L'Oréal v Bellure: defending the ECJ against Lord Justice Jacob

In an earlier post, this weblog reported that a critical article in the Journal of Intellectual Property Law & Practice (JIPLP) was considered with approval by Lord Justice Jacob in L'Oréal v Bellure, in which the learned judge poured out his wrath upon the Court of Justice of the European Union for its approach to trade mark infringement.

In this post, we reproduce a powerfully-articulated response to Lord Justice Jacob by the distinguished German intellectual property practitioner and scholar, Gert Würtenberger (a partner in Wuesthoff & Wuesthoff, Munich, and founder member of the JIPLP editorial board). Dr Würtenberger's piece has already been been published online on the JIPLP website and will appear in the October 2010 issue. However, on account of its importance and general interest, it is published on this weblog too:

L'Oréal v Bellure: An Opinion

On 21 May 2010, the Court of Appeal of England and Wales rendered an outspoken decision in L'Oréal SA and others v Bellure NV and others [2010] EWCA CEV 535. I would like to take this opportunity to pass comment on it.

In contrast to judgments rendered by courts in civil law countries and, even more so, those rendered by the General Court and the European Court of Justice (ECJ), English judgments are characterized by the personal views of the judges deciding the case. As these are a strong expression of the personal views of the deciding judges, they give—at least from the perspective of a Continental lawyer—much clearer guidelines for future cases. With regard to the judgments rendered in light of answers of the ECJ to questions referred to it, the disagreement of English judges with answers of the ECJ and the duty of the national judge to follow the same provokes English judges even more to express their personal views. One of the most striking examples from the recent past is the Court of Appeal's judgment in the ‘smell-alike’ case of L'Oréal SA v Bellure, in which Lord Justice Jacob emphasizes and gives grounds for the court's deep concerns against the judgment of the ECJ. Lord Justice Jacob expresses his deep reservations regarding the court's decision for reasons of impediment to right of free speech, the impact on the freedom of trade, and the consequences of the ECJ's decision, resulting in a more ‘protective’ approach to trade mark law in comparison to other major trading areas or blocks. Moreover, the English court expresses its regret that the ECJ did not address the competition aspect of what the court calls ‘riding on coat-tails’.

I will not discuss each individual aspect of these points of criticism, but feel urged to respond to all of them from a more general perspective. While there is no doubt that the perspectives of right of free speech, freedom of trade, and scope of protection of a trade mark are overriding principles which influence a dispute between a trade mark owner and its competitors, in my opinion, one essential aspect has been omitted from Lord Justice Jacob's considerations: the interest of the trade mark owner. The judgment conveys the impression that the prevailing task of a trade mark is to serve the consumer. This may be the consequence of the use of a trade mark in trade, but it is not the prevailing purpose of a trade mark. The task of a trade mark is to accentuate the producer's goods from the mass of unknown products and to establish a communication channel to actual or potential buyers and users of the product. It is a communication channel for the advantage of its owner, however, with the resulting consequences that the addressed user or buyer may obtain information regarding the product irrespective of whether that information is objective or purely subjective. It is an investment by the trade mark owner which is fundamental to the successful promotion and sale of its goods and/or services.

Trade mark protection is protection of essential investments in a company and its trade connections. The period of grace granted to a registered trade mark for the first 5 years of its existence, protecting against risk of confusion developing into encompassing protection for well-known and famous trade marks, independent of any risk of confusion, is clear proof of the legislative purpose of granting trade mark protection. It ends where legitimate interests of the society as such—or of individuals touched or even negatively influenced—and a balancing of those interests requires restriction of the rights of the trade mark owner. It is this balancing of interests which not only renders the legal system reliable but allows anyone who wishes to invest in the acquisition of a registered right and its development on the market to decide what to do and how much capital should be invested. To regard the ‘poor consumers’ as the ‘losers’ in consequence of the ECJ's decision indicates, in the same manner as the finding that ‘consumers are not stupid’, ‘as they will not see the cheap copy as being the same in quality as the original’, but ‘will see it for what it is and no more’, that the decision obviously lacks the necessary balance from the English court. It did not seriously consider the resulting impact on trade mark owners, had the ECJ come to a conclusion which the English court had wished. This is the more astonishing as His Lordship, summarizing the factual findings in the earlier judgment of the English court, mentions that the defendants got a major promotional advantage from using such lists. It is precisely this fact which raises the question: Can the right of free speech and the freedom to trade be justification forallowing a competitor—who has not attempted to develop perfumes and trade marks and to promote them, as L'Oréal and the other plaintiffs have probably done—to obtain a major promotional advantage of the investment of the plaintiffs by using comparison lists? The producer of the ‘smell-alike’ products is not prevented from promoting such products with the same effort and investments as the plaintiffs; nor is such a producer prevented from trading in such goods. To bar a trader from saying ‘my goods are the same as brand X’ (famous registered trade mark) but at half the price, ‘has nothing to do with freedom to trade’ or, putting it in the words of the ECJ, with undistorted competition. In contrast, giving a competitor such freedom would distort trade as it would allow competitors to seek out successful or, in particular, famous trade marks in order to emphasize certain features of their own products. Admittedly, it may sometimes be hard to enter a market which is dominated by certain brand owners. It is, however, not the task of trade mark law to engender competition for new products in a manner which makes market entrance easier. Referring to well-established trade marks in a market with an abundance of competing products is a striking example of free riding ‘comparison’ which clearly distorts competition to the detriment not only of the owners of the well-known products but of all producers of competing products.

As Lord Justice Jacob correctly pointed out in the preceding judgment, the question involved in Bellure, as well as in the earlier O2 case, is how competitive the law allows European industry to be. The answer to this question may, however, be based only on encompassing consideration and the weighing up of all the interests involved and not only those of competitors and customers. This is the aspect which is clearly missing in Lord Justice Jacob's decision.