O2 Holdings Ltd and O2 (UK) Limited v Hutchison 3G UK Ltd

09 May 2006

Zoe Fuller

On 23 March 2006 the English High Court handed down judgment in O2 Holdings Ltd and O2 (UK) Limited v Hutchison 3G UK Ltd [2006] EWHC 534 (Ch). The case concerned the use of the Comparative Advertising Directive as a defence to a claim of trade mark infringement and could have considerable implications for the advertising industry as it changes the law on what could amount to a comparative advertisement for the purposes of trade mark infringement claims.

Background

The case centred on four registered trade marks owned by O2 Holdings Ltd and O2 (UK) Limited O2 ("O2"). These four marks formed an important part of O2's brand identity in the UK. On television, this brand identity focused on the use of bubbles.

In summer 2004, Hutchison 3G UK Ltd (“Hutchison”) launched a series of television comparative advertisements for its pre-pay mobile phone service which featured bubbles. O2 complained that Hutchison’s advertisements infringed its trade marks and applied to the Court for an interim injunction to stop the broadcast of these adverts. The application was refused on the basis that the balance of convenience did not favour O2, although a speedy trial was ordered.

Decision

Hutchison argued that in a comparative advertisement there could be no infringement where the sign was used to identify the goods or services of the trade mark owner. Use of a sign would only infringe a trade mark if it attempted to attribute the origin of the goods or services to someone other than the trade mark owner.

Lewison J, relying on Parfums Christian Dior SA v Evora BV [1997] ECR I-1603, rejected this argument. He held that a trade mark’s function can go beyond a mere guarantee of origin; the proprietor is also entitled to protect the "image" of a trade mark. He commented that, following the Dior reasoning, use of a trade mark to indicate that the origin of the goods or services is the proprietor of the mark, can, in certain circumstances, still amount to an infringement.

Lewison J observed that bubbles in the alleged infringing advertisement were used in a ‘trade mark sense’ as they were specifically used to identify the origin of the services provided by O2.

He also held that, when assessing the similarity between the O2 trade mark and the Hutchison advertisement, the alleged infringing sign should be considered in context. Therefore, rather than viewing just the visual representation of the bubbles, the fully integrated audio visual presentation should be analysed, as this was how it would be appreciated by the consumer.

Lewison J further held that Hutchison’s use of the bubbles in its advertisements, along with the accompanying soundtrack and caption containing information on O2’s services, would have led the average consumer to believe that the services identified by the sign originated from the same undertaking as the services identified by the mark.

Accordingly, subject to any defences, Hutchinson’s use infringed O2’s rights under section 10 (2) of the Trade Mark Act 1994 (“TMA”).

In contrast, there was no infringement under s 10 (3) TMA, as the advertisement as a whole did not take unfair advantage of, or denigrate, O2's trade mark or brand. In addition, there was no evidence of O2 suffering any economic loss or detriment or Hutchison receiving any economic gain as a direct result of the use of the marks.

Comparative Advertising and the Trade Marks Act

The Court concluded that a comparative advertisement will not constitute a trade mark infringement if the advertisement complies with the Comparative Advertising Directive (97/55/EC) (“the Directive”). This finding, however, does not follow that of Jacob J in British Airways v Ryanair Limited [2001] FSR 32. Lewison J justified his conclusions on the basis that at the time of the British Airways decision, the Directive was not in force and Jacob J did not have the benefit of the ECJ ruling in Pippig Augenoptik GmbH & Co KG v Harlauer Handelgesellschaft mbH [2003] ECR I-3095.

Furthermore, although the bubble imagery used in Hutchison’s advertisements was not identical to the O2 trade marks, it was held that an advertiser who uses a sign which is not identical to a registered trade mark may still comply with the Directive.

Recital 14 of the Directive provides that use of a mark in comparative advertising will only be permitted where that use is indispensable to the advertising. Lewison J commented that particular attention should be made to the medium in which the advertisement appears when deciding this. If the overall message of the advertisement complies with the Directive (i.e. if it is not unfair, misleading and is objective), the Court should not curtail any other subsidiary means of persuasion which give additional impact to the lawful message contained in the advertisement.

The following questions should therefore be answered when assessing whether or not the defence under the Directive is made out:

1) Is the advertisement misleading?
2) Does the advertisement compare goods or services meeting the same needs or intended for the same purposes?
3) Does it objectively compare prices?
4) Does it create confusion in the market place between the advertiser and a competitor?
5) Does it discredit the trade marks or services of the proprietor?
6) Does it take unfair advantage of the reputation of the proprietor's marks?

Lewison J held that the additional defence under section 10 (6) TMA must be interpreted as permitting comparative advertising, provided it is conducted in accordance with honest practices, as those practices have been defined for the purposes of the Directive.

Lewison J concluded that Hutchison’s advertisement fell within the scope of the Directive, as it was not misleading, it objectively compared prices and a viewer would be left in no doubt which part of the advertisement related to which service provider. Consequently, there was no infringement of O2's rights under the TMA.

O2 had applied at the interim stage for a reference to be made to the European Court of Justice which was refused on the basis that any reference should await the outcome of the final factual determination at trial. It is likely that this application will now be revived.

Published in World Intellectual Property Report, May 2006