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Google AdWords – Interflora v Marks & Spencer

Google AdWords – Interflora v Marks & Spencer

Published: 10.06.13 at 17:55

The High Court has ruled that Marks & Spencer's (M&S) use of Interflora as a keyword to trigger search results for its flower delivery service infringed Interflora's trade mark.

AdWords

The Google AdWords system allows businesses to purchase keywords so that a sponsored link appears whenever internet users search for that term. When a user carries out a search, the results page usually contains three main elements. The first is the search box which displays the search term typed in by the user. The second comprises the "natural" or "organic" results of the search with links to websites assessed to be relevant to the search term. The third element comprises advertisements containing links to websites for businesses that have paid for them to appear in response to the search term entered. The sponsored links generally appear in the golden box at the top of the page or to the side of the natural search results.

The Facts

Prior to May 2008, Google operated a policy whereby it prevented businesses from purchasing the trade marks of its competitors as keywords. However, on 5 May 2008 Google reversed its policy so as to cease blocking keywords registered as trade marks. When Google notified its advertiser customers of its change in policy, an M&S internal email sent within hours of the Google notification read: "we are reading this thinking how we can nick traffic from the opposition cheaply, admit it. (Interflora, Interflora!)".

Following the reversal in policy, M&S purchased a number of Interflora keywords so that whenever a user searched for "interflora", an advertisement for M&S's competing service appeared in the search results.

Interflora was at the time the most commonly searched for term in the flower industry and this strategy drove a significant amount of traffic to the M&S website. During the period from May 2008 to August 2010 M&S gained 6,050,112 impressions and 434,338 clicks (a click-through rate of 7.2%) at a cost-per-click of £0.36 from the keyword "interflora" on all match types yielding revenue of £1,809,501(a return on investment of 11.7). A Hitwise report for the 12 weeks ending 18 June 2011 showed that the M&S website received 6.5% of clicks from the search term "interflora", putting it in third place after Interflora's UK and UK mobile sites.

Interflora protested against M&S's use of its name as a keyword and brought a claim for trade mark infringement in the High Court. Interflora claimed that online consumers would be confused by M&S's advertisements and would mistakenly think that M&S were a part of the Interflora network of florists.

The Law

Article 5(1)(a) of the Trade Mark Directive provides that a registered trade mark shall entitle the owner to prevent third parties not having his consent from using in the course of trade "any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered". M&S was using the Interflora trade mark in the course of trade for identical goods or services i.e. a flower delivery service. However, this protection is only available where the use complained of affects or is liable to affect the functions of the trade mark. The essential function of a trade mark is to indicate the origin of the goods or services for which it is applied.

The High Court referred various questions on the interpretation of European trade mark law to the Court of Justice of the European Union (CJEU). The CJEU clarified that the origin function of a trade mark is affected where a reasonably well informed and reasonably observant user cannot tell if the goods originate from the trade mark proprietor or a third party. The CJEU stated that in this scenario it was for the High Court to consider whether the reasonably well informed and reasonably observant internet user was deemed to be aware that M&S's flower delivery service was not part of the Interflora network, and if not, whether M&S's advertisement allowed such internet users to deduce this. The case was then referred back to the High Court for Mr Justice Arnold to apply the CJEU ruling to the specific facts of the Interflora case.

Reasonably well informed and reasonably observant internet user

In his judgment, Arnold J stated: "I must be careful not to consider the issues in this case from my own perspective, namely that of an experienced and technically literate internet user who knows precisely how Google AdWords operates and is aware of the issues." He then went on further to state that "the average reasonably well-informed and reasonably observant internet user is not particularly technically literate, does not know precisely how AdWords operates and is not aware of the issues."

While more internet users are likely to understand the distinction between natural results and paid advertisements now than they were in 2008, a significant proportion of internet users are still unaware of the difference.

Arnold J was also not satisfied that it was known that M&S were not a part of the Interflora network. Evidence was presented by Interflora that following a search for "interflora", a number of users clicked through to the M&S website only to then click through to the Interflora site. Interflora's submission, accepted by the High Court, was that users were initially confused and when they realised that M&S was not part of the Interflora network (as there was no Interflora branding on the M&S site) they chose to visit the Interflora site instead.

The Decision

The High Court held that the adverts displayed by M&S in response to searches for Interflora's trade marks did not enable the reasonably well informed and reasonably observant internet user, or enabled him only with difficulty to ascertain whether the goods referred to originated from Interflora (or from an undertaking economically connected to it) or from a third party. There was nothing in the M&S advertisements to inform the user that they were not part of the network.

"On the contrary...a significant proportion of the consumers who searched for "interflora" and the other signs, and then clicked on M&S's advertisements displayed in response to those searches, were led to believe, incorrectly, that M&S's flower delivery service was part of the Interflora network".

Going Forward

This decision highlights that the use of competitor's trade marks as keywords can result in trade mark infringement where there is room for confusion as to the origin of goods or services. However, even though the High Court ruled in favour of Interflora in this instance, as a general rule, keyword advertising promotes competition and is not inherently or inevitably objectionable from a trade mark perspective.

Infringement was found in this case primarily because of the nature of the Interflora network - a large number of member florists with some trading under their own names. Interflora also has commercial tie-ups with several large retailers making it all the more plausible that M&S's flower delivery service was part of the Interflora network.

Where it is generally known to the internet user that the competitor is a competitor (Apple and Samsung for example), then a finding of trade mark infringement is unlikely.

Final Thoughts

Actions brought under Article 5(1)(a) rely on the notion of the reasonably well informed and reasonably observant user. A significant portion of internet users are currently unable to distinguish between organic results and sponsored links and do not appreciate that adverts are triggered by the keyword search terms. However, the notion of the reasonably well informed and reasonably observant internet user will change as users become increasingly more knowledgeable and start to appreciate how sponsored advertising works. Once the average internet user becomes accustomed with sponsored links, infringement actions may be more difficult to pursue on these grounds.

In the meantime businesses can limit their liability by ensuring that the advertisement makes it clear that the goods and services concerned originate from a competitor. Alternatively, there is the possibility of raising the comparative advertising defence - analogous to supermarket adverts comparing the price of their basic consumables with those of their competitors. Arnold J indicated that the defence of lawful comparative advertising would have been interesting to consider. Unfortunately, he did not consider this in any detail, as the defence was not invoked by M&S and so the likelihood of success of such a defence remains uncertain.

Article by Joe Walsh

Photograph (some rights reserved) by Steve Chilton

 

Please note that this article discusses the legal position in the UK at the time of publication. It provides general information only but is not to be regarded as legal advice. You must take advice from a specialist lawyer in relation to your specific circumstances. Further, you should seek additional legal advice when dealing with parties based in other parts of the world or works originating from other parts of the world as the legal position may vary.

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