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High Court clarifies the law on use of Google Adwords

Interflora comes up smelling of roses

The Claimant, Interflora, operates one of the best known flower delivery networks in the UK and owns various registered trade marks consisting of the word INTERFLORA for, amongst other things, transportation of flowers. One of the Defendants in this case was Marks & Spencer (“M&S”), a well-known retailer in the UK. Both companies operate internet websites which take orders for the delivery of flowers.

M&S paid Google to display advertisements for its flower delivery service. Such advertisements were triggered by a user searching for INTERFLORA through the Google search engine. Google received a payment from M&S every time a user clicked on the advertisement to go through to M&S’s website. A search for INTERFLORA displayed the following sponsored advertisement (or similar advertisements):

“M&S Flowers Online

Beautiful Fresh Flowers & Plants
Order by 5pm for Next Day Delivery.

www.marksandspencer.com/flowers

There was no use of the INTERFLORA trade mark in the advertisement or on M&S’s website.

As a consequence of M&S’s activities (and the change in Google’s policy in 2008 which allowed third parties to bid on other parties’ trade marks) Interflora had to pay nearly £1.6m to bid on its own trade mark (as opposed to around £100,000 if the policy had not changed). In contrast, M&S’s own sales increased dramatically as a result of bidding on the INTERFLORA trade mark.

The question which arose in this case was whether or not M&S had infringed Interflora’s trade marks by bidding on the keyword INTERFLORA and similar terms with Google.

In the initial case before the High Court, Mr Justice Arnold referred a number of questions to the Court of Justice of the EU (“CJEU”), which gave its ruling on 22 September 2011. Following this ruling the case returned to Mr Justice Arnold so that he could grant a decision on the relevant facts and apply the law as stated by the CJEU.

The CJEU has considered the position of keyword advertising in six cases previously. The CJEU case law established the following principles:

  1. The essential function of a trade mark is to guarantee the identity of the origin of the trade marked goods and services. Whether or not that function is adversely affected by Google search results displaying, on the basis of a keyword search for that mark, a third party’s advertisement, depends on the manner in which the advertisement is presented.
  2. The function is adversely affected when the advertisement does not enable reasonably well-informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or an economically linked undertaking or, alternatively, originate from a third party.
  3. It is for the national court to assess, on a case by case basis, whether the facts of the dispute before it indicate that the function of a trade mark is being adversely affected.

Mr Justice Arnold held:

  1. The date to assess trade mark infringement is the date when the use of the sign commenced (i.e. 6 May 2008).
  2. A claim for trade mark infringement under Article 5(1)(a) of the Trade Mark Directive (i.e. double identity, identical marks and identical goods or services) can only succeed if six conditions are satisfied: (1) there must be use of a sign within the territory; (2) the use must be in the course of trade; (3) it must be without the consent of the proprietor; (4) it must be an identical sign to the trade mark; (5) it must be use in relation to identical goods or services to those covered by the trade mark; (6) it must adversely affect or be liable to affect the functions of the trade mark (e.g. the trade mark’s ability to denote the origin of the product). The key issue in this case was whether or not the last requirement was satisfied.
  3. When assessing whether the functions of a trade mark are adversely affected, there is a reversed onus of proof placed on the advertiser to show that use of the sign in the context is sufficiently clear that there is no real risk of confusion on the part of the average consumer as to the origin of the advertised goods or services.
  4. Confusion on the part of internet users who are ill-informed or unobservant must be discounted.
  5. “The starting point is that keyword advertising is not inherently or inevitably objectionable from a trade mark perspective”. The relevant question was whether the reasonably well-informed and reasonably observant internet user was aware that M&S’s flower service was not part of the Interflora network and, if not, whether M&S’s advertisements enabled such a user to ascertain this.
  6. The evidence submitted by Interflora as to the reaction of consumers to M&S’s keyword advertising had no real value and was rejected by the Court of Appeal. This included evidence in the form of witness statements from respondents in two pilot surveys and from questionnaires which were sent out to their own customers. M&S did not produce any evidence of the customers’ reactions notwithstanding the fact that it could identify customers which clicked through to its website after searching for INTERFLORA through Google.
  7. The CJEU said that there were three factors to consider and the judge considered each one in turn. The first was whether the reasonably well-informed and reasonably observant internet user was deemed to be aware, on the basis of their general knowledge of the market, that M&S’s flower service was not part of the Interflora network but in competition with it. Mr Justice Arnold said that he was satisfied that this was not generally known in May 2008 or indeed now. Second was whether or not the advertisement enabled such internet users to determine that M&S’s flower service was not part of the Interflora network. The judge ruled that it did not. Third was the nature of the Interflora network and whether this made it difficult for such internet users to know that M&S was not part of the network. The judge found that the nature of the Interflora network did make it difficult for internet users to determine whether or not M&S was part of the Interflora network. He stated that “it is a feature of the Interflora network that members trade under their own names….Interflora has commercial tie-ups with several large retailers. This makes it all the more plausible that there should be a connection between M&S’s flower service and the Interflora network”.
  8. After considering the additional arguments made by the parties, the judge found it persuasive that M&S had achieved much better results by bidding on the INTERFLORA trade mark than by bidding on the trade marks of other brands. He agreed with Interflora that this was probably the result of INTERFLORA signifying a network whilst the other brands did not. He also noted that the evidence from HITWISE showed that users were more likely to go to Interflora’s website after searching for INTERFLORA (and visiting M&S’s website) than if they went directly to M&S’s website first without searching for INTERFLORA. He accepted the explanation of Interflora that the reason for this was that M&S’s advertisement did not make it clear to those internet users that it was not connected with Interflora. As such, when the internet users realised this, they left the M&S website and went to Interflora’s. This initial interest confusion was relevant when assessing infringement. Further, the judge noted that there were six examples of members of the public believing that M&S was part of the Interflora network. The judge rejected M&S’s argument that the absence of any Interflora branding on the M&S website was sufficient to signify that they were not members.
  9. He concluded that the advertisements as of 6 May 2008 did not enable reasonably well informed and reasonably attentive internet users, or enabled them only with difficulty, to ascertain whether the services referred to in the advertisement originated from the proprietor of the trade mark or an economically connected undertaking or, alternatively, originated from a third party. He therefore concluded that there was an adverse affect on the origin function of the trade mark and that M&S had infringed the trade marks of Interflora under Article 5(1) of the Directive.

Roy Crozier, a partner in the Intellectual Property Group, said “the Court has re-confirmed the general position that advertisers are able to bid on trade marks belonging to third parties in order to trigger their own sponsored links through the Google search engine. However, in some limited cases like this one – where Interflora operates a network and licenses third parties to use its mark – it may be that the advertiser’s use of the trade mark amounts to trade mark infringement because the public are confused into thinking that the advertisement is from the trade mark proprietor or is somehow connected to or approved by the trade mark proprietor. The Interflora case is exceptional as normally the public will know that two parties offering similar goods or services are competitors and unrelated (like with Pepsi and Coca Cola).”