Introduction
Facts
Decision
Comment


Introduction

Following years of legal wrangling between Interflora and Marks and Spencer in respect of keyword advertising, on May 21 2013 the High Court issued a substantial 99-page judgment in favour of Interflora as trademark owner. This decision follows responses received from the European Court of Justice (ECJ) to references previously made by the High Court in 2011.

This decision will be of particular interest to those that base their businesses around bidding on keywords (through services such as Google's AdWord service) which are already protected as trademarks by their competitors.

Facts

Interflora operates a flower delivery network of independent florists, while Marks & Spencer provides its own flower delivery service. Interflora objected to Marks & Spencer's purchase of the keyword 'Interflora' using Google's AdWord service. The effect of this purchase was that users of Google's search engine who searched for the term 'Interflora' would be shown a list of results with a link to Marks & Spencer's flower delivery service appearing as a sponsored link and therefore above 'natural' search results. Interfora issued proceedings in the High Court, which referred a series of questions on the meaning and scope of Articles 5(1) and 5(2) of the EU Trademarks Directive (2008/95/EC) to the ECJ. The ECJ provided its responses to those questions, which the High Court has now applied to this case (for further details please see "Unlocking keyword disputes?", "Interflora v Marks & Spencer: the keyword clash continues" and "ECJ judgment in Interflora: keyword advertisers beware").

Decision

The court agreed with the ECJ's view that Marks & Spencer's selection of the keyword 'Interflora' constituted use of Interflora's trademark, and that such use had had an adverse effect on the origin function of Interflora's trademark, as a significant proportion of the public searching for the term 'Interflora' and selecting Marks & Spencer's service would consider it to be part of Interflora's network of florists. As a result, Marks & Spencer had infringed the exclusive rights held by Interflora in its trademark under Article 5(1)(a) of the Trademarks Directive. In reaching this decision, the High Court considered (among others things) the following key issues:

  • what constitutes the 'average consumer';
  • the effect of keyword advertising on the origin function of trademarks;
  • the effect of keyword advertising on the investment function of trademarks; and
  • unfair advantage and due cause.

Average consumer
It is well established in case law that the issue of confusion and misleading the public in trademark cases is to be considered through the eyes of the 'average consumer' who is "reasonably well-informed and reasonably observant and circumspect". The court held that in this case, such an average consumer is "not particularly technically literate, does not know precisely how AdWords operates and is not aware of the issues". However, the court noted that internet users learn by doing and are more likely to be aware of the difference between natural and sponsored search results today than five years ago. Nevertheless, the court determined that a significant proportion of internet users in the United Kingdom do not appreciate that sponsored search results appear because advertisers have paid for links to their services being triggered by a keyword consisting of or related to the search term entered by the user.

Origin function
The court referred to substantial ECJ case law on the effect of keyword advertising on the origin function of a trademark – namely, Google France, BergSpechte, BANANABAY, Portakabin, L'Oreal v eBay and, most recently, the ECJ judgment in this case. The court confirmed that such case law had established that Marks & Spencer's use of the keyword 'Interflora' adversely affected the origin function of Interflora's trademark if Marks & Spencer's advertisements had not enabled reasonably well-informed and observant internet users to ascertain whether Marks & Spencer's flower delivery service originated from Interflora or an undertaking economically connected with Interflora, or from a third party. The court found that Marks & Spencer's advertisements did not enable users to make this distinction.

The court commented that users did not have sufficient general knowledge of the flower delivery market to make the distinction and Marks & Spencer's advertisements did not make it clear that it was in competition with (rather than part of) Interlora's network. Further, Marks & Spencer was found to have been more successful in generating sales using the keyword 'Interflora' than its other purchased keywords associated with other competitors, such as 'dfs' and 'laithwaites'. The court held that this was probably due to the nature of Interflora's business as a network of traders operating under their own business names, which made it more difficult for users clicking on Marks & Spencer's advertisements to make a distinction as to the origin.

The court found that, although not every user was led to believe that Marks & Spencer's flower delivery service was part of Interflora's network, a significant proportion searching for 'Interflora' and consequently clicking on a link to the Marks & Spencer service were led to believe that it was part of Interflora's network, which had an adverse effect on Interflora's business. The court therefore held that Marks & Spencer had infringed Interflora's trademark under Article 5(1)(a) of the Trademarks Directive.

Investment function
The court then considered whether Marks & Spencer's keyword advertising had adversely affected the investment function of Interflora's trademark – for example, by damaging the image that the trademark conveyed to the public. However, the court was not convinced that Interflora had shown any evidence of this and so Marks & Spencer was not held liable for trademark infringement in this particular regard.

Unfair advantage and due cause
Finally, the court considered whether Marks & Spencer had taken unfair advantage of Interflora's trademark and, if so, whether such use had been fair and with 'due cause'. However, the court was unconvinced by Interflora's arguments that Marks & Spencer had deliberately targeted Interflora and Interflora had been unable to fight back, and thus Marks & Spencer was not held liable for infringement under Article 5(2).

Comment

This decision has been a long time in coming and is undoubtedly an important win for Interflora. It should also provide other trademark owners with considerable comfort. However, the ruling in favour of Interflora was to some extent due to Interflora's relatively unique (or at least uncommon) position as a business built around a network of independent traders operating under their own individual business names, which made the task of distinguishing the origin of Interflora's and Marks & Spencer's services particularly difficult for users.

Nevertheless, keyword advertisers should consider revisiting their online advertising plans and procedures to ensure that their sponsored links and advertisements that use keywords that are identical to competitors' trademarks expressly state that they are not affiliated with their competitors.

The court commented that the awareness of the average consumer has improved and continues to improve as internet users increasingly turn to search engines to navigate the Internet. It is therefore quite possible that should a case like this be brought in years to come, a court might not necessarily find in favour of the trademark owner.

Finally, and interestingly, the presiding judge in this case commented at the end of his judgment that he had been surprised that Marks & Spencer had not attempted to invoke a defence based on its keyword advertising constituting comparative advertising pursuant to Article 4 of the EU Misleading and Comparative Advertising Directive (2006/114/EC) and previous EU case law. Although he did not comment on the merits of such a defence, businesses faced with similar allegations of infringement through the use of keywords protected by trademarks may do well to explore this potential avenue when drafting their defence.

For further information on this topic please contact Paul Joseph or Tom Cadwaladr at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email (paul.joseph@rpc.co.uk or tom.cadwaladr@rpc.co.uk).

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.