In (1) Interflora Inc. (2) Interflora British Unit v (1) Marks & Spencer plc (2) Flowers Direct Online Ltd, Case C-323/09 (22 September 2011), the Court of Justice of the European Union (CJEU) has provided further guidance on circumstances in which use of a registered trade mark as a keyword by a third party advertiser may constitute trade mark infringement.
Marks & Spencer (M&S), a major retailer in the United Kingdom that provides a flower delivery service in competition with Interflora, selected as advertising keywords the word “Interflora” and variants thereof. When internet users entered the word “Interflora” or one of those variants in the Google search engine, an M&S advertisement appeared in the form of a sponsored link. Interflora issued UK proceedings against M&S for trade mark infringement. The UK court referred a number of questions to the CJEU for a preliminary ruling concerning the scope of Community Trade Mark (CTM) Regulation No. 40/94/EEC (now replaced by 207/2009/EC) and the CTM Directive No. 89/104/EEC (now replaced by 2008/95/EC).
Referring to the CJEU’s previous decision in Google France and Google Joined Cases C-236/08 to C-238/08  ECR I- 2417, the CJEU found that a trade mark owner was entitled to prevent a competitor from using a keyword identical to a trade mark to advertise goods or services, which were identical to those for which the trade mark was registered, without the trade mark owner’s consent, where such use was liable to have an adverse effect on one of the functions of the trade mark. Such use would adversely affect the trade mark’s function of indicating origin where the advertising displayed on the basis of that keyword did not enable reasonably well-informed and reasonably observant internet users, or enable them only with great difficulty, to ascertain whether the goods or services in the advertisement originate from the trade mark owner or an undertaking economically linked to that owner.
The CJEU further found that such use did not adversely affect the trade mark’s advertising function in the context of an internet referencing service having the same characteristics as the service at issue in the proceedings and that such use adversely affected the trade mark’s investment function, if it substantially interfered with the trade mark owner’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty. However, the mere fact that keyword use would lead some consumers to switch to competitor goods was not itself a basis for finding that the investment function was adversely affected. It was for the national court to determine whether the use, by M&S, of the sign identical to the INTERFLORA trade mark jeopardised the maintenance by Interflora of a reputation capable of attracting consumers and retaining their loyalty.
With respect to the question of extended protection, the CJEU confirmed that a trade mark owner could prevent third party use of a trade mark as a keyword if the use complained of could be regarded as taking unfair advantage of the distinctive character or repute of the trade mark (free-riding), or where the advertising was detrimental to that distinctive character (diluting), or repute (tarnishing). By way of example, the CJEU found that keyword advertising would be detrimental to the distinctive character of a trade mark with a reputation where it contributed to turning the trade mark into a generic term. It was for the national court to determine whether the selection of signs corresponding to the trade mark INTERFLORA as keywords had such an impact on the market for flower-delivery services that the word “Interflora” had come to designate, in the consumer’s mind, any flower-delivery service.
With respect to taking unfair advantage, the CJEU found that a trade mark owner could not prevent third parties from using trade marks in keyword advertising where they were merely putting forward alternative goods or services, were not offering a mere imitation of the trade mark owner’s goods and services, and were not diluting or tarnishing the trade mark, or adversely affecting the functions of the trade mark, as this fell within the scope of free competition.
The judgment confirms previous principles expounded by the CJEU whilst adding an extra dimension by stating that keyword use may be prevented by a trade mark owner where it substantially interferes with the owner’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty. Ultimately, the outcome of the case will depend on the application of these principles to very specific facts when it is remitted to the UK court.