In Interflora v Marks & Spencer, the Advocate General today agreed that advertisers should be able to "bid" on competitors' famous trade marks in search engine keyword advertising in order to present themselves as a commercial alternative, without being found unlawfully to have taken unfair advantage of the reputation of those competitors.
Key points
- Although in his view an advertiser who buys sponsored listings on search engines set to appear when a search is made for a competitor is "obviously" taking advantage of the competitor's reputation, the AG does not consider that such advantage is unfair.
- Accordingly, opines the AG, an advertiser should be permitted to present itself as a commercial alternative, in the interests of free and undistorted competition and consumer choice.
- However, keyword advertising of this type may confuse consumers when the advertiser's competitor represents a commercial network of companies, as in the case of Interflora, because consumers may think that the advertiser is part of that network. In such a case, the advertising would be an unlawful trade mark infringement.
- The AG's opinion is not binding, and may therefore not be followed by the ECJ when it gives its judgment in this case later this year.
Background
Interflora is a famous flower delivery service, and if you search for it on any of the major search engines, it will appear top of the list of natural search results. On some search engines a search for the name will also display adverts – sponsored listings – for Interflora's competitors. This is because those competitors, like Marks & Spencer, have "bid" on Interflora's name as a keyword, paying so that those looking for Interflora will also see their online offerings. This is the practice Interflora challenged, bringing proceedings in the High Court for infringement of their famous trade mark.
Mr Justice Arnold referred questions on this case to the ECJ in 2009, and the Advocate General has now given his non-binding opinion in advance of the European Court of Justice's ruling, which should arrive later this year. The reference is the latest in a series of such references in recent years – including the Google and Primakabin decisions which were handed down last year. Each of those decisions have, with some qualifications, broadly signalled that the practice is a lawful one, so long as consumers are not confused by the sponsored listings.
Given the savviness of the average internet user, it will be difficult for a trade mark owner to show confusion in the typical case. However, Interflora is not the typical case, because of the nature of Interflora's business. Further, Interflora have looked to exploit the additional protection provided by trade mark law to well-known trade marks, which can be deployed without having to show consumer confusion. This is the prohibition on taking, without due cause, "unfair advantage" of the reputation of a trade mark, a concept which has been given a very wide interpretation by the ECJ in L'Oréal v Bellure, another decision from last year. Then Lord Justice Jacob in the UK Court of Appeal described that decision as creating a "pointless monopoly", by effectively holding that any advantage gained, at least if intentional, is unlawful. L'Oréal thus appeared to suggest that Interflora might succeed on this point, effectively reversing the more liberal Google decision and rendering this kind of advertising unlawful in many cases.
The Advocate General's view on "unfair advantage"
The Advocate General's view is that it is "obvious" that Marks & Spencer are trying to take advantage of Interflora's reputation by buying sponsored listings, as why else would they bid on "Interflora" as a keyword? However, and despite the wide ruling in L'Oréal, the AG does not think that what Marks & Spencer is doing is unfair. In his view, Marks & Spencer are presenting themselves to internet users as a commercial alternative. This he says is "due cause" and permissible in view of the need to promote undistorted competition and to ensure consumers can become well-informed. In expressing this view, he rejected complaints by Interflora that allowing competitors to bid on its trade mark makes it more expensive for Interflora itself to bid on its own trade mark – thus forcing Interflora to spend more money on advertising. While this is a true consequence of the practice in some cases, the ECJ has already rejected it as a relevant consequence in the Google cases and again the AG has rejected it here.
The AG indicated he may think differently where a sponsored listing mentions the trade mark in the advertising text itself – rather than just using it as a trigger – suggesting that in such a case the use will have to comply with comparative advertising law (and the conditions permitting the same set out in the Misleading and Comparative Advertising Directive).
The Advocate General's view on Interflora's nature as a commercial network
The above view points to success for Marks & Spencer, but Interflora may well succeed on another ground as a consequence of its unusual business model. Interflora is not one business but a network of independent florists. In the AG's view, that raises the possibility that a consumer searching for Interflora and viewing an advert for Marks & Spencer may consider that Marks & Spencer is a member of Interflora's network. In such a case, that consumer would be confused and the essential origin function of Interflora's trade mark would be affected. This would amount to an infringement under the law that applies to all trade marks (as opposed to the additional protection afforded to famous marks, which brings in the "unfair advantage" concept). If this view is followed by the ECJ, and the High Court in the UK is satisfied of the possibility of such confusion on the facts, Interflora may well ultimately prevail as a result of its unique circumstances.
Concluding remarks
The ECJ's case law in this area has been unpredictable and regularly criticised. There have been a number of calls for reform, including from the UK High Court and the European Commission. The AG acknowledges these complaints, and although he declines to get into them in detail, he suggests that they best be resolved by further European trade mark legislation, rather than via case law. That call will likely be welcomed by the ECJ's critics, although new legislation may take even longer to arrive than most ECJ judgments (which usually take a good two years or more, leading to long delays in resolving disputes).
The AG's opinion is a sensible one and many will hope the ECJ follows it, at least in its conclusions. Advertisers, including many brand owners, will welcome the AG's view that keyword advertising using another's trade mark should be allowed in order to present products and services as commercial alternatives. It should not be forgotten that while famous brand owners often find their brands being used in this way, sometimes the famous brand owners want to indulge in the practice too – Marks & Spencer is as well-known as Interflora, in the UK at least.
The AG's view on the likelihood of confusion given Interflora's nature as a network of independent florists is an interesting one, but very specific to the facts of the case, and while it has the potential to result in a win for Interflora, it is unlikely to impact on the majority of keyword advertising which does not generally involve businesses like that of Interflora.
