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The High Court has ruled that Amazon infringed Lush’s trade mark by using it in search engine keyword advertising as well as on Amazon’s own site in a case that has potentially wide-reaching implications for e-commerce.
The Claimants own the registered trade mark ‘Lush’ in class 3 for cosmetics and toiletries. Amazon is an online retailer selling just about everything, albeit not the Claimants’ products. It is relevant though that Amazon does sell ‘Lush’ branded hair extensions from a third party supplier.
There were three different categories of alleged infringement. The first two classes concerned the consequence of internet users typing the word ‘lush’ into a search engine. Amazon had bid on keywords including the word ‘lush’ to trigger two types of sponsored advertisements. The first type of ad included the ‘Lush’ mark in several places, such as ‘Lush Soap at Amazon.co.uk’ and ‘Low prices on Lush Soap’ whereas the second type of ad did not include the ‘Lush’ mark at all, but instead included references to equivalent or similar products to those sold by Lush. In both cases, if a consumer clicked on the link they were taken to Amazon’s website and presented with the opportunity to browse or purchase equivalent products to the Lush products. There was no overt message to the effect that Lush’s products were not available on Amazon’s website.
The third class of alleged infringement occurred where visitors to Amazon’s website started searching for ‘lush’. After the letters ‘lu’ were typed, various options appeared in a drop down menu, including ‘lush bath bombs’ and ‘lush hair extensions’. Clicking these suggested links led to pages offering products similar to Lush’s, but without any overt reference to Lush products not being available (except for the ‘lush hair extensions’ link, which led to third party Lush hair extensions, as well as competing products). Although the precise nature of the landing page depended upon the scope of the search, it invariably displayed the word ‘Lush’ in a number of places, including the search term as inputted by the user, a repeat of that search term just below the search box, as part of a number of suggestions for ‘Related Searches’ in the next line down, and on the left hand side under a list of ‘Brands’ (this final use related to the Lush hair extensions).
It is also worth mentioning that the activities complained of largely resulted from automated processes. Amazon’s software decides what keywords to bid on based on consumer behaviour, and the content of ads is generated using a template. The operation of Amazon’s search engine is also based on an analysis of consumer behaviour. Lush’s claim was for infringement under Article 5(1)(a) of the Trade Mark Directive.
Keywords
Applying Google France (Case C-236/08), John Baldwin QC, sitting as a Deputy Judge, found that wherever an ad for competing goods appeared as a result of Amazon having bid on a keyword, Amazon was using the mark in the course of trade in relation to the relevant goods.
Google France also established the principle that the origin function would be adversely affected where an ad does not enable reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to in the ads originate from the proprietor of the mark or from a third party. In this case whether the ads were held to infringe depended on the content of the ads, in a result that was not altogether surprising in light of the existing case law:
- In the first class of ads, Mr Baldwin QC found that the average consumer seeing the ad would expect to find Lush products on Amazon. This caused an adverse effect on the origin function and was therefore infringing.
- In the second class of ads, Mr Baldwin QC found that there was no infringement because average consumers would expect ads for Lush products to include some reference to the Lush mark. He distinguished the case from Interflora v. Marks & Spencer [2013] FSR 33 because Interflora represented a network of flower shops and the Court in that case was not satisfied that the average consumer would understand that Marks & Spencer was not part of that network. Mr Baldwin QC recognised that consumers are familiar with sponsored ads, and used to seeing competitor ads in response to search queries.
Amazon’s search functions
The most hotly-contested issues concerned the activities that took place on Amazon’s own site. The questions considered by the Court were: (i) was Amazon using the ‘Lush’ mark in the course of trade; and (ii) if so, did such use affect the functions of the trade mark.
Use in the course of trade
Mr Baldwin QC found that a user typing ‘lush’ into Amazon’s search engine was not use by Amazon, and therefore not infringement. However, he found that the drop down menu prompting ‘lush bath bombs’ (among other things) in response to a search would inform the average consumer that if they were looking for lush bath bombs on Amazon, they would find them by clicking on that menu item. He therefore held, following the guidance of the CJEU in L'Oreal v. eBay1 (Case C-324/09), that Amazon was using the ‘Lush’ mark in the course of trade in relation to the relevant goods, because it used the mark as part of a commercial communication that it was selling the goods on its website.
Effect on the trade mark
Unsurprisingly, the arguments centred around the origin function and whether the average consumer would be able to ascertain without difficulty that the goods advertised were not connected with Lush. The Court considered the appearance and branding of the goods concerned, as well as the general background of internet shopping. Mr Baldwin QC determined that the mere lack of ‘Lush’ branding on the products for sale was not enough to avoid impact on the origin function, because “the consumer’s initial expectation is that the products are Lush products.” He went on to cite an example where a user misspells lush and searches instead for ‘lsuh’. This would elicit a response: ‘Your search 'lsuh' did not match any products. Did you mean: lush.’ The next line would state ‘Showing Top Results for “lush.”’ Mr Baldwin QC considered this demonstrated that Amazon was using the Lush trade mark as a generic indicator of a class of goods, “conduct which attacks head on the ability of the mark to act as a guarantee of origin.” The Court also held that the investment function of Lush’s trade mark was affected, because the quality of attracting custom was bound to be damaged by Amazon’s use of the mark to attract the attention of customers and attempt to sell them third party goods.
So, without any overt indication that Lush products were unavailable on Amazon, the predictive drop down menus fell foul of Article 5(a). However, in light of the determination that a user typing ‘lush’ into Amazon’s search engine was not use by Amazon, it is not clear whether Amazon merely displaying competing products in response to an unobjectionable search query crosses the line into infringement. The answer may lie in the use of the ‘Lush’ mark on the results page generated, which Mr Baldwin QC went on to consider next.
Use on Amazon landing page
The Court went on to consider each use of ‘Lush’ on the Amazon results pages. He found:
- The repeat of the search term ‘Lush’ just below the search box damaged the origin, advertisement and investment functions. He drew attention in particular to the lack of any notice that no results were returned for Lush (although he acknowledged that Lush hair extensions appeared on p. 3 or 4) and the impact of the ‘Related Searches’ line.
- The use of ‘Lush’ in the ‘Related Searches’ line was also use in the course of trade by Amazon.
- The use of ‘Lush’ under a list of ‘Brands’ on the left hand side, however, was unobjectionable, as clicking on the link directed users to Lush branded hair extensions.
These findings are predictable in light of the Court’s earlier comments, but do not answer the question: in the absence of the drop down menu or any use of ‘Lush’ on the results page, would the display of competing products in response to the search term ‘Lush’ constitute infringement? This is no doubt a question that will be considered by the Court when determining the scope of Lush’s injunction, which was due to take place at a hearing on 26 March 2014 (and the outcome of which has not been reported at the time of writing).
Comment
Insofar as it deals with keyword advertising, the judgment is unsurprising. It may give some comfort to advertisers that Interflora was a case decided on specific facts and that the bidding on trade marks as keywords to display advertisements for competing products per se is not objectionable, provided that internet users are able to easily ascertain whether the advertised goods originate from the proprietor of the mark or not.
More interesting are the comments on the operation of Amazon’s own search function, and the wider implications for online retailers. What is clear is that following this decision the use of a trade mark as part of predictive drop down menus, and repeating a trade mark search term on a results page, is not permissible at least in the absence of an express indication that the trade mark goods are unavailable. In the absence of further clarification, online retailers would be advised to avoid predicting searches for brands they do not sell and either to state ‘item not found’ in response to such searches or, at the very least, make it clear that the results displayed are alternatives.
The comments on predictive drop down menus could also have wider implications. Although the CJEU determined in Google France that “an internet referencing service provider which stores, as a keyword, a sign identical with a trade mark and organises the display of advertisements on the basis of that keyword does not use that sign within the meaning of Article 5(1)”, the CJEU did not consider whether, in predicting that an internet user may be looking for a particular trade mark, a search engine could be considered to be using that trade mark. If this case is followed, that is a possibility.