CJEU Issues Its Decision in the Interflora -v- Marks & Spencer Case
03 November 2011
The CJEU has reiterated its previously expressed view that the actual bidding on a third party's trade mark as a "keyword", may amount to trade mark infringement, if the advertisement featured in the Adword/Sponsored Link section "does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party".
As long as the wording in the advertisement itself does not obscure the origin of the goods or services, then there should be no infringement.
By reiterating this view, the CJEU has endorsed the "guarantee of origin" function of a trade mark. However, the CJEU also commented on other functions that a trade mark may possess, such as an "advertising function" and an "investment function", and whether these were adversely affected by this bidding activity so as to cause an infringement.
With regard to the "advertising function", the CJEU recognises that this bidding on another party's trade mark could well cause the trade mark owner to incur further expense in trying to ensure that any of its own sponsored link advertisements appear above, or near to, those of its competitors. However, the CJEU did not consider that this would adversely affect the trade mark's "advertising function", and the court concluded that the trade mark owner is not therefore prevented from using its mark to inform, or acquire, new customers.
The "investment function" was defined by the CJEU as "the use of the mark by its proprietor to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty". It stated that this function would be adversely affected if a competitor's use of the trade mark owner's mark "substantially" interferes with this function, but that this would not be so if the only consequence is that the trade mark owner has to adapt its own efforts to acquire or preserve its reputation.
Because the INTERFLORA trade mark has acquired a considerable reputation (and both sides agreed that this was the case), the CJEU went on to consider whether this bidding on it by Marks & Spencer amounted to an infringement because it was "detrimental to the distinctive character or repute" of the INTERFLORA mark, or whether an "unfair advantage" arose.
The CJEU felt that this activity would be "detrimental to the distinctive character" of the mark if the use was such that there was a danger of the trade mark itself becoming a generic term. However, it was felt that bidding did not necessarily contribute to this. The Court held that the reasonably well-informed and reasonably observant internet user probably would become aware of the fact that there was an alternative product or service available.
On the issue of "taking unfair advantage", the CJEU recognised that a third party is clearly trying to take advantage of a trade mark which has a reputation by bidding on it, and that if the consumer then goes on to purchase the competitor's product as a result, a real advantage may have been taken by the advertiser. If this was done "without due cause", or affected the "origin function" of the mark, then the Court felt that this would be unfair, especially if the goods offered by the advertiser were imitations of the goods of the trade mark owner. However, the Court stated that, where the advertisement concerned did not actually offer an imitation of the trade mark owner's goods, and was clearly just offering an alternative, and had not caused dilution or tarnishment, then this should not affect the "origin function" of the trade mark, and therefore, such use should generally be seen as fair competition.
Comment / Recommendation
We still have to wait for the UK Court to issue its judgement, which will be based on the evidence in that case, taking into account the answers the CJEU provided to its questions. In our view, if the evidence shows that reasonably well-informed and reasonably observant internet users consider the flower delivery service offered by Marks & Spencer to be part of the Interflora network, an infringement may well be found. However because of the particular nature of the Interflora business model, in which independent businesses are licensed to use the branding and service (and the fact that it relies heavily on the awareness of the INTERFLORA brand), this does not mean to say that this would apply in all keyword bidding cases.
Subject to the UK Court's eventual decision, therefore, we advise clients to take great care to ensure that, if they do bid on another party's trade mark as a keyword, their advertisement in a Sponsored Link/Adwords section should be worded in such a way that it does not mislead or cause confusion. Furthermore, if a competitor's business activities are of the same or similar nature to those of Interflora's business model, then it would be advisable to cease "keyword" bidding on that competitor's trade mark.
If you would like more information on this please contact Sanjay Kapur, John Peacock or Lucy Mills in our Nottingham office.