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550 European Intellectual Property Review The Implications of L’Oréal v Bellure—A Retrospective and a Looking Forward: The Essential Functions of a Trade Mark and when is an Advantage Unfair? Audrey Horton * Bird & Bird LLP Comparative advertising; Essential function; EU law; Infringement; Trade marks; Unfair advantage This article reviews the judgment of the CJEU in L’Oréal v Bellure, and its application by the English Court of Appeal in L’Oréal itself and subsequent cases. The relevance of “intention” to take advantage of a famous mark is considered and general proposals for the future development of the law are drawn. The impact of the doctrine of the “essential functions” of a trade mark is considered in the light of L’Oréal, comments made by the Advocate General in his Opinion in Interflora v Marks & Spencer and the recently published Max Planck Institute’s Study on the European Trade Mark System. Background This article reviews the guidance of the Court of Justice of the European Union (CJEU) in L’Oréal v Bellure NV (C-487/07) in its judgment of June 18, 2009 1 and considers the application of that guidance by the English Court of Appeal in the L’Oréal case itself, 2 by the English Court of Appeal in Whirlpool Corp v Kenwood Ltd, 3 and the English High Court in Daimler AG v Sany Group Co Ltd 4 and Specsavers International Healthcare Ltd v Asda Stores Ltd. 5 The criticisms of the CJEU judgment by the English Court of Appeal in the L’Oréal v Bellure case are reviewed in a wider context, and in the light of the application of the judgment in subsequent cases. The relevance of intention to take advantage of the famous mark is considered. Finally a particular fact scenario in the entertainment field is considered in the light of the L’Oréal v Bellure principles, and some general proposals * The author would like to thank Trevor Cook of Bird & Bird LLP for kindly reading and commenting on this article. 1 L’Oréal v Bellure NV (C-487/07) [2009] E.C.R. I-5185. 2 L’Oréal v Bellure NV [2020] EWCA Civ 535; [2010] E.T.M.R. 47. 3 Whirlpool Corp v Kenwood Ltd [2010] R.P.C. 2 CA (Civ Div). 4 Daimler AG v Sany Group Co Ltd [2009] EWHC 2581 (Ch). 5 Specsavers International Healthcare Ltd v Asda Stores Ltd [2010] EWHC 2035 (Ch); [2011] F.S.R. 1. 6 Interflora v Marks & Spencer Plc (C-323/09) Opinion March 24, 2011. for the future development of the law including further referrals to the CJEU, in this area are drawn. In particular the impact of the doctrine of the “essential functions” of a trade mark is considered in the light of the L’Oréal v Bellure case, and comments made by the Advocate General in his Opinion in Interflora v Marks & Spencer Plc (C-323/09) 6 of March 24, 2011, and in the Study on the Overall Functioning of the European Trade Mark System by the Max Planck Institute (the Max Planck Study) of February 15, 2011. L’Oréal v Bellure: the judgment of the CJEU The L’Oréal case concerned so-called “smell-alike” or imitation perfumes and the use of well-known registered marks (TRESOR, MIRACLE, NOA and ANAIS-ANAIS) in price and smell comparison charts. The first issue referred to the CJEU concerned whether the use of registered word marks in the comparison lists fell within art.5(1)(a) of the Trade Marks Directive/art.9(1)(a) of the Trade Marks Regulation (2009/207) (identical marks and identical goods). The CFEU was asked whether the use of a registered trade mark on a comparison list for the purposes of indicating the characteristics, in particular the smell of the goods, in such a way that it did not cause any likelihood of confusion, did not affect sales under the well-known mark, did not jeopardise the essential function of the trade mark as a guarantee of origin, and did not tarnish or blur the registered trade mark, but played a significant role in the promotion of the product, could constitute infringement under art.5(1)(a)/art.9(1)(a). The CFEU held that an effect on any of the functions of the trade mark, such as the guarantee of quality of the goods or services, and those of communication, investment or advertising, and not just the origin function, is sufficient to sustain a claim under art.5(1)(a)/art.9(1)(a). The case also involved infringement under art.5(2)/art.9(1)(c) of L’Oréal’s registered marks for bottle shapes and packaging in respect of the defendant’s look-alike packaging (which did not incorporate L’Oréal’s word marks). Trade mark infringement occurs under art.5(2)/art.9(1)(c) where there is unauthorised use of a Community trade mark “which has a reputation in the Community”, in relation to identical, similar or non-similar goods and services, and where use of the sign “without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the Community trade mark”. The defendants were using the registered trade marks for the purposes of comparing the characteristics, in particular the smell of the goods, in such a way that it did not cause confusion, did not impair sales under the [2011] E.I.P.R., Issue 9 © 2011 Thomson Reuters (Professional) UK Limited and Contributors
well-known mark, did not jeopardise the essential function of the trade mark as a guarantee of origin, and did not tarnish or blur the registered trade mark. The question was whether this could still amount to the taking of “an unfair advantage”. The CJEU judgment similarly decided in relation to art.5(2)/art.9(1)(c) also that a trade mark owner can prevent use not only where the essential function (namely the guarantee of origin) of the mark is jeopardised but also where any of the mark’s other functions are affected, such as the guarantee of quality of the goods or services, and those of communication, investment or advertising. The CJEU decision clarified that it is not necessary to show all three types of injury to infringe the trade mark; any one will suffice. It follows that there can be a finding that unfair advantage has been taken of the repute of a registered mark under art.5(2)/art.9(1)(c) without the need to show any detriment to the distinctive character (dilution) or detriment to the repute of the registered mark (tarnishment). All the usual factors, including the likelihood of confusion, dilution or tarnishment, will be taken into account as part of a global assessment, but none of these are necessary ingredients for an unfair advantage to be found. The CJEU also held that: “Where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of its own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark.” 7 A pre-condition to establishing infringement under art.5(2)/art.9(1)(c) is that the relevant public must make a connection between the allegedly infringing sign and the registered mark, or establish a “link” between them, which results from the similarity between the mark and the sign. In the L’Oréal case the defendants’ own witnesses had said that the perfume packaging was designed to give “a wink of an eye” towards the original perfumes. There was no confusion: the public knew that the look-alike perfumes were not the real thing and had no trade connection with L’Oréal but the “link” that was made enabled the defendants to charge higher prices and helped them to market their products. The focus in L’Oréal was on the commercial advantage obtained by the defendants rather than damage to the trade mark owner’s business. Even if no one is confused and there is no harm, the competitor may have still benefited from the investment which has gone into creating the 7 L’Oréal v Bellure NV (C-487/07) [2009] E.C.R. I-5185 at [49]. The Implications of L’Oréal v Bellure—A Retrospective and a Looking Forward 551 iconic status or cachet of the well-known brand. All the trade mark owner need show is that the defendant has obtained a commercial advantage from the reputation of his mark by establishing a link with the well-known mark through use of an identical or similar sign. Such a form of trade mark infringement is broadly comparable to the continental concept of unfair competition or “parasitical trading” and, at least for the particular circumstances of this case involving well-known marks used on look-alike or imitation products, goes well beyond what would be protected by common law passing off in the United Kingdom. The English Court of Appeal applies the CJEU judgment to the facts of L’Oréal v Bellure Following the CJEU decision the Court of Appeal, in a judgment given by Jacob L.J., in L’Oréal v Bellure, reluctantly held that trade mark infringement had indeed occurred. Lord Justice Jacob however made it clear that, if he were free from the opinion of the CJEU, his strong predilection would be to hold that trade mark law should not prevent the defendants from telling the truth, namely that their smell-alike perfumes, which in themselves were not unlawful, smelled like the corresponding famous brands. He prayed in aid principles of freedom of speech and freedom of expression. He also referred to the right of freedom to trade, and potentially in other cases (since the parties were not in competition with each other in this case) to compete honestly. He considered that such competition would be distorted if, for example, traders were not allowed to state truthfully that their goods were the same as brand X (a famous registered trade mark), but half the price. In his view, preventing comparison lists which necessarily refer to well-known brands, such as lists of generic versions of branded drugs or equivalent printer cartridges and the like, clearly distorts what may be proper or lawful competition. Specifically, Jacob L.J. said he regretted that the CJEU “has not addressed the competition aspects of what it calls ‘riding on the coat-tails’”. This raises some interesting questions about where the line should be drawn between what the judge thought of as permissible and impermissible “free-riding”. In Jacob L.J.’s view, there may be cases where there is no confusion, where the parties are not directly in competition with each other so that the activity involved does not impinge on the trade of the trade mark owner, but nevertheless the defendant may get some benefit from the fame of the mark. As he pointed out when he originally referred the question to the CJEU, that sort of case may or may not involve some adverse effect on the fame, distinctiveness or repute of the trade mark. In other words the fact of benefit to the defendant does not necessarily cause harm to the trade mark owner. The CJEU decided that benefit (the “unfair advantage” element) is enough; you don’t also have to [2011] E.I.P.R., Issue 9 © 2011 Thomson Reuters (Professional) UK Limited and Contributors
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