Lush smells success in keyword infringement battle

Just as a tree grows and blossoms with age, so too do principles of law.  That is clearly apparent from the latest High Court judgment in Cosmetic Warriors Ltd and Lush Ltd v Amazon.co.uk Ltd and Amazon EU Sarl [2014] EWHC 181 (Ch) in which the cosmetics and toiletries brand sought to prevent the use of LUSH in online advertisements by the retailer.  

Trees

Up until 2010, the only oasis of guidance in a barren legal landscape on the use of keywords was the English Court of Appeal’s 2004 judgment in Reed v Reed ([2004] R.P.C. 40).  That case established that consumers were aware that online search results had “much rubbish thrown in” and that, unless there was evidence of direct confusion, it would be difficult for a claimant to succeed.  

Now, four years after the first shoots appeared in the Court of Justice’s decision in LVMH v Google France (iPit post here), we have a rich thicket of European jurisprudence (see iPit summary here) which provides a solid framework for assessing liability.  Every case is unique to its facts but the principles have now taken deep root.

The English High Court’s judgment in Lush v Amazon is the latest to consider the circumstances in which the use of a third party’s trade mark is justified and when, on the contrary, it will infringe.  It is based heavily on the guidance given by the Court of Justice of the European Union in Google France, L’Oreal v eBay (iPit post here) and Interflora (iPit post here) but also considers “auto-complete” functions and the use of consumers’ search terms within a retailer’s website.  

Lush is the owner of certain trade mark registrations for the sign LUSH in respect of cosmetics and toiletries, such as Community trade mark number 1388313.   Crucially, it does not sell its products through Amazon’s retail platform because it saw a difference between its standards of environmental and ethical concerns and those which it attributes to Amazon.  

Winning the battle for the moral high ground is much more challenging however, given Lush’s application to register as a trade mark the name of Amazon’s Managing Director, a move the court described as “bizarre”.

Lush’s claim against Amazon

Lush complained that the world’s largest online retailer damaged the origin function, the advertisement function and the investment function of its marks when it:

i) purchased the keyword LUSH so that third party search engine results pages (such as those on Google) would display advertisements which used the word LUSH in relation to cosmetics

ii) purchased the keyword LUSH so that third party search engine results pages would display generic advertisements in relation to cosmetics

iii) used the word LUSH in results pages generated by Amazon’s search engine embodied in its website (example shown below)

In the European Union, the test for infringement under Article 5(1)(a) of Directive 2008/95/EC and the interpreting case law requires:

  1. use in the course of trade;

  2. of an identical sign;

  3. in the relevant territory;

  4. in relation to identical goods or services for which the mark is registered;

  5. without the consent of the proprietor; and

  6. the use must be liable to have an effect on one of the functions of the trade mark

(see Holterhoff v Freiesleben (Case C-2/00), Arsenal v Reed (Case C-206/01), Celine (Case C-17/06), O2 v Hutchison 3G (Case C-533/06).

The court also noted the requirement laid down in Article 6 of Directive 2000/31 (the E-Commerce Directive) that the identity of the person making an electronic commercial communication must be made clear.  

It is against this backdrop that the court considered whether Amazon’s advertisements would:

enable reasonably well informed and reasonably observant internet users, or enables them only with difficulty to ascertain whether the goods or services referred to by the advertisement originate from [Lush]… or on the contrary, originate from [an unconnected] third party

In short, if consumers were able to appreciate that Amazon’s advertisements and search engine results did not relate to Lush’s products then there would be no infringement.  That depended on the average consumer’s perception of Amazon’s retail business as well as the content of the advertisement and the context in which they appeared.

Did Amazon infringe the Lush trade marks?

Deputy Judge Mr John Baldwin QC found that:

i) Amazon did infringe when advertisements were triggered in search engine results pages which used the term LUSH because consumers would expect to see Lush products on the Amazon website;

ii) Amazon did not infringe when generic advertisements were triggered in search engine results pages because consumers are familiar with sponsored advertisements appearing from competitors;

iii) Amazon did infringe by providing an “auto-complete” function for LUSH within the search facility embodied in its website because the consumer’s expectation is that the items displayed are Lush products

In reaching his decision, the Deputy Judge recognised the role Amazon’s services played in allowing consumers to enjoy the benefits of technology.  However, that right

does not go so far as to allow a trader… 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 a consumer might have an interest.

He placed a strong emphasis on the fact that Amazon’s results pages did not show a “No results found” but rather simply showed items which were alternatives but which in his view were not clearly indicated as alternatives.  The consequence was that consumers were left with the overall impression that the products displayed originated from the brandowner displayed on the page.

So where does that leave us?

In conclusion, businesses can still bid on competitors’ keywords.  However, if the context and content of any search engine results page and advertisement mean that there is any doubt as to the origin of the goods or services there is likely to be infringement.  In making that assessment, the consumer’s perception of the brand and the retailer will be highly significant.

Brand names are more important online than they are in the physical world 

Jeff Bezos, founder of Amazon, 1997 (http://www.inc.com/magazine/19970901/1314.html)

Robert Cumming, Appleyard Lees, February 2014

Also published at http://www.appleyardlees.com/lush-smells-success-in-keyword-infringement-battle/ and in the ITMA Review

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