O2 Holdings Ltd & Anor v Hutchison 3G Ltd

Comparative use of a competitor’s trade mark raises questions of EU law where the mark identifies the competitor but does not suggest a trade connection. The Court of Appeal referred to the European Court of Justice whether such use falls within article 5(1) of the Trade Marks Directive and whether lawful comparative advertising must satisfy a requirement of indispensability.

The court held that article 6(1)(b) covers comparative indications. Compliance with the conditions governing comparative advertising therefore supplies a defence to trade mark infringement. A non-compliant advertisement is not used in accordance with honest commercial practices.

O2 owned registered marks depicting bubbles and had made bubble imagery distinctive of its mobile telephone services. Hutchison 3G used bubbles in a television advertisement which truthfully compared its prices with O2’s. It was accepted that the advertisement was not misleading and did not suggest a trade connection.

Lewison J held in [2006] EWHC 534 (Ch) that the use fell within article 5(1)(b) of the Trade Marks Directive, complied with article 3a(1) of the Misleading Advertising Directive, and was protected by article 6(1)(b) of the Trade Marks Directive. O2 appealed on the defence; Hutchison challenged the finding of prima facie infringement.

The central questions were whether purely comparative use fell within article 5(1), whether compliance with the comparative-advertising conditions supplied a defence, and whether those conditions required use of the competitor’s mark to be indispensable.

1. Three questions referred to the European Court of Justice. The appeal raised EU-law issues which were not acte clair. An authoritative EU-wide ruling was required because the dispute concerned principles applicable throughout the internal market and an eventual reference was inevitable. The questions concerned whether purely comparative use could fall within article 5(1) of the Trade Marks Directive, whether article 3a of the Misleading Advertising Directive imposed an indispensability requirement, and whether any such requirement precluded use of a confusingly similar sign.

2. Jacob LJ considered provisionally that article 5(1) should not cover use which merely identifies a competitor for an honest comparison and does not jeopardise the mark’s function of guaranteeing origin. The context of the use forms part of the assessment. On the accepted facts, the advertisement distinguished the businesses and created no likelihood of confusion. This view did not determine the referred issue.

3. Article 6(1)(b) extends to comparative indications concerning the kind, quality, quantity, purpose, value or other characteristics of goods or services. Its protection depends on use in accordance with honest industrial or commercial practices. An advertisement which fails the cumulative conditions in article 3a cannot satisfy that requirement. Conversely, compliance with those conditions supplies a defence to a trade mark infringement claim. The court regarded that conclusion as acte clair. To the extent that BA v Ryanair [2001] FSR 541 was inconsistent with it, Jacob LJ rejected his earlier conclusion.

4. Jacob LJ’s provisional view was that article 3a contains no additional requirement that use of a competitor’s trade mark be indispensable. Such a requirement is absent from the operative conditions and conflicts with the principle that those conditions should be construed in the manner most favourable to comparative advertising. Recital 14 explains why comparative advertising may extend to another’s mark; it does not create a restrictive ninth condition.

5. Jacob LJ also considered provisionally that any requirement of necessity should not restrict an advertiser to reproducing a mark exactly as registered. That restriction could make legitimate comparative advertising impracticable and produce arbitrary results. Mummery LJ and Sir Christopher Staughton agreed with the judgment and the proposed reference.

1. Court of Appeal (Civil Division): In [2006] EWCA Civ 1656 , referred three questions of EU law to the European Court of Justice and did not finally determine the appeal.

2. High Court, Chancery Division: Lewison J held in [2006] EWHC 534 (Ch) that the advertisement fell within article 5(1)(b) of the Trade Marks Directive, complied with article 3a(1) of the Misleading Advertising Directive, and was protected by article 6(1)(b) of the Trade Marks Directive.