L'Oreal SA & Ors v Bellure NV & Ors

Factual and Procedural Background

This judgment concerns an appeal from a 2006 judgment by Judge Lewison, relating to trade mark infringement involving three product ranges named Stitch, Creation Lamis, and Dorrall. These products are perfumes that smell like famous luxury branded perfumes protected by registered trade marks owned by Company A. Company A alleged that the defendants' use of comparison lists showing which products corresponded to which of Company A's perfumes infringed its trade marks. Initially, Company A also claimed that some packaging infringed trade marks, but only two "historic" packaging items remained at issue after the defendants ceased using them before trial. The court affirmed that current packaging did not infringe, and the defendants accepted infringement of the historic packaging, leaving only a dispute about costs related to those.

The central dispute now concerns the comparison lists used by the defendants, which truthfully state that their products smell like Company A's famous perfumes. The court summarized factual findings from the earlier judgment, noting that it is lawful to make and sell smell-alike products, the comparison lists are the only practical means to describe the smell, and the defendants gain a promotional advantage from the lists. Importantly, neither consumers nor ultimate purchasers are deceived, the trade marks' distinctiveness or image is not impaired, and sales of the original perfumes are unaffected. The key legal question is whether trade mark law prohibits the defendants from truthfully stating that their products smell like those of Company A.

Legal Issues Presented

1. Does the use of the registered trade marks on and in relation to the comparison lists fall within Article 5(1)(a) of Directive 89/104?
2. If so, does that use comply with the Comparative Advertising Directive?
3. Should Company A be permitted to include a claim under Article 5(2) (and its equivalent Article 9(1)(c) of the Regulation)?
4. If so, does that use infringe those provisions?

Arguments of the Parties

Appellant's Arguments

• The defendants argued that their use of Company A’s trade marks in the comparison lists was purely descriptive and therefore excluded from infringement under Article 5(1)(a), citing the ECJ case C-2/00 Hülterhoff.
• They contended that the comparison lists truthfully informed consumers and did not deceive or confuse them.
• They further argued that even if the use was "unpermitted" under the Comparative Advertising Directive, it was not unlawful absent a cessation order, and thus should not be considered infringement under Article 5(2).

Appellee's Arguments

• Company A maintained that the use of identical trade marks for identical goods in advertising comparison lists fell squarely within Article 5(1)(a) and was not purely descriptive.
• They argued that the comparison lists took unfair advantage of the reputation of their trade marks, contrary to conditions of the Comparative Advertising Directive, particularly Articles 3a(1)(g) and (h).
• Company A asserted that the defendants’ use constituted infringement under Article 5(2) because it exploited the reputation of the trade marks without due cause.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by affirming that the defendants’ use of Company A’s trade marks in the comparison lists constituted use "in the course of trade" and involved identical marks applied to identical goods, thus prima facie falling within Article 5(1)(a) of Directive 89/104. The defendants’ argument that their use was purely descriptive and therefore outside Article 5(1)(a) was rejected because the use was for advertising purposes, not mere description.

The Court acknowledged that while the essential function of a trade mark is to guarantee origin, the mark also has other functions such as communication, investment, and advertising. It accepted the ECJ’s position that use affecting these other functions could constitute infringement even if the origin function was unaffected. The Court expressed difficulty with the vagueness of these additional functions but recognized the need to follow the ECJ’s interpretation.

Regarding the Comparative Advertising Directive, the Court noted that the defendants’ use did not comply with Articles 3a(1)(g) and (h), which prohibit unfair advantage of a trade mark’s reputation and presenting goods as imitations or replicas. The ECJ interpreted "imitation or replica" broadly to include truthful statements that a product shares an essential characteristic (such as smell) with a trade mark owner’s product. The Court regretted this expansive interpretation, seeing no rational basis for prohibiting truthful comparative advertising of lawful products.

The Court also rejected the defendants’ contention that "unpermitted" comparative advertising under the Directive is not necessarily unlawful absent a cessation order. It held that non-compliance with the Directive’s conditions renders the advertising unlawful and that such use is "without due cause" and not "in accordance with honest practices" under Article 6(1)(b) of the Trade Marks Directive.

On Article 5(2), the Court considered whether the defendants’ use took unfair advantage of the distinctive character or repute of Company A’s marks. The ECJ’s reasoning equated any "free-riding" on the reputation of a mark as automatically unfair, with no distinction between permissible and impermissible free-riding. The Court expressed disagreement with this moralistic approach but acknowledged its duty to apply it. Accordingly, the Court held that the defendants’ use infringed Article 5(2) as well.

Holding and Implications

The Court held that the defendants infringed Company A’s registered trade marks by using the comparison lists that truthfully stated their products smelled like Company A’s perfumes. This use fell within Article 5(1)(a) as it was not purely descriptive but used for advertising, and it failed to comply with the Comparative Advertising Directive’s conditions, rendering it unlawful. Further, the use was without due cause and not in accordance with honest practices, constituting infringement under Article 5(2).

The Court expressed regret that the ECJ’s ruling restricts truthful commercial speech and limits competition by prohibiting honest comparative advertising, especially affecting consumers of lower-priced lawful products. However, as a national court, it was bound to follow the ECJ’s interpretation of EU law. The decision does not set new precedent beyond the application of the ECJ’s ruling but confirms the current EU trade mark law’s protective stance over trade mark owners’ rights, even at the expense of truthful comparative advertising.

The only remaining issue concerns the costs related to the historic packaging infringement, which the parties were encouraged to resolve by written submissions or a short further hearing.