Does trade mark law prevent traders from telling the truth? Absolutely. That’s the take away message from the UK Court of Appeal after having its hand forced by the European Court of Justice (“ECJ“). But forget about the ruling for a moment. The highlight of this case is Lord Justice Jacob delivering the dissenting judgment to his own ruling (Lord Justices Wall and Rimer agreeing). And it’s not subtle. Despite upholding the ECJ ruling, LJ Jacob dedicates pages and pages to why the ECJ got it wrong, before ending with “I do not agree with or welcome this conclusion… But my duty is to apply it“. It’s very entertaining, so we’ll come back to “LJ Jacob v the ECJ” later in the piece.
Let’s take a moment to briefly educate ourselves on what the case was about. L’Oreal makes expensive perfumes. Bellure NV makes cheap imitations of those perfumes, which is entirely lawful. Bellure sells its products by providing consumers with lists identifying the Bellure perfume which smells like the more expensive L’Oreal perfume. So the question is, even though it’s lawful to make a product which smells like a famous perfume, is it lawful to tell people about it? No it isn’t – at least, not in the UK after the Court of Appeal was forced to follow the ruling of the ECJ.
LJ Jacob states that the ECJ’s ruling is contrary to Article 19 of the Universal Declaration of Human Rights which provides the right to free speech, and that this right is one which should be championed, particularly when the words spoken are true. Further, LJ Jacob considered that the ruling is contrary to freedom of trade for “[i]f a trader cannot (when it truly is the case) say: “my goods are the same as Brand X … but half the price”, I think there is a real danger that important areas of trade will not be open to proper competition”. Finally, LJ Jacob points out the problems if this is applied to the generic pharmaceutical market such that generics are prevented from issuing lists informing customers of the brand name drug to which their generic product is similar. Not that any of that matters, because the Court of Appeal followed the ECJ like it was obligated to do.
The end result? A “man who trades in lawful replicas or in lawful copies” is restricted from honestly informing the public of what they are, whether expressly by words or impliedly by virtue of the overall presentation and economic context of the product. Why? Because comparing one’s product to a more famous equivalent is “free riding” and constitutes taking “unfair advantage”. Actually, it would be more accurate to say it constitutes taking “advantage” because, in the words of LJ Jacobs following the ECJ, “No line between ‘permissible free riding’ and ‘impermissible free riding’ is to be drawn. All free riding is ‘unfair'”. However, it gets even more complicated, as LJ Jacob observes:
“A line is apparently to be drawn between something like a discussion between a would-be seller and his potential customer (“I can supply a diamond cut in the same shape as Spirit Sun”), which is apparently not “advertising” even though “Spirit Sun” is being used to gain a sale, and an out-and-out general purpose advertising aid such as a comparison list. I confess I do not know where that line is, but this case falls the wrong side of it. Why? Because the Court has said so.”
Before those of you selling replica soccer tops at the Vic Markets get too excited about how this could affect your business, note that this is largely based on European rules preventing ”unfair competition” which Australian Judges have generally dismissed to date. Also, section 122 of our Trade Marks Act expressly provides that comparative advertising does not infringe another person’s registered trade mark. You can find the text of the judgement here.