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L’Oreal Trademark Victory Hurts the Poor, Judges Say

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May 21 (Bloomberg) -- A U.K. appeals judge said he was obligated to uphold a ruling in favor of L’Oreal SA from the European Union’s highest court, while the decision to block comparison advertising for “smell-alike” perfumes would “muzzle” competitors and hurt poor people.

The Court of Appeal’s judgment in London today follows a decision last year from the European Court of Justice setting out how far L’Oreal, the world’s largest cosmetics maker, can go under EU law to block marketing of copied scents. The U.K. court said it had a “duty” to apply the European ruling.

“The ECJ’s decision in this case means that poor consumers are the losers,” Judge Robin Jacob said in the ruling. “Only the poor would dream of buying the defendants’ products. The real thing is beyond their wildest dreams.”

L’Oreal, based in Paris, is suing perfume designers in the U.K. over their use of smells and packaging similar to some of its most famous fragrances, including Tresor, Miracle and Noa. L’Oreal argued the perfume makers also took unfair advantage of the reputation of its trademarks by advertising their scents on lists alongside L’Oreal’s brands.

L’Oreal’s press office didn’t immediately respond to an e-mailed request for comment.

The decision written by Jacob for the three-judge panel said L’Oreal’s trademarks weren’t harmed by the copycats and the only potential harm would be “letting the truth out” that expensive luxury items can be cheaply imitated, “albeit not to the same quality.”

‘A Delusion’

“There is a bit of a message that the price of the real thing may be excessive and that the ‘luxury image’ may be a bit of a delusion,” Jacob said in the ruling.

The copycat brands cost about 3 pounds ($4.30) for a 100-millileter bottle, compared with about 100 pounds for the real version. Smell comparison lists are considered advertisements because the manufacturers give them to retailers so they can share them with consumers.

Hamish Porter, the defendants’ lawyer from the firm Field Fisher Waterhouse LLP in London, said today’s judgment is an “indictment” of the European court’s approach to protecting well-known brands.

“It is a strange anomaly that, whilst it is permissible under European Law to manufacture a perfume that smells like those sold under famous brands, you cannot tell the public which famous brand it smells like,” Porter said today in an e-mail.

The appeals court said the Luxembourg-based court’s ruling showed the EU was taking a more protective approach to trademark law than other major trading areas, such as the U.S.

Contemptuous

Joel Smith, an intellectual property lawyer at Herbert Smith who isn’t involved in the case, said the appeals court was contemptuous about having its “hands tied” by the EU court.

“This is no ordinary judgment from the Court of Appeal -- it is radical and emotive, playing to deeply held convictions about free trade and the role of IP in society,” Smith said today in an e-mail. “This judgment highlights the very generous protection afforded to brand owners,” to block rival products.

L’Oreal has said the costs for bringing the perfumes copied by the group to market can be as high as 120 million euros ($150 million).

England’s Court of Appeal in 2007 referred the case to Luxembourg for guidance on the scope of L’Oreal’s trademark rights under EU law.

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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