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Interflora wins Adwords war of the roses

Nick Rose
29/05/2013

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United Kingdom

Interflora wins Adwords war of the roses

Summary

The High Court has held that Marks and Spencer (M&S) infringed Interflora's trade marks when it bought keyword terms sold by Google which referenced "interflora" and advertised its own flower service on the back of them.

Mr Justice Arnold said that the CJEU has made it clear that "It is the responsibility of the advertiser to ensure that the advertisement is transparent as to the origin of the goods or services advertised in it".  The Judge then considered the case from the perspective of an "average consumer" who he decided would have been confused as to the origin of the services advertised by M&S.

Background

Google operates an "Adwords" service whereby advertisers can pay for their adverts (or sponsored links) to be displayed on the top of the results screen when a user enters corresponding keywords into the Google search engine.

M&S purchased several keywords containing the INTERFLORA mark so that internet users searching using the INTERFLORA keyword were directed to an advert for the M&S online flower-delivery service.

The Court of Justice of the EU ("CJEU") was asked to determine whether Interflora could prevent M&S using INTERFLORA as an advertising keyword, even though that mark did not appear in the advertisement.

CJEU ruling

A full discussion of the CJEU ruling can be found here. To summarise, the CJEU held that use of a competitor's trade mark as a keyword:

  • was use in the course of trade in relation to goods and services but could only be prevented if it was liable to affect one of the functions of the trade mark. Whether there was an adverse effect on the origin function of the mark depended on the content of the advertisement. The advertisement has to enable a reasonably well-informed and observant internet user to easily discern whether the advertisement belonged to the trade mark owner or a competitor;
  • did not adversely affect the trade mark's advertising function simply because an alternative product was being offered. However, there could still be an adverse effect on the trade mark's investment function, which allowed a trade mark owner to "acquire or preserve a reputation capable of attracting consumers and retaining their loyalty";
  • may take unfair advantage of the reputation of a trade mark if, on the facts, the use could be considered to be without due cause; and
  • may dilute the distinctive character of a trade mark but not if consumers realise the competitor's advertisement is not related to the trade mark owner.

High Court Ruling

The case returned to the UK High Court for it to make a determination about whether there was a trade mark infringement on the facts of the case.

Was there an adverse effect on the origin function?

At the direction of the CJEU, Mr Justice Arnold looked at 3 specific factors that were relevant to this assessment.

  1. He was not satisfied that it was (or is) within the general knowledge of the reasonably well-informed and observant internet user that the M&S flower delivery service is not part of Interflora's network.
  2. He did not think that the M&S adverts enabled the reasonably well-informed and observant internet user to discern that the M&S's flower delivery service is not part of the Interflora network. There is nothing in M&S's adverts to inform the user that the M&S service is not part of the Interflora network. The onus lies with the advertiser to ensure that there is no real of risk consumers being confused.
  3. He noted that key features of the Interflora network are that Interflora has commercial tie-ups with several larger retailers and that members of the Interflora network trade under their own names. This makes it all the more plausible that there should be a connection between M&S's flower delivery service and the Interflora network. 

Arnold J therefore concluded that the M&S advert did not easily enable the reasonably well-informed and reasonably attentive internet user to ascertain whether the service referred to in the advert originated from the trade mark proprietor or an unconnected entity. On the contrary, a significant proportion of the consumers who searched for "interflora" and then clicked on the M&S advert displayed in response, were led to believe, incorrectly, that M&S's flower delivery service was part of the Interflora network.  Thus the M&S use of the signs had an adverse effect on the origin function of the trade mark and there was infringement of the trade marks under s5(1)(a) of the Trade Mark Directive 89/104/EEC article 9(1)(a) of the Community Trade Mark Regulation 40/94/EC.

Was there an adverse effect on the advertising/ investment function?

Arnold J had difficulty understanding what the CJEU meant by "investment function" and how that differs from the "advertising function" of a trade mark. However, he thought that, if the third party's keyword advertising adversely affects the reputation of the trade mark, as for example where the image of the trade mark conveys is damaged, then there will be an adverse affect on the investment function.

On the facts, there was no effect on the investment function of the INTERFLORA trade mark because there was no adverse effect on the reputation of the mark, such as damage to Interflora's image.

Was there unfair advantage?

Arnold J noted that the CJEU has stated that selecting a trade mark with a reputation as a keyword is obtaining a real advantage from the distinctive character and repute of the trade mark, which will equate to an unfair advantage in the absence of due cause. However, the CJEU has also stated that, if the advertisement offers an alternative to the goods/ services of the proprietor without offering a mere imitation or causing dilution or tarnishment of the trade mark or adversely affecting the functions of the trade mark, then this use constitutes fair competition and is not without due cause. Arnold J commented that, by doing so, the CJEU has recognised an important limitation on the very broad principle set out in L'Oreal v Bellure, which appears to involve balancing the interests of the trade mark proprietor with those of other economic operators.

In this case, he did not think there was infringement under article 5(2). The fact that Interflora could not "fight back" because it would not have been effective to purchase "marks and spencer" as a keyword was irrelevant and did not deprive M&S of due cause for its keyword advertising. However, he decided this on the assumption that there was no effect on the origin function of the trade mark.

Comment

It is not surprising that the Judge has found in Interflora's favour, given the particular nature of Interflora's services and network.  The CJEU had specifically suggested that the UK Courts should take into account the fact that Interflora's commercial network comprises a large number of retailers which vary greatly in terms of size and commercial profile.  In those circumstances the CJEU has said that it would be particularly difficult for the reasonably well-informed and reasonably observant internet user to determine whether the relevant advertisement is part of Interflora's network. 

The facts of this case therefore are at one end of the spectrum, and it will not necessarily lead to many more challenges from trade mark owners where rival adverts appear above their own links on Google's search engine.  It was common ground in the case that keyword advertising is not inherently or inevitably objectionable from a trade mark perspective.

In most instances, most businesses will continue to comply with the guidelines laid down by the CJEU that there needs to be an indication from the advertiser which enables the reasonably well-informed and reasonably observant internet user to determine whether or not the advertisement which is displayed in response to a search using the trade mark as a search term is connected to the business of the trade mark owner.

It is unclear at the time of publication whether M&S will appeal the decision. The level of damages payable will still need to be assessed.

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