Introduction

On 5 November 2014, the Court of Appeal for England and Wales overturned the High Court’s finding of trade mark infringement in favour of Interflora under Article 5(1)(a) of the Community Trade Mark Directive (CTMD) and Article 9(1)(a) of the Community Trade Mark Regulation (CTMR). The case will now be remitted to the High Court for retrial.

Key messages

The Court of Appeal’s judgment clearly discredits “initial interest confusion” in EU trade mark law and infers that it cannot be relied upon to show an adverse effect on the origin function of a trade mark for the purposes of Article 5(1)(a) CMTD / Article 9(1)(a) CTMR or to establish a likelihood of confusion under Article 5(1)(b) CMTD / Article 9(1)(b) CTMR.

Whilst the courts acknowledge the importance of trade marks in supporting a system of free competition, at the same time, their purpose is not to protect trade mark proprietors against competition.

The Court of Appeal noted that internet advertising on the basis of keywords which correspond with trade marks is not inherently objectionable because its purpose is, in general, to offer choice.

It is not the duty of advertisers to avoid confusion; rather trade mark proprietors will need to show advertisements do not enable an average consumer to determine the origin of the advertised goods or services and so make an informed choice.

Background

In 2008, M&S purchased a number of keywords from the Google AdWords service to promote their online flower delivery service, including the word and variants of “interflora”.

A Google search for “Interflora” triggered the display of an M&S advertisement promoting M&S Flowers Online which appeared as the second highest result (following Interflora’s own) in sponsored (non-organic) search results.

Interflora brought an action for infringement of its UK and Community trade marks on the basis of M&S’s identical use of its well-known INTERFLORA UK and community trade marks (Article 5(1)(a)  CTMD) and claimed dilution and unfair advantage caused to the reputation of the INTERFLORA brand (Art 5(1)(c) and 5(2) CTMD).

In order to prove trade mark infringement under Art 5(1)(a)CTMD, Interflora was required to demonstrate M&S’s keyword use constituted use of a sign in relation to goods or services identical to those of Interflora and that such use affected or was liable to adversely affect one of the functions of the INTERFLORA trade marks: 1) the origin function, designating the trade origin of Interflora goods; 2) the advertising function; or 3) the investment function.

To prove unfair advantage under Art 5(2) CTMD, Interflora needed to show detriment to the distinctive character or repute of the INTERFLORA name, without due cause. The mere use of a keyword by a competitor to draw internet users’ attention to alternative products would not be sufficient to show dilution, tarnishment or an adverse impact on the functions of Interflora’s trade marks.

High Court decision on keyword advertising

In May 2013, the High Court of England and Wales found that M&S had infringed Interflora’s registered trade marks under Article 5(1)(a) CTMD and Article 9(1)(a) CTMR. The Court confirmed that a significant proportion of consumers searching for “interflora” who clicked on the online M&S advertisement were led to believe, incorrectly, that the M&S flower delivery service formed part of the Interflora network and, as a result, M&S’s use had an adverse effect on the origin function of the INTERFLORA trade marks. However, trial judge J Arnold was not convinced M&S’s activities had, without due cause, taken unfair advantage of the distinctive character or repute of Interflora’s trade marks under Art 5(2) CTMD.

Read our summary of this case.

The Court of Appeal decision

The Court of Appeal has now allowed M&S’s appeal, remitting the case back to the High Court.

In reaching its decision, the Court of Appeal analysed a number of key trade mark law concepts.

  1. Defining the average consumer: The Court of Appeal confirmed that national courts must conduct a qualitative assessment when identifying the average consumer of the goods or services in issue in a trade mark infringement claim. The average consumer test is designed to provide the court with a benchmark from which to assess an infringement. The Court of Appeal re-affirmed the High Court decision to consider the impact of M&S’s advertisement through the eyes of a reasonably well-informed and observant internet user. The Court of Appeal also confirmed that J Arnold was right to consider the potential impact of M&S’s advertisement on a significant class of consumers, however, a court’s final finding on infringement should be based on a global assessment of the case facts, rather than just the question of whether or not a majority of consumers would be confused.
  2. No reversal of burden of proof in infringement proceedings: The Court of Appeal rejected J Arnold’s suggestion that, in order to bring a double identity claim under Art 5(1)(a) CTMD, the onus of proving infringement should be reversed, such that a third party using a sign in relation to goods or services identical to those of a trade mark proprietor should be obliged to prove there is no risk of confusion as to the origin of its advertised goods or services.

    Following the leading keyword case of Google France, the Court of Appeal confirmed that the onus of proof lies on a trade mark proprietor to establish that a keyword advertisement 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 in the advertisement originate from the trade mark proprietor.

    Whilst advertisers should ensure that their advertisements enable the average consumer to ascertain the actual origin of the goods or services, the burden of proof that they have not done so lies with the trade mark proprietor.
  3. Doctrine of initial interest confusion discredited: The applicability of the “initial interest confusion” doctrine, or the initial confusion a consumer may experience in relation to the origin of a product or service which is dispelled prior to purchase, but nonetheless results in a purchase, was also considered by the High Court.

    The Court of Appeal suggested that, in an EU trade mark law context, it is not helpful to rely on a highly controversial doctrine derived from US trade mark law where it has been used to encompass a broad range of situations. The Court of Appeal referred to the doctrine as an unnecessary and potentially misleading gloss on the required test the Court of Justice had already articulated – namely, in deciding whether the use of a sign has an adverse effect on the origin function of a trade mark, the national court is required to decide, adopting the average consumer’s perspective, whether an advertisement enables the average user to ascertain the origin of the advertised goods or services.

    Interestingly, although the Court’s judgment referred specifically to keyword advertising, the clear inference is that “initial interest confusion” is discredited in EU trade mark law and cannot be relied upon to show an adverse effect on the origin function of a trade mark for the purposes of Article 5(1)(a) CMTD / Article 9(1)(a) CTMR or to establish a likelihood of confusion under Article 5(1)(b)  CMTD / Article 9(1)(b) CTMR.
  4. Points on procedure and errors in judgment: Interflora sought to rely on consumer research to prove, amongst other things, that an average internet user would not have been aware of the distinction between natural and paid for (i.e., sponsored) search results and that, statistically, internet users searching for “interflora” who click through to the M&S Flowers Online site were more likely to visit the Interflora website afterwards, thus demonstrating initial interest confusion.

    On the basis of Interflora’s evidence, J Arnold came to the view that internet users searching for “interflora” and subsequently clicking through to the M&S website mistakenly believed that M&S’s flower delivery service formed part of the Interflora network. The Court of Appeal disagreed, as it doubted the evidentiary strength of some of the statistical data provided. It also argued that, because of the High Court’s approach to the burden of proving trade mark infringement, Arnold J’s assessment of the evidence would likely be affected, thus influencing his findings.

    The Court of Appeal acknowledged that it is not for appellate courts to interfere with the findings of trial judges, however, in the circumstances, it was compelled to do so due to a lack of confidence in the High Court’s stance on burden of proof and its application of the “initial interest confusion” doctrine.
  5. Use of generic keywords constitutes indirect use of ‘interflora’: In conclusion, the Court of Appeal considered M&S’s use of generic flower- related key terms without negatively matching the word “interflora”. The terms had the same effect as M&S’s other keywords, such that when an internet user searched for “interflora” the M&S advertisement would still be displayed.

The High Court considered that use of flower- related terms could still constitute an indirect use of the sign “interflora” as a consumer searching for the Interflora name would still be presented with an M&S search result. The Court of Appeal confirmed the position, stating that the selection of a generic key term by M&S should not be considered in isolation from other keyword matches. As the object and effect of M&S’s activities was to trigger the display of its own advertisements via an ‘Interflora’ search result, bidding on the generic flower- related terms constituted use by M&S of the “interflora” sign within Article 5(1) and (2) CTMD.

Conclusion

In its second judgment issued on 12 November 2014, the Court of Appeal confirmed that it had correctly identified the infringement issues for retrial and proposed that, in the circumstances, the case be put before a different judge of the Chancery Division of the High Court.

This may be a veiled attempt to avoid a court clash on the relevance of the US “initial interest confusion” doctrine to keyword advertising, double identity infringement cases or EU trade mark law as a whole.

We await further case developments towards the end of the year.