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Retailers must review own brand packaging after ECJ trade mark ruling, says expert

Supermarkets and other retailers who create own-brand goods must change the way they package them in the wake of a European court ruling on trade marks, according to a legal expert. The ruling outlaws packaging that imitates major brands, he said.18 Jun 2009

Europe's top court has said that packaging will infringe trade mark rights when it mimics major brand packaging and gains an advantage by it. The European Court of Justice (ECJ) said that this was the case even if consumers were not confused into thinking that the goods came from the major brand.

Iain Connor, an intellectual property law expert at Pinsent Masons, the law firm behind OUT-LAW.COM, said that the ruling means that any business that makes own brand goods needs to reassess its packaging designs.

"This is an important ruling which means that if someone has a packaging trade mark for a leading brand and somebody else produces lookalike packaging that intentionally imitates it, it will be found to be taking unfair advantage of that leading brand, which is outlawed," said Connor. "In terms of own brand products it could have huge implications."

The case involved L'Oréal and three companies involved in the creation and sale of perfumes which were marketed as 'smell-a-likes'. The perfumes' packaging imitated L'Oréal's and were sold according to lists of the L'Oréal fragrances which they smelled like.

L'Oréal sued the companies and argued that its activity was in breach of laws based on the European Union's Trade Marks and Comparative Advertising Directives.
 
The ECJ was asked whether the similarity of the perfumes produced by Bellure and sold by Malaika Investments and Starion International to L'Oréal's trade marked packaging broke the law.

Most trade mark law is designed to achieve a single purpose, which is to ensure that consumers are sure that goods and services that claim to be from a company are actually from that company.

The Directive, though, does contain a clause which says that a trade mark offence can be committed even if there is no 'likelihood of confusion' between the goods in question and those of the trade mark owner.

Article 5 of the Directive says that use of material similar to a trade mark is not allowed where the trade mark owner "has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark".

The ECJ had to rule on whether making product packaging look similar to trade marked packaging counted as "taking unfair advantage" of a trade mark, and therefore as trade mark infringement. It said it did.

"Where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige…the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark," its ruling said.

"The taking of unfair advantage … does not require that there be a likelihood of confusion or a likelihood of detriment to the distinctive character or the repute of the mark or, more generally, to its proprietor," it said.

Connor said that this ruling will be vital for manufacturers and retailers, who had never before had such a clear indication of how courts would define 'unfair advantage'.

"This is the first proper expression of what it means to take unfair advantage of someone else's trade mark," he said. "It means that all leading brands have strong powers to prevent what was described as the free riding on their coat tails by competitors."

Connor said that leading brand holders' rights will extend to whatever characteristics are protected by trade marks, including colour, shape and style of packaging.

The ECJ ruling also said that it was against trade mark and comparative advertising law for the makers of imitation perfumes to produce a list detailing what of L'Oréal's fragrances they believed each perfume to smell like.

Contradicting the advice given to it by the Advocate General, the ECJ said that the use of L'Oréal's trade marks in the list was unfair even if the list did not cause confusion as to the origin of the goods for sale.