It has been another busy year in the world of brands, with numerous interesting cases and practice developments. These decisions and changes will affect the choices that UK brand owners make about the management of the protection and exploitation of their trade marks.

Similar marks

In June 2007, the ECJ handed down its decision in an opposition filed by the owners of a Spanish word mark Limonchelo, against a CTM application for that device.

While OHIM originally allowed the opposition, on appeal, the Court of First Instance (CFI) held that the marks, despite an identity of goods, were not sufficiently similar to result in confusion. In making its decision, the CFI relied on a visual comparison of the two marks. It found that the round plate device was the dominant element of the CTM application, and as a result no likelihood of confusion arose from any visual, phonetic or conceptual similarities between the words Limonchelo and Limoncello. On appeal to the ECJ by OHIM, the ECJ sent the case back to the CFI for reconsideration and held that, when assessing the likelihood of confusion, each of the marks in question should be considered as a whole – a comparison based solely on the dominant elements is only valid if all the other components of the mark are negligible. We are awaiting the CFI's reconsideration of the facts in the context of the ECJ's decision, especially regarding whether it will consider the descriptiveness and conceptual meaning of the word element Limoncello (a generic name for lemon liqueur produced in Southern Italy) and the effect on the resulting scope of protection of the earlier mark. Perhaps this will provide the CFI with a means for coming to a conclusion similar to its original decision.

Trading names

Céline SA has used the mark Céline for luxury clothes since 1928. It registered the term as a trade mark in 1948. A separate company, Céline Sarl, was registered in France under that name in 1992, but its owners had used the name for its clothing and accessories store since 1950. In 2003 Céline SA became aware of Céline Sarl and issued trade mark infringement proceedings, seeking to prohibit it from using Céline as its trading name. Céline Sarl argued that the mark was used as the name of its business, rather than as a trade mark for its goods, and relied on the own name defence.

The ECJ held that use of a company name would not necessarily infringe a registered trade mark, as it could be used as a reference to the company itself rather than its goods and services. It listed the following guidelines for assessing whether a company's use of its own name could be considered honest:

1. The extent to which the later name is understood by the relevant consumers as indicating a link with the earlier trade mark proprietor.
2. The extent to which the later party ought to have been aware of the possibility of that link.
3. The strength of the earlier trade mark's reputation, from which the later party might profit.

This case confirms that although a defendant needs to use its sign to distinguish its goods and/or services under Articles 5.1 and 5.2 of the Trade Marks Directive (TMD), the court may consider that use of a company name is an infringement if the use affects or is liable to affect the function of the registered trade mark in acting as an indicator of origin – for instance, if it is used in a way that could be interpreted as use in relation to goods.

It should be noted that provisions due to come into force on October 1 2008 under the Companies Act 2006 will create a new right to object to the use of a company name, which is the same as a name in which that person has goodwill, or is so similar to it that it is likely to be misleading. This may give owners of trade mark rights an avenue to prevent registration (and hence discourage use) of company names without needing to prove trade mark use. It will also make it increasingly important for company name registrants to conduct searches before registration.

Identical bubbles

Upcoming ECJ opinions in the O2 and Bellure cases should help to clarify the interplay between laws on trade marks and comparative advertising. The two cases are reviewed below.

O2 Holdings v Hutchison 3G

In this case, mobile phone company Hutchinson 3G ran a television advertising campaign in the UK making price comparisons between Hutchinson's phone services and those offered by O2. The advertisements contained the term O2 and images of bubbles in water. Although there was no claim that the advertisements were misleading or that they suggested a trade connection, O2 sued for trade mark infringement of its (pictured) bubble device marks.

At first instance the Court found that, although Hutchinson's use constituted trade mark infringement under Article 5.1 of the TMD, the advertisements complied with the Comparative Advertising Directive (CAD), thus making Hutchinson's use descriptive and non-infringing. At the Court of Appeal, Jacob LJ considered the position to be unclear and asked the ECJ, 1) whether the use of a registered trade mark in a comparative advertisement in such a way that the essential function of the trade mark (that is, as a guarantee of origin) is not jeopardized amounts to infringement under Article 5.1; and 2) whether such use must be "indispensable" to comply with the CAD, and what criteria must apply.

The Advocate General handed down his opinion in January 2008. The Advocate General's role is to give a non-binding opinion in cases brought before the ECJ, before the handing down of the court's decision. He found that if a comparative advertisement complies with the CAD, Article 5.1does not prohibit the ad. As a result, the proprietor of a trade mark contesting its use in comparative advertising must base its claim on the breach of one of the conditions laid down in Article 3a of the CAD. The AG did not find an additional requirement of "indispensability", as this is not expressly required by the CAD and cannot be implied simply because of the Directive's prohibition on taking unfair advantage of the reputation of a trade mark.

If this opinion is followed by the ECJ, a trade mark proprietor will have to rely on the CAD rather than an infringement action to prevent use of its mark in an advertisement. The difficulty in doing so is that only the Trading Standards and Advertising Standards Authorities can take action under the UK implementation of the CAD. Given that such authorities are less likely to take action than a trade mark owner unless a consumer protection issue arises, there is a risk that a similar ECJ decision could lead to an open season on trade marks in the field of comparative advertising. Successful trade mark infringement actions in a comparative advertising context have been rare. Trade mark owners may also need to look to copyright law as a means of preventing use of device marks. The AG did note that comparative advertising law in the EC is weighted in favour of advertisers. It suggested that there should be a requirement of necessity to prevent advertisers taking unfair advantage of a mark's reputation.

L'Oréal v Bellure

L'Oréal brought an action for trade mark infringement and passing off in respect of Bellure's smell-alike products, which used similar bottles and packaging to those used by L'Oréal for its products (as compared above), as well as Bellure's use of comparative tables, which explained which smell-alike resembled which original fragrance. At first instance Lewison J held that an infringement had occurred under sections 10.1 and 10.3 of the Trade Marks Act 1994, but that Bellure's actions did not amount to passing off .

At the Court of Appeal Jacob LJ agreed that the use of the comparison lists enabled Bellure to sell its products on the basis that they smelled like L'Oréal's perfumes, but held that it was finely balanced as to whether such use would constitute infringement. In his view, the essential function of the trade marks in question was not adversely affected, as customers would not be fooled into confusing the replicas with the original products. Jacob LJ also confirmed that an action in passing off could not be established for those reasons. Further, L'Oréal's argument that the common law should be extended to embrace a tort of "unfair competition" was rejected because of the difficulties in defining such a tort and in the interests of maintaining freedom of competition in the EC.

The Court of Appeal referred a series of questions to the ECJ, including whether use of L'Oréal's marks in the comparison tables constituted infringement under Article 5.1a of the TMD or was permitted under the "honest practices" defence (Article 6.1b) and the CAD. Jacob LJ expressed the hope that the ECJ would consider this question at the same time as the similar issues raised in the above O2 case and provide guidance on the meaning of "unfair advantage". The ECJ's decisions in these two cases will be awaited with interest by trade mark owners.

Parallel imports

In Honda Motor Co v KJM Superbikes Honda brought trade mark infringement proceedings based on KJM's importation of Honda bikes obtained from Honda in Australia into the UK. Unusually (given most cases since Davidoff have found to the contrary) the High Court held that there was implied consent by Honda to the importation of the majority of the consignments. Therefore Honda's rights were exhausted and there was no infringement.

The bikes imported into the UK had originally been sold by Honda Australia to Lime Exports, a supplier of KJM. No checks had been made by Honda Australia regarding the destination of the bikes, although it knew that the bikes would be resold, having had a long relationship with Lime. Honda Australia subsequently revised its practices and requested details of the destination of the bikes sold to Lime Exports. From that point on, implied consent to UK importation no longer existed (although the date of such consent has been disputed). On this basis, further imports into the UK were an infringement of Honda's trade mark rights.

This case highlights how a lack of controls regarding the sale and export of goods in one jurisdiction can amount to implied consent for the benefit of a parallel importer in the UK. However, as was the case here, prudent checks and a change of policy can be enough to defeat an argument of implied consent. Interestingly, the claimants conceded that any consent by Honda Australia to the parallel imports was equivalent to the consent of the trade mark owner, Honda Japan – arguments by parallel importers that a subsidiary's consent constituted consent of the trade mark owner were rejected in an earlier related case, as being contrary to the principles in Davidoff.

Bringing practice into line

As of October 1 2007, the UK Intellectual Property Office (UKIPO) abolished examination on relative grounds. Although the UKIPO still issues a standard examination report that identifies any absolute ground objections and possible conflicting marks on the UK and CTM Registers, the marks listed will not pose an obstacle to acceptance of the application. Instead, the applicant has an opportunity to withdraw the application or file one round of submissions arguing against the Registry's notification of the application to the owners of the prior marks. If the arguments are not successful (or none are filed), those owners will be alerted to the new application directly after its publication, so that they have the opportunity to oppose.

Unlike UK trade marks, owners of earlier CTMs will not receive automatic notification of the publication of a potentially similar application unless they have opted in to this notification procedure for a fee of £50 ($100). The obvious effect of this change, due to the absence of UKIPO relative grounds objections, has been an increase in oppositions filed.

In addition, before October 1 2007 it was possible to oppose an application on the basis of any earlier registered rights, even rights owned by third parties. Now, an opponent only has standing if it has a proprietary interest in the earlier right. In this respect UKIPO practice is brought into line with that of OHIM. However, before the UKIPO an application can still be opposed on both absolute and relative grounds (OHIM will only consider oppositions based on earlier third party rights). If a potential opponent believes that the mark fails to meet the absolute criteria for registration it must commence invalidation proceedings after OHIM grants registration of the mark.

Under Section 11.1 of the Trade Marks Act 1994, use of a registered trade mark cannot amount to infringement of an earlier UK registered trade mark. Despite the change of practice regarding objections on relative grounds, this statutory defence will remain in operation.

Fast tracks

In response to a recent review of the UK's Intellectual Property law and policy, applicants for UK trade marks can opt to fast-track applications, as of April 7 2008. The Office will issue examination reports within 10 business days of filing, as opposed to the current average of two months. Once the examination report has been issued, the application will be treated by the Office in the same way as a standard application.

We are waiting for a number of decisions to be handed down in the months to come, not least the ECJ's decisions in the above 02 and Bellure cases as well as CFI's reconsideration in the above Limonchelo case. In particular, we await with interest any guidance these will provide on the legitimacy of trade mark use in comparative advertising. It remains beyond doubt that brand owners will be faced with further interesting decisions to take into account when determining brand strategies in the year ahead.

Ville Patja

Ville Patja is a trade mark associate at Bristows. He has experience in UK, Community, international and overseas trade mark filing, and prosecution and opposition proceedings. He has substantial experience in relation to trade mark portfolio management, reviews and audit, as well as in relation to selection and maintenance of trade marks. Patja's specialism is in relation to Community Trade Mark opposition proceedings and the preparation of evidence both for the Community Trade Mark Office and the UK Trade Marks Registry. Patja has experience in international IP law. He is fluent in French and previously worked as a legal adviser for a large software company in France.

Sally Dunstan

Sally Dunstan is an associate in the commercial IP and trade marks groups at Bristows, advising across a number of industries. Previously, she worked in the IP department of a large Australian law firm and she also managed anti-counterfeiting actions of a large multinational manufacturer in the UK. Dunstan advises on trade mark prosecution (including the management of large international portfolios, oppositions and strategy advice), trade mark infringement, advertising law and IP aspects of corporate transactions. She also drafts commercial agreements relating to the development and exploitation of intellectual property. Her work within both departments allows her to give advice across all aspects of the development, prosecution and exploitation of brands. Dunstan has completed the requirements to obtain a Graduate Diploma in Intellectual Property Law at the University of Melbourne. She is qualified to practise in England and Wales and in Australia. She is an associate member of the Institute of Trade Mark Attorneys.