South Africa: Advocate General’s Opinion: Interflora Inc Vs Marks & Spencer

Last Updated: 29 July 2011
Article by Donvay Wegierski

Advocate General Jääskinen's (AG) opinion in relation to Interflora Inc, Interflora British Unit v Marks & Spencer PLC, Flowers Direct Online Limited C-123/09 delivered on 24 March 2011 indicates that brand owners can, in certain circumstances, prevent keyword advertising.

The opinion has been widely reported in the media and brand owners are therefore hopeful that the opinion will be followed by the European Court of Justice (ECJ). Although theAG's opinions are not binding on the ECJ they are persuasive and have reportedly been adopted in at least 80% of the cases before the full court.

The High Court of Justice (England and Wales, Chancery Division) had previously opted to stay proceedings in the matter and instead referred it to the ECJ in July 2009.

Initially ten questions were referred to the ECJ. However questions five to ten were withdrawn by the High Court following the Google France and Google judgments (joined cases C-236/08 to C-238/08). The remaining four questions were consequently divided into two groups by the AG:

  • Rights conferred to all trade marks under Article 5(1) of the First Council Directive 89/104 EEC (Directive) and Article 9(1)(a) of Council Regulation (EC) No. 40/94 (the regulation).
  • Protection of trade marks with a reputation under Article 5(2) of the Trade Marks Directive 89/109.

Both the Directive and the regulation are applicable to member states of the European Economic Community.

In his analysis, the AG states that while these questions are subject to examination in light of Article 5(1)(a) and 5(2) of the Directive, the interpretation is equally applicable to Article 9(1)(a) and (1)(c) of the regulation.

Facts

In past cases aggrieved parties have chosen to institute proceedings against Google for its sponsored link and competitor bidding practices. However in this instance, Interflora Inc instituted trade mark infringement proceedings against Marks and Spencer (M&S) directly.

The applicant, Interflora Inc, is a US corporation with a worldwide flower delivery network and is the proprietor of trade mark registrations on a global scale for the INTERFLORA mark in various classes including class 31 (plants and flowers), class 35 (advertising services), and class 39 (transportation of flowers and gifts).

The respondent is M&S a well known UK retailer offering a wide range of goods and services via its stores and its website www.marksandspencer.com. M&S also offers a flower delivery service and purchased keywords for Google's AdWord paid referencing service. Consequently M&S advertisements appeared under the "sponsored link" heading when internet users entered the search term "interflora" or the like on Google. Importantly the advertisements did not contain any references to the INTERFLORA mark and its services and instead offered flower delivery services from M&S Flowers online.

The purchase of the keywords purportedly coincided with Valentines Day and, being a significant day for flower trade, further prompted Interflora to institute trade mark infringement proceedings against M&S.

Article 5(1)(a) of the Directive

Article 5(1)(a) affords the exclusive right to a proprietor of a trade mark to prevent the unauthorised use of a sign that is:

  • Identical to a registered trade mark and used in respect of identical goods and/or services for which the mark is registered.
  • Similar to a registered trade mark and is used in respect of similar goods and/or services where confusion and/or association with the registered trade mark and proprietor is likely.

The interpretation of Article 5(1)(a) offered by the AG is that in instances where a keyword is identical or similar to a registered trade mark and is used in respect of identical or similar goods or services, the unauthorised party can be prohibited from doing so. The proviso is that the advertisement does not enable, "an average internet user or enables the said user only with difficulty" to determine the origin of the advertisement.

The opinion acknowledges that the Google France and Google case, the only judgment involving a search engine operator, established that the operation of a search engine or a paid referencing service does not constitute "use" of a trade mark. Instead it is the advertiser itself who both chooses and uses a keyword. While these adverts in the main do not associate the advertiser with the trade mark, and even less so when used in respect of different but somewhat related goods and services, the likelihood of confusion on the part of the internet user cannot always be excluded.

Pertinent to the AG's reasoning is that he acknowledges that the INTERFLORA trade mark is well-known for its network of flower delivery services and has therefore also gained a secondary meaning in commerce. Consequently he is of the view that the M&S Flowers online advertisements, shown when typing in the "interflora" keyword, are likely to create an association between M&S and Interflora in the mind of the average internet user.

Article 5(2) of the Directive

The questions referred to the ECJ seek clarity as to when Article 5(2), which protects against dilution of trade marks with a reputation, applies. Reference to dilution in EU law concerns the terms "blurring", "tarnishment" and "free-riding" while similar provisions in US law concern only "blurring" and "tarnishment".

Considering Davidoff v Durffee (C-292/00), the AG asserts that protection against dilution for a trade mark with a reputation extends to identical as well as similar signs, goods and/or services. Consequently the extended protection in terms of Article 5(2) of the Directive is afforded against a user of an identical or similar sign where the parties are competing commercially.

So as to address these three concepts comprising dilution and further determine whether Article 5(2) of the Directive applies to the Interflora matter, the AG maintains that as per Google France and Google, the visible outcome or sponsored link ultimately revealed to the internet user should be the starting point.

Blurring, tarnishment and free-riding

"Blurring" arises when a sign or mark is used in a manner that does not only identify the goods and/or services as belonging to one source namely the trade mark holder. Although the INTERFLORA mark risks blurring because the M&S adverts offer flower delivery services, this argument is dismissed in the opinion because the INTERFLORA mark does not appear. The AG states that the sign must both be present in the advertisement and be used in a generic manner that covers a group of goods or services generally for there to be blurring.

L'Oreal SA & Others v Bellure Nv & Others (case no.487/07) dealt with the imitation of luxury products finding that there is "tarnishment" when the use of a sign is detrimental to the mark's reputation. The advertised M&S flower services offer an alternative to Interflora, but will not necessarily negate the image of the INTERFLORA mark. Acknowledging that it is not a case about tarnishment, the opinion deals no further with this issue.

The L'Oreal judgment further states that "free-riding" occurs when an unauthorised user takes unfair advantage of a mark with a distinctive character and repute by benefitting from it, without expending any additional effort or compensating the trade mark holder for any of the benefit derived. Free-riding may be better explained as, "riding on the coat tails of the trade mark proprietor". Following this rationale the use complained of does not necessarily need to be detrimental to the trade mark proprietor.

The AG's view however is that it would be anti-competitive if a trade mark proprietor could assert its right to prohibit the unauthorised use of a sign in all instances even when the use complained of is not harmful. He states that even if the advertisement in the sponsored link contains the mark, this may still be acceptable as comparative advertising. Although M&S also offers flower delivery services there are no comparisons drawn or express references made to the INTERFLORA mark therefore no free-riding.

Implications

The opinion indicates that there are certain circumstances when trade mark proprietors may be able to prevent the use of a mark in keyword advertising. In terms of Article 5(1)(a) of the Directive, this could occur if:

  • there is unauthorised use of an identical or similar sign to a trade mark as a keyword and the advertisements revealed refer to the trade mark; or
  • the origin of the goods and/or services offered in the advertisement are not clear; or
  • the average internet user is likely to be misled into believing there is an association between the trade mark proprietor and advertiser.

And in terms of Article 5(2) of the Directive, this could occur if:

  • the keyword used is identical to a reputable trade mark and the advertisement refers to the trade mark; or
  • the mark is used in a generic manner (blurring) or is an attempt to take unfair advantage of the goodwill and repute associated with the mark (free-riding).

In September 2010 Google changed its AdWord policy allowing companies to use competitors' trade marks as keywords so as to display their own advertisements in search results. The ECJ ruling in the Interflora matter is expected some time this year and, if the opinion is adopted, advertisers and arguably Google, could be forced to revisit keyword advertising and sponsored link strategies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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