ECJ gives guidance on implicit comparative advertising and designations of origin

Practical Law UK Legal Update 0-295-8952 (Approx. 5 pages)

ECJ gives guidance on implicit comparative advertising and designations of origin

by PLC IP&IT

Background

Comparative Advertising Directive

Comparative advertising is regulated by the Comparative Advertising Directive (97/55/EC) which inserted into the Misleading Advertising Directive (84/450/EEC) (Directive) a number of provisions concerning comparative advertising.

Comparative advertising is defined as "any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor" (Article 2(2a), Directive).

Article 3a(1) of the Directive sets out various conditions that advertisements must fulfil in order to make them permissible under the Directive. These require, among other things, that:

(b) the advertising compares goods or services meeting the same needs or intended for the same purpose;

(f) for products with designation of origin, the advertising relates in each case to products with the same designation;

(g) the advertising does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor, or of the designation of origin of competing products.

Protected designations of origin

A protected designation of origin is the name of a region, specific place or (in exceptional cases) a country which is used to describe an agricultural foodstuff or product that originates there and owes its quality or characteristics to a particular geographical environment in which the production and preparation of the foodstuff or product take place (Article 2(2)(a), EC Regulation on the protection of geographical indications and designations of origin for agricultural products and foodstuffs (2081/92)). Champagne is a designation of origin relating to the Champagne region of France.

Article 13 of the Regulation gives wide protection to registered designations of origin, for example preventing them from being commercially used (directly or indirectly) for products that do not fit the relevant description, even if the true origin of the product is indicated (as in, for example, "champagne-style wine" or "imitation champagne").

Facts

The Belgian company De Landtsheer Emmanuel SA marketed several varieties of beer under the trade mark MALHEUR. In 2001, it launched a beer under the name "Malheur Brut Réserve", which was brewed using a process based on the production method for sparkling wine. The bottle and packaging carried various words containing the term "brut", as well as the phrase "à la méthode traditionnelle", the name "Reims-France" and the word "Champagnebier". It extolled the virtues of the beer by ascribing to it the characteristics of sparkling wine and, in particular, champagne.

In 2002, the Comité Interprofessionnel du Vin de Champagne (CIVC) and the champagne producer Veuve Clicquot Ponsardin brought an action against De Landtsheer alleging that its advertising was contrary to Belgian law because it was misleading and constituted unlawful comparative advertising.

At first instance, the Belgian court allowed De Landtsheer to continue using the word "brut", but said it must stop using all the other words listed above, including the designation of origin "Champagne" contained within the word "Champagnebier". Both parties appealed this decision, and the Belgian appeal court referred various questions of interpretation of the Directive to the ECJ, which are set out below. In November 2006 Advocate General Menozzi gave an opinion on these questions (see Legal update, Advocate General gives opinion on interpretation of Comparative Advertising Directive).

Decision

The ECJ has declined to follow the Advocate General's recommendations on two of the questions asked. It has held that an advertisement may fall within the scope of the Directive even if it does not mention any specific competitor, product or service by name. Another result of the judgment is that advertisers are allowed to refer to protected designations of origin in their advertising even if their own product is not covered by that designation.

First question: Naming the competitor

Does Article 2(2a) of the Directive mean that a reference to a type of product within an advertisement, which does not identify any specific undertaking or product, should be considered to be comparative advertising?

The ECJ pointed out that Article 2(2a) referred to implicit references as well as explicit ones, and that EC case law had interpreted this as a very broad definition. If an advertisement implicitly referred to a competitor, or his products and services, then it was comparative advertising even if several competitors could claim to be identified in this way.

Whether consumers would actually identify them as being referred to in the advertisement was a matter for the national court to decide.

Second question: Defining the competitor

In relation to the concept of "competitor" referred to in Article 2(2a) of the Directive:

If a business can be identified within a particular advertisement, does that mean it should be regarded as a "competitor" regardless of the type of goods or services it offers?
The court's answer to this was no. It emphasised that the nature of the goods, and the needs that they met, were fundamental to their "competitiveness" or otherwise. This was precisely why Article 3a(1)(b) of the Directive stipulated that any goods or services that were compared in an advertisement must meet the same needs or be intended for the same purpose.
If not, are market conditions and consumer habits a relevant factor, and should they be examined in all member states, or only those where the advertisement appeared? To what extent should one take into account the substitutability of the products, and the particular product characteristics that the advertisement promotes or the image it seeks to convey?
The ECJ held that the national court must analyse the competitive relationships within the market where the comparative advertising took place, but that they might also choose to look further afield at consumer habits in other countries that might have an impact on local consumer behaviour. The characteristics that the advertisement singled out and the image it sought to give would also be relevant influences on consumer behaviour.
Are the criteria for determining whether someone is a competitor the same as those that are to be applied under Article 3a(1)(b) to decide whether goods and services meet the same needs, or are intended to serve the same purpose?
The court concluded that the criteria applicable under each of these provisions were different. Article 2(2a) required a relatively loose assessment of whether somebody was a competitor or not, and whether their goods or services could be substituted to a certain degree for those of the advertiser. In contrast, Article 3a(1)(b) required an individual and specific assessment of the goods or services that had been comparatively advertised so as to determine whether there was a real possibility of substitution.

Third question: Relevance of national law

If an advertisement only refers to a type of goods, and does not identify any competitor either expressly or implicitly, is it automatically unlawful? If not, should one apply national law (other than the law that transposed the Directive itself) even if this offers consumers (or undertakings selling the type of product referred to) less protection than the Directive offers?

The ECJ held that such advertising could be lawful, but would not be covered by the Directive. Consequently, other provisions of national and EC law would necessarily have to be applied as far as they were relevant, even if this meant that consumers or competing undertakings had a lower level of protection than was given under the Directive.

Fourth question: Designations of origin

Are advertisers allowed to make comparisons between products with a designation of origin and products that have no such designation?

The ECJ confirmed that this sort of comparison was permitted under Article 3a(1)(f) of the Directive. This was because EC case law clearly indicated that provisions of the Directive must be interpreted in the sense most favourable to comparative advertising. In addition, Article 3a(1)(g) already ensured that advertisers could not take unfair advantage of designations of origin. Taken in conjunction with all the other requirements set out in Article 3a(1), this meant that it would be unjustifiable to interpret Article 3a(1)(f) as requiring an absolute ban on such comparisons.

Comment

The ECJ has declined to follow the Advocate General's opinion on questions one and four. Its judgment confirms a wide application of the Directive to cover advertisements that refer only implicitly to competitors or their products, and erodes the protection enjoyed by designations of origin.

On the first question, this judgment clarifies that advertisers should have their copy legally cleared even if it only "nods" towards competing products or services without naming them. No doubt the large number of cases involving comparative advertising that have reached the European and UK courts is partly due to the tactical value of suing a competitor, but it also indicates how subjective - and therefore unpredictable - decisions in this area of law can be.

Manufacturers and retailers of products covered by designations of origin will be unhappy about the ECJ's answer to the fourth question, as they will be likely to take the view that any reference to a designation of origin will inevitably take advantage of its cachet. De Landtsheer claimed that its beer sparkled like champagne surely because that would elevate its product's image in the minds of consumers, as well as for the more prosaic reason that it was brewed using similar methods. In doing so, it took advantage (although not necessarily unfair advantage) of champagne's reputation in the same way that the computer manufacturer IBM did when it claimed that its computers amounted to "Champagne for the price of sparkling wine" ("Champagner Bekommen, Sekt Bezahlen" [2002] ETMR 1091 (Bundesgerichtshof). The difference was that (as reconfirmed by the ECJ here) the latter was not comparative advertising because it did not compare substitutable products or services. Instead, it merely borrowed the characteristics of one type of goods to illustrate the finer points of another, non-competing, kind of product.

Case: De Landtsheer Emmanuel SA v Comité Interprofessionel du Vin de Champagne and Veuve Clicquot Ponsardin SA, Case C-381/05, 19 April 2007.

End of Document

Also Found In

Trade Marks

Resource ID 0-295-8952

Law stated as at 19-Apr-2007

Resource Type Legal update: archive

Jurisdiction

European Union