Who: Interflora Inc and Interflora British Unit and Marks and Spencer Plc
Where: Court of Appeal
When: November 2014
Law stated as at: 5 November 2014
What happened: This was an appeal from the Judgments of Justice Arnold as well as his consequential orders in which he held that Marks & Spencer (“M&S”) infringed Interflora’s trade marks for the term “Interflora” through their use of that term as a keyword for internet searching. For our previous report on this case click here.
The Court of Appeal decision
The Court of Appeal allowed M&S’s appeal against Justice Arnold’s finding of infringement and has remitted the case to the High Court for a complete retrial of the claims for infringement under Article 5(1)(a) of the Trade Marks Directive (“the Directive”). In so doing, the Court of Appeal made various useful observations as to the application of trade mark law to keyword advertising on the web.
Perhaps the most important of the Court of Appeal’s findings was that they upheld Justice Arnold’s finding that bidding on generic flower related terms by M&S without negative matching (where the advertiser specifies search terms in response to which the advertisements will not appear) could be characterised as use by M&S of the sign “Interflora” within the meaning of Article 5(1) and 5(2) of the Directive.
It explained that whether or not this would constitute an infringement would depend on factors such as
• for how long the activity had been carried on, and
• whether the object and effect of the activity had been to trigger the appearance of its advertisements in response to searches for “Interflora”.
The Appeal judges noted that the absence of negative matching would not in and of itself be sufficient to constitute infringement; it must also be shown that the advertisements triggered by the search did not enable the average consumer to ascertain whether the goods and services referred to in the advertisement originated from M&S or Interflora.
The average consumer
Arnold J had decided that he was entitled to have regard to the effect of the advertisements upon a “significant” section (as opposed to a majority) of the relevant class of consumers. In answering the question of whether the advertisements at issue would enable the reasonably well-informed and observant internet users or enable them only with difficulty to ascertain whether the goods and services advertised originated from Interflora or an undertaking economically linked to Interflora, or from M&S or a third party.
The Court of Appeal agreed that this was a legitimate analysis of the familiar “average consumer” test.
The onus of proof
Arnold J in his judgment concluded that the likelihood of confusion test placed the onus on M&S to prove non-infringement. Not accepting that the CJEU intended identical tests to apply in the case of Google France (C-236/08), Arnold J held that, following his own judgment in Datacard ( EWHC 244), the test to be applied under Article 5(1)(a) is the same at that under Article 5(1)(b) but with a reversed onus of proof.
The Appeal judges strongly disagreed.
The test described in Google France, which dealt with infringement of a trade mark by its use in keyword searching, was as follows: “the function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or on the contrary originate from a third party”. In Die BergSpechte Outdoor Reisen (Case C-278/08) the CJEU gave further guidance, and in relation to Article 5(1)(b) explained that “the risk that the public might believe that the goods or services in question come from the same undertaking or, as the case may be, from economically linked undertakings constitutes a likelihood of confusion”.
Neither judgment, the Court of Appeal said, chose to draw any distinction between the test to be applied under Article 5(1)(a) and Article (1)(b). Had it intended there to be such a “radical difference as reversed onus” then it was surprising that it did not say so.
In explaining why Justice Arnold’s reasoning for this reversal was wrong, the Court of Appeal noted that the starting point for infringement analysis is the express recognition by the CJEU that a trade mark proprietor cannot oppose the use of a sign unless all of the conditions set out in Article 5 of the Directive are satisfied.
Although the right is “absolute” it is conferred to enable the trade mark proprietor to protect his interests as proprietor – that is to ensure the trade mark can fulfil its functions. Further, the normal burden of establishing trade mark infringement lies with the party making the allegation – as a matter of EU law and English law and it did not see any reason to reverse this.
Initial interest confusion
In his judgment, Arnold J introduced the American trade mark law concept of initial interest confusion into his analysis. The Court of Appeal disagreed that this should apply. They explained that the CJEU has already given an exhaustive test to be applied in determining whether the accused sign has an adverse effect on the origin function of the trade mark – namely that first seen in Google France set out above.
The Court of Appeal noted that these tests had been carefully formulated by the CJEU and reflect the importance of trade marks in developing a system of undistorted competition whilst recognising that their purpose is not to protect their proprietors against fair competition. The tests established by the CJEU therefore incorporate appropriate checks and balances.
Procedural irregularities and errors on the evidence
The Court of Appeal also held that the Judge had placed weight on evidence which he had accepted should not have been relied upon.
Consequences of the errors of the judge
The Court of Appeal were far from confident that the Judge would have come to the same conclusion had he not made the errors they identified. Unfortunately, the Court of Appeal did not feel that it was in a position to determine the issue of infringement itself and so remitted the case to the High Court for a retrial.
Why this matters:
The Court of Appeal has confirmed that the burden of proof in establishing non-infringement for use of trade marks in keywords is the same for Article 5(1)(a) and Article 5(1)(b) and is not reversed in the case of Article 5(1)(b). Further the Court of Appeal has ruled that initial interest confusion will not play a role in this context and that the test provided by the CJEU, in Google France was a sufficiently robust test. Finally, the Court of Appeal has held that not taking the opportunity to negative match a trade mark where generic terms are being used as a keyword may in certain circumstances also constitute infringement.