Intellectual Property Law: Trademark - Assignment Example

 Intellectual Property Law: Trademark Name Course Table of Contents 1.0 Introduction 2.0 Background to the Case: L’Oreal et al v Bellure et al 3.0 The 2007 Decision of the Court of Appeal 4.0 The ECJ Decision 5.0 Discussion: The ECJ Holding vis-à-vis Lord Jacob’s Remarks 6.0 Conclusion 1.0 Introduction In 2006, cosmetics and perfume manufacturing giant L’Oreal group filed a case against Bellure NV and several other companies for trademark infringement, passing off and unfair competition. The complaint objected to the similarities of packaging and the use of comparison lists to inform retailers which of the perfumes were intended to copy the fragrance of the original L’Oreal perfumes. The High Court Chancery Division came out with a decision in 2006 that stated that the action generally failed although it admitted that there were violations in three instances.1 Not entirely agreeing with the High Court’s position, the Court of Appeal did not decide on some issues when the case was appealed to it and instead referred them to the European Court of Justice. In 2009, the ECJ held that the use of comparative lists amounts to unfair advantage if they use the marks of a competitor so as to advertise its own products. Seemingly disliking this ruling, Lord Jacob remarked, “The problem, stated at its most general, is simple. Does trade mark law prevent the defendants from telling the truth? Even though their perfumes are lawful and do smell like the corresponding famous brands, does trade mark law nonetheless muzzle the defendants so that they cannot say so?”2 A study of the decisions shows that whilst the ECJ decision stresses the trade holder’s rights as against distorted competition, Lord Jacob places emphasis on the right of the defendants to free speech and the right of the consumers to hear it. This paper seeks to examine both sides of the argument, specifically, the rationale for the prohibition against free riding and the consequences for its expansion as expressed in the L’Oreal case. This paper is divided into several parts, the first of which takes a look at the facts of the original case and the decisions as handed down by the trial court up to the European Court of Justice. Finally, a comparative analysis of the decisions of the Court of Appeal and the ECJ is made. 2.0 Background to the Case: L’Oreal et al v. Bellure et al L’Oreal, together with its subsidiaries, brought an action founded on the Trademark Act of 1994 and the Trademark Directive 89/104 of the European Economic Council against Bellure NV, North West Cosmetics Ltd, HMC Cosmetics Ltd, Malaika Investments Ltd, Shure Enterprises Ltd, Saveonmakeup.co.uk and Starion International Ltd. The charges were passing off,3 trademark infringement4 and unfair advantage.5 Subsequently, some of the defendants entered into settlements with L’Oreal and company.6 Bellure and the other defendants imported, distributed and sold imitation fragrances that were manufactured in Dubai. The imported fragrances imitated those of the top selling brands of the L’Oreal group namely Trésor, Miracle, Anaïs Anaïs and Noa. The infringement charge was based, among others, on the use by the defendants of comparative lists, which compare marks of the plaintiffs’ top fragrances and the imitation fragrances sold by the defendants as well their comparative prices. 7 The plaintiffs claimed that this violated the TMA 1994 which states that “A person infringes a registered mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.”8 The defendants answered this with the honest commercial practices9 defence. In addition, by commercially dealing with products similar or identical to that of the plaintiffs’, the plaintiffs claimed that the defendants have violated the passing off prohibition of the Trademark Act 1994,10 which has two elements: identity or similarity of marks, and; likelihood of confusion. The defendants claimed that the similarities are not enough and there is no proof as to the likelihood of confusion.11 Finally, the plaintiffs also claimed unfair advantage under section 10(3) of the TMA. Under this provision, the plaintiffs only need to prove the elements of similarity between the mark and the sign, the reputation of L’Oreal et al and either the unfair advantage being taken by defendants in the use of the sign or the likely damage to the reputation of the mark. Proof of confusion is not necessary here. The defendants simply denied the charges.12 On the charge of passing off under 10(2) of the TMA 1994, the High Court ruled that the similarities between the bottles and packaging used by the defendants and those of the plaintiffs were not enough as to create confusion in the minds of the public and so passing off cannot be established. However, the use of comparison lists to answer customer questions is considered infringement under s 10(1) of the TMA 1994. On the claim of unfair advantage under s 5(b) of the Directive implemented by s 10(3) of the TMA 1994, the High Court held that the Trèsor packaging mark and the Miracle bottle mark were too similar to those of La Valeur and Pink Wonder. 3.0 The 2007 Decision of the Court of Appeal The defendants appealed the decision to the CA. The claimants also cross appealed some issues. The CA agreed to most of the rulings except that it withheld judgment on the issues of comparison lists and the historical packaging of La Valeur and the historical bottle of Pink Wonder. The CA referred the following issues to the ECJ: (1) whether the use of a competitor’s trade mark in advertising one’s goods, without confusing the public or endangering its nature can amount to constitutes infringement under Art 5(a) or (b) of the TM Directive (s 10(1) or (2) of the TMA 1994); (2) whether the use of a competitor’s trade mark in the course of business to emphasise one’s own product without the likelihood of confusion or affecting the competitor’s sales or endangering its character, constitutes infringement under Art 5(1)(a) when the use is important in the promotion of the goods; (3) whether comparing one’s goods with a competitor’s through a comparison list is to “take unfair advantage”; (4) whether claiming that one’s product is similar to a popular product with no likelihood of confusing the public’s mind is “presenting goods or services as replicas or imitations” of Art 3a(h) of the Directive 84/420 as amended by Directive 97/55, and; (5) whether the use of a sign similar to a protected trade mark of another constitutes “an unfair advantage” even though it does not injure the product or its owner. 13 4.0 The ECJ Decision 4.1 On the First and Second Question The ECJ held that the use of the trade mark of another to advertise one’s goods constitutes an infringement under Art 5(1)(a) and the trade mark holder has the right to oppose it. The use of the defendants of comparison lists where the word marks Trésor, Miracle, Anaïs Anaïs were expressly named to represent the products themselves falls under Article 5(1)(a) and not 5(1)(b), and here, there is no necessity to prove likelihood of confusion. The emphasis here is identity and not similarity and in such a case the right of the trade mark holder is absolute. The purpose of this, according to the ECJ, is to protect the interests of the holder: to ensure the guarantee of the mark as identity of its source, and; to guarantee the quality of the product and its communication, investment and advertising. The Court also stressed that the use of comparison lists can constitute comparative advertising and must satisfy all the conditions.14 15 The use of protected marks for purely descriptive purposes, according to the Court, is exempt from the application of Art 5(1)(a) of TM Directive (89/04) as was held in Holterhoff v Freiesleben16, but here, the use by the defendants of the claimants’ marks cannot be said as purely descriptive because they were used to advertise the defendants’ products. Also, since the UK Court has determined that the protected marks have established a reputation the holder may be allowed to prevent their use by another even if they refer to products that are not identical or similar or even if the use does not cause damage.17 4.2 On the Third and Fourth Questions As to the third and fourth questions of the CA, the ECJ held that the use of the reputable marks of another for comparison is acceptable so long as it meets the conditions in Art 3a of Directive 9/55/EC. This is not, however, true in the present case because it presented the defendants’ products as “imitations and replicas of goods and services bearing a protected trade mark or trade name,”18 a condition which does not meet paragraph 19 of the Preamble as to comparative advertising. This is true even when there is no likelihood of confusion or is not misleading because it is a separate condition under Art 3a(1)(d). Moreover, according to the ECJ, as the use of comparison lists is unlawful any advantage gained by it is deemed unfair advantage.19 4.3 On the Fifth Question The ECJ held that as to Art 5(2) of Directive 89/04, the expression unfair advantage should be taken to mean the exploitation of reputable marks by using similar or identical signs to represent one’s product. In this case, the likelihood of confusion or likelihood of detriment to the distinctiveness or repute of the mark or its owner is not important.20 5.0 Comparative Analysis: The ECJ Perspective vis-à-vis Lord Jacob’s Point-of-View As a result of the ECJ decision, the CA through Lord Jacob, who wrote the 2007 decision, resumed judgment on the remaining issues. After a lengthy lecture on the virtues of freedom of expression and free trade, Lord Jacob handed down the CA’s decision in accordance with the ECJ ruling. His criticism against the ECJ decision in “muzzling” the defendants from telling the truth stands out as a most scathing remark by an English court against the European court. He also said that the public will be at the losing end. Some people, however, doubt this point of view. According to the Millian Harm Theory, freedom of speech is not absolute but may be suppressed by the state when public order and security requires or when the same violates public policy and public good. Freedom of speech loses its absolute character when it becomes an “instigative speech” or when it constitutes an “indecent public conduct.” Instigative speech, which can be determined from its content, manner, intention, and circumstances, has the overall effect of inciting or causing physical harm to others. Speech as indecent public conduct occurs when speech, although not constituting harm and “ought not to be legally interdicted,” offends good manners and is offensive to the public. 21 In this case, the ECJ ruled that the acts of the defendants amounted to unfair practice and as such, are unlawful. Moreover, it is not the freedom of expression of the defendants that are being proscribed by the law but the act of infringing upon the rights of the plaintiffs. The use, for example, of descriptive statements involving competitors’ products, according to the ECJ, is not in itself objectionable and was upheld in the Holterhoff case. However, the defendants used the descriptive statements of the plaintiffs’ products as a tool to advertise their own products. The ECJ correctly pointed out that the use of imitations and replicas violate the rule on comparative advertising. The exercise of the right of freedom of speech and expression and the extent of the limits that can be imposed on it is dependent on the types of expression. Political expressions, for example, are protected more than commercial expressions and often, states are allowed to exercise its power more when the value of the expression is not deemed socially high.22 In Müller and others v Switzerland,23 the European Court of Human Rights agreed with the government of Switzerland in its act of confiscating paintings, which showed graphic crude sexual themes that were open for viewing by the public at large even as it admitted that freedom of expression extends to even “those that offend, shock or disturb the State or any section of the population.”24 According to Lord Jacob, the right to tell the truth has high international recognition as illustrated by the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, amongst others, but it became a casualty in the ECJ decision. A writer, however, belittled the “truth” that Lord Jacob wanted to protect as this “truth” referred to the defendants’ importation of cheap scents from Dubai, which were intended to smell like those of the popular brands of the claimants. Some of the advertisements of these imitation fragrances read: “From creation Lamis Brand new boxed and sealed 100ml (3.3 fl oz) sweet pearls (“Noa” by Cacharel) spray eau de parfum a designer fragrance for a fraction of the price of the original”; “Coffret d’or compares to Trésor”; “Alternative to Trésor by Lancôme Coffret d’or”.25 It is obvious from these advertisements that the defendants were cashing in on the established status of the original fragrances and publicly admitting copying them, which is “riding on the coattails,” according to the ECJ. Copying itself, without the consent of owners, is considered by society as a form of cheating and is contrary to the high moral ground that the TMA tries to impart as illustrated by Art 5(2) of the Trademark Directive 89/04, which prohibits unfair advantage even without proving detriment to the repute or distinctiveness of the sign. Many signs that are not seen by the eyes, such as smells and sounds, are refused registration but this reflects their inherent difficulty in meeting the standards of the trade mark law rather than as an endorsement to deprive trade mark owners of their rights. This inherent difficulty to meet specific requirements, such as graphic representation,26 is confirmed by the cases of Sieckmann v German Patent Office27 in the ECJ and In the Matter of Trade Mark Application in the Name of John Lewis of Hungerford plc28 in the UK Intellectual Property Office. Sieckmann’s case was an application for trademark registration of an olfactory mark that was refused because it failed to graphically represent the scent despite attempts at giving it a literary description accompanied by a its corresponding chemical formula, and a deposit of a sample of the scent in a container. The ECJ held that signs should be capable of being represented graphically through “images, lines or characters, and that the representation is clear, precise, self-contained, easily accessible, intelligible, durable and objective,”29 and olfactory signs cannot be so graphically represented by formulas, by written descriptions or even by a sample deposit. The Lewis case failed in the UK IPO for a similar reason after registering the scent of articles of furniture and fittings as “the smell, aroma or essence of cinnamon.” The inherent difficulty of graphically representing smells and fragrances was briefly captured in that case with the statement that “sensory evaluation is ultimately subjective and presents obvious problems for a trade mark system which must delimit exclusive rights.”30 Author Gurt Wurtenberger noted that although freedom of speech and expression often present as primary issues in trade mark protection cases, Lord Jacob’s tirade against the ECJ neglects one important aspect: the interest of the trade mark holder. This neglect results, according to Wurtenberger, in the lack of balance of the English decision with all its attention and concern mostly on customers’ interests rather than between that of customers and trade mark holders. This is unfortunate, according to Wurtenberger, because trade mark law is primarily aimed to provide and sustain a mechanism that will identify a trade holder’s product from the mass of products in the market and provide for the channel between such product and the end user. As such, the trade mark law, added Wurtenberger, chiefly benefits the trade mark holder and by necessary extension the end user, who is benefited by the information obtained as a result. This objective can be seen from the trade mark provision that allows the trade mark holder a grace period of five years from the grant of application within which to fully develop his trade free from risk of confusion.31 The question is thus asked: can the right of free speech and expression justify the freeloading and the riding of the coattails by the defendants on the established reputation of the plaintiffs’ perfumes? 32 Table 1 shows the approximate costs being spent by L’Oreal in launching a new line of fragrances, the process of which takes two long years, including the promotion. It shows that the costs run by the millions of euros and the thorough process starts from preliminary market analysis to campaign launching. The notion that the defendants were free to present their products as imitation of the plaintiffs’ brands and at the same time, exploit these products to advertise their own would be similar to adding insult to injury. The ECJ calls this coattail riding distorted competition, but Lord Jacob sees this as an obstacle to free trade. The use of comparison lists, for example, is common in pharmaceuticals where drug merchants often use it to inform customers of the generic version of drugs that sell at very high prices. Similarly, print cartridge dealers also make use of comparative lists to inform their customers of the imitation print cartridges available that correspond to original models.33 There is a doubt, however, that the ECJ decision will have much effect much in the industry considering that the facts of the case are specific and clear. It is obvious that the defendants were wrong and their conduct unfair, but in cases where the facts will be less clear, a different outcome may be reached. 34 Table 1 L’Oreal estimate expenses in launching a new line of scents35 7.0 Conclusion The ECJ decision on the L’Oreal v Bellure case drew various reactions from the public. There were those who welcomed the decision seeing it as a way of giving not only big businesses what is due them but also small and medium-sized enterprises as well. Others did not see the decision positively. The most intense of these reactions came from Lord Jacob of the CA where he criticised the decision as a means of stifling freedom of speech and free trade. A scrutiny of these decisions show that Lord Jacob tended to place his emphasis on the right of the customers to be informed, whilst the ECJ decision leaned more towards the rights of trade mark holders as against unfair competition and unfair advantage. It has been discussed by this paper that freedom of speech and expression is not absolute and this is especially true when it tends to infringe upon the rights of another, in this case a legitimate trade mark holder. There is also some misgiving about the nature and the quality of the “truth” that the defendants are trying to impart to the general public. It has been pointed out, however, that English courts should exercise a balancing of interests in the application of trade mark law with a view to attaining its underlying aims. Trade mark law aims to support the use of trademarks to identify and distinguish one product from another and uphold the rights of the trademark holder in communicating, informing and advertising such to the public. Thus, protecting the customers alone and neglecting the rights of the trade mark holders against unfair competition and advantage does not support the entire objectives of the law. Nonetheless, the issue of freedom of speech is real and almost always is of primary importance in the application of trade mark law. A hopeful note, however, is that the ECJ ruling in the L’Oreal case does not seem to point to far-reaching implications considering that the facts of the case clearly point to obvious violation of the trade mark law by the defendants. Bibliography Books R Cohen-Almagor, ‘Speech, Media and Ethics: The Limits of Free Expression: Critical Studies on Freedom o Expression, Freedom of The Press and the Public's Right to Know’ (2nd Edn Palgrave Macmillan, New York 2001). C J F Doebbler, ‘Introduction to International Human Rights Law’ (CD Publishing, 2006). Cases L’Oreal SA, Lancôme Parfums & Laboratoire Garnier v Bellure, North West Cosmetics, HMC Cosmetics, Malaika Investments Ltd, Shure Enterprises Ltd, Saveonamkeup.co.uk & Starion International Ltd [2006] EWCH 2355 Ch. L’Oreal S.A., Lancôme Parfums et Beaute Cie and Laboratoire Garnier & Cie v Bellure N.V., Malaika Investments Ltd and Starion International Ltd [2007] EWCA Civ 968. L’Oreal SA, Lancôme parfums et beauté & Cie SNC and Laboratoire Garnier Cie v Bellure NV, Malaika Investments Ltd and Starion International Ltd [2010] Bus LR 303, [2009] EUECJ C-487/07, [2010] RPC 1, [2009] ECR I-5185, [2009] ETMR 55. L’Oreal SA, Lancôme parfums et beauté & Cie SNC and Laboratoire Garnier Cie v Bellure NV, Malaika Investments Ltd and Starion International Ltd [2010] EWCA Civ 535. Holterhoff v Freiesleben Case C-2/00 [2002] ECR I-4187. In the Matter of Trade Mark Application in the Name of John Lewis of Hungerford plc Application No. 2,000169. Müller and others v Switzerland [1988] ECtHR Ser A No133. Sieckmann v German Patent Office Case C-273/00 [2002]. Electronic Articles R Guthrie, “ECJ Strengthens Brand Owners’ Position against Lookalikes” Intellectual Property Bulletin (July 2009) Accessed 1 Feb 2011. J Lambert, ‘Does Trade Mark Law Really Stop Us from Telling the Truth? L’Oreal v Bellure’ 22 May 2010. Accessed 1 Feb 2011. G Wurtenberger, ‘L’Oreal v Bellure: An Opinion’ IP in Review. Journal of Intellectual Law and Practice, 2010, Vol. 5, No. 10. Accessed 2 Feb 2011. Laws/Statutes Directive 84/450/EEC of 10 September 1984 Relating to the Approximation of the Laws, Regulations and Administrative Provisions of the Member States Concerning Misleading Advertising. Directive 97/55/Ec Of European Parliament And Of The Council Of 6 October 1997 Amending Directive 84/450/Eec Concerning Misleading Advertising So As To Include Comparative Advertising. Trademark Act 1994. Trademark Directive 89/04/EC. Trademark Directive 97/55/EC. Read More