mark.  These functions include not only the essential function (which is to guarantee to consumers the origin of the goods/services sold under the trade mark), but also other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising.  In this case, the comparison lists were held to affect the communication, investment and advertising functions of the L'Oreal registered trade marks.

Further, the defendants' use of the L'Oreal trade marks did not escape infringement, as it did not comply with all of the conditions set forth in the relevant sections of the Comparative Advertising Directive (which permits comparative advertising).  In particular, the comparison lists implicitly communicated to the relevant public the idea that the defendants' perfumes were imitations of fragrances marketed under registered trade marks of L'Oreal, in that they imitated an essential characteristic of the L'Oreal perfumes, namely their smell.  As such, the defendants' unlawful comparative advertising also took unfair advantage of the reputation of the L'Oreal trade marks.  

Whilst the CoA's decision is a major win for registered trade mark owners, it has potentially far reaching consequences.  For example, it implies that a generic pharmaceutical company cannot now tell its customers and potential customers that its drug is a cheaper, generic version of a well-known drug, whose name is registered as a trade mark - even though the manufacture and sale of the generic drug is itself lawful.  Thus, it will make it more difficult for the generic pharmaceutical company to inform the relevant public of the nature of the drug that it is selling.        

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Ashfords LLP is regulated by the Solicitors Regulation Authority. The information in this note is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.