Interflora v M&S – High Court judgment

The High Court of England & Wales has handed down its mammoth 50 page judgment in the long awaited case of Interflora v Marks and Spencer.  In deciding whether Marks and Spencer (M&S) infringed the trade mark rights of Interflora by bidding on keywords, principally through Google’s AdWords service, Arnold J sought to interpret the guidance of the Court of Justice in Case C-323/09 (iPit post here).

The ruling is the culmination of several years of references to the European Union’s highest court for clarification on just when one party may legitimately use a third party’s trade marks.  For a summary and analysis of the main cases in European Union keyword caselaw, see the iPit post here.

SPOILER ALERT!

In summary:

…the M & S advertisements which are the subject of Interflora’s claim did not enable reasonably well-informed and reasonably attentive internet users, or enabled them only with difficulty, to ascertain whether the service referred to in the advertisements originated from the proprietor of the [Interflora] Trade Marks, or an undertaking economically connected with it, or originated from a third party.

In other words, a significant proportion of the consumers who searched for “interflora” and then clicked on M & S’s advertisements believed that M & S’s flower delivery service was part of the Interflora network.  M & S’s use therefore had an adverse effect on the origin function of the marks and consequently infringed Interflora’s rights pursuant to Article 5(1)(a) and Article 5(2) of the Trade Marks Harmonisation Directive 89/104/EEC and Article 9(1)(a) of Community Trade Marks Regulation (EC) 207/2009.

Just who is the average consumer?

At the crux of the dispute was the perception of the average consumer and, in particular, his understanding of the Interflora business and interpretation of the M&S advertisements.

Firstly, the court concluded that in the context of keyword advertising cases, the “average consumer” and the “reasonably well-informed and reasonably observant internet user” are one and the same.  That consumer is not particularly technically literate, does not know precisely how AdWords operates and is not aware of the legal issues.

It summarised the legal principles and case to be decided as follows:

i) The origin function of a trade mark is adversely affected by keyword advertising triggered by the trade mark if the advertisement does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the advertised goods or services originate from the trade mark proprietor (or an economically-connected undertaking) or from a third party.

ii) The onus lies upon the advertiser to ensure that the advertisement does enable such users to ascertain this without difficulty and hence that there is no real risk of such users being confused.

iii) It is not sufficient to establish an adverse effect that some internet users may have difficulty in grasping that the advertised goods or services are independent of the trade mark proprietor. Confusion on the part of ill-informed or unobservant internet users must be discounted.

iv) If the advertisement causes a significant section of the relevant class of persons wrongly to believe that the advertised goods or services are connected to the trade mark proprietor, that does establish an adverse effect. Thus there is no single meaning rule.

v) In the context of the present case, it is relevant to consider whether the reasonably well-informed and reasonably observant internet user is aware that M & S’s flower delivery service is not part of the Interflora network and, if not, whether M & S’s advertisements enable such a user to ascertain this.

Arnold J found that many internet users in the UK do not appreciate the distinction between the natural search results and the paid advertisements on Google’s search results page but acknowledged that internet literacy has steadily increased over the last five years.  Crucially however, he concluded that, even now, a significant proportion of internet users in the UK do not appreciate that, unlike the natural search results, the advertisements appear in the search engine results because the advertisers have paid for the advertisements to be triggered by a keyword consisting of or related to the search term entered by the user.

The origin function and the investment function of a trade mark

Although the primary function of a trade mark is to indicate origin through its distinctive character, the CJEU has acknowledged in several decisions (Google France v LVMH, L’Oreal v eBay) that a trade mark may also have other functions which are protected by trade mark law.

This was the first English case to apply the CJEU’s guidance in relation to the investment function of a trade mark, namely that the investment function is adversely affected where the third party’s use affects a mark’s reputation and thus jeopardises its maintenance.

Arnold J interpreted this to mean that if the origin of a third party’s keyword advertising is unclear, then the image the trade mark conveys is damaged.  In those circumstances, there is an adverse affect not only on the origin function but also on the investment function.

So if M & S’s advertisements did enable reasonably well-informed and reasonably observant internet users to ascertain that the advertised service is independent of Interflora, then neither the origin function nor the investment function would be adversely affected.  This neatly aligns the test for infringement of an identical mark under Article 5(1)(a) of the Directive with the test for detriment to distinctive character and reputation under Article 5(2).

Without due cause

The court then considered the circumstances in which the use of a third party’s trade mark is justified, even where it confers an advantage on the “infringer”.  As a rule, such use is fair competition provided it offers an alternative to the goods or services of the proprietor without causing dilution or tarnishment of the trade mark (see the CJEU’s guidance in Google France and Interflora).  This principle represents a clawing back of the apparently much broader test of infringement of reputation indicated in its earlier judgment in L’Oreal v Bellure, which was much criticised by Sir Robin Jacob.  It acknowledges that it was in the interests of fair competition that parties other than the trade mark proprietor should be allowed to use trade marks without such use constituting infringement.

Judgment

After weighing up the evidence, the court directed itself to determine the case based on the three particular factors:

1.  whether the reasonably well-informed and reasonably observant internet user is deemed to be aware, on the basis of their general knowledge of the market, that M & S’s flower delivery service is not part of the Interflora network, but is in competition with it

Arnold J found that this was not generally known at the time of the complained infringing activities in May 2008 and nor that it is generally known now.

2.  whether M & S’s advertisements enable the reasonably well-informed and reasonably observant internet user to tell that M & S’s flower delivery service is not part of the Interflora network

Arnold J found that there was nothing in any of M & S’s advertisements to inform the reader that M & S’s flower delivery service is not part of the Interflora network.

3.  the specific nature of the Interflora network

Arnold J found that it is a feature of the Interflora network that members trade under their own names and that 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 delivery service and the Interflora network.

Overall therefore, consumers appreciate that Interflora is a network of florists of which M&S could have been a member. M&S’s advertisements failed to clarify that it was not a member and a significant proportion of the relevant public would have believed that it was after seeing the advertisement.  That undermined the distinctive character and reputation of the Interflora brand and hence M&S infringed.

Comment  

Given the nature of Interflora’s business as part of a network which licenses its brand to third parties and the lack of any indication on the advertisements that there was no connection with Interflora, the judgment is entirely logical.  Businesses may be tempted to use a third party’s marks to increase their own online profile but should not do so indiscriminately.  Whether there is infringement depends on the perception of the targeted public as well as on the nature of the advertisement.

All iPit posts on keyword advertising cases can be found here.

Advertisements

What do you think?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s