Decision should force radical rethink of web advertising tactics

Businesses which attempt to boost on line sales by "piggybacking" off the good reputations of similar products will have to radically rethink their tactics after a trade mark decision in the High Court this month.

The bottom line is this. Use someone else's trade mark in adverts on a third party search engine, such as Google, or in the search function of your own website, to direct consumers to products which are not the trade mark owner's and you run the risk of being sued successfully for trade mark infringement.

The decision will make many online retailers rethink their marketing strategies, whilst trade mark owners who have been suffering infringement may well wish to take action with the weight of the decision behind them.

The case is Cosmetic Warriors Ltd and Lush Ltd ("Lush") v Amazon.co.uk Ltd and Amazon EU Sarl ("Amazon"). The claimants are the registered owner and the exclusive licensee of the Community trade mark for the sign Lush in respect of cosmetics and toiletries including soap. The Defendants are the company that operates fulfilment centres and logistic services for www.amazon.co.uk and the operator of that website.

The essential function of a trade mark in the online arena is enabling internet users searching for a specific trade mark to distinguish the goods or service of the proprietor of that mark from those which have a different origin. Or in other words, if you search the web for a Chanel suit a trade mark should help you tell easily which results relate to genuine Chanel suits and which don't. Trade marks are particularly important as a sign of origin in the arena of e-commerce where shoppers are more likely to become confused than they might be on the High Street.

A key aspect of the case is that Lush is very brand aware and has made great efforts to build up a reputation in the Lush name. The brand had made a conscious decision not to sell its products through amazon.co.uk. The company believes it has built up a reputation for ethical and environmental friendly trading and that Amazon does not share these standards. Also important in the decision was that there was no overt message either in web ads placed by Amazon on Google or on the ads on its website that Lush soap is not available for purchase from Amazon.

The claim concerned three things with which Lush took issue. The first two elements of the claim concerned Amazon's use of Google AdWords. Amazon stopped bidding for Lush on Google AdWords (and other third party search engine sites) in February 2012 (shortly after Lush made its complaint and before proceedings were issued) but would not undertake not to restart the practice if it wanted to and denied that such bidding might be trade mark infringement. As the judge, John Baldwin QC, said: "Although it referred to the practice as "historical, it refused to consign it to history."

The first activity Lush complained about was Amazon bidding on Lush as a keyword on Google AdWords and placing sponsored ads on Google showing the Lush trade mark (eg Lush soap at Amazon.co.uk/www.amazon.co.uk/lush+soap). In relation to this the judge held that consumers were likely to think that Amazon was a reliable supplier of a very wide range of goods and that they would not be expecting Amazon to be advertising Lush soap for purchase if it were not, in fact, available for purchase. Accordingly, he held that the average consumer would not, without difficulty, ascertain that the goods referred to by the ad were not the goods of or connected with Lush.

The second activity Lush complained about was Amazon bidding on Lush as a keyword on Google AdWords and placing sponsored ads that did not show the Lush trade mark eg bomb bath at Amazon.co.uk.

In relation to this, Lush bombed; the judge found in favour of Amazon. He held that the average consumer could not reasonably fail to appreciate that the Amazon ad was just another ad from a supplier offering similar products to those requested by the internet searcher. Ads which did not include the Lush trade mark were not infringing.

The third element of the claim concerned how Amazon was running its own search engine. Amazon is both the designer and operator of the search engine and operations on its site. The search engine is, of course, designed in order to maximise the sale of goods from the site and the judge noted that it was this philosophy that had "made Amazon the UK's biggest online retailer."

When consumers started to type Lush into its search facility, Amazon gave it a drop down menu of options. This menu was produced by Amazon's software which analyses the connection between the search terms shoppers use and the items they buy. So in this case, the software was using the word Lush to identify products which it believed a consumer searching for Lush products might wish to buy instead of Lush branded products

"Lu" produced a menu of various options including "lush bath bombs", "lush cosmetics" and "lush hair extensions", which, in turn, led to them being offered products similar to those available from Lush.

Amazon said it regarded the attack on its internal search facility when a user types in the word "lush" as an attack on its core business model and the choice of products it offers consumers. It argued that its search facilities benefit consumers as they allow them to navigate the Amazon catalogue easily, to access information and to decide for themselves whether that information is what they are looking for. It argued that Lush was trying to take control away from consumers, thereby restricting or hindering competition, and that intellectual property rights should not be exercised in a way that interferes with the public's basic right to access technological development.

In relation to the third element the judge considered that the drop down menu would inform the average consumer that if he were looking for Lush bath bombs on Amazon, he would find them by clicking on that menu item; he would not think the menu was leading him to products which were similar to or competitive with Lush's. This view was reinforced by the fact that the goods the drop down menu led him to looked like Lush goods and there was nothing to tell him that they weren't (unless he were to drill down into detail in a way most consumers don't if they think they've found what they're looking for). The judge held that Amazon's use was an infringement of the origin function of a trade mark; he did not consider that the average consumer would ascertain without difficulty that the goods to which he was directed did not originate from Lush. The judge was fairly scathing in relation to Amazon's argument on the public's rights. He said that "the right of the public to access technological development does not go so far as to allow a trader such as Amazon to ride rough shod over intellectual property rights, to treat trade marks such as Lush as no more than a generic indication of a class of goods in which the consumer might have an interest. Amazon was using the Lush trade mark as a generic indicator of a class of goods; this conduct attacked "head on the ability of the mark as a guarantee of origin in the claimants".

The judge also found that Amazon had infringed the advertising function of the Lush trade mark. Lush relies on the reputation of the mark to attract custom. The judge held: "That quality of attracting custom is bound to be damaged by the use by Amazon of the Lush mark to attract the attention of consumers to and attempt to sell to them the goods of third parties whilst at the same time making no effort at all to inform the consumer that the good being offered are not in fact the goods of Lush," he said.

Lastly the judge held that Amazon had also infringed the investment function of the trade mark. Lush was entitled to take the view that selling its goods on Amazon might damage its reputation.

Kate Macmillan is an expert in managing individual and corporate brands using reputation management and intellectual property law. She has been a Partner in the reputation management and intellectual property teams at Collyer Bristow since 2010.

This case concerned Trade Mark Infringement under Article 5(1)

of the Trade Marks Directive (89/104/EEC),

now replaced by consolidated Directive (2008/95/EC).

The key elements for trade mark infringement under this provision are set out below

  1. There must be use of a sign by a third party within the relevant territory;
  2. The use must be in the course of trade;
  3. The use must be without the consent of the proprietor of the trade mark;
  4. The use must be of a sign which is identical to the trade mark;
  5. The use must be in relation to goods or services which are identical to those for which the trade mark is registered;
  6. The use must be such as to affect or be liable to affect the functions of the trade mark.