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Keyword search advertising has become an essential marketing
tool for many companies. Google's 'AdWords' service
operates it as follows: Internet users search the web using
particular words (keywords); the search results page displays a
list of websites best corresponding to the keywords and separately,
on the side, some sponsored links. Advertisers can select one or
more keywords in response to a search for which their sponsored
link will appear. But are advertisers free to choose any keywords?
The European Court of Justice gave its guidance in its recent case
of Interflora v Marks & Spencer [2012] E.T.M.R. 1.
Case facts
Interflora operates a worldwide flower-delivery network and
registered its name as a trade mark. Using AdWords, M&S
selected the word 'Interflora' and some of its variations
as keywords. Consequently, when Internet users searched the web for
'Interflora', an advertisement of M&S's flower
delivery service appeared besides the search results under the
heading 'sponsored links'. Interflora brought a claim for
trade mark infringement, but the High Court of Justice stayed the
proceedings and referred certain legal questions to the ECJ. Some
of the guidelines formulated by ECJ (some of which had been
established in earlier ECJ jurisprudence) are summarised below.
Legal principles
A trade mark owner may prevent others from using its mark as a
keyword for goods or services identical to those covered by the
mark registration, only if this may adversely affect one of the
functions of the mark: in particular, the essential function of
guaranteeing origin, the investment function and the advertising
function. This may occur if the advertisement suggests to internet
users that the advertised goods or services originate from the
owner of the mark or that there is an economic link between these
two entities. For example, if M&S's advertisement led users
to believe that M&S's flower service was part of
Interflora's network, this could indicate infringement. To
reduce the chances of confusion, the advertisement text prompted by
the keyword search should not contain the keyword itself. The
advertising function is not adversely affected merely by consumers
being offered an alternative supply, even though the trade mark
owner may have to spend more on advertising.
The investment function relates to the owners acquisition of a
reputation, but is not affected merely by the owner having to adapt
its efforts to do so, or by consumers switching to other
suppliers.
Keyword advertising is also infringing if its effect is
'tarishment', 'dilution' or 'free-riding'
'without due cause' of a mark with an established
reputation, or if it interferes with the mark owner's ability
to maintain such reputation. However, such effect on reputation may
be difficult to prove. Dilution will not take place where the
consumers can establish the origin of the goods and the use of the
mark does not contribute to its becoming generic. Free-riding will
not take place if the advertisement offers goods and services
alternative to those covered by the mark, as opposed to their
'mere imitation', there is no dilution, and no interference
with the guarantee of origin. Neither will it be sufficient for the
trade mark owner to show that its own advertising costs increased
as a result of its mark being used by a competitor for keyword
advertising.
The ECJ left it to the High Court to apply the above legal
principles to the facts of Interflora's case and the outcome is
expected later this year.
Food for thought...
Companies advertising via 'AdWords' or similar services
should choose and use the keywords carefully. In principle, using
keywords including or resembling competitors' trade mark is not
prohibited, but it should not mislead consumers, or affect the
reputation and the functions of the mark. If in doubt, taking legal
advice may be the best way to avoid liability for trade
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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