England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/03/2005

The Vice-Chancellor :

Introduction
1. The issue for my determination is whether to refer to the European Court of Justice ("ECJ") for a preliminary ruling under Article 234 of the EC Treaty the twelve questions set out in the appendix to this judgment. The applicants, the claimants ("O₂"), contend that each of them is relevant to the issues which have arisen in this action commenced by them against the defendant ("H3G") and will have to be referred to the ECJ at some stage. They submit that the reference should be made now in advance of the trial because the answers to the questions, depending on what they are, will or may eliminate, reduce in scope or at least affect substantial areas of factual inquiry. The application is opposed by H3G on the grounds that it cannot now be predicated that it will be "necessary to enable [the court] to give judgment" at the trial to have the answers to all or any of the questions O2 wishes me to refer. Nor, H3G submits, can I be sure now that these are the only questions on which the court will need a ruling from the ECJ. To explain these submissions and my conclusion it is necessary to set out the facts in some detail.
The Facts
2. O₂ carries on business in the field of mobile telecommunications. It originated as BT Cellnet which was demerged from BT in November 2001. BT Cellnet was renamed O₂. The name is the same as the chemical formula for oxygen. To strengthen that association O₂ adopted a 'blue bubble imagery'. The O₂ brand was relaunched in May 2002. To protect its brand O₂ registered a number of Trade Marks in respect of classes 9 and 38. They fall into two categories. The first category comprises four word or name marks for various forms of "O₂" ("the Word Marks"). The second category comprises twelve device marks consisting of 'bubbles devices' in a number of different forms colloquially described as 'Individual', 'Technical', 'Vortex', 'Relax (close-up)', 'Continuous', 'Blast', 'Agitate', 'Individual Group', 'Relax' and 'Fizz'. Ten of them are shown in various shades of blue which is described as an element of the mark. Two of them (Individual and Technical) are also shown in monochrome for which no colour is described as an element. I shall refer to all twelve collectively as "the Bubble Marks".
3. H3G is a subsidiary of Hutchison Whampoa Ltd. It or an associated company was awarded one of the five third generation licences issued by HMG in May 2000. Its services were launched in the UK in March 2003 under the brand name 3. In the summer of 2004 H3G launched a campaign of comparative advertising on TV and other media. In July the advertisements compared 3 with Vodafone, Orange and T-Mobile. On 20th August 2004 it launched its comparative advertisement comparing 3 with O₂.
4. I have been provided with a CD showing the 20 second sequence and gratefully adopt the description of it given by Pumfrey J in his judgment on an earlier application in this action, namely:

"It begins in black and white with a shot of a circular field of bubbles. This circular region expands to fill the screen, accompanied more or less immediately by a voice over as follows: "On 0₂ 'pay-as-you-go' the first 3 minute peak rate call each day could cost you 75 pence." By the words "75 pence", which happen about nine seconds into the advertisement, what is called a "Super" appears at about 7.5 seconds into the advertisement. This consists of three lines at the foot of the screen and reads: "O2 Talkalot & Talkalotmore 5p per minute thereafter. Based on a £25 VideoTalk voucher with a 30 day validity period. Certain calls excluded. See three.co.uk." The screen clears at 9 seconds while leaving the Super in place. Then an animated figure 3, enters stage right and performs a motor bicycle-like journey to stage front with the same Super and with the following voice over [in a different voice]: "Or. With ThreePay, that exact same call could cost you 15p." By this stage we have got through 15 seconds of advertisement and the Super vanishes. The 3 becomes fixed in the middle of the screen, losing a trail, which it has hitherto drawn behind it, and a further voice over 'Threepay - Pay as you go from 3." The whole lasts almost exactly 20 seconds."

5. On 25th and 26th August 2004 O₂ applied to Etherton J for injunctions to restrain the transmission of this sequence (and the equivalent on radio and the print media) on the grounds that it was grossly misleading and infringed both their Word Marks and their Bubble Marks. The matter was disposed of in the short term on undertakings because the campaign was due to finish, as it did, on 31st August 2004.
6. O₂ served its particulars of claim on 10th September 2004. It relied on its four Word Marks and ten of the Bubble Marks (the monochrome marks were not registered until 8th October 2004) and its reputation associated therewith. It claimed that the advertisement was both an infringement of those trade marks and also constituted passing off. It sought an injunction and other specific relief and damages. On 4th October 2004 H3G served its defence. On 28th October 2004 it served a counterclaim. By its counterclaim it sought an order to rectify the register of Trade Marks by the deletion of each of the Bubble Marks on the ground of invalidity. The alleged invalidity arose from the allegations that (a) the application for each of the marks had been made in bad faith and that (b) each of them was devoid of any distinctive character.
7. The application was heard by Pumfrey J on 5th/8th November. On 9th November he dismissed the application and ordered a speedy trial of the action. His reasons, in summary, were that the advertisement was in substance true, the use of the sign O₂ in that context was not an infringement of the Word Marks, that it was arguable that the use of bubbles in the advertisement was an infringement of the Bubble Marks but the balance of convenience did not justify the grant of any injunction pending trial.
8. In the light of the conclusions of Pumfrey J O₂ reconsidered its particulars of claim and substantially amended them on 15th November 2004. O₂ abandoned any claim for infringement of the Word Marks. It also abandoned its claim for passing off and for infringement of the Bubble Marks by the newspaper and radio advertisements. But it added (para 9) specific contentions of law in anticipation of defences which H3G might advance. Those contentions are reflected in Questions 5 - 9 as set out in the appendix. Consequential amendments were made by H3G to its defence in which it averred that each of the contentions of European Law advanced by O₂ in its amended particulars of claim was wrong. O₂ then amended its reply. The amended statements of case have been consolidated with those served in connection with a second claim issued by O₂ on 3rd December 2004 raising the same claims in regard to the two monochrome Bubble Marks first registered on 8th October 2004 (see para. 6 above).
9. On 10th December 2004 H3G sought further information from O₂ pursuant to CPR Part 18 including (i) precise identification of the sign used by H3G alleged to constitute the infringement, (ii) specifying whether O₂ relied on the entirety of the bubble sequence in H3G's advertisement or any specific frame or frames therein and if so which and (iii) confirmation that such sign or signs was alleged to be similar to each of the Bubble Marks relied on. On 17th December 2004 the solicitors for O₂ declined to comply with the request "as we consider it unnecessary and a waste of costs until we know the outcome of any pre-trial reference regarding clarification of the law to be applied in this matter".
10. The application to which that response referred and with which I am concerned was issued by O₂ on 21st December 2004. The other relief sought by O₂ and the relief sought by H3G in their application issued on 11th February 2005 have been withdrawn or adjourned pending the outcome of the request for a reference.
The Law
11. The Trade Marks Act 1994 was enacted to give effect to the United Kingdom's obligation to implement Council Directive No:89/104/EEC ("the Trade Marks Directive") promulgated on 21st December 1988 in order to approximate the laws of Member States relating to trade marks. Thus it is appropriate to start with the Directive. It recites that

"Member States also remain free to fix the provisions of procedure concerning the registration, the revocation and the invalidity of trade marks acquired by registration; whereas they can, for example, determine the form of trade mark registration and invalidity procedures, decide whether earlier rights should be invoked either in the registration procedure or in the invalidity procedure or in both and, if they allow earlier rights to be invoked in the registration procedure, have an opposition procedure or an ex officio examination procedure or both; whereas Member States remain free to determine the effects of revocation or invalidity of trade marks;"

12. Article 1 prescribes that the Directive applies to every trade mark applied for or registered in every Member State. Article 2 defines what a trade mark may consist of. Article 3.1 sets out what marks may not be registered or if registered are liable to be declared invalid. They include

"(b) trade marks which are devoid of any distinctive character:"

Article 3.2 provides that Member States may provide that a trade mark shall not be registered or if registered shall be liable to be declared to be invalid where and to the extent that:

"(d) the application for registration of the trade mark was made in bad faith by the applicant."

13. Article 5 sets out the rights conferred by a trade mark. They include the right (para 1)

"to prevent all third parties not having his consent from using in the course of trade:

(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;

(b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark."

Para 2 goes on to provide that

"Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter 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."

14. Article 6(1) puts limitations on the effects of a trade mark and entitles a third party to use in the course of trade

"(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;"

Article 12 sets out the grounds on which a trade mark may be revoked.

15. Effect was given to these provisions in the Trade Marks Act 1994. Thus s.3 provides that trade marks which are devoid of any distinctive character (s.3(1)(a)) or were applied for in bad faith (s.3(6)) shall not be registered. S.10 (as amended) provides for infringements, so far as relevant, as follows:

"(1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.

 (2) A person infringes a registered trade mark if he uses in the course of trade a sign where because—

 (a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or

 (b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered,

there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.

 (3) A person infringes a registered trade mark if he uses in the course of trade a sign which—

 (a) is identical with or similar to the trade mark.....

 (b) ...

where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark."

Thus s.10(2) and s.10(3) correspond, respectively, to Articles 5.1(b) and 5.2 of the Directive.

16. S.10(6) Trade Marks Act 1994 also provides

"(6) Nothing in the preceding provisions of this section shall be construed as preventing the use of a registered trade mark by any person for the purpose of identifying goods or services as those of the proprietor or a licensee.

But any such use otherwise than in accordance with honest practices in industrial or commercial matters shall be treated as infringing the registered trade mark if the use without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark."

There is no provision in the Trade Mark Directive, whether in Article 6 or elsewhere, corresponding to s.10(6). It is this omission which prompts question 5 as set out in the appendix to this judgment.

17. S.11 corresponds to Article 6 and, so far as relevant, provides

"(2) A registered trade mark is not infringed by—

 (a) ...

 (b) the use of indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services, or

 (c) ....

provided the use is in accordance with honest practices in industrial or commercial matters."

18. S.32(3) provides

"(1) An application for registration of a trade mark shall be made to the registrar.

(2)...
(3) The application shall state that the trade mark is being used, by the applicant or with his consent, in relation to those goods or services, or that he has a bona fide intention that it should be so used."

There is no corresponding provision in the Trade Marks Directive.

19. S.46 provides for revocation of registration for non-use and, by subsection (2) that

"For the purposes of subsection (1) use of a trade mark includes use in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered, and use in the United Kingdom includes affixing the trade mark to goods or to the packaging of goods in the United Kingdom solely for export purposes."

S.47 provides that a mark may be declared to be invalid on the ground that it was registered in breach of s.3.

20. I should also refer to the Misleading Advertising Directive (Directive 84/450/EEC) as amended by Directive 97/55/EC. The latter recited:

"(2) Whereas the completion of the internal market will mean an ever wider range of choice; whereas, given that consumers can and must make the best possible use of the internal market, and that advertising is a very important means of creating genuine outlets for all goods and services throughout the Community, the basic provisions governing the form and content of comparative advertising should be uniform and the conditions of the use of comparative advertising in the Member States should be harmonized; whereas if these conditions are met, this will help demonstrate objectively the merits of the various comparable products; whereas comparative advertising can also stimulate competition between suppliers of goods and services to the consumer's advantage;

[(3)-(12)]

(13) Whereas Article 5 of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (8) confers exclusive rights on the proprietor of a registered trade mark, including the right to prevent all third parties from using, in the course of trade, any sign which is identical with, or similar to, the trade mark in relation to identical goods or services or even, where appropriate, other goods;

(14) Whereas it may, however, be indispensable, in order to make comparative advertising effective, to identify the goods or services of a competitor, making reference to a trade mark or trade name of which the latter is the proprietor;

(15) Whereas such use of another's trade mark, trade name or other distinguishing marks does not breach this exclusive right in cases where it complies with the conditions laid down by this Directive, the intended target being solely to distinguish between them and thus to highlight differences objectively;

(16) Whereas provisions should be made for the legal and/or administrative means of redress mentioned in Articles 4 and 5 of Directive 84/450/EEC to be available to control comparative advertising which fails to meet the conditions laid down by this Directive;..."

21. In Article 2a comparative advertising is defined as "any advertising which explicitly or by implication identifies a competitor or goods and services offered by a competitor". Article 3a provides, as far as relevant:

"1. Comparative advertising shall, as far as the comparison is concerned, be permitted when the following conditions are met:

[(a) – (d)]

(e) it does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities, or circumstances of a competitor;

[(f)..]

(g) it 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;

[(h)..]

The Questions
22. Questions 1 to 4 (see appendix) relate to issues concerning the claim of O₂ that the comparative advertisement infringed their Bubble marks. It is not disputed that the goods or services supplied or rendered by O₂ and H3G are identical. Similarly it is clear that no part of the sign used by H3G is identical to any of the Bubble Marks. Accordingly the Bubble Marks can only be infringed if the circumstances fall within Article 5(1)(b) of the Trade Marks Directive and its counterpart in s.10(2)(b) of the Trade Marks Act 1994 or Article 5(2) and s.10(3).
23. Question 1 anticipates a defence of H3G to the claim for infringement under Article 5(1)(b)/s.10(2)(b) Trade Marks Act 1994 to the effect that the bubble sequence in the Comparative Advertisement cannot give rise to any likelihood of confusion because it is used in conjunction with the word O₂ to identify the goods or services of O₂ and the numeral 3 is used to identify those of H3G. O₂ suggests that such word and numeral are extraneous to the sign and must be ignored in considering the likelihood of confusion. Counsel for O₂ relies on statements to that effect in paragraphs 47 – 49 of the Opinion of the Advocate-General in SA Societe LTJ Diffusion v SA Sadas [2003] ECR I-2799 and paragraph (d) of a Ruling made on 11th March 2004 by the German Bundesgerichtshof in Montres Rolex v Ricardo Case I ZR 204/01.
24. Questions 2, 3 and 4 arise from the terms of Article 5(2)/s.10(3). Question 2 anticipates a contention of H3G to the effect that O₂ cannot establish the requisite reputation for each of the Bubble Marks because, though it can prove their use in a similar form, it cannot prove their use in an identical form. Question 3 seeks to establish that 'dilution' of a trade mark is detrimental to its distinctive character or repute. Question 4 asks if use of a sign which has the effects indicated in sub-paragraphs (a) and (b) takes unfair advantage etc within the meaning of Article 5(2)/s.10. Counsel for O₂ does not suggest that there is any jurisprudence of the ECJ on any of these points but, in relation to Question 3, relies on a dictum in American Express Co. v Vibra Approved Laboratories Corp.10 USPQ 2d.2006 (SDNY 1989) quoted by Mr Hobbs QC, sitting as the Appointed Person in Sheimer's Trade Mark Application [2000] RPC 484, 506.
25. Questions 5 to 9 seek rulings in relation to defences advanced by H3G. Question 5 deals with s.10(6) Trade Marks Act 1994. It has no counterpart in the Trade Marks Directive. H3G relies on it as permitting the use of O₂'s Bubble Marks to identify O₂'s own goods and services. O₂ contends that the sub-section is inconsistent with the Trade Marks Directive and therefore void. It relies on paragraph 39 of the judgment of the ECJ in Zino Davidoff SA v A & G Imports Ltd [2001] ECR I-8691 where it is stated that Articles 5 to 7 of the Trade Marks Directive

"embody a complete harmonisation of the rules relating to the rights conferred by a trade mark and, accordingly, define the rights of proprietors of trade marks in the Community."

A complete harmonisation, so it is submitted, leaves no room for further defences under national law such as s.10(6).

26. Question 6 raises an issue in connection with Article 6(1)(b)/s.11(2)(b). It is suggested by counsel for O₂ that the defence of descriptive use is only available to one who has used a sign identical to the registered mark so that use of a sign which is merely similar cannot attract this defence. This argument is based on recital (14) to the Misleading Advertising Directive, as amended (see para 20 above). It is suggested that it is not 'indispensable to make comparative advertising effective' that use of a sign similar to the registered mark, as opposed to one which is identical, should be allowed.
27. Questions 7, 8 and 9 relate to the Misleading Advertising Directive as amended and its relationship with the Trade Marks Directive. Question 7 seeks to ascertain whether the descriptive use defence afforded by Article 6(1)(b) of the Trade Marks Directive is available to a comparative advertiser only if he complies with the Misleading Advertising Directive as amended. The submission is that recital (15) (see para 20 above) to the latter shows that compliance is required.
28. If the answer to Question 7 is in the affirmative then Questions 8 and 9 raise issues as to what is required for such compliance. Question 8 suggests that use of a sign which involves an infringement within Article 5(2) of the Trade Marks Directive because it damages the distinctive character or repute of the trade mark will not comply with Article 3a(1)(e) of the Misleading Advertising Directive because it will also discredit or denigrate the trade mark. Question 9 raises a comparable point in relation to Article 3a(1)(g) of the Misleading Advertising Directive.
29. Questions 10 to 12 relate to the counterclaim of H3G insofar as it relies on invalidity arising from the application for registration of each of the Bubble Marks. The points originate in the requirement of s.32(3) of the Trade Marks Act that an applicant should state that the trade mark is being used or, if not, that he has a bona fide intention that it should be used. H3G contends that the statements to that effect made by O₂ in connection with the registration of each of the Bubble Marks were made in bad faith so that the registrations are liable to be declared invalid under Article 3.2(d) of the Trade Marks Directive and s.3(6) of the Trade Marks Act. That this may be the consequence is shown by some cases decided by Appointed Persons. See Ferrero Spa's Trade Marks [2004] RPC 583. O₂ does not accept this. It submits that s.32(3), which has no counterpart in the Trade Marks Directive, may be permitted by the second recital thereto (see para 20 above) as a procedural requirement but not if it gives rise to the substantive effect of revocation. Question 10 is directed at ascertaining whether failure to comply with s.32(3) can constitute bad faith for the purpose of Article 3(2)(d) and S.3(6).
30. If it can then Questions 11 and 12 are designed to elicit whether the absence of a present intention to use the mark constitutes bad faith and whether an intention to use a similar mark will negative bad faith. In relation to Question 11 O₂ refers to a dictum of Pumfrey J in Reef Trade Mark [2002] RPC 387, 393. Counsel for O₂ submits that Question 12 is arguable too and points to his own decision when sitting as the Appointed Person in Robert McBride's Application [22nd November 2004 unreported].
31. I have not sought to do more that indicate in general terms the points which have generated these questions because counsel for H3G accepted that, with one exception, if the question arose the answer was not acte clair. The exception is Question 6. He submitted that it is clear beyond doubt that use of a descriptive sign which is similar to the registered mark is as entitled to this defence as use of an identical mark. The logic of this proposition was disputed by counsel for O₂ on the footing that the distinction between use of a sign which is identical and one which is only similar is drawn in the recitals to the Misleading Advertising Directive (see paragraph 20 above). Thus, recital 13 refers to a sign similar to the mark but recitals 14 and 15 refer to the mark itself. It is not necessary to resolve this dispute to determine whether or not to make the reference sought by O₂ for if I am to refer the other 11 questions I do not think that the answer to Question 6 is so clear as to require me to omit it.
Jurisdiction to make a reference
32. As is well known the jurisdiction to make a reference is conferred by Article 234. The question must relate to the interpretation of a provision of Community law; it must have been raised before the national court. If the answer to it is "necessary to enable the national court to give judgment" then any judge from whose decision an appeal lies may request the ECJ to give a ruling on it. Thus I have a discretion to refer any of the 12 questions to which the answer is necessary to enable the judge at trial to give judgment.
33. Though the conventional view has been that the facts should be found first it is clear from various authorities to which I have been referred that that is not an indispensable requirement. Thus in Irish Creamery Milk Suppliers Association v Ireland [1981] ECR 735 the argument for the Government of the Republic of Ireland that the reference made by the High Court before the facts had been found was premature was rejected by the ECJ. In paragraphs 5 to 9 of the judgment the Court stated:

"5. … the second paragraph of [Article 177] makes it clear that it is for the national court to decide at what stage in the proceedings it is appropriate for that court to refer a question to the Court of Justice for a preliminary ruling.

6. The need to provide an interpretation of Community law which will be of use to the national court makes it essential… to define the legal context in which the interpretation requested should be placed. From that aspect it might be convenient, in certain circumstances, for the facts in the case to be established and for questions of purely national law to be settled at the time the reference is made to the Court of Justice so as to enable the latter to take cognizance of all the features of fact and of law which may be relevant to the interpretation of Community law which it is called upon to give.

7. However, those considerations do not in any way restrict the discretion of the national court, which alone has a direct knowledge of the facts of the case and of the arguments of the parties, which will have to take responsibility for giving judgment in the case and which is therefore in the best position to appreciate at what stage in the proceedings it requires a preliminary ruling from the Court of Justice.

8. Hence it is clear that the national court's discretion when to make a reference under Article 177 must be dictated by considerations of procedural organisation and efficiency to be weighed by that court.

9. The reply to the first question which has been raised should therefore be that under Article 177 the decision at what stage in proceedings before it a national court should refer a question to the Court of Justice for a preliminary ruling is a matter for the discretion of the national court."

34. I have been referred to similar statements in paragraph 5 of the Opinion of the Advocate-General in Pretore Di Salo v Persons Unknown [1987] ECR 2345, paragraphs 22 and 23 of the Opinion of the Advocate-General in R v Home Secretary ex p Evans Medical Ltd [1995] ECR I-563 and in paragraph 16 of the Opinion of the Advocate-General in David Petrie v Universita Di Verona [1997] ECR I-6527. In addition my attention has been drawn to no fewer than 12 reported cases in England where a reference was made before the trial of the action and one in which the reference was made after the trial. I was not referred to the details of any of them except Courage v Crehan [1999] EuLR 834.
35. I have also been referred to the judgment of the ECJ in Telemarsicabruzzo SpA v Circostel [1993] ECR I-393 where, in paragraph 5 it was pointed out that the national court must define the factual and legislative context in which the questions it asks arise or at the very least explain the factual circumstances. I should also have regard to the views expressed by the Advocate-General in paragraphs 8 to 20 of his opinion in the later case of Wiener GmbH v Hauptzollamt Emmerich [1997] ECR I-6495. In that passage he questioned whether it was still appropriate to expect the ECJ to answer all the questions which have been referred. After further discussion of the problems he said:

"17...I do not consider that it is appropriate, or indeed possible, for the Court to continue to respond fully to all references which, through the creativity of lawyers and judges, are couched in terms of interpretation, even though the reference might in a particular case be better characterised as concerning the application of the law rather than its interpretation....

18. It seems to me that the only appropriate solution is a greater measure of self-restraint on the part of both national courts and this Court."

36. The submission of counsel for O₂ that I should make the reference he seeks at this stage is founded on the proposition that such a reference is bound to be made at some stage and that if it is made now the answers, depending on what they are, will eliminate, reduce or substantially affect the factual enquiries which will need to be made at the trial. Thus, and I quote from paragraphs 42 and 43 of his written argument:

"42. ....depending on which way the ECJ rules, the following areas of factual inquiry may be eliminated entirely or at least reduced in scope:

(1) the impact on the average consumer of material extraneous to the marks, and in particular whether the average consumer would confuse the services advertised in the TV Advertisement with those of the Claimants (question 1);

(2) the use which the Claimants have made of images of bubbles similar but not identical to the Bubbles Trade Marks and the effect that this has had on the reputation of the Bubbles Trade Marks (question 2);

(3) whether the purpose or effect of the use of images of bubbles in the TV Advertisement was to attract the average consumer's attention to the Advertisement or to blur the distinction between the Claimants' trade marks and those of the Defendant (questions 4 and 9);

(4) whether the Defendant's use of the bubbles images amounts to taking unfair advantage of the distinctive character or repute of the Bubbles Trade Marks (questions 4 and 9);

(5) whether the Defendant's use of the bubbles images was in accordance with honest practices in industrial and commercial matters (questions 5 and 6);

(6) whether the Defendant's use of the bubbles images was damaging to the distinctive character or repute of the Bubbles Trade Marks (questions 8 and 9);

(7) whether the Defendant's use of the bubbles images was necessary (question 9);

(8) whether the Claimants intended to use each of the Bubbles Trade Marks as at the respective application dates (questions 10-11);

(9) whether the Claimants intended to use marks differing from the Bubbles Trade Marks in forms which do not affect the distinctive character of those marks as at the respective application dates (question 12).

43. In addition, even where the need for factual inquiry is not eliminated or reduced, the nature and scope of the factual and legal inquiry is likely to be affected in the following areas:

(1) the facts needed to prove that use of the signs complained is detrimental to the distinctive character or repute of the Bubbles Trade Marks and in particular whether it is sufficient for the Claimants to show that the distinctiveness of those marks has been diluted (question 3);

(2) whether it is necessary to consider section 10(6) as well as section 11(2)(b) (question 5); and

(3) whether it is necessary to assess the TV Advertisement for compliance with Article 3a(1) of the Misleading Advertising Directive as amended by the Comparative Advertising Directive (question 7)."

37. This is disputed by Counsel for H3G. He submits that none of the 12 questions is bound to be referred at some stage; he contends that all of them are contingent on prior findings of fact or mixed fact and law. In addition, he suggests that depending on the findings of fact at the trial the Court in England might find it necessary to refer further or different questions to enable it to give judgment in the action. He submits that it would be inappropriate to have more than one reference. He expresses the concern of his clients that a reference may delay the trial of the action by two years or more.
Conclusion
38. In all the circumstances of this case I do not think that it is appropriate to make the reference sought by O₂ now. I cannot say now that it will be necessary at trial to enable the court to give judgment to have answers to these questions. Accordingly a reference now would be premature and, probably, incomplete. Further it would, if made now, delay the trial and thereby prejudice the quality of the evidence to be adduced at the trial.
39. First, none of the 12 questions will arise if H3G succeeds in making good its counterclaim that each of the Bubble Marks is devoid of any distinctive character. The test of distinctiveness has been variously expressed as Lloyd J pointed out in Dualit's Application [1999] RPC 890, para 28. The evidence shows that bubbles are often used as part of a mark or brand. Without the addition of more, usually in the form of a name, it is not possible even to guess at the type or identity let alone the origin of the relevant goods or services. Counsel for O₂ sought to counter this contention by pointing out that it was not suggested that the counterclaim was bound to succeed. In addition he submitted that this attack on the validity of the Bubble Marks was inconsistent with the defence of H3G.
40. In my view those are not sufficient answers. It is not suggested that the inconsistency indicates that the counterclaim is, in this respect, an abuse of the process of the court. It is true that it is uncertain whether this attack on the validity of the Bubble Marks will succeed but the fact that it might shows that it cannot be predicated that these questions will arise and have to be referred to the ECJ at some stage. It cannot be said that it will be 'necessary' for the ECJ to answer these questions to enable the national court to give judgment in due course, only that it may be.
41. Second, there is a dispute as to what is the relevant sign used by H3G. The solicitors for O₂ declined to answer the request for information on this matter (see paragraph 9 above) pending the outcome of the pre-trial reference they sought. Counsel for H3G suggested that the relevant sign is the whole sequence of images included in the comparative advertisement. Only in his reply did counsel for O₂ make clear what his client's case is on this fundamental issue. He then stated that the sign of which O₂ complains is each and every image of bubbles contained in the comparative advertisement.
42. I was told by both counsel that there is no authority in England to indicate the identity of the relevant sign in the case of a sequence of images intended to be viewed as a whole. Counsel for O₂ suggested that I should cover this point by adding a thirteenth question. But that submission merely serves to indicate the dangers of making any reference at this stage. The questions may not be exhaustive or in the most helpful form. In this connection I recall what was said by the ECJ in paragraph 49 of its judgment in SA Societe LTJ Diffusion v SA Sadas [2003] ECR I-2799:

"The national court should therefore first identify what it is that is perceived by the average, reasonably well-informed, observant and circumspect consumer as the relevant marks, or the relevant mark and sign, then perform the global assessment described above in order to determine whether the two are likely to be perceived as the same or merely similar."

43. I do not think that it is by any means obvious that such a consumer would regard as the relevant mark or sign each bubble image rather than the entire sequence or such part of it as contained bubble images. The identification of the relevant sign is a matter for the national court to determine in accordance with the test indicated. The answer to that question is fundamental to whether and if so in what form any of the 12 questions will arise.
44. Third, the very fact that the answers to the questions may eliminate, reduce or affect areas of factual enquiry demonstrates that they are to that extent dependent on the findings of fact made by the judge at trial. The same point is apparent from the form of most of the questions. The use of the subordinate clauses ("where a third party" etc in Question 1, "which dilutes" in Question 3, "which has the purpose and/or effect" in question 4 etc) shows that the question will only arise in the event of prior findings of fact or conclusions of mixed fact and law. Having regard to the entreaty of the Advocate-General in Wiener GmbH v Hauptzollamt Emmerich [1997] ECR I-6495 which I have quoted in paragraph 35 above and the adverse effect on the evidence of delay in holding the trial it seems to me to be best that the facts are found here first to be followed, only to the extent those findings warrant, by a reference under Article 234.
45. Fourth, in the passage in the opinion of the Advocate-General to which I have just referred a clear distinction is drawn between the interpretation of the law and its application. Only when the facts have been found can it be seen if there is a real question of interpretation. In many cases I consider that the judge at trial is likely to conclude that, whatever the precise interpretation of the law, on the evidence before him the relevant test is or, as the case may be, is not satisfied. In such cases it is not necessary for the ECJ to consider the point.
46. For all these reasons I decline to make the reference sought by the application made by O₂ or any other reference.
Appendix Section 10(2)(b) of the Trade Marks Act 1994/Article 5(1)(b) of Council Directive 89/104/EEC ("the Trade Marks Directive")

1. Where the conditions of Article 5(1)(b) of the Trade Marks Directive are met (i.e. where a third party without the consent of the proprietor of a registered trade mark uses in the course of trade a sign where, because of its similarity to the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public), should that provision nevertheless be interpreted as permitting the third party to defend a claim for infringement by the proprietor on the ground that, by reason of factors extraneous to the sign (for example, the use of other signs or disclaimers), the average consumer is not in fact confused?

Section 10(3) of the 1994 Act/Article 5(2) of the Trade Marks Directive

2. For the purposes of determining whether a registered trade mark has a reputation within the meaning of Article 5(2) of the Directive, is it relevant that:

(a) the proprietor has not used the mark exactly in the form in which it is registered but in one or more forms differing in elements which do not alter the distinctive character of the mark in the form in which it is registered (i.e. use falling within Article 10(2)(a) of the Directive); or

(b) the mark is always or normally used in combination with another mark?

3. Does use of a sign which dilutes the distinctiveness of a trade mark or its reputation constitute use which is "detrimental to the distinctive character or repute of the trade mark" within the meaning of Article 5(2) of the Trade Marks Directive?

4. Does use of a sign which has the purpose and/or effect of either (a) attracting the average consumer's attention to an advertisement for the third party's goods or services or (b) blurring the distinction between the proprietor's trade mark and a trade mark of the third party constitute use which "takes unfair advantage of … the distinctive character or repute of the trade mark" within the meaning of Article 5(2) of the Trade Marks Directive?

Section 10(6) of the 1994 Act/Article 6 of the Trade Marks Directive

5. Does Article 6(1) of the Trade Marks Directive comprehensively regulate the limitations upon the effects of a registered trade mark or may a provision of national law permit a third party to use a registered trade mark in circumstances falling outside Article 6(1) and in particular Article 6(1)(b)?

Section 11(2)(b) of the 1994 Act/Article 6(1)(b) of the Trade Marks Directive

6. Does Article 6(1)(b) of the Trade Marks Directive on its true construction apply to the use of signs similar to (as opposed to identical with) registered trade marks for the purposes of comparative advertising?

Relationship between the Trade Marks Directive and Council Directive 84/450/EEC ("the Misleading Advertising Directive") as amended by Council and Parliament Directive 97/55/EC ("the Comparative Advertising Directive")

7. Must the Trade Marks Directive, and in particular Article 6(1)(b) thereof, be construed as permitting the use by a third party of a registered trade mark in comparative advertising even if the comparative advertising does not comply with Article 3a of the Misleading Advertising Directive as amended by the Comparative Advertising Directive?

Article 3a of the Misleading Advertising Directive as amended by the Comparative Advertising Directive

8. Does a comparative advertisement which uses signs similar to a competitor's trade marks in a manner which damages the distinctive character or repute of those trade marks discredit or denigrate those trade marks within the meaning of Article 3a(1)(e)?

9. Does a comparative advertisement which uses signs similar to a competitor's trade marks take unfair advantage of the reputation of those trade marks within the meaning of Article 3a(1)(g) if:

(a) use of such signs is not necessary for the purposes of identifying the proprietor of the trade marks or its goods or services since the advertiser can use the proprietor's primary trade mark for that purpose and the trade marks to which the signs are similar are secondary indicia used by the proprietor; or

(b) the purpose and/or effect of the use of the signs is to attract the average consumer's attention to the advertisement; or

(c) the effect of the advertiser's use of the signs is to blur the distinction between the competitor's trade marks and the advertiser's trade marks; or

(d) the manner of such use damages the distinctive character of the competitor's trade marks?

Sections 3(6) and 32(3) of the 1994 Act/Article 3(2)(d) of the Trade Marks Directive

10. Does a provision of national law which requires an applicant for registration of a trade mark to state on his application form that the trade mark is being used by the applicant or with his consent in relation to the goods or services in relation to which it is sought to register the trade mark, or that he has a bona fide intention that it shall be so used, fall within the freedom allowed to Member States under the Trade Marks Directive to fix the provisions of procedure concerning the registration of trade marks or does it amount to a substantive provision which is incompatible with the Trade Marks Directive?

11. Is it bad faith within Article 3(2)(d) of the Directive to make an application to register a trade mark without having a present intention to use the mark applied for in relation to goods and/or services in respect of which the mark is sought to be registered?

12. If the answer to question 11 is yes, does it make a difference if the applicant intends to use the mark in a form differing in elements which do not alter the distinctive character of the mark in the form in which registration is sought within Article 10(2)(a) of the Directive?