When will an internet advertiser be liable for trade mark infringement as a result of their use of a third party's trade mark as a keyword search term?
The recent judgment of the Court of Justice of the European Union (the "CJEU") in the Interflora v M&S case – one of a long list of cases to be referred to the CJEU on this issue- appears to have increased the options available to brand owners to take action against such so-called 'negative' keyword advertising.
Background
Interflora has a Community Trade Mark registration for the word 'Interflora' (the "Interflora Mark") and brought proceedings against M&S, claiming infringement of the Interflora Mark, as a result of M&S's use of the Interflora Mark as a keyword search term in order to point to advertisements for M&S's own flower delivery service. The High Court referred a series of questions to the CJEU, which were answered in a judgment handed down last month.
Use of an identical mark to prove identical services
Interflora claimed that, under Article 5(1)(a) of EC Directive 89/104 (the "Trade Marks Directive"), by using the Interflora Mark as a keyword, M&S was using an identical mark to Interflora's registered trade mark, in the course of business, to offer identical services; a so called 'double identity case', where there is no need to show a likelihood of confusion on the part of the public.
The CJEU stated that an Article 5(1)(a) infringement could occur where a trade mark is used for the purposes of keyword advertising, but only where one of the functions of a trade mark is adversely affected. This is the first case in which such a functional analysis has been applied to infringement under Article 5(1)(a). The CJEU summarised the main functions of a trade mark as:
- indicating the origin of the goods or services in question (the "Origin Function");
- advertising goods and services sold under the mark (the "Advertising Function"); and
- acquiring and preserving a reputation capable of attracting customers (the "Investment Function").
The CJEU ruled that M&S was not adversely affecting the Advertising Function of the Interflora Mark. In fact, M&S was using the Interflora Mark to offer customers alternative services as part of normal commercial competition and, whilst it may have increased the cost to Interflora of securing a high ranking advertisement on Google, the Advertising Function itself had not been adversely affected. On the other hand, the CJEU confirmed that the Origin and Investment Functions of a trade mark can be adversely affected through negative keyword advertising.
The Origin Function
The CJEU followed its previous keyword decision in the Google France, Google Inc. v Louis Vuitton Malletier case and held that the Origin Function will be adversely impacted if the advertisement displayed as a result of a keyword search on a registered mark does not enable the reasonably well informed and observant internet user (or only enables them with difficulty) to ascertain whether the origin of the goods or services originate from the trade mark proprietor or a third party. For example if the public was deceived into thinking that the services being marketed by M&S were provided on behalf of, or were licenced by Interflora, this could adversely affect the Origin Function of the Interflora Mark.
The CJEU stated that, in determining whether the Origin Function has been adversely affected, a court must consider: (1) whether the general market awareness of the reasonable internet user would allow it to know that the goods offered by the keyword advertiser were from a source other than the proprietor of the trade mark in question; and (2) if not, whether the keyword advertisement itself was sufficient to inform the user of this fact.
It will be for the High Court to apply this test to the specific circumstances of the Interflora case, in particular with regard to the M&S advertisements which were generated by a keyword search on the Interflora Mark. The CJEU pointed out that other factors may influence this application; for example, due to the nature of Interflora as a network of a large number of retailers of various sizes, customers might be more easily confused into thinking that M&S was part of, or connected to, the Interflora network.
The Investment Function
For the first time the CJEU elaborated on the 'Investment Function', which it described as the ability to use a trade mark to acquire or preserve a reputation capable of attracting customers. The CJEU acknowledged that there is some overlap with the Advertising Function, but stated that the two are separate. In particular, the CJEU stated that Investment Function takes account of commercial methods (other than advertising) used to build a reputation. These could include, for example, providing a high level of customer service, providing a strong quality of product, or adopting an appealing ethical stance.
The CJEU confirmed that the Investment function could have been adversely affected by use of the Interflora Mark as a keyword. However, it went on to say that if an advertiser's use of the keyword falls within the ambit of fair competition and does not attempt to confuse readers as to the origin of the goods or services in question, then the Investment Function would not be adversely affected if the brand owner has merely been forced to adapt its efforts to acquire or preserve a reputation. In this context, evidence of consumers switching from the trade-marked goods to the advertiser's alternatives would not, in itself, prove the necessary adverse effect.
This appears to be similar to the CJEU's finding in respect of the Advertising Function above, in that the CJEU is distinguishing between effects which actually damage the Investment Function and those which simply force a change of approach from the trade mark owner. It appears that the nature and commercial 'ethics' of the keyword advertiser will be relevant (i.e. whether it is a genuine and fair competitor or a counterfeiter). Hopefully, when the High Court comes to apply this decision, it will elaborate further on what does and does not constitute an adverse effect on the Investment Function.
Dilution or unfair advantage
Interflora also argued that M&S' use of the Interflora Mark as a keyword constituted trade mark infringement under Article 5(2) of the Trade Marks Directive, on the basis that such use:
- was detrimental to the distinctive character of the Interflora Mark (known as dilution); and/or
- took unfair advantage of the distinctive character or repute of the Interflora Mark.
Dilution
The CJEU stated that dilution of a trade mark occurs when consumers begin to cease associating a trade mark with a particular producer or type of goods. This might occur where a trade mark falls into usage as a generic term. Interflora alleged that M&S's use of the Interflora Mark as a keyword would lead to it becoming a generic term for any flower delivery company.
The CJEU confirmed that there was a potential for dilution, but only if M&S's use had an adverse effect on the Origin Function. Presumably, if there was no such adverse effect, consumers would not believe that the Interflora Mark had come to describe goods or services produced by more than one commercial operator and would continue to associate the mark exclusively with Interflora.
Unfair advantage
The CJEU concluded that M&S was clearly gaining an advantage
from the Interflora Mark, as users searching for
'Interflora' might follow M&S's link and end up
giving it their custom. However, the CJEU emphasised that unfair
advantage can only be made out where the advertiser has used the
owner's mark without due cause. It stated that if
M&S was offering genuine alternative services, as oppose to a
mere imitation, and was not adversely affecting any functions of
the Interflora Mark nor causing dilution or tarnishment, it would
be operating in fair competition. Under such circumstances M&S
would not be using the mark without due cause. Again, the CJEU
seems to be drawing the distinction between genuine competitors who
provide alternatives to the trade-marked goods and counterfeiters
offering mere imitations. However, it is worth remembering that
genuine competitors could still be caught if care is not taken to
avoid adversely affecting the functions of the trade mark.
Whether, in practice, this ruling will provide more than a fairly
narrow exception remains to be seen.
Conclusion
Interflora's publicity team have been pushing the line that the CJEU responses put it in a strong position. Brand owners may concur with cautious optimism given that the CJEU's acknowledgement that negative keyword advertising could constitute trade mark infringement under Article 5(2) of the Trade Marks Directive (in addition to under Article 5(1)), and its elaboration on the Investment Function, have potentially opened up further avenues of argument.
However, the CJEU also ruled that when considering alleged adverse effects to the Origin Function, the reasonable internet user's awareness of the general market is an important consideration. Given that internet users are now increasingly familiar with the practice of keyword advertising, in particular the fact that a search is likely to display advertisements from a number of parties in addition to the trade mark owner and that most advertisements generated by keyword searches make it reasonably clear who the advertiser is, brand owners may find it difficult to succeed in infringement actions based on keyword advertising.
It now falls to the High Court to apply the CJEU's reasoning to the facts in the Interflora case and brand owners will no doubt await the final judgment with interest.
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