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However, the Court of Appeal was forced to comply with EU law when delivering its judgment in the case, stating that the defendants’ use of well know trademarks to advertise smell-alike products was in fact a trademark infringement and contravened the Comparative Advertising Directive.

The trademark infringement case has been rumbling on for the last six years. In October 2006, the High Court ruled in favour of the claimants and the case then went to the Court of Appeal (CoA). The appellate court, unable to clarify European law in the area, referred it to the ECJ.

In June last year the ECJ ruled that when a third party attempts “to ride on the coat-tails” of a  reputed trademark “in order to benefit from its power of attraction, its reputation and the prestige of that mark and to exploit” the result is an advantage that has been unfairly taken.

For an infringement to have taken place, it said, harm need not have occurred for the unfair advantage to be established.

On the issue of the comparison lists, the ECJ found that the defendants’ use of L’Oréal trademarks had been a deliberate attempt to present their products as direct imitations of L’Oréal’s products.

Consequently, the ECJ said, the defendants’ use was not “fair and lawful” as required to rely upon the defence that it was a permitted advert under the Directive.

The ruling handed a major victory to L’Oréal and appeared to give broader protections to well known brands.

In the CoA, however, Jacob LJ stated that had it been his own decision, free from influence from the ECJ, he would have found in favour of the defendants. The ECJ’s ruling, he said, contravened the basic right to freedom of speech.

In his ruling, with which Lord Justices Wall and Rimer concurred, he stated: “I’m in favour of free speech – and most particularly where someone wishes to tell the truth. There’s no good reason to dilute the predilection in cases where the speaker’s motive for telling the truth is his own commercial gain. Truth in the marketplace matters – even if it doesn’t attract quite the strong emotions as the right of a journalist or politician to speak the truth.

“The right to tell – and to hear - the truth has high international recognition.”

Furthermore, he added, the ECJ ruling could be interpreted as being anti-competitive.

The judge ruled: “If a trader cannot (when it’s truly the case) say: “my goods are the same as Brand X (a famous registered mark) but half the price”, I think there’s a real danger that important areas of trade will not be open to proper competition.”

In a further criticism he suggested that the ECJ decision put European law in this area at odds with that of other trading blocks.

“Countries with a healthy attitude to competition law, such as the US, wouldn’t keep a perfectly lawful product off the market by the use of trademark law to suppress truthful advertising,” he stated.

While the ruling offers clarity to IP lawyers, the remarks of the CoA suggest there could be further challenges to European trademark law.

Lawyers:

Claimant: Baker & McKenzie IP partner Paul Rawlinson instructed 11 South Square’s Henry Carr QC to lead Jacqueline Reid for L’Oréal.

Defendant: Field Fisher Waterhouse partner Hamish Porter instructed Hogarth Chambers’ Roger Wyand QC to lead Tom Moody-Stuart of 8 New Square for Bellure.