A recent (February 12 2007) judgment of Commercial Court 4 in Barcelona makes an interesting contribution to two issues: imitation and the requirements for imitation to be unlawful.

The judgment resolves in the first instance a dispute between two important groups in the business of making and/or marketing cosmetic products: L'Oréal Group and Coty or Coty-Astor Group. L'Oréal sued Coty-Astor for copying seven products:

1. a face cream;
2. a make-up base;
3. a lip gloss;
4. an eyelash mascara;
5. a make-up base;
6. an undereye make-up concealer; and
7. an eyelash mascara

In addition to specific relevant product references, these products were each identified by means of the well-known trade marks L'Oréal and Astor (previously Margaret Astor).

Product imitation

Under paragraph 6 of the judgment, the judge resorts to the Spanish Royal Academy dictionary to provide that "imitating is doing or endeavouring to do the same as another or using another's style". The products need not be the same. It is sufficient to take a certain object as a model (the imitated product) and use it to obtain a new one (the imitating product), which will therefore largely resemble, but need not be identical to, the imitated product. There are three ways to conclude that there is imitation:

1. Taking into account the similar products existing in the Spanish market, even if they do not exactly compete within the same market sector. One has to decide whether the product as such is being copied or whether the object is to make an item that largely matches other products of other competitors having a similar use.
2. What determines a potential imitation is the number of matching features in the imitated product compared to the imitating product. It is not therefore sufficient to prove imitation of any given feature, such as colour, the type of container or the container material. It is their common features that will altogether determine that there is imitation.
3. Price does not necessarily determine that there is no imitation. Specifically (paragraph 15 of the judgment), in comparing the products Cashmere Perfect (L'Oréal) and Silk Perfect (Astor) the defendant argued the price difference of the make-up, which was up to 100% higher in the L'Oréal product compared to the Coty-Astor product. The judge considered that the fact that the L'Oréal make-up costs ?17 and the Coty-Astor make-up costs ?9 has no influence on the type of public targeted by both products, with respect to which it has to be established whether or not there is imitation.

Having made these and other points, the judge concluded in paragraph 30 of the judgment that out of the seven products in dispute, Coty had imitated:

• The Astor Laserlift anti-wrinkle cream, with respect to the L'Oréal Revitalift face cream.
• The Astor Silk Perfect make-up, with respect to the L'Oréal Cashmere Perfect make-up.
• The Astor Jelly Gloss lip gloss, with respect to the L'Oréal Maybelline Fruit Jelly lip gloss.
• The Astor Anti Stress Lift undereye make-up and concealer with respect to the L'Oréal Visible Lift make-up and undereye concealer.

Requirements for unfair imitation

Having established the existence of imitation in four products, the judge looked at whether that imitation was unlawful, and started by referring to Article 11.1 of the Unfair Competition Act (UCA), which states: "The imitation of renderings and business enterprises of another is free, unless they are covered by exclusive rights recognized by Law."

Therefore, the general rule is that imitation is lawful unless products protected by exclusive rights are imitated, that is unless trade marks or trade names or industrial designs are imitated.

We should bear to mind that in the case in hand, L'Oréal had no, or at any rate did not claim to have any, IP rights protecting the four products imitated. Exceptions to this general rule are:

1. That the imitation is likely to generate association on the part of consumers between the imitated product and the imitating product. Supreme Court Case Law has established that this association means that the public may mistakenly believe that the products originate in the same enterprise or financially related enterprises.
   The judge denied the existence of a likelihood of association in the case in hand, mainly for two reasons: first, in perfume shops and large stores the products are on display on racks grouped by brand and, second, the manufacturer's trade mark stands out on the products compared and, in addition in the case of L'Oréal and Astor, they are well-known trade marks. Yet again, well-known character is seen by case law as an element to be borne very closely in mind when ruling as to the existence of confusion or, in this case, the likelihood of association between two products.
2. Where the imitation takes unfair advantage of another's reputation. The judge also denies that this is the case given the well-known character of the trade marks identifying the products in dispute.
3. Where the imitation takes unfair advantage of another's reputation or effort. This exception is split into two requirements: first, that an advantage is taken and, second, that the advantage taken is unfair.

In our view, under paragraph 36, the judgment examines just one of these requirements – that unfair advantage is taken – but does not examine the second requirement – that the advantage taken is unfair. The judgment concludes that Coty has taken advantage of L'Oréal's efforts in creating, designing, launching and marketing, but considers that the advantage is all of a piece with imitation.

However, what should have been examined, and was not, was the fairness or unfairness of the advantage taken. And in order to judge this important requirement, an analysis would have to be made of such items as L'Oréal's investment in all the elements which Coty may have taken advantage of, the financial relevance of such investments and (most importantly) the existence of any information or events which might allow the advantage taken to have been ascribed, for instance, to relations between both companies, etc.

4. Where a systematic imitation of a competitor's products exists and that is designed to prevent or stand in the way of the competitor so that he cannot become established in the market. This requirement is self-evidently not satisfied because the imitated company, L'Oréal, has a very significant presence in the Spanish market.

In conclusion, this is an important judgment providing practice guidelines as to how and how not to imitate, blotted to a certain extent with reference to examining the exception to the lawfulness of an imitation where unfair advantage is taken of another's effort.

José Antonio Hernández