The Court of Justice of the European Union has finally handed down its judgment in a titanic battle between the flowers and retail brands over Marks & Spencer’s purchase of “Interflora” as a link word. Now the case takes its final journey back to the UK courts, as Emily Devlin reports.
Who: Interflora Inc and Interflora British Unit ("Interflora") and Marks and Spencers plc ("M&S")
When: 22 September 2011
Where: Court of Justice of the European Union ("CJEU")
Law stated as at: 1 October 2011
It has been almost three years since Interflora issued proceedings against M&S for trade mark infringement. Interflora claimed that M&S's use of the Google AdWords programme to trigger a sponsored link to M&S's flower delivery service when the term "Interflora" is searched infringed its trade mark INTERFLORA. The English High Court stayed those proceedings at an early stage and referred a number of questions to the CJEU on the interpretation of Articles 5(1) and 5(2) of the Trade Marks Directive (89/104) and Articles 9(1)(a) and 9(1)(c) of the Community Trade Mark Regulation (207/2009) in the context of keyword advertising.
In the meantime, other keyword cases from across Europe were coming before the CJEU (notably Google France), each of which queried whether the availability and use of trade mark terms as triggers for sponsored links on the Google search engine were legitimate. So far, the consistent response from the CJEU has been that keyword advertising of this kind is not an infringement, other than in cases where the resulting advertisement does not enable reasonably well-informed and reasonably observant internet users ("Reasonable Internet Users"), or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.
The CJEU's conclusion in a nutshell
- The CJEU has followed the reasoning in the Google France case and held that bidding on trade marked words as keywords is not in itself an infringement.
- It has reiterated that it is the impact of the sponsored link on Reasonable Internet Users which is relevant.
- It has held that even if the trade mark has a reputation, there will not be any trade mark infringement as long as it is clear to Reasonable Internet Users that the goods or services offered through the sponsored link are an alternative to those of the trade mark proprietor and there is no economic connection between the advertiser and the trade mark proprietor. To this end the CJEU made clear that a trade mark cannot be used to prevent fair competition.
In coming to these findings the CJEU examined further the functions of a trade mark that may be affected by keyword advertising, as well as ruling for the first time on the considerations to be taken into account in relation to keyword advertising, where the trade mark is a mark with a reputation.
Functions of a trade mark
Recent cases before the CJEU have discussed in some detail the concept of trade mark function, and the requirement for there to be an effect on function(s) before infringement is made out (for example, L'Oreal v Bellure C-487/07 and going all the way back to Arsenal v Reed C-206/01).
In this case, the CJEU considered the origin, advertising and investment functions in its infringement analysis under Article 5(1)(a). In order for there to be infringement one of the functions of the trade mark has to be affected:
(a) In relation to the origin function, it reiterated its ruling in Google France and Portakabin and stressed that it is the impact of the advertisement on the internet user that is key to whether an infringement has taken place. In particular, the CJEU observed (at paragraph 50): "the relevant public comprises reasonably well-informed and reasonably observant internet users.
Therefore, the fact that some internet users may have had difficulty grasping that the service provided by M&S is independent from that of Interflora is not a sufficient basis for a finding that the function of indicating origin has been adversely affected".
(b) In relation to the advertising function, the CJEU again reiterated Google France and also its judgment in Die BergSpechte C-278/08, namely that use of a sign identical to a trade mark as a keyword "does not have an adverse effect on [the advertising] function of the trade mark".
(c) In relation to the investment function, this will protect a trade mark's "ability to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty". Interfering with that ability can give rise to infringement. However, the CJEU held that a trade mark proprietor cannot prevent use of the trade mark in conditions of fair competition that respect the trade mark's origin function, if the only consequence is that the trade mark owner has to adapt its efforts to gain or maintain a reputation that attracts customers or retains their loyalty. The fact that a customer decides to purchase from the 3rd party using the sign as a keyword is irrelevant – there is no property in a customer.
This case brought an extra dimension to the keyword case law already in existence, namely the question as to whether Article 5(2) of the Directive will protect a trade mark with a reputation when it is used as a keyword by a third party. That provision is designed to prevent detriment to the distinctive character of a mark (dilution), detriment to its reputation (tarnishment), and unfair advantage being taken of its reputation (free-riding). As no allegations of tarnishment have been made against M&S by Interflora, the CJEU limited its judgment to the consideration of dilution and free riding:
(a) In relation to dilution, it held that the selection as a keyword of a sign identical or similar to a trade mark will not automatically result in damage to that mark's distinctive character. The CJEU has held it is the impact of the advertisement on Reasonable Internet Users that is relevant. If they do not connect the resulting sponsored link with the trade mark owner, no detriment will have occurred. Rather, the advertisement will have simply drawn the internet user's attention to the existence of an alternative product or service – something the CJEU deemed to be fair competition.
(b) In relation to free-riding, the CJEU held that where the sponsored link puts forward an alternative to the goods or services of the trade mark proprietor, then such use must be within the ambit of fair competition, as long as the goods or services offered in the sponsored link were not imitations of the trade mark proprietor's goods or services and did not affect the functions of the trade mark or cause dilution or tarnishment. The CJEU held that as long as the sponsored link was within the ambit of such "fair competition", then the use made by the advertiser was not without "due cause" and so there would not be any free riding.
Why this matters:
The CJEU has endorsed its previous decisions in Google France and Portakabin as to the legitimacy of keyword advertising and held that bidding on trade marked words as keywords is not in itself an infringement. Throughout its judgment the CJEU was at pains to emphasise that it is still for the national court, namely the English High Court, to come to a view on all these issues based on the evidence presented at trial. However, it has provided legal clarity in detailing the advertising and investment functions, and trod new ground by putting the interests of consumer choice and fair competition at the forefront of the infringement analysis.