O2 has lost its case in a European court to prevent rival operator 3 using O2's logo and bubbles in comparative advertising.

Legal experts suggest that the ruling opens the way for other companies to do the same.

A 2004 broadcast television advertisement for 3's Threepay pay-as-you-go service compared the price of its services with those of O2.

The advertisement began by using the O2 name and black-and-white bubble imagery, similar to that used in O2's own campaigns, followed by Threepay and 3 logos and a message that 3's services were cheaper in a specific way.

O2 brought proceedings for infringement of its bubbles trade marks before the English High Court, although it accepted that the price comparison in the advertisement was true and that the advertisement was not misleading.

When the action was dismissed O2 took its case to the European Court of Appeal, which asked the Court of Justice to form a ruling. Yesterday that ruling was handed down from the Court of Justice.

"A trade mark proprietor is not entitled to prevent the use of a sign identical with, or similar to, a mark in a comparative advertisement if there is no likelihood of confusion on the part of the consumer between the advertiser and the proprietor of the mark or between the advertiser's marks, goods or services and those of the proprietor of the mark," said a summary of the ruling.

The ruling potentially brings into conflict two European directives concerning trade marks and comparative advertising.

Under the trade mark directive "the use, in a comparative advertisement, of a sign identical with, or similar to, a mark of a competitor for the purposes of identifying the latter's goods and services" may be prevented.

However, because the European Parliament is seeking to promote comparative advertising, the Court came down on the side of the comparative advertising directive.

To clarify the situation the Court of Justice has stipulated that a proprietor of a mark may prevent the use of a sign which is similar to its mark if the following four conditions are satisfied:

• Use must be in the course of trade
• It must be without the consent of the proprietor of the mark
• It must be in respect of goods or services which are identical with, or similar to, those for which the mark is registered
• It must affect, or be liable to affect, the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services by reason of a likelihood of confusion on the part of the public

The Court said that there was no likelihood that consumers watching the ad could misconstrue the source of the comparison, so O2 lost its case.