C-220/98

ESTÉE LAUDER

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 16 September 1999 *

I — Introduction common case that the cream does not produce any lasting effect, although the defendant claims that it produces a signifi- cant firming effect. The action has been brought, pursuant to German law on unfair 1. The parties in the main proceedings competition, primarily as a defensive mea- giving rise to the present reference from sure by the plaintiff to protect its market the Landgericht, Köln (Regional Court, position, since, as it emerged at the oral Cologne, hereinafter 'the national court') hearing, a consumer-protection organisa- are the German subsidiaries of competing tion had succeeded before another German multinational cosmetic companies. The court, the Kammergericht (Higher Regional subject-matter of the dispute is the facial Court), Berlin, in obtaining an injunction firming cream 'Monteil Firming Action prohibiting the use by the plaintiff of the Lifting Extreme Creme' (hereinafter 'the word 'lifting' in respect of its own facial cream'), which is manufactured in Monaco firming cream. 2 and distributed throughout Europe by companies in the Lancaster group. 1 The defendant is the German member of that group and is responsible for organising the distribution of the cream not only on the German market but throughout Lancaster's selective distribution system.

4. The national court has taken the view misled by the word "lifting" in the name, that, in the absence of expert evidence, it indicating the effect of the product, into cannot dismiss 'the possibility that more assuming that it is of lasting effect, if that than an inconsiderable number of consu- product is being distributed with the same mers might be misled'. It cites a Bundesger- indication of its effect on the packaging ichtshof (Federal Court of Justice) judg- lawfully and without challenge in other ment of 12 December 1996, upholding the countries within the European Union?' earlier view taken by the Kammergericht, Berlin in the successful action taken against Estéé Lauder that the use of the word 'lifting' could be misleading. 3 However, it is uncertain whether C o m m u n i t y law requires it to depart from the rule devel- oped in German case-law, whereby the use of a word may be prohibited if 1 0 % to 1 5 % , at least, of potential consumers could be misled. In particular, it wishes to know II — The relevant legal context whether, in the light of cases like Mars, such a threshold would constitute too strict a standard of protection. 4

6. The German Gesetz gegen den unlaute- ren Wettbewerb (Law Against Unfair Com- petition) of 7 June 1909 (hereinafter 'the 5. Accordingly, the following question has UWG'), because of its potential to affect been referred to the Court: trade in goods, has given rise to numerous references to the Court, most notably for present purposes that in Clinique. 5 Para- graph 3 of the UWG provides:

'Are Articles 30 and 36 of the EC Treaty and/or Article 6(3) of Council Directive 76/768/EEC relating to cosmetic products to be interpreted as precluding the applica- tion of national legislation on unfair com- 'Injunction proceedings may be brought petition which allows the importation and against anyone who, in the course of trade distribution of a cosmetic product lawfully and for the purposes of competition, pro- manufactured or distributed in a Member vides misleading information [on the fea- State of the European Union to be prohib- tures of products] with a view to securing ited on the ground that consumers will be an end to the dissemination of the informa- tion in question.'

'Member States shall take all measures necessary to ensure that, in the labelling, putting up for sale and advertising of cosmetic products, text, names, trade marks, pictures and figurative or other Paragraph 27(3) of the LmBG provides signs are not used to imply that these that a name is misleading 'if words which are apt to confuse ... are used ... in relation to factors which have a bearing on an 6 — Council Directive 76/768/EEC of 27 July 1976 on the assessment of the products'. approximation of the laws of the Member States relating to cosmetic products (hereinafter 'the 1976 Directive'), OJ 1976 L 262, p. 169. 7 — Council Directive 84/450/EEC of 10 September 1984 relat- ing to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising, OJ 1984 L 250, p. 17. 8 — Council Directive 88/667/EEC of 21 December 1988 amending for the fourth time Directive 76/768/EEC on the approximation of the laws of the Member States relating to cosmetic products, OJ 1988 L 382, p. 46. A further sentence was also added by Article 1(9) of Council Directive 93/35/EEC of 14 June 1993 amending for the sixth time 7. Apart from Articles 30 and 36 of the EC Directive 76/768/EEC on the approximation of the laws of the Member States relating to cosmetic products, OJ 1993 Treaty (now, after amendment, Articles L 151, p. 32, but it is not relevant in the present case.

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products have characteristics which they do IV — Analysis not have.'

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10 — The current provision, which is contained in Arti- cle 3(2)(b) of Council Regulation (EEC) No 2913/92 of 11 — Case 41/76 Donckerwolcke v Procureur de la République 12 October 1992 establishing the Community Customs [1976] ECR 1921, paragraphs 17 to 18. See also Case Code (OJ 1992 L 302, p. 1), as amended by Article 1(b) of 119/78 Peureux v Services Fiscaux de la Haute-Saône et du Council Regulation (EC) No 82/97 of the European Territoire de Belfort [1979] ECR 975, where the Court Parliament and of the Council of 19 December 1996 held, regarding Article 30, that 'the prohibition of mea- amending Regulation (EEC) No 2913/92 establishing a sures having an effect equivalent to quantitative restric- Community Customs Code (OJ 1997 L 17, p. 1), is tions in infra-Community trade has the same scope as worded as follows: 'Although situated outside the territory regards products imported from another Member State of the French Republic, the territory of the Principality of after being in free circulation there as for those originating Monaco as defined in the Customs Convention signed in in the same Member State', paragraph 26. Paris on 18 May 1963 ... shall, by virtue of that Conven- tion, also be considered to be part of the customs territory 12 — Donckerwolcke, paragraph 25. of the Community'. 13 — OJ 1994 L 349, p. 53.

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14. Admittedly, the assimilation to the the Community for customs purposes pro- notion of goods in free circulation,which vides a more convincing basis for that applies to goods already imported from a extension than that suggested by the defen- third country, of goods being exported dant at the hearing, viz. that the fact that directly from Monaco, a third country, to the goods in the present case (presumably Germany implies an extension of that in common with most Monacan exports) notion. In particular, it involves applying pass physically through France en route the prohibition of measures having equiva- from M o n a c o to Germany suffices to lent effect to quantitative restrictions as render Community law applicable.

Mon- 14 — Pursuant to its Article 1(1), Regulation N o 3285/94 aco's legal status, as part of the Commu- applies to imports of products originating in third nity's customs territory, renders these countries, with the exception of textile products and products originating in certain, not including Monaco, requirements superfluous. Consequently, I third countries; see Annex I to Council Regulation (EC) am satisfied that the legal significance of N o 519/94 of 7 March 1994 on common rules for imports from certain third countries and repealing Regulations the Community legislature's decision to (EEC) Nos 1765/82, 1766/82 and 3420/83, OJ 1994 L 67, p. 89. 15 — See Snyder, International Trade and Customs Law of the European Union (1998), p. 504, at footnote 3 . 16 — She observed that Monaco is effectively obliged — appar- ently as a result of the bilateral customs union agreement 17 — See Council Decision 92/561/EEC of 2 7 November 1992 between Monaco and France of 18 May 1963, ratified in on the conclusion of an interim Agreement on trade and France by Decree N o 63-982 of 24 September 1963, customs union between the European Economic Commu- JORF, p . 8679 — to respect Community legislation such nity and the Republic of San Marino, OJ 1992 L 359, as the 1976 Directive. The Court was informed that p. 13. The agreement establishes a customs union between problems still arise and that, following approaches made the Community and San Marino (Article 1), under which by the French and Monacan authorities, the Commission is (Article 8) quantitative restrictions and measures having now considering the need for the negotiation of an equivalent effect to quantitative restrictions are expressly international agreement with Monaco. prohibited in trade between the contracting parties.

17. To begin with, it is not contested that the grant of an injunction by the national court restricting the sale of the cream merely because the word 'lifting' is used in its name would constitute a measure having equivalent effect to a quantitative restriction on imports prohibited, in prin- B — The substantive issue ciple, by Article 30 of the Treaty, as well as a restriction on trade in cosmetic products contrary to Article 7(1) of the 1976 Direc- tive. 18 The cream is sold widely under similar conditions in other Member States so that compliance with special German rules would, as in the Clinique case, entail for the exporter additional labelling and 16. Not surprisingly, the written and oral advertising costs for that market alone. 19 submissions made to the Court in the Consequently, it is necessary only to con- present case do not disclose any substantial sider the extent to which such a restriction disagreement regarding the principles to be is none the less permissible. applied in formulating an answer to the question posed by the national court. The principal legal issues have been settled by 18 — Although the UWC and the LmBG apply equally to both relatively recent case-law. The real issue in German and imported products, the grant of the injunction would clearly constitute a 'products rule' for the purposes the case is the extent to which consumer of Joined Cases C-267/91 and C-268/91 Keck and Mithouard [1993] ECR I-6097 and the restraint on trade protection, provided under German rules, it would entail must thus be justified. in particular a rule tending to presume that 19 — See Chnique (footnote 5), paragraph 19.

18. It is equally well established in the case- so as 'to imply that [they] have character- law of the Court, in particular in Clinique, istics which they do not have'. The 1976 that the 1976 Directive 'provided exhaus- Directive leaves to the Member States the tively for the harmonisation of national choice of measures to give effect to this rules on the packaging and labelling of obligation. This is not surprising since it cosmetic products'. 20 It 'defines the mea- would be impossible to lay down in sures to be taken in the interests of advance comprehensive criteria which consumer protection and fairness of com- may be applied in all cases to determine mercial transactions, which are included whether product claims are erroneous. among the imperative requirements speci- None the less, the 1976 Directive must be fied in the case-law of the Court in the interpreted as providing exhaustively for context of the application of Article 30 of the rules to be applied to protect consumers the Treaty'. 21 In other words, this particu- from selling or marketing practices which lar imperative requirement is adopted by make or even imply false claims about the 1976 Directive and the rules to pursue cosmetic products. In other words, the it are therein exhaustively defined. relevant standard is laid down at Commu- nity level and must simply be applied on a case-by-case basis by the Member States. Consequently, the latter are precluded from legislating in the matter and are confined to acting within the confines of the harmo-

State. advertising through the establishment of minimum objective criteria for determining whether particular advertising is mislead- ing. 23 I cannot therefore agree with the contention, advanced by Finland and sup- ported by France at the hearing, that 20. The debate in the present case, thus, Article 6(3) of the 1976 Directive should centres around the obligation imposed on Member States by Article 6(3) to ensure that products are not labelled or marketed 22 — See Case C-1/96 R v MAFF, ex parte Compassion in World Farming [1998] ECR I-1251, paragraph 47, Case C-323/93 Centre d'Insémination de la Crespelle v Coop- érative de la Mayenne [1994] I-5077, paragraph 31 and Case 148/78 Pubblico Ministero v Ratti [1979] ECR 1629, 20 — Ibid., paragraph 11. See also Case C-77/97 Österreichische paragraphs 36 to 38. Unilever v Smithkline Beecham Markenartikel [1999] 23 — Case 238/89 Pall [1990] ECR I-4827, paragraph 22, Clin- I-431, paragraph 24 (hereinafter 'Unilever') and the cases ique, paragraph 10 and Joined Cases C-34/95 to C-36/95

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be interpreted in the light of Directive implementing those objectives, where they 84/450/EEC. Member States, although left are in conflict, national courts are naturally with the primary responsibility for control- called upon to strike a balance between ling the use of misleading labelling claims, them. The function of this Court, in are required to apply the standard pre- responding to a question such as that posed scribed in Article 6(3), i.e. to prohibit false by the national court in this case, is, as or misleading claims regarding the charac- Germany and France rightly submit, to teristics possessed by a cosmetic product. provide clear and useful interpretative Finland's view, based on an analogy with criteria to assist the latter in that task. Article 7 of Directive 84/450/EEC, that Member States may apply higher standards of consumer protection is thus miscon- ceived. Each Member State must apply the same Community-law standard.

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divergent views expressed in German legal measures taken ... must not create obstacles literature regarding the appropriate level of to imports which are disproportionate to protection. At one extreme is the view that those objects'. 29 As the Court has specifi- the right to equality of economic opportu- cally acknowledged, citing Clinique and nity suggests that Articles 30 and 36 of the Mars, measures of protection against 'the Treaty should not be interpreted with the risk of misleading consumers cannot over- mature and critical consumer in mind, as ride the requirements of the free movement that would discriminate against consumers of goods and so justify barriers to trade, with limited intellectual capacity! 26 At the unless that risk is sufficiently serious ...'. 30 other end of the spectrum is the view that The obligation to 'observe the principle of Community law imposes the standard of proportionality' applies equally to 'the the well-informed consumer and that Ger- measures which Member States are man unfair-competition law should aban- required to take for the implementation' don 'the attempt, which is as stupid as it is of Article 6(3) of the 1976 Directive. 31 pointless, to seek to protect practically the Thus, the Community interest in protecting last "simpleton" ("Trottel") from the dan- consumers, which the directive recognises, ger of being misled by advertising'. 27 may be allowed to impinge on the free movement of cosmetic products only to the extent that is clearly necessary to serve that interest.

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. .'; breweries that is likely to be of the greatest utility could, thus, be obliged to indicate on their both to national courts and to the Court, in labels the raw materials used, while, as the latter case to obviate the need to decide regards beers sold on draught, they could such cases on an individual basis. It appears be required to ensure that 'the requisite to have been Germany that first laid information . . . appear on the casks or the emphasis on the significance of the infer- beer taps'. 34 A few years later, the Court ence which 'the average well-informed held in Pall, rejecting the possibility of consumer' 37 might draw regarding whe- error by German consumers regarding the ther a product would have prophylactic or place of registration of a trade mark in therapeutic properties in successfully respect of imported products bearing the defending the view of German authorities, symbol '(R)' as a justification for allowing whose validity was challenged in that case such use to be prohibited pursuant to the by the Commission, that eye lotions could UWG, that 'even assuming that consumers, be regarded as medicinal products and, or some of them, might be misled on that point, such a risk cannot justify so con- siderable an obstacle to the free movement 35 — Cited in footnote 23 above, paragraph 19. of goods, since consumers are more inter- 36 — C-362/88 GB-INNO-BM [1990] ECR I-667 at para- g r a p h 1 4 . In C a s e 1 2 6 / 9 1 Yves Rocher [1993] ECR I-2361, the Court held to be a disproportionate restriction of trade a general prohibition under the German UWG on eye-catching price comparisons in advertising 'in that it affects advertising which is not at all misleading and contains comparisons of prices actually charged, which can be of considerable use in that it enables the consumer to make his choice in full knowledge of the facts' (paragraph 17, emphasis added). 37 — See Case C-290/90 Commission v Germany [1992] ECR I-3317, paragraph 1 1 .

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thus, subject to an authorisation procedure ten per cent. The Court adopted, for the prior to marketing. 38 In 1994 in Meyhui first time, the notion of the 'reasonably the Court upheld a Community-law circumspect consumer' who might 'be requirement imposed, pursuant to a 1969 deemed to know that there [was] not directive, 39 on manufacturers of glass fall- necessarily a link between the size of the ing within certain categories ('crystal glass' publicity markings relating to an increase and 'crystalline') to use only descriptions of in the product's quantity and the size of such glass that appear in the language or that increase'. 41 languages of the Member State in which the product is marketed, since '... the difference in the quality of the glass used is not easily discernible to the average consumer for whom the purchase of crystal glass pro- ducts is not a frequent occurrence', who must therefore 'be given the clearest infor- mation possible so that he does not confuse a product [in the above categories] with a product in the higher categories and con- sequently ... pay too much'. 40

38 — See Council Directive 65/65/EEC of 26 January 1965 on the approximation of provisions laid down by Law, 41 — Paragraph 24. Regulation or Administrative Action relating to proprie- 42 — Case C-210/96 Gut Springenbeide and Tusky v Oberk- tary medicinal products, OJ, English Special Edition, First reisdirektor Steinfurt (hereinafter 'Gut Springenbeide') Series 1965-1966, p. 20. [1998] ECR I-4657. 39 — See Council Directive 69/493/EEC of 15 December 1969 4 3 — See Council Regulation (EEC) N o 2771/75 of 29 October on the approximation of the laws of the Member States 1975 on the common organisation of the market in eggs relating to crystal glass, OJ, English Special Edition, First (OJ 1975 L 282, p. 49) and Article 10 of Council Regula- Series 1969 (II), p. 599. tion (EEC) N o 1907/90 of 26 June 1990 on certain 40 — Meyhui, cited in footnote 25 above, paragraph 18 (empha- marketing standards for eggs (OJ 1990 L 173, p. 5), as sis added). amended.

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continued by enunciating (paragraphs 31 graph 36) reiterated flic Gut Springenbeide to 32) the following test: test:

'In those cases, in order to determine whether the description, trade mark or '... it is for the national court to assess in promotional description or statement in the light of the circumstances whether, question was liable to mislead the pur- bearing in mind the consumers to whom chaser, the Court took into account the it is addressed, a brand name or its presumed expectations of an average con- component parts are liable to be confused sumer who is reasonably well informed and with all or part of the description of certain reasonably observant and circumspect, wines. In that respect, it is also apparent without ordering an expert's report or from the Court's case-law that the national commissioning a consumer research poll. court must take into account the presumed expectations of an average consumer who is reasonably well informed and reasonably observant and circumspect' (paragraph 36).

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law. In conclusion, the important point is Member State may justify a different view that a single Community-law test is now being taken as to the effect of a particular available and it would, therefore, be inap- claim on consumers in t h a t M e m b e r propriate for a national court to base its State. 4 7 The national court may need final decision as to confusion on statistical therefore to consider whether, from a evidence regarding the probable effect on linguistic perspective, the use of the English 1 0 % to 1 5 % of potential consumers. word 'lifting' rather than a German word with the same or a similar connotation is apt to mislead German consumers.

The fact that 45 — In Sektkellerei Kessler (cited in foornote 44) the Court, the Court was concerned with trade marks does not, in my citing paragraphs 35 to 3 7 of its judgment in Gut Spring- view, detract from the general significance of its comment. enheide, (cited in foornote 42) also expressed reservations At paragraph 10 of his Opinion in that case, Advocate as to their utility: 'It is only where it has particular General Jacobs had observed that the name 'Cotonnelle' difficulty in appraising the misleading nature of the brand provided 'an excellent illustration of the linguistic factor' name that, in the absence of any Community provision on since it 'might, arguably, cause a speaker of English, the matter, the national court must assess whether it is French or Italian to believe that a product is made of necessary, under the conditions laid down by its national cotton [but] it could hardly have that effect on someone law, to decide upon measures of enquiry such as an expert's w h o understands only German or Spanish, since the words report or a consumer research poll as guidance for its for cotton in those languages are "Baumwolle" and judgment'. "algodón" respectively'.

liable to render German consumers more previous paragraph, regarding the factors susceptible to being misled by the word which the latter may wish to consider in 'lifting' than consumers in other Member applying that test so that the national court States, but it is for it to assess whether any has all the relevant material to enable it to such factors actually exist and, if so, determine whether granting the injunction whether they influence the inferences in this case would be compatible with drawn by German consumers on seeing Community law. However, in doing so, it the word. The national court may also wish should, as Advocate General Gulmann to consider whether the very fact that the advised in Clinique, not 'link its interpreta- cream is specifically intended to be used on tion of Article 30 too closely to the parti- a regular, if not daily, basis, thus necessitat- cular facts of the case'. 49 I also agree with ing ongoing expenditure by consumers his view that 'under the system of the desirous of obtaining the desired firming Treaty, [the] task' of ensuring uniform effects, in itself sufficiently emphasises the application of general provisions such as ephemeral and transient nature of those those found in the 1976 Directive 'devolves effects as to dispel any contrary inference on the national courts'. 50 Thus, notwith- that might be drawn from the word 'lift- standing the earlier willingness of the Court ing'. In other words, as the Court has occasionally, 'where the evidence and infor- acknowledged particularly in respect of mation before it seemed sufficient and the alleged confusion between trade marks, solution clear', to 'settle [...] the issue itself the national court should, in determining rather than leaving the final decision for the whether the Community standard for con- fusion is met, adopt a 'global appreciation' national court', I am convinced that such of the risk. 48 departures from the normal division of competence between national courts and the Court of Justice in preliminary-refer- ence cases are inappropriate and, in the light of the development at Community- law level of a test that enables the proper degree of protection of consumers to be determined by national courts, unneces- sary. 51 In cases such as that in the main proceedings, the Court should henceforth confine itself to interpreting Community law and providing guidelines for its appli-

Articles 30 and 36 of the EC Treaty (now, after amendment, Articles 28 EC and 30 EC), read in conjunction with Council Directive 76/768/EEC of 27 July 1976 on the approximation of the laws of the Member States relating to cosmetic products and in particular its Articles 6(3) and 7(1), preclude the prohibition, pursuant to a Member State's national legislation on unfair competition law, of the importation and distribution of a cosmetic product that is marketed without restriction in other Member States and that satisfies the labelling requirements of Council Directive 76/768/EEC, unless, in that Member State, an average consumer of the product in question, who is reasonably well informed, observant and circumspect, would, having regard to all of the circumstances in which the product is sold, be confused by a claim made in its name or description into attributing a characteristic to it that it does not in fact have.

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