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O2 and 3 bubble trade mark dispute sent to Europe

A lot more than bubbles at stake

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A long-running dispute between mobile phone networks O2 and 3 has been referred to the European Court of Justice for clarification. The dispute centres on a series of 3 adverts which O2 says infringed its trade marks.

A trade mark protects the use of images and words in commercial communications, but the Comparative Advertising Directive says that trade marks can be used in comparative advertising, to a limited extent.

The Directive, which has become law in the UK via the Control of Misleading Advertisements Regulations, says that it may be "indispensable, in order to make comparative advertising effective, to identify the goods or services of a competitor, making reference to a trade mark or trade name of which the latter is the proprietor".

O2 says that a 3 advert which used bubbles as a reference to O2 when comparing its prices with O2's infringed its trade marks. The case was won by 3 in March of this year, when the High Court ruled that the adverts did violate O2's trade marks but came under the comparative advertising exemption.

In assessing the appeal of the case, the Court of Appeal's Lord Justice Jacob said that Europe needed to decide the relative strengths of the competing laws.

"The trial judge, Lewison J, opened his [High Court] judgment saying 'this is a case about bubbles.' And so it is," said Jacobs in his ruling. "But it is also about a lot more. How aggressively does EU law permit comparative advertising to go? Particularly can the advertiser not only use his rival's main name or trade mark but also, honestly, his subsidiary registered trade marks including marks embodying his trade imagery (what the Americans call trade dress)? The question deep down involves a decision based upon the philosophy of how competitive the law allows European industry to be."

Jacobs has referred three questions to the ECJ in order that the law across Europe be standardised. The three questions are:

1. "Where a defendant in the course of trade uses a sign in a context purely for the purpose of comparing the merits (including price) of his goods or services with those of the trade mark owner and in such a way that it cannot be suggested that the essential function of the trade mark to guarantee the trade mark as an indication of origin is in any way jeopardised, can his use fall within either (a) or (b) of Art.5.1 of Directive 89/104?"2. "Where a defendant uses, in a comparative advertisement, the registered trade mark of another, in order to comply with Art. 3a of Directive 84/450 as amended, must that use be 'indispensable' and if so what are the criteria by which indispensability is to be judged?" 3. "In particular, if there is a requirement of indispensability, does that requirement preclude any use of a sign so similar to the registered trade as to be confusingly similar to it?"

Although he referred these questions to the ECJ, he also gave his own views on some of the issues involved. He said that the use of the O2 bubbles did not break the rules of the Trade Marks Directive on the question of causing a likelihood of confusion for consumers.

Jacobs said that some of the law needed to be clarified because it was not clear how a court should treat it. "Now there are some oddities about the Comparative Advertising Directive," he said. "One has the uneasy feeling that those responsible for this legislation had but a hazy idea of how various kinds of IP rights could apply to comparative advertising."

Jacobs said that he would refer the questions to the ECJ but was open to negotiation on exactly how they should be framed. "I do not regard those I have suggested as set in stone and they should be open to post-judgment discussion," he said.

See: The ruling

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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