Who: Lush v Amazon
When: 10 February 2014
Where: High Court of Justice, London
Law stated as at: 10 February 2014
What happened:
On 10 February 2014 the English High Court ruled that online retailer Amazon had infringed the registered trade mark rights of Lush (retailer of soaps and fizzy bath bombs) as a result of the manner in which it used the word LUSH (which Lush has registered as a trade mark in relation to soaps, bath bombs etc.) firstly in its sponsored advertisements on Google and secondly on its own website when customers searched for Lush products.
Search advertising: a recap
The Google Adwords advertising system allows advertisers to arrange to have short advertisements (or sponsored links) appear in prominent positions on a search engine results page (SERP) in return for a payment calculated on a cost-per-click (CPC) basis. Advertisers effectively bid on keywords via an online portal. When an internet user searches for any given term on Google’s search engine, Google’s Adwords system runs an algorithm-driven, automated auction process and displays and ranks sponsored links based on the amount bid by the advertiser, as well as an assessment of the relevancy of the advertiser’s website to the terms searched for by the internet user.
In practice, most large advertisers, including Amazon, use specialist software to interact with the Google Adwords system to automatically identify and bid on high-performance keywords with a view to maximising cost-effectiveness and return on investment.
Since May 2008, Google has allowed advertisers to bid on keywords which correspond to trade marks owned by third parties.
The jurisprudence of the CJEU in Google France and other cases has confirmed that Google is not liable for trade mark infringement in relation to such activities. The situation with regard to advertisers themselves is less straightforward. The act of bidding on a keyword which corresponds to a third party’s trade mark is not itself trade mark infringement. While such activity does indeed amount to the use of a third party trade mark in the course of trade, it will only be infringement if that use has some adverse impact on one the functions of the trade mark (e.g.: origin function, advertising function or investment function).
Liability must therefore be assessed by reference to the sponsored links or advertisements that are displayed when an internet user searches using a word or words which correspond to a registered trade mark. An advertisement will infringe the trade mark owner’s rights where the advertisement does not enable the reasonably well-informed and reasonably observant internet user, or enables them only with difficulty, to ascertain whether or not the goods and services being advertised are the goods and services of the trade mark owner.
Search advertising: use of LUSH trade mark in ad text
Google’s AdWords system generally prohibits the use of third party trade marks by advertisers in the text of sponsored links, however it is most likely unable to block the use of trade marks which are also commonplace terms. For example, a retailer might legitimately want to use the word “lush” to describe the goods they are offering. As such, unlike other trade marks which may be bid on as keywords, Amazon was able to use the word LUSH in its sponsored links as in the example below which was displayed as a result of a search for “lush”:
Lush Soap at Amazon.co.uk
www.amazon.co.uk/lush+soap
amazon.co.uk is rated *****
Low prices on Lush Soap
Free UK Delivery on Amazon Orders
Amazon does not offer Lush’s products for sale via its website, as a result of a decision made by Lush not to sell goods via Amazon.
Amazon does however offer for sale certain Lush-branded products, such as Lush Hair Extensions in the Beauty Department, which are unconnected with the claimant’s business.
When users click on the hyperlink in these advertisements they are directed to the Amazon website where they are presented with alternative goods, including bath bombs and similar goods made by a company called Bomb Cosmetics.
The High Court ruled that the advertisements presented on Google and which included a reference to “Lush” in the ad text did infringe Lush’s registered trade mark rights. In the judge’s view, they did not enable the reasonably well-informed and reasonably attentive internet user, or enabled them only with difficulty, to ascertain that the goods on offer were not Lush’s goods.
The judgement does not expressly elaborate on how the functions of the LUSH trade mark are adversely affected by these advertisements, however the judge’s reasoning clearly revolves around issues relating to the origin function of the mark. In the judge’s words: “My reason is that the consumer is likely to think that Amazon is a reliable supplier of a very wide range of goods and would not expect Amazon to be advertising Lush soap for purchase if it were not in fact available for purchase”.
Search advertising: no use of LUSH trade mark in ad text
Amazon also used different ad text for some advertisements which were displayed on Google when users searched for “lush”, such as the example below which appeared as the result of a search for “lush cosmetics bath bomb”:
Bomb Bath at Amazon.co.uk
www.amazon.co.uk/bomb+bath
amazon.co.uk is rated *****
Low prices on Bomb Bath
Free UK Delivery on Amazon Orders
Again, users clicking on the hyperlink were directed to the Amazon website and presented with non-Lush products.
The High Court ruled that these advertisements, which did not feature the word LUSH in their text, did not infringe Lush’s registered trade mark rights. In the judge’s view UK consumers were well-accustomed to seeing sponsored advertisements from competing suppliers appear in response to searches for trade marks.
Use of LUSH trade mark on Amazon website
A third class of infringement was claimed based on various uses made by Amazon of the LUSH mark on its own website when a customer used the website’s search function to search for “Lush”. Such uses included:
Use of the word “Lush” in the predictive drop-down menu in the search box: whereby Amazon provides customers with suggested search terms including the word “Lush” when the user types “Lush” into the search box on the Amazon website (e.g. suggestions for “Lush bath bombs”, “Lush Cosmetics” and “Lush Products”).
The judge held that these uses did infringe Lush’s trade mark rights, particularly in circumstances in which there was no overt indication that the claimant’s products were not available for purchase on the site. Such uses were commercial communications which customers would understand to mean that Lush bath bombs and similar Lush products were available for purchase on the Amazon site.
The origin function of the LUSH trade mark was adversely affected as the average user would not be able to ascertain without difficulty that the goods offered for sale did not in fact originate from Lush.
The advertising function of the LUSH trade mark was adversely affected because Lush relied on the reputation of their mark to attract customers to purchase Lush products and the attractive quality of the mark was damaged by the use of the LUSH mark by Amazon to offer for sale alternative goods.
The investment function of the LUSH trade mark was also adversely affected, the Court held. Lush has built up a reputation in the LUSH trade mark as being a brand that is associated with ethical trading. Lush submitted that it had decided not to sell its goods via Amazon because it perceived that an association with Amazon might damage that reputation.
Repetition of the word “Lush” below the search box in the “Related Searches” line: by which Amazon presents hyperlinks to search results searches for similar terms which the Amazon software deems may be of interest to the user (e.g. suggestions for “Lush bath bombs”, “Lush Cosmetics” and “Lush Gift Sets”).
The judge held that this was a use of the trade mark in the course of trade and in relation to identical or similar goods to those for which the claimant’s trade mark was registered. The use also affected the origin, advertising and investment functions of the trade mark for the reasons summarised above and therefore infringed Lush’s trade mark rights.
Use of the word “Lush” in the list of brands available in the Beauty Department:
This use did not infringe the LUSH trade mark, primarily as it related to the offer for sale of Lush Hair Extension products which did not infringe the LUSH trade mark.
Why this matters:
As a result of the ways in which search advertising and related technologies work, and the tools at the disposal of professionals in the field, the purpose of human intervention in the selection and use of keywords is generally to ensure that systems are operating cost-effectively and are generating the maximum return on investment.
As with aspects of the judgements of Mr Justice Arnold in the Interflora case, this ruling underlines the fact that marketing professionals who run search advertising campaigns (and now also staff who are responsible for own-website search functions) need to be alert to the dangers of infringing third party trade mark rights in certain circumstances.
With regard to sponsored links on Google, nothing in this ruling changes the general rule laid down by the CJEU in Google France and other cases. Bidding on third party trade marks will still only be an infringement if the resulting advertisement does not enable the reasonably well-informed and reasonably attentive internet user (or enables them only with difficulty) to ascertain whether or not the goods and services advertised are those of the trade mark owner or another business unconnected with the trade mark owner.
Key practical points for online advertisers
Online advertisers should ensure that when bidding on trade marks which are also commonplace words, that they do not also use the trade mark in the text of the resulting advertisement in a way which may lead consumers to believe that, if they click that link, they will be directed to a site where they can buy that trade mark owner’s goods or services.
Advertisers who only use ad text which has been written by their search marketing professionals will be able to manage this risk relatively easily, subject of course to the relevant staff being aware of potentially problematic trade marks in the first place. Advertisers who rely on software to generate ad text will need to put measures in place to monitor and manage infringement risks.
Similarly, this case underlines the importance of human monitoring of and, where necessary, intervention in, the ways in which the internal search functions of retailers’ websites deal with words which are also third party trade marks.
Amazon have been reported to be planning to appeal the High Court’s ruling. An appeal of the High Court’s ruling in the earlier Interflora case has still to be heard by the Court of Appeal.
