ReactS : Advertising Lawyers & Attorneys : Reed Smith Law Firm : Marketing Regulations, Product Placement

 On September 14, the European Court of Justice rejected an appeal by Danish toy company Lego against a ruling by the Court of First Instance in 2008. Lego had previously sought to register its iconic 3-D studded brick as a trade mark. The 3-D studded brick featured prominently in Santander’s UK rebranding television campaign which began earlier this year. Registration had been granted to Lego by the European trade mark office in 1999 but it was subsequently overturned in 2004 following an appeal by Canadian rival Mega Brands. The ECJ ruled that the iconic 3-D studded brick cannot be registered as a trade mark as the "shape merely incorporates a technical solution developed by the manufacturer of the product". This would in effect grant an exclusive right to a technical solution which cannot be "freely used by all economic operators". The ECJ has restricted the prohibition to "signs which consist exclusively of the shape of goods which is necessary to obtain a technical result". The ECJ has stated that Lego may be able to protect the iconic 2x4 studded brick by using unfair competition laws to object to copies. Advertisers should also be warned that as with most iconic toy manufacturers, Lego fiercely protects its copyright in the design of its product and therefore clearance for use in advertising is advised.

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Google’s new trademark policy comes into play from the 14th September 2010 in UK, Ireland and Canada, and effectively most of Europe. The change has been received with differing views. One view is that it will ultimately result in a better surfing experience for users; the other is that it is nothing other than a ruse for Google to hike up prices and cut costs. Whatever your view brands need to be aware of what, if any, rights they have left to protect their brands on line in sponsored search results on Google.

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At the end of July, Intercontinental Brands ("ICB") lost their appeal against the High Court ruling that their "VODKAT" brand was being passed off as genuine vodka. In an important case, which will have an effect on advertisers' choices for product names, the court held that makers of vodka, such as Diageo, were entitled to protect the 'vodka' name under the doctrine of "extended passing off".

Five elements have to be established in order to succeed in a claim for extended passing off:

1. That his business consists of, or includes selling in England a class of goods to which the particular trade name applies;
2. The class of goods is clearly defined, and that in the minds of the public, or section of the public, the trade name distinguishes that class from other similar goods;
3. Due to the established reputation of the goods there is goodwill attached to name;
4. The claimant is the owner of the goodwill which is of substantial value;
5. The claimant has suffered, or is likely to suffer substantial damage to his goodwill.

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Last week the Chancery Division dealt a blow to Specsavers when judgment was given in its trade mark infringement claim against Asda. Keen-eyed observers will also see that Specsavers were represented by the aptly named Adrian Speck.

Asda ran an in-store advertising campaign for its optician's services which featured a logo containing two ovals along with the straplines "Be a real spec saver at Asda" and "Spec savings at Asda". Specsavers, whose own logo consists of two interlocking ovals framing the word 'Specsavers', brought claims for trade mark infringement on the basis that the use of the logo and the straplines caused confusion, and took unfair advantage of their registered marks. They also claimed passing off. (The logos can be seen in the appendices to the judgment which can be found here.)

The court ruled against Specsavers on all but one of its claims. It was a clean sweep for Asda on likelihood of confusion (or the lack of it), which can be a difficult claim to run in comparative advertising cases: in order to draw an effective comparison, it must be possible for consumers to distinguish between the two traders in question, and so comparative campaigns are generally designed to avoid confusion. Specsavers did have some success on the 'unfair advantage' claims, as the court held that Asda's use of the "Be a real spec saver at Asda" strapline took unfair advantage of the SPECSAVERS trade mark. The use of the words 'spec saver' was a clear link to the SPECSAVERS mark, and by using it Asda were taking unfair advantage of Specsavers' established reputation. There was, however, no unfair advantage in Asda's use of the ovals logo (which was held to have only a weak resonance with the Specsavers logo) or the "Spec savings at Asda" strapline.

There was an obvious intention on Asda's part to incorporate a reference to Specsavers into their campaign and the court seemed to accept that it was 'living dangerously'. Intention is generally irrelevant in trade mark infringement claims (except perhaps where it comes into the 'honest practices' test applying to some of the defences), but here the court conceded that if there is evidence showing a defendant is 'living dangerously', that would be admissible but not conclusive in relation to the question of actual confusion. In this case the 'living dangerously' evidence did not affect the result on confusion, but it did appear to make the court more amenable to a finding that there was a link between the logo used by Asda and the Specsavers logo. The court's approach appears to suggest that advertisers who deliberately sail close to the line could find themselves in more trouble, but anyone who mounts a comparative advertising campaign will surely be 'living dangerously' in the same way that Asda was. Comparative campaigns will always involve a deliberate attempt to incorporate a reference to another trader. The trick is to live dangerously by sailing close to the line without crossing it, so it is important to obtain good compliance advice.

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A recent case from Sweden has highlighted the risks in using images of individuals without their permission.

A Swedish publication, The Local, has reported that a 77 year old Greek man has reached a 2 million kroner (c. £180,000) settlement with a Swedish dairy company, Lindahls, in respect of the use of his image by Lindahls to advertise their Turkish yoghurt. The photograph, seen here, had been used by Lindahls on packaging and advertising for 8 years before Minas Karatzoglis found out.

Karatzoglis had originally sued for 50 million kroner, and his claim form, perhaps not unreasonably, emphasised that he was Greek and not Turkish, and that therefore the advertising was misleading. Lindahls has paid Karatzoglis the agreed settlement figure, and is now seeking damages from its advertising agency.

This small case serves as a reminder to advertisers and their agencies that, unlike in the UK, image rights do exist in Europe, and therefore they should always ensure that the individual featured on packaging and advertising for campaigns in Europe has given their consent to the intended use.  

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Following the ruling of the European Court of Justice (ECJ) on Google's Adwords policy in the Louis Vuitton case, which we wrote about in March, a new decision dealing with the problems associated with AdWords was handed down yesterday in the case Portakabin Ltd v Primakabin BV, Case C-558/08.

Portakabin build and supply mobile buildings and own the trademark for "Portakabin" in that market sector in the Benelux countries. Primakabin, a seller and lessor of new and second-hand mobile buildings, including legitimate second-hand Portakabin buildings, used the word "Portakabin" and some similar misspelled variants as keywords on Google's AdWords. Portakabin sued for trademark infringement and, after passing through the Dutch courts, a number of questions were subsequently referred to the ECJ.

The judgment reiterates one of the main decisions in the Louis Vuitton case: that advertisers who use competitor's trademarks as "keywords", must make it clear in the advertisement that there is no commercial connection between the advertiser and the proprietor of the trademark. This case goes on state that, unless this is done, there is no defence under Article 6 of the Trademark Directive (which in essence allows third parties to use trademarks to indicate the origin of products provided that such use is in accordance with honest commercial practices).  

However this latest decision also makes clear that re-sellers of second-hand products can use third party trademarks as keywords, provided that it is clear from their website that they only sell "used" or "second-hand" products manufactured by the trademark owner and providing that the manner by which he sells those products does not risks seriously damaging the reputation of the trademark owner or his mark.

This latest decision also confirms that misspellings of trademark names constitute signs which are similar to the trademark, and therefore the usual rules of analysis apply: notably, is there a likelihood of confusion?

All very helpful, and we now await the ECJ's ruling in the Marks & Spencer v Interflora case which will analyse issues on dilution and the free-riding on the distinctive character of the trademark.

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Google is celebrating yet another significant litigation victory today, after a federal judge in New York ruled in favour of Google in the $1 billion claim made against them by Viacom. This follows Google's recent victory in March this year in the case brought by Louis Vuitton about AdWords (see our Ad Guide).

Viacom sued Google in 2006, after its purchase of YouTube, on the basis that Google knowingly allowed copyright protected material, such as Viacom's programmes, to be used on the YouTube website without permission and was thus infringing Viacom's copyright. Viacom claimed Google was liable for "massive intentional copyright infringement" but the judge ruled that Google could not be held liable for having a general awareness that infringing material may be uploaded onto the site. In his decision, he stated that YouTube's "notify and take down" policy allowed Google safe harbour protection under the Digital Millennium Copyright Act 1998, and therefore dismissed Viacom's suit in summary judgment.

These two victories are certainly very useful to Google. The victory against Louis Vuitton allows them to retain their very lucrative AdWords search advertising policy, and this latest success seems to confirm YouTube as the world's pre-eminent video-sharing site, with all the revenue raising possibilities that this entails.

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A recent, and somewhat surprising, Australian case has highlighted the risk for advertising agencies when preparing advertising copy. In Budget Eyewear v Specsavers [2010] FCA 507, the Australian Federal Court granted an interlocutory injunction stopping Specsavers from running an ad campaign in which the words used were extremely similar to wording used in a campaign by their competitor, Budget Eyewear, on the basis that there was an arguable case that this amounted to an infringement of Budget Eyewear’s copyright in the advertisement.

By way of example, the Budget Eyewear original advertisement stated “If your Specsavers glasses break – and we’re not saying they will – simply bring them into Budget Eyewear. We’ll replace them with a pair from our own range – free of charge”. Compare that with Specsavers wording “If your OPSM glasses happen to break, and we’re not saying they’re going to, we’ll exchange them with a pair from Specsavers with a 2 year guarantee, for free”.

Judge Bennett decided that this and other similar wording within the advertisements amounted to more than the copying of an idea. She stated that “the way in which a concept is expressed in an advertisement intended to attract customers may involve originality that attracts copyright protection.” She also stated that “Specsavers could have copied the idea but exercised its own imagination to express a novel concept in new and different language rather than using a thesaurus to substitute a synonym”.

It seems a rather odd decision, especially since Specsavers could probably find similar wording in any number of past advertisements, and no doubt they will raise this at trial, but it certainly cuts against the general belief that generic advertising promotional wording is unlikely to be protected by copyright. However it does serve as a reminder that advertising agencies need to ensure that their creative teams are properly creative when copying (or should we say parodying?) competitor’s ideas, and show more originality than merely using synonyms.

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Official sponsors of the World Cup call foul as yet another brand owner successfully pulls off an ambush marketing stunt. This week two Dutch women were arrested for organising 36 girls to appear scantily clad in orange to promote the Dutch brewery, Bavaria. Perhaps the brewery were hoping of a repeat of four years ago at the World Cup in Germany when scores of Dutch men were ordered to remove orange lederhosen bearing the name of Bavaria.

This event though is another example in a long list of companies making the most of the tournament's huge marketing appeal. While official sponsors must of course be protected from such blatant ambush marketing, there is a concern that calls for yet more legal restrictions are disproportionate. (See our full Ad Guide on Ambush Marketing ). Existing law means that stunts such as the ones mentioned above can be stopped. The mere fact that 36 women identically dressed in orange managed to enter the stadium is a failure on the part of the organisers and not the law. Over-reacting and arresting the women in this case is also seen by consumers as heavy handed and only draws attention to the ambush marketer. However, being branded as an ambush marketer seeking to exploit rights without contributing to a major event is also not a good result for most reputable brands either.

However, more worrying for freedom of commercial expression and competition, is the alleged claim that FA sponsor, Mars, is threatening to sue Nestle over the current football-themed Kit Kat campaign. It is hard under UK law to see how such a case could succeed, though it is not helpful that Marketing Magazine suggest that Kit Kat has successfully hijacked the World Cup. Nevertheless it is difficult to see how a claim for passing off could be successful in the UK. Kit Kat has not used any of the World Cup logos or protected marks, nor does the campaign claim directly or indirectly that Kit Kat are sponsors. If such a marketing campaign were attempted however in the run up or during the 2012 Olympics, then the London Olympic Association Right  (LOAR) would mean LOCOG could stop the advertisements by virtue of a mere "association" with the event. 

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 In an extraordinarily frank judgment on 21 May 2010, Lord Justice Jacob handed down the Court of Appeal’s (CA) final decision in the case L’Oreal SA v Bellure NV [2010] EWCA Civ 535, following last summer’s response by the European Court of Justice (ECJ) to a number of trademark questions referred to it by the CA. The judgment deals particularly with the issues of comparative advertising and the use of comparison lists for advertising purposes.

What is fascinating about the judgment is Lord Justice Jacob’s strong disagreement with the ECJ’s decision, and he makes it abundantly clear that he is following their decision extremely reluctantly. For the first 21 paragraphs of a 51 paragraph judgment, he criticises the ECJ’s decision, stating that in his view, it is contrary to the principle of freedom of commercial expression and it disadvantages poorer consumers, whilst favouring luxury brand owners, despite the fact that a brand owner’s business is unlikely to be affected to any significant extent by the sale of the legitimate low-cost imitation products.

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