In L'Oréal SA v Bellure NV [2010] EWCA Civ 535, Jacob LJ applied the findings of the European Court of Justice (ECJ) in the “smell-alike” case to the Court of Appeal  

BACKGROUND  

L'Oréal is the proprietor of various Community and national trade marks in respect of the words TRÉSOR, MIRACLE, ANAÏS-ANAÏS and NOA NOA for perfumes. L'Oréal sued for trade mark infringement of the word marks under Section 10(1) and infringement of the bottle and box marks under Section 10(3) of the Trade Marks Act 1994. The case reached the Court of Appeal of England and Wales, which referred questions to the ECJ concerning the inter-relationship of the Trade Marks Directive (89/104/EEC) and the Comparative Advertising Directive (97/55/EC) (CAD), where the use was made in a manner that did not cause confusion and did not jeopardise the function of the trade mark as a guarantee of origin, but played a significant role in the promotion of the trader's product. In particular, Lord Justice Jacob sought guidance on the meaning and scope of the concept of "unfair advantage" under Article 5(2) and Article 3a(1)(g) of the Directives respectively.

The ECJ, in answering the questions, held that unfair advantage under Article 5(2) of the Trade Marks Directive was not reliant on a likelihood of confusion or detriment to the registered trade mark. The advantage arising from the use by a third party of a sign similar to a mark with a reputation is an advantage taken unfairly by "riding on the coat-tails" of the mark with a reputation in order to benefit from its reputation and prestige and to exploit the marketing efforts of its proprietor. Even though the use did not jeopardise the essential function of the mark to indicate the origin of the goods, provided that its use affected, or was liable to affect, one of the other functions of the mark, such as its ability to guarantee the quality of the goods and its advertising function, the advantage taken was sufficient.

Finally, the ECJ held that an advertiser who states either explicitly or implicitly in comparative advertising that the product marketed by him is an imitation of a product bearing a well-known trade mark presents “goods or services as imitations or replicas" within the meaning of Article 3a(1)(h) CAD.

Following the ECJ's ruling, the Defendants accepted that the packaging infringed L'Oréal's trade marks, but disputed that the comparison lists fell within Article 5(1)(a) or 5(2) of the Trade Marks Directive and argued in the alternative, that this use complied with the CAD.

DECISION

Jacob LJ felt that he had no choice but to hold that the comparison list fell within Article 5(1)(a), holding that, according to the ECJ, the use went beyond "purely descriptive" use because it was used for advertising. He concluded that a line was to be drawn between something like a discussion between a would-be seller and his potential customer ("I can supply a diamond cut in the same shape as Spirit sun")—which was apparently not "advertising"—and an "out and out general purpose advertising aid" such as the comparison list.

Jacob LJ found that the comparison lists did not fall within the defence provided by the CAD. He concluded that even saying, truthfully, that the Defendant's product had an essential characteristic of the trade mark owner's product amounted to saying that the product was an "imitation or replica" and so fell outside the protection of the CAD.

Jacob LJ said that he understood this ruling to mean that the provision should be read as though the word "unfair" was simply not there. He concluded that there was no line between "permissible free riding" and "impermissible free riding". Jacob LJ stated that he did not agree with or welcome this conclusion, which amounted, in his view, to a pointless monopoly. But it was, he noted, his duty to apply it, as there was, by use of the comparison lists, clearly free-riding of the sort condemned by the ECJ.

The EU Commission has asked the Max Planck Institute to review the ECJ Decision.