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Google AdWords and the use of third party trade marks following Interflora v Marks and Spencer

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Are you seeking to keep ahead of the competition by using their brand names as keywords in online advertising, in particular through Google AdWords?  Or are you a brand owner who wants to prevent third parties from using your trade marks in this manner?  A decision was recently issued in the High Court in Interflora v Marks & Spencer, which applied guidance from the Court of Justice of the EU (CJEU), which considers this issue. The case provides guidance on the parameters of ‘honest’ practice and we examine here how to navigate keywords from whichever perspective you are approaching it.

In applying the CJEU's guidance (Interflora v Marks & Spencer Case C-323-09), on what basis did the High Court find that M&S had infringed Interflora's trade marks?

Mr Justice Arnold decided that by purchasing 'interflora' as a keyword to advertise, M&S infringed Interflora's trade mark by using an identical mark for identical goods in the course of a trade. Interflora's arguments on both 'dilution' and 'taking unfair advantage' failed. The court noted that M&S did not use comparative advertising as a defence, but indicated it might well have been appropriate, based on established CJEU law.

The key question arising out of this case is whether it has wider-reaching implications or whether the set of facts and evidence presented might mean it can be ring-fenced, at least to some degree. What is absolutely certain is M&S will be appealing.  Notably, a quick Google search after the judgment for 'interflora delivery' had the M&S AdWord advertisement in number one position:

 

Google listing


The nature of the advertisement is addressed further below.

Google conducts over 90% of searches in the UK--no wonder a significant proportion of the online advertising spend is made through the Google advertising system using their AdWords system. AdWords generate varying payments to Google, with preagreed maximums, every time a user clicks on the advertiser's link. M&S regularly purchased 'interflora' as a keyword through Google to advertise their flower delivery services. The advertisement they displayed contained no reference to Interflora, nor did the page to which the advertisement clicked through.

Under Google's (current) AdWords policy, advertisers can purchase whatever words they like as AdWords, whether or not they are third party trade marks. Google does not provide a mechanism where the owner of such a trade mark can do anything about it through Google. However, what a trade mark owner can do, under Google's policy, is to prevent third parties from using its trade marks in the text of the advertisement. Hence here, where the use of 'Interflora' was restricted to keywords, Interflora needed to bring this case through the courts. Interestingly, both Bing and Yahoo! allow trade mark owners to apply to block third parties from using their trade marks as keywords.

What distinguishes this case is the nature of Interflora's business. Interflora is a flower delivery service largely fulfilled by third party entities who join their network, whether or not the order is taken centrally by Interflora (online or by telephone) or through a particular florist (by telephone, online or in person). The consumer, whether buyer or recipient, will usually expect any Interflora order to be received via a third party florist--or for some limited orders by a third party courier. It was undisputed in this case that 'interflora' was the top-performing keyword in driving traffic in the flowers sector.

Does this decision depart from the preceding line of CJEU rulings on keyword advertising at all (eg Google France, L'Oreal v eBay, Portakabin)?

The CJEU addressed the question of use of a trade mark as a keyword in Google AdWords in Google France SARL v Louis Vuitton Malletier SA, Google France SARL v Viaticum SA, Google France SARL v Centre National de Recherche en Relations Humaines (CNRRH) SARL Joined cases C-236-238/08 [2011] All ER (EC) 411. Mr Justice Arnold summarised the CJEU's conclusions:

'an advertiser who used a sign identical to a trade mark as a keyword part of Goodle's AdWords thereby used the sign in the courts of a trade in relation to the advertised goods or services, but... Google did not.'

The question that arose was 'whether there was an adverse effect on either the origin function or the advertising function of the trade mark'.

The question that needed to be considered by national courts in relation to a particular set of facts was what the 'normally informed and reasonably attentive internet users' (CJEU in Google France v Louis Vuitton ) or 'reasonably well-informed and reasonably observant internet users' (CJEU in Interflora Inc v Marks and Spencer plc: C-323/09 [2011] All ER (D) 169 (Oct)) would conclude in relation to origin--and whether that was in accordance with honest practices in industrial or commercial matters. The CJEU position, as summarised in this case, was that the advertiser carried the responsibility of ensuring that origin of the goods was clear and did not confuse the reasonably informed and reasonably observant internet user. The application of that test would necessarily vary from case to case dependent on the facts, which Mr Justice Arnold considered was further clarified and underlined by the answers provided by the CJEU in Interflora.

In the referral in the case before Mr Justice Arnold here, the CJEU had found that if the relevant user had 'difficulty grasping that the service provided by M&S is independent from that of Interflora, that would be insufficient to support a finding of adverse effect on the INTERFLORA mark. However, if the relevant user in fact thought there was an economic link between Interflora and M&S, then there would be an adverse effect and so infringement.

Here, Mr Justice Arnold concluded that as a particular feature of the Interflora network was that those fulfilling orders traded under their own names, so the consumer placing the order would not necessarily expect Interflora branding (and the recipient would not know to expect any Interflora branding at all). In addition, there were tie-ups with several large retailers, so it was plausible there would be a connection between M&S's flower delivery service and the Interflora network. The relevant user would only be able, with difficulty, to ascertain whether the services referred to in the advertisements, originated form the proprietor of the trade marks or an economically linked undertaking--or whether they originated from a third party. Therefore, there was infringement.

What significance was attached to the fact that Interflora is essentially a network and has partnered with other businesses (eg Tesco and Co-op)?

The court noted that in recent years Interflora had combined with retailers such as Sainsbury's and Tesco with delivered flowers branded 'Interflora' on cellophane, ribbon or other packaging; with the Co-op in relation to a co-branded funeral care business; and also with Thorntons. For example, Interflora and Sainsbury's had co-branded leaflets promoting flowers for delivery but fulfilment was through Interflora's network and the flowers received only carried Interflora branding. It was well known by the public that Interflora was a network used by florists to enable local fulfilment of a delivery of a gift, usually and mostly of flowers alone but sometimes in combination with other items such as chocolates or soft toys. The way the business operated was fundamental to the conclusion that Interflora might have legitimately combined with M&S and, without clarification, the relevant consumer would be in some difficulty in working out whether this was a commercial collaboration, or the businesses were operating entirely separately.

What does this judgment mean for advertisers who bid for keywords that well known trade mark for the purpose of offering competing goods and services?

It is worth noting that, from a financial perspective, Interflora's financial position was directly and clearly effected simply by how much it paid to Google for AdWords for its own brand. Mr Justice Arnold found Interflora had paid more than £1.5 million to Google to bid for 'interflora' as a keyword on its own. He found that without the change in Google's policy in 2008, it would only have paid £96,087 (on the basis of 1p/click).

M&S argued that bidding on competitor trade marks as keywords was commonplace--in some attempt to contextualise, an email sent internally at M&S a couple of hours after receipt of a change of Google AdWords policy in 2008 read: 'we are reading this thinking how can we nick traffic from the opposition cheaply, admit it. (Interflora, Interflora!)'. The comment was not ideal. It was not proven whether use of third party trade marks was commonplace, although the court appeared to accept that competitive brand bidding did occur. Not addressed in the judgment directly, but it seems that in many instances, the purpose of using third party trade marks is for multiple and potentially legitimate reasons. The consumers for the relevant product(s) may not be confused at all. If you were to search for 'Mercedes' and some ads were to come up for 'BMW' (with no mention of 'Mercedes' either in the ad or in the click through page), would you think the advertiser of BMW was an authorised reseller of Mercedes? Or just that they were offering a competing product? It might be that you would click through for all sorts of reasons, but the factual position in that instance would be fundamentally different.

In light of the judgment, how should lawyers advise clients that advertise using services such as Google AdWords?

Interflora is a very particular type of business, so this decision does not necessarily mean that clients should not use third party marks as keywords. The key question to address is what the client believes motivates the user to click on their link, having only seen the client's ad as a result of having entered a third party trade mark as a search term. Will the consumer have any doubt as to origin? If, as set out above, they search for Mercedes, and see an ad for BMW, it seems pretty unlikely they will be confused as to origin--the comparative advertising defence suggested by Mr Justice Arnold would likely be very usefully applied. Perhaps that might also be the case for M&S in relation to Interflora--it was not argued, but the judge certainly thought it ought to have been considered.

It is important clients are made aware of the need to observe honest commercial practices when using third party trade marks as keywords. Consciously setting out to 'nick' business from others is, on one level, completely legitimate--a business trying to break into a new area may have to be relatively aggressive at establishing market share to justify its new venture from a commercial perspective, and to enable it to succeed. To some extent, what may be regarded as 'establishing market share' and 'nicking business' may simply reflect from which side the use is being seen. Morality is very subjective. But there is a line between what is 'honest' and what is not in all circumstances, whether or not it is clear where that line falls. The key is to keep on the right side of the line by sufficient margin to avoid trouble--or provide a decent chance of a defence. When using third party trade marks in

AdWord campaigns, at the very least where there is real doubt (and probably where there might even be an inkling of concern), it is worth seeking legal advice--not least to ensure the proposal and its checking is protected by legal privilege. Just ignoring the issue or thinking you can get away with it is not sufficient.

Does this judgment bolster brand owner's abilities to prevent third parties using their trade marks for keyword advertising?

From a brand owner's perspective, it is certainly worth considering enforcement of its trade marks against a third party where web traffic is being lost as a result of that third party's use of the marks in keywords. However, when making such a threat, careful assessment should be made of what compromise might be acceptable. Taking an aggressive approach is the alternative but with it comes real risk, most especially on costs.

This decision leaves the question still open as to what is considered 'honest' in terms of use of third party trade marks in keywords and what is needed to ensure the consumer is not confused as to origin.

If M&S were to now make the landing page from the ad entirely clear with regard to origin, would that be sufficient to differentiate its new approach from the approach assessed by Mr Justice Arnold in this case? Or would M&S need to ensure the advertisement made it clear that what was being offered was 'M&S flowers delivered from your local M&S store'. Is the advertisement set out by M&S above clear enough: 'M&S flowers online--blooming flowers and plants at M&S'?

The risk of multiple appeals up to the Court of Appeal and references to the CJEU over many years is commercially quite off-putting to both parties. Pending the next round in this almighty battle, compromise and care are the watchwords.

In your view does this judgment (which follows a ruling from the CJEU) strike a fair balance between between (i) promoting competition by allowing fair use of trade marks as keywords (ii) protecting consumers and (iii) protecting the investments made by businesses in their brand?

The Interflora branding model is relatively unusual, where the user of the brand may have minimal or significant levels of Interflora branding alongside an entirely independently badged business. There was clearly bad behaviour in this case by M&S, not least evidenced by the internal email referenced above--and Interflora were justifiably incensed. No doubt, following any further appeals, there will be a wide-ranging dispute on damages. The question of whether there is confusion as to origin is such a fact-based question that it is not clear this decision will really clarify where the balance is to be struck.

The judgment set out that the mail order and online flower delivery market accounted for about 2% of the flower and houseplant market in 2008--with a value for that portion of the market of around £35-45 million out of a total of £1.7-2.2 billion. With the increased reliance and trust in ordering through the Internet, no doubt the battle for online sales will continue to mount--not just in this sector, but many others. With increased volume of internet sales, businesses will likely be prepared to take greater risk at aggressively challenging the more dominant online presence of competitors--while making careful clever use of their competitor's trade marks to help them get there.

I rather suspect protection of consumers is not really what businesses will have at the forefront of their thinking when formulating and taking legal advice on their AdWord policies. This judgment probably just shifts the questions that will need to go through for the next round of judicial testing. In the meantime, it probably encourages careful, rather than entirely fair, use of third party trade marks as keywords. While it is a victory of some sort to Interflora, for the moment, it may yet prove a pyrrhic victory--and another headache for businesses seeking to protect their brands.

This piece was first published in LexisPSL in May 2013.

For further information on the topic, please contact Rebecca Halford-Harrison.