A well-known brand's gift card can be an attractive competition prize. But may the organiser use that brand's name and logo to advertise its own services? The limits of this practice are illustrated by a dispute over the ZARA trademark, considered by both the Court of Justice of the European Union and the Spanish Supreme Court.
For businesses, what matters is not only the prize offered but also how it is presented in advertising.
How did the dispute over the ZARA trademark arise?
Buongiorno Myalert ran a campaign promoting its “Club Blinko” service. Subscribers could enter a prize draw in which one of the prizes was a ZARA gift card worth €1,000. The ZARA sign was used in the promotional materials.
Inditex, the trademark owner, challenged this use and brought legal proceedings.
What did the CJEU decide?
In its judgment of 11 January 2024, C-361/22, the Court interpreted Article 6(1)(c) of Directive 2008/95/EC, which applied to the events of 2010.
That provision permitted use of another party's trademark where necessary to indicate the intended purpose of one's own product or service, provided the use complied with honest practices in industrial or commercial matters.
The Court explained that this limitation did not cover every informative reference to the trademark owner's products. It left the assessment of the particular campaign to the national court.
What was the final outcome before the national court?
In judgment No 485/2024 of 10 April 2024, the Spanish Supreme Court ruled in favour of Inditex.
It found that Buongiorno had used the attraction, reputation and prestige of the ZARA brand to promote its own services, taking unfair advantage of the brand's reputation. The use of the sign did not fall within the limitation of trademark rights applicable to the campaign under review.
The court:
- found that the rights in the ZARA trademark had been infringed;
- prohibited repetition of the infringing activities;
- awarded €2,215.60 in damages;
- ordered publication of information about the judgment, with a link to its full text, on blinko.es and blinkogold.es for one month.
Damages were calculated using a hypothetical licence fee of 9.03% of campaign revenue of €24,536. The court rejected the claimed initial fee of €84,000 and additional compensation for harm to the brand's reputation.
What does Article 14 of Directive 2015/2436 provide?
The later legislation defines permitted uses of other parties' signs more broadly. Article 14(1) sets out three categories of situations in which the trademark owner cannot prohibit particular uses:
- A natural person's own name or address — including where it coincides with another party's trademark. The exception does not automatically extend to a company's name.
- Descriptive or non-distinctive signs — concerning, for example, the kind, quality, quantity, intended purpose, value or geographical origin of goods.
- Identifying or referring to the trademark owner's goods or services — in particular indicating the intended purpose of one's own product, such as a spare part or accessory.
Paragraph 2 requires all these uses to comply with honest practices in industrial or commercial matters.
Separately, paragraph 3 protects the exercise of an earlier right of local significance recognised by national law, within the territory in which it is protected.
What are honest practices?
Useful guidance comes from the CJEU judgment of 17 March 2005 in C-228/03, Gillette, concerning the earlier legislation.
The Court indicated that use of a trademark does not comply with honest practices where, in particular, it:
- suggests a commercial connection with the trademark owner;
- takes unfair advantage of the sign's distinctive character or reputation;
- discredits or denigrates the trademark;
- presents one's own product as an imitation or replica of a product bearing another party's trademark.
The overall appearance of the product and the presentation of the signs matter. The recipient should be able to distinguish the third party's offering from that of the trademark owner.
When may another party's brand be used?
An example of these principles in practice is the description “cartridge compatible with brand X devices”. Here, the sign explains the product's intended purpose. The packaging and advertising must still be assessed, particularly whether the customer might believe they are buying a product from the owner of brand X or its authorised partner.
The same approach applies to advertising by an independent repair service identifying the brands of equipment it repairs. Information about the services should clearly identify the provider and should not suggest authorisation that does not exist.
These are examples of how the rules may apply, rather than unconditional permission to use the signs.
May the brand of a competition prize be named?
Under Article 14(1)(c), describing a prize by its brand may be regarded as referring to the trademark owner's goods or services. Honest use remains a condition.
When preparing a promotion, it is therefore worth assessing:
- whether the recipient can clearly identify the competition organiser;
- whether the wording and graphics suggest sponsorship or cooperation with the brand owner;
- whether the sign's size and placement are proportionate to the purpose of describing the prize;
- whether a logo is needed or the name in plain text would suffice.
A statement that there is no cooperation may help explain the relationship between the parties, but should not replace an assessment of the overall message.
What should be checked before launching a campaign?
A practical step is to review the terms and conditions, graphics and advertising copy together. They should consistently identify the organiser and the prize. The graphics should also be viewed on their own, as a user scrolling through social media would see them without reading the terms.
The ZARA case shows that how another party's brand is used can determine a promotion organiser's liability. However, it concerned earlier legislation. Its outcome should not automatically be applied to every modern campaign; the particular message and applicable legal basis must be assessed.
Barbara Kardynia, Advocate
Legislation and judgments: Article 14 of Directive (EU) 2015/2436 of the European Parliament and of the Council; CJEU judgment of 11 January 2024, C-361/22, ECLI:EU:C:2024:17; Tribunal Supremo judgment No 485/2024 of 10 April 2024, ECLI:ES:TS:2024:1906; CJEU judgment of 17 March 2005, C-228/03, ECLI:EU:C:2005:177.