A 'lush' result for Cosmetic Warrior; another 'bomb' for Amazon

Following a recent defeat in the High Court,

relating to a finding of infringement in respect of Cosmetic Warrior Limited's (Cosmetic Warrior) LUSH Community trade mark for cosmetics and toiletries (CTM), Amazon.co.uk Limited and Amazon EU Sarl (together, Amazon) have suffered a further blow in their attempt to limit the scope of the Court's Order (Cosmetic Warriors Ltd and another v Amazon.co.uk Ltd and another [2014] EWHC 1316 (Ch), 2 May 2014).

Background

On 10 February 2014, Cosmetic Warrior and its exclusive licensee, Lush Limited (together referred to as Lush), the manufacturer and supplier of the LUSH cosmetic products, famous for its colourful soaps and 'bath bombs', issued proceedings in the High Court for trade mark infringement in respect of Amazon's use of the sign Lush in its sponsored adverts within the Google search engine results and in the search facility on the amazon.co.uk website.  In his Judgment dated 10 February 2012, Mr John Baldwin QC, sitting as a Deputy Judge, referred to the leading cases in this area, Google France (Case C-236/08) [2010] RPC 19, and more recently, Interflora Inc v Marks and Spencer plc [2013] FSR 33 to make the following findings:

1. the use by Amazon of the LUSH trade mark as a keyword within the Google Adwords service to trigger  sponsored advertisements for the Amazon.co.uk website, which included references to "Lush" and "Lush soap" products despite the fact that such products were not available (and instead offered similar or equivalent products), infringed Lush's CTM pursuant to Article 5(1)(a) of the Trade Marks Directive; the Deputy Judge held that the average consumer would not expect Amazon to be advertising Lush soap for purchase if it were not in fact available for purchase.
2. there was no finding of infringement in respect of those Amazon sponsored adverts which did not include any reference to "Lush" or "Lush Soap" but only references to similar or equivalent products as, according to the Deputy Judge, consumers are familiar with sponsored adverts and are used to seeing such adverts from competing suppliers.
3. the use by Amazon of the Lush trade mark within its internal search results, so that when consumers searched for "lush" they were then directed towards a 'drop down' menu which ultimately led the consumer to competitor products, infringed Lush's CTM pursuant to Article 5(1)(a) of the Trade Marks Directive; the Deputy Judge held that the average consumer would not be able to ascertain without difficulty that the goods available on the Amazon site were not Lush products.
   Form of Order hearing

As the parties were unable to agree the form of Order it was left to the Deputy Judge to finalise the terms of the Order, following submissions from the parties.  The most pertinent aspects of the Order are set out below:

Form of injunction: Lush, not unsurprisingly, argued that the Court should impose a general form of injunction against infringement.  Amazon, on the other hand, argued that the injunction should be in a specific form, relating only to certain uses of the Lush mark, as set out in the Judgment.  Amazon's concern was that because of the way it designed its software, it was technically difficult to avoid infringement. For example Amazon contended that it did not quite know how to prevent its web page reproducing the word Lush above the offering of a range of products competitive to Lush products.  The Judge was not convinced by this argument and was satisfied that Amazon did have the expertise to do what was required if it wished but only commercial reasons which prevented it from doing so.  Amazon provided no adequate justification as to why they could not use more conventional methods to inform customers that the goods that were being offered were not Lush's products.  On this basis, the Deputy Judge granted a general form of injunction.

Territorial extent: The Deputy Judge rejected Amazon's argument that the injunction should only apply to the UK (since the trial had only concerned Amazon's UK site) and held that there were no special circumstances to warrant a departure from the usual order that as the infringement related to a CTM, the injunction should be effective throughout the EU.

Publicity: As to the question of whether the Court should grant a publicity order, the Deputy Judge sought guidance from the case of Samsung Electronics (UK) Ltd v Apple Inc [2013] FSR 9. He concluded that Amazon should publish a notice on its website, by way of a link to the judgment, for one month. This was in relation to all pages which returned in response to the term "lush." The Deputy Judge did, however, take into account the fact that the decision had already attracted significant publicity and for this reason no further advertisement in national press was warranted and the Deputy Judge agreed to grant a stay regarding the publicity order, pending any appeal to the Court of Appeal.

Permission to appeal: The Deputy Judge refused to grant permission to appeal on the basis that he had simply applied established legal principles to a set of facts. Amazon now has the opportunity to apply to the Court of Appeal in order to obtain permission to appeal.

Registration of licence: The Deputy Judge rejected Amazon's argument that Lush should only be entitled to 50% of its costs owing to the fact that the exclusive licence between Cosmetic Warrior and Lush had not been recorded at the UK Intellectual Property Office within the prescribed time period pursuant to Section 25(4) of the Trade Marks Act 1994.  In sum, Section 25(4) states that where a person becomes the licensee of a registered trade mark and the mark is infringed before the licence has been recorded, in proceedings for infringement, the Court shall not award him costs unless the licence has been recorded within 6 months (unless it was not practicable for the licence to be recorded).  The Deputy Judge contended that this was a case about injunctive relief which depended almost entirely upon what had happened subsequent to registration of the licence and that it was incidental that Amazon's infringements date back to a period prior to registration.  The Deputy Judge conceded that the position may well be different when it comes to costs of any damages inquiry or account of profits of pre-registration activity.

Conclusion

Increasingly, form of Order hearings are becoming fiercely contested, as parties seek to gain any possible advantage over each other.  This decision acts as helpful guidance as to the type of issues that are considered following judgment in intellectual property cases. In particular, it demonstrates that commercial considerations of the defendant are not relevant when deciding the form of any injunction.  This decision also acts as a useful reminder to rights holders that any exclusive licence should be recorded at the UK Intellectual Property Office as soon as possible, and in any event, within 6 months as it could have an effect on cost recovery, at least in respect of a damages inquiry.