The use by Marks & Spencer ("M&S") of the keyword "Interflora" to trigger search results via Google AdWords for M&S's flower service, has been held to infringe Interflora's trade mark.
Mr Justice Arnold held that M&S's advertisements did not make clear to reasonable internet users that its flower-delivery service did not originate from Interflora or an economically linked undertaking. The origin function of the marks was held to be affected, although not the investment and advertising functions. Interflora's claims of dilution and unfair advantage were unsuccessful. The defence of comparative advertising was not invoked.
- This decision is good news for trade mark owners who wish to challenge the use by competitors of keywords consisting of their registered marks. It does not matter whether users cease to be confused once they have clicked through the advertiser's sponsored link - initial interest confusion is sufficient for trade mark infringement. However, this decision may not be transferrable to all businesses. The particular nature of the Interflora business, comprising an extensive network of members and suppliers, was key.
- Trade mark owners should act fast. This sort of infringement assumes a significant portion of internet users are unsophisticated and unable to distinguish between organic results and sponsored links, but users are becoming increasingly more knowledgeable and are beginning to appreciate how the rank of search results can be manipulated and how sponsored advertising works. Once the "average consumer" is search-savvy, infringement actions may be more difficult to pursue on these grounds.
- Arnold J. indicated that the defence of lawful comparative advertising would have been interesting to consider in this context, but since M&S had not pursued this he could not comment on its application here. Going forward, potential defendants in keyword advertising situations may be encouraged to invoke the comparative advertising defence, although the likelihood of success of such a defence still remains uncertain.
On 21 May 2013, Arnold J. handed down the much-awaited judgment in the case of Interflora v Marks & Spencer, a long-standing dispute which saw questions being referred to the Court of Justice of the European Union (see our e-bulletin here) on keyword advertising and latterly included two Court of Appeal case management decisions on issues of survey evidence (see our e-bulletins here and here).
Five years earlier, in May 2008, as a result of the change in Google's AdWords policy enabling third parties to bid on keywords registered as trade marks, M&S had started bidding on Interflora-related keywords. Interflora is the registered proprietor of both UK and Community trade marks for goods and services including “natural plants and flowers”, “advertising services … provided for florists”, “information services relating to the sale of … flowers” and transportation of flowers”, and it brought proceedings for infringement of its trade marks.
The case went all the way to the CJEU, which concluded that the proprietor of a trade mark is entitled to object to the use of a trade mark as a keyword where:
- A reasonably well informed and reasonably observant user cannot tell if the goods originate from the trade mark proprietor or a third party; or
- Advertising on the basis of a keyword contributes to turning the trade mark into a generic term.
The CJEU was willing to recognise the potential impact of keywords on a number of functions of a trade mark (indication of origin, investment function and advertising function) but it also recognised that most internet users were reasonably savvy, suggesting that it may be potentially difficult for brand owners to demonstrate infringement of their rights, unless there was confusion as to origin or a risk of the trade mark becoming generic.
The case returned to Arnold J, who had triggered the reference, and who then heard a series of case management applications, two of which (on the admissibility of survey evidence) resulted in appeals to the Court of Appeal (again see our e-bulletins here and here on these appeals). The High Court trial was finally heard in April 2013.
"Average consumer": In light of the fact that many questions of European trade mark law (including trade mark infringement) called for an assessment of the "reasonable consumer", Mr Justice Arnold provided useful guidance on how the "reasonable consumer" or "average consumer" test worked in practice, concluding that:
- there is no "single meaning" rule in law of the average consumer nor is there a statistical test in the sense of confusion needing to be established on the balance of probabilities. It is sufficient that a significant proportion of the relevant class of persons is likely to be confused, rather than a majority;
- a "reasonable consumer" is reasonably well informed and reasonably observant and circumspect. Even though the average consumer is not ill-informed or unobservant, neither is he particularly technically literate. The average consumer does not know precisely how Google's AdWords service operates.
Having reviewed research on internet literacy generally and on consumer understanding of keyword advertising, Arnold J concluded that, while more internet users are likely to understand the distinction between natural results and paid advertisements now than they were in May 2008, there is still a significant proportion of internet users in the UK who are not aware of the difference.
Article 5(1) infringement: On Interflora's trade mark infringement claim pursuant to Article 5(1)(a) Directive 89/104/EEC (the "Trade Mark Directive"), equivalent to s.10(1) of the UK Trade Marks Act 1994 (TMA), Arnold J. emphasised that a claim for trade mark infringement under Art. 5(1)(a) will only succeed if the use complained of affects or is liable to affect the functions of the mark, including its origin, advertising, investment and communication functions.
- The origin function was affected because as of 6 May 2008 (the date at which M&S started bidding), to date actual M&S's advertisements did not enable reasonable internet users to tell whether M&S's flower service originated from Interflora or an undertaking economically linked with Interflora, or a third party. Key factors which were decisive in the outcome of the decision included (i) the nature of Interflora's business (M&S could well have formed part of the Interflora network); (ii) the lack of clarity in the advertisements as to whether Interflora and M&S were part of the same network; and (iii) the proportion of customers who visited the Interflora website after having intially clicked through to M&S's flower pages having M&S's sponsor link which appeared on a search for "Interflora".
- The CJEU had held in Google France that increased advertising costs and decreased prominence of the trade mark owner's sponsored links were not sufficient factors to establish that the advertising function was affected.
- The investment function of a trade mark was not affected; Arnold J. held, because there was no evidence that the reputation of the Interflora trade marks had been damaged.
Article 5(2) infringement: On Interflora's trade mark infringement claim pursuant to Article 5(2) Trade Mark Directive (equivalent to s.10(3) TMA), Arnold J. considered whether M&S's use caused (i) detriment to the distinctive character of the mark through dilution; and/or (ii) unfair advantage without due cause.
- Arnold J. proceeded on the assumption that there was no adverse effect on the origin function of the mark, and therefore no dilution. Loss of distinctiveness (dilution) was dependent on the effect that the use of the marks had on the origin function of the mark.
- Mr Justice Arnold rejected Interflora's argument that the use was unfair and without due cause because "Interflora was unable to fight back" , i.e. because M&S, unlike Interflora, was a general retailer and it would have been very expensive for Interflora to bid on M&S-related words as a result.
Comparative advertising defence: Arnold J. suggested that M&S might have argued, as a defence to Interflora's trade mark infringement claims, that their use amounted to lawful comparative advertising. Whilst he did not comment on the likelihood of success of such a defence in this case, he pointed to the broad definition of comparative advertising contained in Article 4 Directive 2006/114/EC on Comparative Advertising and its generous interpretation by the CJEU and other European Courts, including a recent decision from the District Court of The Hague (Tempur v Energy+) under which keyword advertising was considered to amount to comparative advertising.