Interflora Inc and Interflora British Unit v Marks and Spencer plc, High Court, 21 May 2013

Facts

The claimants operated the well known flower delivery network in the UK under the mark INTERFLORA. Around 27% of independent florists in the UK belong to Interflora, using the INTERFLORA branding to varying degrees, as well as their own trading names. The claimants had formed a commercial tie in with Sainsburys in the past and continued to have co-branding arrangements with the Co-op, Tesco and Thorntons.

Both Interflora and M&S operated internet websites for placing flower delivery orders. Interflora itself used keyword advertising, mainly via Google, spending over £2.2 million in 2012, which generated estimated revenues of £29 million. Research showed that INTERFLORA was the top performing keyword for the flower sector.

Google had changed its policy for the UK and Ireland in May 2008 so as to allow advertisers to bid for and purchase keywords registered as third party trade marks. Between 2004 and 2008 M&S bid on 30,000 keywords relating to flowers, all of which were generic terms. Following Google’s policy change, M&S purchased keywords from Google so as to display advertisements for its own service when an internet user searched Google for INTERFLORA and similar terms. By 2012 M&S had several million keywords, most of which were generic words, with about 2.5% relating to competitive brands.

As soon as M&S started bidding on INTERFLORA keywords, the claimants complained and alleged trade mark infringement.

The case was referred by the High Court to the CJEU in 2009 which answered some of the questions in its separate decision of Google France, Case C-236/08 and the remaining questions in this case in September 2011 in Case C-323/09. In relation to the origin function of a trade mark the CJEU held that:

“the function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor… or an undertaking economically connected to it, or… originate from a third party.”

Subsequently there were several skirmishes between the parties before trial concerning the admissibility of various survey and other evidence. Two of Arnold J’s judgments on these issues were successfully appealed to the Court of Appeal which refused to admit certain evidence and laid down strict rules on the admissibility of witness evidence derived from surveys in circumstances where the surveys themselves were not relied upon.

Law

Interflora alleged infringement under Article 5(1)(a) of the Trade Marks Directive (identical marks, identical goods/services) and also Article 5(2) relating to marks with a reputation where the defendant’s use of the mark, without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or repute of the mark.

Under CJEU case law, in order to succeed on a claim for infringement the claimant must show that one of the functions of a trade mark is adversely affected. Interflora alleged adverse effect to the origin and investment functions of its trade marks. M&S relied on the CJEU’s finding in this case that keyword advertising has no effect on the advertising function.

Decision

The Court considered the “average consumer” test: the test is not statistical in that the Court is not attempting to ascertain if a statistical majority of relevant people has been misled. Further, the average consumer is the same as the “reasonably well-informed and reasonably observant internet user” as referred to by the CJEU in this case. The Court disagreed with M&S which tried to argue for a “single meaning” in trade mark law, ie. a rule that use of a sign must convey a single meaning in law even though it is in fact understood in different ways by different people.

Article 5(1)

The Court reviewed the case law to date on the effect of keyword advertising on the origin function of trade marks (Google France and subsequent cases) and summarised as follows:

  • The origin function is adversely affected by keyword advertising triggered by the trade mark if the advertisement does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the advertised goods or services originate from the trade mark proprietor (or an economically-connected undertaking) or from a third party.  
  • The onus lies upon the advertiser to ensure that the advertisement does enable such users to ascertain this without difficulty, so as to avoid real risk of confusion (in this way there is a reverse onus of proof).  
  • It is not sufficient to establish an adverse effect that some internet users may have difficulty in grasping that the advertised goods or services are independent of the trade mark proprietor, as confusion on the part of ill-informed or unobservant internet users must be discounted.  
  • If the advertisement causes a significant section of the relevant class of persons wrongly to believe that the advertised goods or services are connected to the trade mark proprietor, this does establish an adverse effect. Thus there is no “single meaning” rule.  
  • Here, it was relevant to consider whether the reasonably well-informed and reasonably observant internet user is aware that M&S's flower delivery service is not part of the Interflora network and, if not, whether M&S's advertisements enable such a user to ascertain this.

Arnold J’s conclusion was that keyword advertising is not inherently objectionable from a trade mark perspective. Considering all the evidence he concluded that:

  • a significant proportion of internet users in the UK do not appreciate the difference between natural search results and paid-for advertising via keywords (although a majority are so aware);  
  • the reasonably well-informed and reasonably observant internet user did not know that M&S’s flower delivery service was not part of the Interflora network;  
  • there was nothing in M&S’s advertisements to inform a reader that M&S was not part of the Interflora network;  
  • the nature of the Interflora network made this difficult to tell as members trade under their own names, with varying prominence given to the Interflora brand;  
  • Interflora had co-branding arrangements with several large retailers, which made a connection with M&S all the more plausible; and  
  • some consumer analysis data showed that consumers searching for Interflora who then clicked on an advertisement and visited M&S’s site were then more likely to visit Interflora’s site than the average visitor to M&S’s flower delivery website; this was likely to show initial interest confusion, at least for some consumers who then realised that M&S was not part of the Interflora network.

Consequently, as at May 2008 when the case began, and also up the present time, M&S infringed Interflora’s marks under Article 5(1) by adversely affecting the origin function of the marks.

Although not necessary to decide the case, the Court continued to consider the functions of a trade mark other than origin. In relation to the “advertising” function (using a mark to inform and persuade consumers), the CJEU in the Google France case had decided that keyword advertising using a third party’s trade mark did not affect the advertising function because the trade mark proprietor’s own site will normally be displayed in natural search results, and thereby be visible to internet users.

In relation to possible adverse effect on the “investment” function (using a mark to acquire or preserve a reputation capable of attracting customers and retaining loyalty) the CJEU had left this issue to the national court. Arnold J here found that there was no evidence of this type of damage.

Article 5(2)

Under Article 5(2) concerning marks with a reputation, there was no challenge to the status of Interflora’s marks as such. Interflora had argued that use of its mark as a keyword was detrimental to the distinctive character of its trade mark under Article 5(2) as it gradually persuaded consumers that INTERFLORA was a generic term. The CJEU did not agree that this was necessarily the case: if an internet user were able to tell that the brands were competing, there would be no damage to distinctiveness. However, if the internet user were not able to tell that the brands were independent, such damage would be a possibility, depending on the findings of the national court.

Further the CJEU considered Article 5(2) relating to the taking of unfair advantage without due cause, or “riding on the coat-tails” of another brand. It had found that as a rule, where goods offered were not “mere imitations” and where there was no dilution or tarnishment, such use of a third party’s mark via a keyword ad would generally fall “within the ambit of fair competition” and would therefore not be without “due cause”. Again it would be for the national court to decide. Arnold J noted that this was a very important development as it retracted somewhat from the broad principles of unfair advantage as set out in the case of L’Oreal v Bellure, the CJEU’s leading case on unfair advantage under Article 5(2).

Arnold J here found no additional infringement under Article 5(2).

He also noted case law of other European jurisdictions in this area concerning keywords. In some cases the trade mark proprietor had succeeded, and in others it had not, depending on the facts.

Comment

There is no doubt that the facts of this case were very significant and that a different result may be achieved in other cases.

As an interesting aside at the end of the judgment, Arnold J raised the possibility of arguments on the issue of comparative advertising, which had not been run here. Given the broad scope of the Comparative Advertising Directive, he seemed surprised by this, so perhaps this is an area for future exploration. Certainly there are parallels between keyword advertising and conventional comparative advertising, both of which have been said by the courts to increase competition and consumer choice.

Interflora Inc and Interflora British Unit v Marks and Spencer plc, High Court, 21 May 2013

For the full text of the decision, click here.