Many would argue that the question in the title should not be too difficult to answer. Except that more than one simplistic answer could be offered. Brand owners on the one hand may understandably take the view that their brands should not be available ‘free for all’ as a means to grab internet traffic, not least when that traffic is directed to a competitor’s commercial site. For the consumer, however, a search facility that yields results showing different competing brands in response to a search for a particular named brand (in addition to providing results relating the brand name searched for), is undoubtedly a very useful tool. So, is it acceptable then to use a competitor’s brand name as a means to attract Internet traffic? Can a company legitimately use its competitor’s brand as a ‘keyword’ triggering its own advertising in order to gain visibility in the market?

In an age where the internet became the prime marketplace for many goods and services, the Google search tool (by far the most popular means for searching information online in Europe) became one of the most important channels to the market and a key battlefield where commercial competition takes place. The legal question of the legitimacy of using competitors’ brand names as ‘keywords’ is therefore of paramount importance not just from the stand point of fairness and the protection of commercial interests and goodwill, but also as a matter of promoting and protecting competition and consumer choice.

Balancing commercial fairness against the need for effective competition has always been at the heart of trade mark law and this is essentially how the European Courts chose to approach the issue of keyword advertising. In broad terms, the view adopted by the European Courts in regard to the use of third- party brand names as keywords in search engine advertising is that competition should not be curtailed as long as consumers are not being misled. The actual rule that the European courts developed in regard to Google’s AdWords service turned out, however, to be somewhat less straightforward.

The most prominent case in this area in the UK is the claim brought by Interflora, the florists’ network, against Marks & Spencer, a leading retailer. The case has already been brought before higher courts on preliminary issues including twice before the UK Court of Appeal (on questions of the use of survey evidence) and once before the Court of Justice of the European Union (“CJEU”). It has now finally produced a final judgement by the trial court. The decision may still be appealed but it provides a good indication where the line is drawn under European law.

A pragmatic approach

When the issue concerning Google’s AdWords service first came before the CJEU (in Google France v Louis Vuitton Malletier) a major question was whether Google itself could be held liable for trade mark infringement when it offers any person the use of third party registered trade marks as a keyword to trigger advertisements on Google’s search result pages. This was a significant issue not least because the AdWords service is the main source of Google’s (very considerable) income (although admittedly only part of that income derives from the use of third- party registered trade marks). But the CJEU held that it was not Google, but the advertiser alone, that “used the brand name in trade, in relation to goods and services” thereby potentially infringing the trade mark. Google itself, it was held, was only providing an automated search facility.

As far as the advertiser’s liability for infringement was concerned, the CJEU had to address a technical difficulty. Under European legislation, if by bidding for a competitor’s brand name for use as a keyword, an advertiser is deemed to be “using” the registered mark “in trade” in relation to the goods or services advertised, and those are the same as the goods or services protected by the registration, that use (if unauthorised) should give rise to an ‘automatic infringement’. The term ‘automatic infringement’ is used in the legislation itself (albeit in the preamble rather than the operative legal text). The infringement is ‘automatic’ in the sense that no additional facts need to be established. The use in trade of a sign identical to a registered mark in relation to goods or services identical to those for which it is registered is enough to constitute an infringement. At least, that is the plain reading of the European legislation.

However, if the rule were applied simpliciter, the result would be that any use of a third party registered mark as a keyword through Google’s AdWords service (or through any similar search engine service) to advertise goods or services identical to those specified in the registration would have to be treated automatically as an infringement. To avoid that result, the CJEU resorted to another pre-condition for infringement that had been recognised by the Court’s case law over the past decade. The condition, which is not yet found in EU legislation (although it is set to be expressed in the legislation under current proposals for a revision of EU trade mark law) is that the use of the mark will only constitute an infringement if it adversely affects the legal functions of the mark (that is, its functions as an indication of origin, the advertising function or the investment function).

The CJEU held that these functions of the registered mark would be adversely affected if the advertising triggered by the keyword “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 of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party” (Google France, paragraph 84). The CJEU added that the internet user should be able to ascertain these facts “on the basis of the advertising link and the commercial message attached thereto”.

The test adopted by the CJEU is similar in many respects to the requirement of ‘likelihood of confusion’ (which is one of the main criteria for infringement of a trade mark under EU law, particularly in the common cases where the mark used by the alleged infringer is slightly different from (yet still similar to) the registered mark or where the mark may be identical but the goods or services for which it is used are similar but not quite identical to the goods or services specified in the registration). But it is not quite the same test.

Perhaps the most important difference is that the CJEU appears to place the burden on the advertiser (the defendant) to establish that its advertisement does indeed enable the internet user to realise that the advertised products are competing products and not products offered by the brand owner or licensed by the brand owner. This is in contrast to the normal situation where the brand owner (as claimant) has to meet the burden of proof to establish likelihood of confusion. In any event, this is how the English High Court interpreted the CJEU’s decision on this point in its recent decision in Interflora v Marks & Spencer.

The application of the test

The decision of the CJEU in Google France had established the basic test for infringement where a registered mark is used by a competitor as a keyword on Google’s AdWords service. Several more cases were brought before the European Court subsequently in which the question was revisited from different angles. The latest of those was a referral from the High Court in England in the Interflora v Marks & Spencer case itself. That referral highlighted some of the difficulties in applying the test laid down by the CJEU in Google France.

The test does not provide clear guidance as to the circumstances in which advertising using a competitor’s brand name as a keyword would be permitted. Instead, it calls for a judgment in each case as to how the “reasonably informed and attentive internet user” would react to the search result. The response given by the CJEU to the UK Court’s questions indicated that the Court would have to decide at least two questions:

  • whether the reasonably informed and attentive internet user would know (even before looking at the advertisement) that the advertiser’s offering is competitive to the brand he used as a search term and that it is not a related offering, and
  • what that internet user would make of the Google search results in general and specifically of the set of links to websites that appear in the ‘Ads’ section of the search results, and whether he or she would realise from the results that the advertiser’s offering is competitive with, rather than being related to, the brand searched for.

The answer to the first question depends on what is generally known in the market about the two brands in question (that is, the brand used as a search term and the brand advertised in the links triggered by the keyword), and the level of knowledge that can be expected from the reasonably informed user.

The answer to the second question depends to a great degree on the user’s understanding of the nature of the Google search results in general. Google itself does not make it too easy for users to understand the distinction between ‘natural results’ and ‘ads’.

For a long while, Google’s search results identified the advertised (or paid for) results by the obscure term ‘sponsored links’ (setting them out on the top of the page and in a side section). Today - at least in the UK - the advertised links are presented in a ‘golden box’ at the top of the search page, with the heading “Ads related to [search term]” on top. Other advertised links are presented on the side of the page under the heading “Ads”. Natural results appear against a white background below the ‘golden box’. This layout is clearer than the old designation ‘sponsored links’ section but still the headings “Ads” or “Ads relating to [search term]” are presented in plain and fairly small characters and many consumers, who focus on the results themselves, may not realise that advertised results are really advertisements. Further, often the brand owner’s advertising would appear in the ‘Ads’ section alongside its competitors’ advertising, which could add to the confusion.

Google, as a vendor of advertising space, has little interest in highlighting the difference between ‘natural results’ and links provided as advertisements, or in putting too much emphasis on the nature of these results as advertisements. This means that it is more difficult for advertisers to make sure that users understand the nature of the advertisements and how they relate (or not relate) to the search term.

In practice, different internet users have different levels of familiarity with both the brands in question and with the nature of Google’s search results (and what the ‘Ads’ section stands for). One of the main difficulties that the High Court in Interflora v Marks & Spencer struggled with in its final decision was how to characterise the “reasonably informed and attentive internet user” and what weight should be given to evidence relating to the perceptions of specific consumers concerning the defendant’s advertising on the Google search results.

The UK Court tackled various theoretical and evidentiary questions in this context, which are important in themselves. But at the end of the day, it is for the advertiser to ensure that its advertising on the Google search page – triggered by the use of a competitor’s trade mark as a keyword - enables reasonably informed internet users to understand that the advertising is competitive, rather than being in any way associated with, the brand name in question. To what lengths the advertiser must go to do so depends on the circumstances of each case.

In the case of Interflora v. Marks & Spencer one particular fact weighed heavily against the defendant. That was the fact that Interflora is a network of independent florists (and is well known as such among consumers) and the fact that its membership includes small retailers as well as some very large ones not unlike M&S. The M&S advertising (the links to its website with associated description) and the M&S website, contained no mention to Interflora or anything else to suggest a connection with Interflora. The only connection was that the advertising appeared on a search result page relating to a search for ‘Interflora’. Equally, however, although the M&S branding was heavily featured on the advertised link and on the M&S website (leaving no doubt at all that the services are offered by M&S), there was nothing in the link or in the M&S website to alert users to the fact that M&S was unrelated to Interflora, and nothing to dispel a possible assumption in the user’s mind that M&S might be an Interflora member.

Because Interflora is a network of independent retailers, and because consumers had no particular reason to know whether or not M&S was a member of that network, the Court held that the use of the brand name as a keyword to attract traffic to the M&S website could have easily suggested to many consumers that M&S was part of the Interflora network. It held therefore that M&S’s advertising did not allow reasonably informed and attentive internet users to ascertain, without undue difficulty, that M&S was not related to Interflora (as a member of the network) and therefore that M&S infringed the trade mark by using it as a keyword on the Adwords service.

Practical implications

The particular circumstances of the Inteflora case may seem quite specific, but they are not unique. Of course, there will be cases where a reasonably informed consumer could be expected to know that two brands are unrelated. For example, this could be the case if the two brands are known (by the relevant section of the public interested in their offering) to be head-to-head rivals (for instance, in specialised markets where the customers have a high level of sophistication). But in many cases, the nature of the relationship between two brands might not be obvious to the consumer and, therefore, the mere fact that an advertising for one brand appears in response to a Google search for another brand may cause confusion for some (or, more precisely, the advertising may fail to enable the reasonably informed and attentive consumer to ascertain, without too much difficulty, that the two brands are competing).

Take for instance the hypothetical case of two well-known dry food producers, GRAINS ARE US CORP and THE WHEAT PEOPLE LTD, known in the market for their rivalry. A reasonably informed consumer can perhaps be expected to know that THE WHEAT PEOPLE LTD is unrelated to GRAINS ARE US CORP. Therefore, if THE WHEAT PEOPLE LTD uses name (or house brand) ‘GRAINS ARE US’ as a keyword to trigger the display of a link to its own website, this may not necessarily amount to an infringement. Reasonably informed consumers would know that the two are competitors. However, if THE WHEAT PEOPLE LTD use one of GRAINS ARE US CORP’s product brands (say a cereals brand called HEARTIES) as a keyword (as opposed to using the competitor’s house brand GRAINS ARE US), consumers could be more easily misled to believe that the cereals brand HEARTIES that they used as a search term is one of THE WHEAT PEOPLE LTD’s products, hence the advertising for THE WHEAT PEOPLE LTD’s other cereals or breakfast products, even though in reality the cereals brand HEARTIES belongs to GRAINS ARE US CORP. This could mean that THE WHEAT PEOPLE LTD’s advertising (for competing breakfast food products) did not enable the consumer to ascertain, without undue effort, that the advertiser (or the goods advertised) were unrelated to the maker of the cereals brand HEARTIES used as a search term. Hence, the use of the keyword ‘HEARTIES’ in these circumstances (assuming the word is a registered trade mark) could give rise to an infringement.

The onus on advertisers that choose to use their competitors’ brand names as keywords to capture internet traffic through the Google AdWords service (or similar search engine services) is, therefore, not trivial. Brand owners, in many cases, will have plenty of room to object to the use by their competitors of their registered trade marks as keywords on Google’s European services (and on similar search engines that allow advertising to be triggered in response to a user’s use of a brand name) and may be well positioned to require that appropriate disclaimers are added to the competitor’s advertising and to its website in order to enable the users to “ascertain without undue difficulty” that the competitor’s offering is unrelated to the brand used in the search.