Interflora v M&S

May 24, 2011

This artice was written for and first featured in E-commerce law reports Vol 1, issue 2

Introduction

The Advocate General of the European Court of Justice ("ECJ") has recently issued an opinion concerning the purchase by Marks & Spencer ("M&S") of the AdWord 'interflora'. The Advocate General considered that M&S's use of the AdWord as a search term to drive internet traffic constituted use of the trade mark owned by the flower delivery service company, Interflora.

The Advocate General’s opinion contrasts with earlier rulings of the ECJ, where big name brands such as Louis Vuitton and Portakabin have been unsuccessful in their attempts to sue Google. In both cases the ECJ concluded that Google had not infringed trade mark law by allowing advertisers to purchase keywords corresponding to their competitors trade marks.

The difference with the present case, however, is that Interflora’s claim of trade mark infringement is against M&S, the advertiser, as opposed to the search engine operator. Interestingly, in both the Louis Vuitton and Portakabin cases, the ECJ commented that, although Google had not infringed trade mark law, an advertiser itself may be found liable for infringing a competitor’s trade mark if its advert does not enable internet users, or enables them only with difficulty, to ascertain whether the goods and services referred to in the advert originate from the owner of the trade mark or some other entity.

Interflora v M&S is therefore the first claim against the advertiser to put these comments to test. If, as expected, the Advocate General's opinion is followed by the ECJ, this will provide some hope for owners of trade marks that have been used to advertise rival products; namely that in certain situations such use is unlawful and can be prevented. In any event, given the recent flurry of cases concerning the Google AdWords service, a uniform set of rules is urgently needed.

Interflora’s complaint

Interflora brought an action against M&S for infringement of its INTERFLORA trade mark. M&S had bought the keyword 'interflora' (and variations) through Google's 'AdWords' referencing service. Consequently, if a consumer entered the search term 'interflora', the results returned would include an advertisement for M&S's flower delivery service as a sponsored link. Unsurprisingly, Interflora was not happy to learn about this, particularly given that M&S had purchased the keyword in the run up to Valentine's Day.

M&S made an application to the High Court to stay proceedings pending the ruling of the ECJ on six existing references concerning a number of issues related to keyword advertising. The High Court judge refused a stay on the basis that there was a risk that the rulings would not resolve all the issues central to the present case. The High Court therefore referred certain questions to the ECJ to ascertain whether M&S's conduct could amount to trade mark infringement under the provisions of Council Directive 89/104/EEC ("the Directive"). On 24 March 2011 the Advocate General gave his non-binding opinion on how the questions should be answered.

M&S’s use of INTERFLORA

Both the first and second question concerned use of the INTERFLORA trade mark. The Advocate General was required to consider whether M&S's conduct in respect of, amongst other things, selecting the keyword, setting the maximum price per click and displaying the keyword in business correspondence would constitute "use" of Interflora’s trade mark. If use could be inferred, the Advocate General then had to determine whether such use was "in relation to goods or services".

The Advocate General noted that a sign identical with a trade mark is used 'in relation to goods or services' when it has been chosen as a keyword without the consent of the trade mark owner, and the display of adverts ('ads') is organised on the basis of the keyword. It follows that M&S’s selection and subsequent purchase of the keyword 'interflora', which, when entered into Google, would produce an ad for M&S's flower delivery service, amounted to use in relation to goods or services.

Should Interflora be entitled to prohibit such use?

Next, the Advocate General considered whether Interflora was entitled to prevent M&S using its trade mark under the ambit of Article 5(1)(a) of the Directive.

Following the Louis Vuitton and Portakabin cases against Google, the Advocate General took the view that a trade mark owner is entitled to prohibit use of its trade mark in ads sponsored by third parties in circumstances where that ad does not enable an internet user, or enables them only with difficulty, to ascertain whether the goods or services referred to in the ad originate from the trade mark owner, an undertaking connected to it, or from a third party.

In the present case, the trade mark INTERFLORA was not included in M&S's sponsored link itself. However, the Advocate General regarded this as immaterial. In his view, the INTERFLORA trade mark denotes a well-known commercial network of businesses that offer a particular kind of flower delivery service and has therefore achieved a "secondary meaning". Accordingly, having entered ‘interflora’ as a search term, the display of an identical service promoted by M&S makes it more likely that consumers would believe that M&S belongs to the Interflora network of undertakings when in fact it does not.  The Advocate General considered this to be sufficient to entitle Interflora to prohibit M&S from using the keyword 'interflora'.

Should Interflora be entitled to increased protection?

Another of the questions referred by the High Court was, if use could be established, whether such use would also fall within the scope of Article 5(2) of the Directive. Under this provision, additional protection will be granted where a third party has used an identical or similar mark to that belonging to the trade mark owner and where such use takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.

The Advocate General considered that there was no question that the INTERFLORA trade mark had the requisite reputation under Article 5(2). The ECJ’s ruling on this question should therefore turn on whether such reputation or distinctive character has been the subject of unfair advantage or detriment.  This is also referred to as "trade mark dilution".

Interflora claimed two different types of dilution: blurring, and free-riding, which the Advocate General considered as follows:

  • Blurring
    Blurring occurs when a third party uses a mark identical or similar to another well-known mark, with the result that the well-known mark becomes less distinctive.  The Advocate General noted that this often occurs where identical or similar marks are used on different goods or services to those for which the well-known mark is registered.  Given that M&S were using an identical mark on identical goods and services the Advocate General did not view this as a case of blurring.  However, because of the risk that the INTERFLORA mark might become a generic term for the sale and delivery of flowers, the Advocate General considered this a case of degeneration, which he believed was also capable of falling within the remit of Article 5(2).
  • Free-riding
    Although the Advocate General believed that M&S had used the keyword as a means of presenting consumers with an alternative product and service to those offered by Interflora, and was therefore undeniably taking advantage of the repute of the INTERFLORA mark, there was no mention of the mark in M&S’s link itself and so there could be no free-riding.

According to the Advocate General, protection under Article 5(2) should only be available when reference is made to the trade mark in the competitor’s ad, particularly if it is used either as a generic term or is being used by the advertiser to benefit from the trade mark’s reputation.

Google’s Policy

The Advocate General was also required to consider whether it made any difference to the availability of protection under either Article 5(1)(a) or (2) of the Directive if Google does not permit trade mark owners to block the selection of keywords that are identical to their trade marks. Referring to the ECJ’s ruling in Google France and Google, where it was held that search engine operators are not "using" signs similar to trade marks, the Advocate General considered that the attitude of Google as to the possibility of the trade mark owner forbidding the use of its trade mark as a keyword is irrelevant to determining the question of whether use falls within the scope of Article 5(1)(a) or (2). Therefore, the fact that in the UK Google had previously allowed trade mark owners to prohibit the use of their trade marks as search terms and the fact that it now does not permit trade mark owners to do so is irrelevant.

Comment

Unfortunately, the Advocate General’s Opinion is not binding. The ECJ’s ruling on this reference will therefore be greatly anticipated and will either confirm the Advocate General’s view or rule against it. If it is followed by the ECJ many trade mark owners who advertise and sell their products online will be mightily relieved. In the meantime, brand owners should try to monitor the use of their trade marks by conducting regular searches of key words to establish whether their trade mark is being used by competitors. Deliberate misuse of their trade mark should be reported to Google (or the relevant search engine provider) and legal action should be considered.


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