Interflora v Marks and Spencer

Following years of legal wrangling between Interflora and Marks and Spencer (M&S) in respect of keyword advertising, on 21 May 2013, the High Court handed down a substantial 99 page judgment, ultimately, in favour of Interflora as trademark owner.

This decision follows responses received from the Court of Justice of the European (CJEU) to references previously made by the High Court in 2011.

This decision will be of particular interest to those who base their business around bidding on keywords (through services such as Google's AdWord service) that are already protected as trademarks by their competitors.

Facts

Interflora operates a flower delivery network of independent florists, whilst M&S provides its own flower delivery service. Interflora objected to M&S' purchase of the keyword "Interflora" using Google's AdWord service. The effect of this purchase was that users of Google's search engine who search for the term "Interflora" would be shown a list of results with a link to M&S' flower delivery service appearing as a sponsored link and therefore above 'natural' search results. Interfora issued proceedings in the High Court, which referred a series of questions on the meaning and scope of Articles 5(1) and 5(2) of the EU Trademarks Directive (2008/95/EC) to the CJEU. The CJEU provided its responses to those questions, which the High Court has now applied to this case.

Decision

The Court agreed with the CJEU's view that M&S' selection of the keyword "Interflora" constituted use of Interflora's trademark and that such use had had an adverse effect on the origin function of Interflora's trademark as a significant proportion of the public searching for the term "Interflora" and selecting M&S' service would consider it to be part of Interflora's network of florists. As a result, M&S infringed the exclusive rights held by Interflora in its trademark under Article 5(1)(a) of the EU Trademarks Directive (2008/95/EC). In reaching this decision, the High Court considered (amongst others) the following key issues:

• what constitutes the average consumer;
• the effect of keyword advertising on the origin function of trademarks;
• the effect of keyword advertising on the investment function of trademarks; and
• unfair advantage and due cause.

The average consumer

It is well established in case law that the issue of confusion and misleading the public in trademark cases is to be considered through the eyes of the average consumer who is "reasonably well-informed and reasonably observant and circumspect." The Court held that, in this case, such an average consumer was "not particularly technically literate, does not know precisely how AdWords operates and is not aware of the issues."However, the Court noted that internet users learn by doing and that they are more likely to be aware of the difference between natural and sponsored search results today than five years ago. Nevertheless, the Court determined that a significant proportion of internet users in the UK do not appreciate that sponsored search results appear because advertisers have paid for links to their services being triggered by a keyword consisting of or related to the search term entered by the user.

The origin function

The Court referred to substantial CJEU case law on the effect of keyword advertising on the origin function of a trademark, namely, Google France, BergSpechte, BANANABAY, Portakabin, L'Oreal v eBay and, most recently, the CJEU's judgment in this case. The Court confirmed that such case law had established that M&S' use of the keyword "Interflora" adversely affected the origin function of Interflora's trademark.. The Court found that M&S' advertisements did not enable users to ascertain whether M&S' flower delivery service originated from Interflora or an undertaking economically connected with Interflora, or originated from a third party.

The Court commented that users did not have sufficient general knowledge of the flower delivery market to make the distinction and M&S' advertisements did not make it clear that M&S was in competition with (rather than part of) Interlora's network. Further, M&S was found to have been more successful in generating sales using the keyword "Interflora" than its other purchased keywords associated with other competitors, such as dfs and Laithwaites. The Court held that this was likely due to the nature of Interflora's business as a network of traders operating under their own business names, which added further difficulty to users clicking on M&S' advertisements from being able to make a distinction as to origin.

The Court found that, although not every user was led to believe that M&S' flower delivery service was part of Interflora's network, a significant proportion searching for "Interflora" and consequently clicking on a link to M&S' service, were led to believe that it was part of Interflora's network, which had an adverse effect on Interflora's business. The Court therefore held that M&S had infringed Interflora's trademark under Article 5(1)(a) of the EU Trademarks Directive (2008/95/EC).

The investment function

The Court then considered whether M&S' keyword advertising had adversely affected the investment function of Interflora's trademark, for example, by damaging the image that the trademark conveyed to the public. However, the Court was not convinced that Interflora had shown any evidence of this and so M&S was not liable for trademark infringement in this particular regard.

Unfair advantage and due cause

Finally, the Court considered whether M&S had taken unfair advantage of Interflora's trademark and, if so, whether such use had been fair and with "due cause". However, the Court was unconvinced by Interflora's arguments that M&S had deliberately targeted Interflora and Interflora had been unable to fight back and so M&S was not liable for infringement under Article 5(2).

Comment

This decision has been a long time coming and is undoubtedly an important win for Interflora. It should also provide other trademark owners with considerable comfort. However, the ruling in favour of Interflora was to some extent due to Interflora's relatively unique (or at least uncommon) position as a business built around a network of independent traders operating under their own individual business names, which caused the task of distinguishing the origin of Interflora's and M&S' services as particularly difficult for users.

Nevertheless, keyword advertisers should consider revisiting their online advertising plans and procedures to ensure that their sponsored links and advertisements that use keywords, which are identical to their competitors' trademarks, expressly state that they are not affiliated with their competitors.

The Court commented that the awareness of the average consumer had improved, and continues to improve, as more and more internet users increasingly turn to search engines to navigate the internet. It is therefore quite possible that should a case like this be brought in years to come then a court might not necessarily find in favour of the trademark owner.

Finally, and rather interestingly, the presiding judge in this case, Arnold J, commented at the end of his judgment that he had been surprised that M&S had not attempted to invoke a defence based on its keyword advertising constituting comparative advertising pursuant to Article 4 of the Misleading and Comparative Advertising Directive (2006/114/EC) and previous case law elsewhere in the European . Although he did not comment on the merits of such a defence, businesses faced with similar allegations of infringement through the use of keywords protected by trademarks may do well to explore this potential avenue when drafting their defence.

Written by Thomas Cadwaladr and Paul Joseph