The European Court of Justice (ECJ) has delivered its long-awaited judgment in the keyword advertising case Interflora v Marks & Spencer plc, on a reference from the English High Court made in June 2010.
The ruling appears to be a victory for trademark owners that wish to restrict the use of their brands as keywords. The ECJ has set out at least three grounds of attack that a trademark owner can rely on: prejudice to the guarantee of origin, prejudice to the so-called 'investment function' and "riding on the coat-tails" of a registered trademark. It is now for the High Court to apply the ECJ ruling to the facts of the case, but keyword advertisers should certainly tread carefully.
Flower delivery network Interflora objected to retailer Marks & Spencer buying the word 'Interflora' as a Google AdWord so that Marks & Spencer's flower delivery website would appear prominently in the sponsored links when a user searched for the term 'Interflora'. Interflora sued in the High Court for trademark infringement. Several questions were referred to the ECJ (for further details please see "Unlocking keyword disputes?" and "Interflora v Marks & Spencer: the keyword clash continues").
The ECJ followed its approach in previous cases and held that Marks & Spencer's selection of the 'Interflora' keyword was 'use' of Interflora's trademark, but that such use can be restricted only if the use has an adverse effect on one of the functions of a trademark.
The key function of a trademark is to act as a guarantee of origin, but the ECJ confirmed that there are other functions. A trademark may act as an "instrument of commercial strategy used to acquire reputation to develop customer loyalty" - termed the 'investment function'.
Guarantee of origin
As far as the guarantee of origin function is concerned, there will be an infringement if the keyword advertisement:
"does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or an undertaking economically connected to it."
On the facts of the case, this means that Interflora's trademark will be found to be infringed if the High Court considers that "the display of [Marks & Spencer's] keyword may lead users to believe that the flower-delivery service offered by [Marks & Spencer] is part of Interflora's commercial network". The ECJ followed in the path laid by the advocate general by suggesting that because the Interflora business model depends on the recognition that the Interflora brand brings to a network of independent florists, there is a higher risk of infringement on these facts than might arise in most other keyword disputes.
As far as the investment function is concerned, there will be an infringement if the keyword advertisement "substantially interferes with the proprietor's use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty".
On the facts of the case, this means that Interflora's trademark will be found to be infringed if the High Court considers that "the display of [Marks & Spencer's] keyword jeopardises the maintenance by Interflora of a reputation capable of attracting customers and retaining their loyalty".
Marks with reputation
The ECJ stated that the use of keywords is capable of constituting an infringement under Article 9(1)(c) of the Community Trademark Regulation (and analogous national provisions in respect of national trademarks) if such use amounts to "riding on the coat-tails of a trade mark with a reputation in order to benefit from its power of attraction… without paying financial compensation".
For further information on this topic please contact Jeremy Drew or Paul Joseph at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email (firstname.lastname@example.org or email@example.com).
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