O2 Holdings Ltd. & Anor v Hutchison 3g Ltd

Use of a competitor’s imagery in comparative advertising may constitute trade mark use and prima facie infringement, even where the imagery identifies the competitor’s genuine services. Similarity and confusion are assessed globally, by reference to the sign as used in its overall audio-visual context. A static device mark may be infringed by a moving image if the animation is recognisable as, or deceptively similar to, the mark.

Comparative advertising must comply with the Comparative Advertising Directive. Its requirements are interpreted in the manner most favourable to lawful comparative advertising. The indispensability of imagery is assessed by reference to the effectiveness of the advertisement in its particular medium. A fair, objective, accurate and non-misleading advertisement may use a similar, rather than identical, distinguishing sign. The action therefore failed despite a prima facie case under section 10(2).

O2, telecommunications providers, owned four registered bubble device marks. Hutchison 3G used animated black-and-white bubbles in a television advertisement comparing its ThreePay service with O2’s pay-as-you-go service.

O2 alleged infringement under sections 10(2) and 10(3) of the Trade Marks Act 1994. Hutchison 3G counterclaimed that the registrations were invalid for lack of distinctiveness. The price comparison was assumed, for the purposes of the action, to be accurate and fair.

The issues included validity, trade mark use, similarity and likelihood of confusion, reputation, unfair advantage and detriment, and the effect of the Comparative Advertising Directive.

1. The bubble registrations were valid. Registration was prima facie evidence of validity under section 72, placing the burden of establishing invalidity on Hutchison 3G. The marks had inherent distinctiveness because bubbles were not descriptive of telecommunications. They had also acquired distinctiveness through extensive use. Use of the bubbles with the O2 logo and in cropped forms was relevant, provided consumers perceived the bubbles themselves as indicating trade origin.
2. A static device mark is not incapable of protection against a moving image. The court must compare the moving image as a whole with the registered mark, rather than freezing an individual frame where the average consumer would not perceive that frame separately.
3. Use may be infringing even where the sign indicates that the services originate from the trade mark proprietor. The relevant question is whether the use affects, or is liable to affect, the functions of the mark. The advertisement’s bubbles were used in a trade mark sense because they identified O2’s services.
4. For section 10(2), the advertisement was assessed globally through the eyes of the average consumer. The services were identical, O2’s general bubble imagery was highly distinctive, and the bubbles resembled the registered Technical and Fizz marks. The use therefore established prima facie infringement through likelihood of confusion.
5. For section 10(3), Relax had a reputation, but the advertisement did not call that particular mark to mind. Continuous was not shown to have a reputation. No infringement under section 10(3) was established. The claim also failed for lack of proof of actual economic detriment or unfair advantage.
6. The Comparative Advertising Directive exhaustively harmonised the conditions governing lawful comparative advertising. Compliance was assessed by reference to the advertisement as a whole. The advertiser was not confined to the exact registered mark and could use a similar distinguishing sign. Indispensability meant indispensability for effective comparative advertising, taking account of the medium. The television advertisement was accurate, objective, non-misleading, non-confusing, non-denigratory and did not take unfair advantage of O2’s marks. It therefore complied with the Directive and afforded a defence to the section 10(2) claim.
7. Section 10(6), in the context of comparative advertising, had to be interpreted consistently with the Directive. Its honest-practices defence was materially the same defence. The action was dismissed and the counterclaim was dismissed.

First-instance decision. No appellate history is stated in the judgment.