On 18 November 2016, Mr Justice Henry Carr handed down his judgment in Victoria Plum Ltd (t/a Victoria Plumb) v Victorian Plumbing Ltd & Ors [2016] EWHC 2911 (Ch), the latest High Court case (in only a handful of previous UK cases on this subject - L'Oreal v eBay, Interflora v M&S, Lush v Amazon and Mr Spicy) to consider the issue of keyword advertising in relation to trade mark infringement and passing off.
Background
The Claimant is an online bathroom retailer, incorporated in 2001 and one of the largest and best-known bathroom retail brands. In July 2015, the Claimant dropped the "b" in its company name to become Victoria Plum. The Defendant was incorporated in 2000 but had been trading prior to this date, originally specialising in the sale and repair of Victorian and Edwardian bathroom fittings and, as of 2002, contemporary bathroom fittings.
In 2008 the Defendant began to bid on Google keywords including: "Victoria Plumb", "Victoria Plum", "Victorian Plumb" and "Victorian Plum". The keyword advertisements which the Defendant displayed included the terms: "Victoria Plumbing" and "Victorian Plumbing", posted together with a URL linking to their website. In 2012, the Defendant's bidding on these keywords increased substantially.
The Claimant brought proceedings for infringement of the trade mark VICTORIA PLUMB and passing off. The Claimant did not object to the use of the name "Victorian Plumbing" by the Defendant.
The Defendant relied on a defence of honest and concurrent use: a novel pleading in the context of key-word advertising. The Defendant also counterclaimed for passing off as a result of the Claimant having bid on and utilised various keywords relating to the Defendant's business.
Judgment
From the outset, the Defendant accepted that the advertisements containing the words "Victoria Plumb" were infringing. Such advertisements were generated by Google's "dynamic keyword insertion" which automatically incorporated the keyword as part of the advertisement text.
Mr Justice Carr reiterated that the Claimant had only alleged infringement of the "origin function" under s.10(1) Trade Mark Act 1994 (Art 5(1)(a) Trade Mark Directive). As such, he did not consider harm to the other functions, namely guarantee of quality, investment, advertisement or communication.
The case law on keyword advertising established that:
- A user searching a brand name is likely to be looking for the brand and has a propensity for confusion;
- Transparency is therefore necessary to protect the consumer; and
- Bidding on keywords where the advertiser ensures internet users can ascertain where the goods/services originate from is not objectionable: it falls within fair competition.
It was held that the Defendant's advertisements would not enable a reasonably informed and attentive internet user, or would enable them with difficulty, to ascertain whether the goods/services originated from the Claimant or an undertaking economically connected to it, or a third party. As such, infringement had occurred.
Regarding honest concurrent use, it was emphasised that no such provision existed within EU legislation. The case law considering the defence could be summarised as follows:
- Where 2 entities have co-existed for a long period, honestly using the same/similar names, the inevitable confusion that arises may have to be tolerated;
- This is so where the trade mark distinguishes the goods/services of either entity, rather than one single entity. The origin function is, therefore, not affected because the trade mark denotes both;
- The Defendant must not take steps which exacerbate the level of confusion beyond what is inevitable.
Whether prior concurrent use was "honest" required consideration of: (i) the duty to act fairly in relation to the legitimate interests of the trade mark proprietor (ii) whether the Defendant is unfairly competing with the proprietor (iii) use of the sign giving rise to consumer deception or taking unfair advantage of or being detrimental to distinctive character or repute (iv) whether there is a good reason why confusion can be tolerated and (v) whether the Defendant ought to have been aware of confusion or deception.
It was held the defence failed. The Defendant was using the Claimant's mark rather than its own name and the only use was to bid on keywords rather than any other prior use. If the Defendant's use were permitted, they would be entitled to apply for their own trade mark, which could not be right. Lastly, the mark was not a guarantee of origin of the Defendant's goods: instead, it was an exclusive guarantee of the origin of the Claimant's goods.
Mr Justice Carr went on to state that, assuming he was wrong, the fact the Defendant had purposefully and substantially increased its expenditure on bidding for the keywords, therefore exacerbating the confusion, was not consistent with its duty to act fairly in relation to the Claimant's legitimate interests. Therefore, the use of the keywords was not in accordance with honest practices.
In dealing with an Estoppel argument raised by the Defendant, it was held that no representation had been made by the Claimant to the effect that it did not object to the keyword advertising. Similarly, the Defendant had not relied on any such representation to their detriment. Thus, this argument failed.
Finally, Mr Justice Carr found that the Claimant's own acts of bidding on the keywords "Victorian Plumbing" amounted to passing off. Specifically, the Defendant had goodwill in the name and the Claimant's advertising amounted to a misrepresentation that the two were connected with a likelihood of damage. Therefore, the counterclaim succeeded.
Comment
Mr Justice Carr sets out a clear and unambiguous summary of the relevant trade mark law relating to keyword advertising. The case reiterates that keyword advertising is not objectionable per se, but that infringement will hinge on the transparency of the advertisement. Here, the similarity between the trade mark and the Defendant's name rendered it exceedingly difficult to ensure the origin function was not adversely affected by the use and that consumers were not confused.
This is also the first reported case where the defence of honest and concurrent use was pleaded in response to infringement by keyword advertising. Again, Mr Justice Carr has set out clear and unambiguous guidance for those wishing to invoke the defence going forward. The facts of this case were particularly unusual and it will be interesting to see where the defence will next be raised in this context going forward.