Oxford IP Moot: Part 2 - Trade mark use in double identity infingement - rethinking L'Oreal v Bellure

This post continues the coverage of the Oxford Intellectual Property Moot, but approaches the task from a different angle.

The moot provides an interesting opportunity to revisit the landmark decisions made by the Court of Justice of the European Union with the benefit of hindsight and reference to other jurisdictions.

The moot focuses on a non-existent country called Erewhon. This country has trade mark legislation very similar to the EU Trade Marks Directive and Regulation. However, Erewhon is not bound by any decisions of the CJEU. On the contrary, the judges are willing to consider jurisprudence from other jurisdictions as an aid to interpretation of Erewhonian law. The only limitations are the TRIPS Agreement and the Paris Convention.

The moot problem for this year is available here. To summarise it, the case involves two producers of the same drug. The first one (GBD) has been producing and selling the original drug Fordox under a patent. When the patent monopoly was expiring, GBD tried to protect its drug using trade mark law – by registering a word mark for the commercial name of the drug and a shape mark for the packaging. After the patent expired, the rival company (Ellebee’s) started producing a cheaper, but otherwise identical generic version of the same drug under the name Bridge-to-Calm. Ellebee’s is trying to market its generic drug as effectively as possible – by launching an aggressive advertisement comparing its cheaper generic drug with the original and by copying elements of the get-up of the original drug (colour of the pills and elements of the packaging). GBD sued for trade mark infringement and passing off.

The court has to establish to what extent trade mark law can protect previously patented substances and what marketing strategies used to promote generic drugs are permissible.

Ellebee’s published an aggressive advertisement using the trade name of the original drug which was registered as a trade mark by GBD. In the advertisement Ellebee’s called the rival product ‘overpriced’ and stated that GBD is ‘fleecing’ its consumers by selling identical drug for a much higher price.

Can this advertisement amount to a trade mark infringement considering that consumers are not confused as to the origin of the two drugs?

It would be a straightforward case of double identity infringement (the trade name of the original drug is used to promote its identical generic version), but for the issue of trade mark use (use in a trade mark sense). Does this advertisement affect the functions of the trade mark?

Under the EU law this would be an infringement, even though there is no confusion as to the source of the drugs and even if the indication-of-origin function is not affected. In L’Oreal v Bellure the ECJ held that there are other essential functions of a trade mark which can be protected under trade mark law. Among those are advertising, communication and investment functions. Aggressive advertising can affect these functions and result in liability.

The ECJ approach to trade mark use, however, was not followed in Singapore. The Singaporean Trade Marks Act closely resembles the European Directive – the section on double identity infringement is the same. Despite this fact, the Singaporean Court of Appeal in City Chain Stores v Louis Vuitton Malletier carefully considered L’Oreal v Bellure and decided not to follow it. In Singaporean trade mark law there is only one protectable trade mark function – the indication-of-origin function.

There are good reasons to reject the ECJ approach to trade mark use. Although the principles established in L’Oreal v Bellure were developed and explained in a string of cases including Google France v Louis Vuitton Malletier and Interflora v Marks & Spencer, there are still pieces missing from the puzzle.

It does not seem that the list of protectable functions suggested in L’Oreal v Bellure is exhaustive. The European Court can still introduce new protectable functions. The second problem lies with the fact that relationship between the indication-of-origin, advertising, communication and investment functions is far from being clear. Stating that these functions overlap, but are distinct from each other does not help much. If the number of the functions and relationship between them are not clear, competitors cannot be sure if a particular marketing campaign will result in a trade mark infringement.

For the purpose of argument, let us try to go further and pose the following question – ‘Should the trade mark use requirement be implied into the double identity infringement provision in the first place?’

There are good reasons to say it should not be implied. Recital 11 of the EU Trade Marks Directive states that in double identity cases protection should be ‘absolute’. It should be absolute in a sense that if signs are identical, goods are identical and the use is in the course of trade, this should be the end of discussion. Prima facie infringement is established. In fact, some support for absolute liability can be found in the comments made by Sir Robin Jacob. When L’Oreal v Bellure returned to the Court of Appeal from the ECJ Jacob LJ (as he then was) thoroughly criticised the approach taken by the European Court and the idea that functions other than the indication-of-origin function can be protected. At the same time Jacob LJ lamented that the ECJ did not come to the same result ‘by a clearer direct route’ – saying that it was simply ‘a case of same mark/same goods’.

Furthermore, if liability in double identity infringement cases is absolute and there is no need for trade mark functions to be affected – this approach may be more in line with the logic of trade mark infringement provisions.

There are three different types of trade mark infringements – (1) double identity infringement – when a sign identical to a registered trade mark is used in relation to identical goods; (2) similarity coupled with confusion – when a sign similar or identical to a registered trade mark is used for similar or identical goods and consumers are likely to be confused as to the origin of the goods; (3) dilution – when the infringing party uses a sign which is similar or identical to a trade mark with a reputation to gain unfair advantage or if such use dilutes the distinctive character of the famous trade mark.

According to the ECJ case law there is an additional element in all trade mark infringement cases – there must be trade mark use. Essential functions of a trade mark (indication-of-origin, advertising, communication or investment) have to be affected.

But if one is to look closer into the circumstances under which these functions are affected, he or she can make a curious discovery. The indication-of-origin function can be affected if there is a likelihood of confusion as to the origin of the goods (coincides with the ‘similarity coupled with confusion’ infringement). Advertising, communication or investment functions are usually infringed when the competitor receives unfair advantage (coincides with the ‘dilution’ infringement).

Consequently, introduction of the trade mark use requirement can be justified in cases of similarity coupled with confusion or in dilution infringements. But there is nothing in the wording of the double identity provision to suggest that trade mark use can be required there.

If liability in double identity infringement is absolute and trade mark functions need not be affected, the distinction between different types of trade mark infringements becomes much clearer.

This may seem to be a radical proposal. There are cases in which a trader should be allowed to use a sign identical to a registered trade mark in relation to identical goods. For example, the trader should be able to describe the characteristics or purpose of his or her goods (e.g. to say that his or her razor blade refills are compatible with a Gillette razor) or when a trade mark is used to compare his or her goods or services with the goods or services of another trader (e.g. to say that his or her services are five times cheaper than services of the competitor). This is precisely the reason why the ECJ introduced the ‘trade mark use’ requirement in the first place.

However, such uses can be allowed without relying on mysterious notions of ‘trade mark use’ and ‘essential functions’. It would be much easier and simpler to allow these uses by providing specific defences which are already present in national legislation (e.g. descriptive use defence). The whole idea of duplicating these defences, moving them to the front and clothing them in the guise of trade mark use seems controversial.

To summarise, the development of the ‘trade mark use’ requirement in the ECJ case law left many lawyers and judges racking their brains over it. It is a valid question to ask now – do we really need it?