Interflora Pours Weedkiller On Key Words

In Brief

On 21 May 2013, Interflora obtained judgment in the High Court in London against Marks & Spencer ("M&S") for use of Interflora's registered trade marks as a Google AdWord.

In essence the judgment says that M&S infringed Interflora's trade marks because, having purchased from Google certain keywords containing "interflora", in its advertisements which came up on a Google search using those keywords, M&S failed to make clear to internet users that the M&S flower delivery service had no connection with Interflora. A significant proportion of internet users were led to believe that M&S's flower delivery service was part of the Interflora network.

A further hearing on the level of damages payable by M&S will take place. This may not be the end of this long running dispute between the parties; M&S may well decide to appeal the decision.

The effect of the ruling is that, if a third party's trade mark is used as an AdWord, the advertisement must make clear that it does not originate from (nor is it economically connected with) the trade mark owner, and the onus is on the advertiser to do this. How this will work in practice remains to be seen. It should be noted that the judgement does not prevent the use of third parties' trade marks as Google AdWords in the UK (and, since M&S did not attempt to defend the claim by contending that its advertisements were comparative advertising, does not deal with the issue of trade mark use in comparative advertising, whether on the internet or otherwise).

The issue of the use of trade marks as keywords still varies considerably between jurisdictions, even within the European Union.

Background

The claimants, Interflora Inc and Interflora British Unit (together "Interflora"), operate the well known online flower delivery service which enables orders for flowers to be placed over the Internet. Interflora Inc. is the registered proprietor of two registered trade marks:

• UK registered trade mark INTERFLORA (UK No. 1329840) in respect of various goods and services relating to plants and flowers, including advertising services for florists, information services for sale of flowers and transportation of flowers; and
• Community Trade Mark INTERFLORA (CTM No. 909838) for various goods and services including for plants and flowers, advertising services for florists, transportation of flowers and information services for the sale of flowers (both the "Trade Marks").

The defendant, "M&S", operates an online flower delivery service through the M&S website.

Google's AdWords service

Google operates the well-known internet search engine google.co.uk, one of the most popular websites in the UK. Google's main source of revenue is from advertising and the principal way in which Google provides advertising is via its AdWords service. This works as follows:

• An advertiser can purchase (or "bid on") certain keywords, which are known as AdWords.
• When an internet user carries out a search using Google and that search includes a keyword, on the search engine results page ("SERP"), in addition to the (reproduced) search term and the natural or "organic" results of the search, a shaded box appears.
• The shaded box is currently headed "Ads" although it was previously headed "Sponsored Links" (Google's AdWords service has evolved since 2008), and the box usually promotes three advertisements.
• More than one advertiser may purchase an AdWord - the advertiser appearing in the shaded box pays to Google an amount (known as "cost per click") whenever a user clicks through to the advertiser's website.
• Google will also give a 'quality score' to each advertisement and this will also influence where the advertisement is ranked in the 'Ads' box. Factors that are considered include the relevance of promotional text, the 'click through rate' and the relevance of the landing page.
• Subject to the quality score, the advertiser who bids to pay the highest cost per click will have its advertisement appear highest in the shaded box. Therefore, popular keywords are more expensive than unpopular ones.
• Advertisers also have the ability to match a keyword to the user's search in different ways. There may be an 'exact match' (where the search term entered by the user must be the same as the selected keyword) or a 'phrase match' (where the search term must contain the same words as the selected keyword - in the same order - but it may include additional words before or after the phrase) or a 'broad match' (where the search term can be matched to different variations of the selected keyword). There is also an 'advanced broad match' which allows a search term to be linked to different keywords which are not the same but still relevant.

It is also worth noting the following factors, mentioned in the judgment, which can also affect both the positioning of advertisements with Google AdWords and how users are influenced by advertisements:

• The appearance of the SERP can vary depending on the device being used, e.g. personal computer, laptop, tablet or smartphone. It can also vary depending on software and the browser which is used.
• The appearance of the SERP can be affected by the user's browsing history, in particular where there are cookies on the user's device.
• A study commissioned by Google in 2011 shows that 71% of users look at advertisements at the top of a desktop SERP compared to 70% at the natural results above the 'fold' (i.e. where the user needs to scroll down) and just 21% below the fold. On average users look at the advertisements for 2.5 seconds, the natural results above the fold for 2.2 seconds and the natural results below the fold for 0.2 seconds.

What did M&S do?

M&S purchased from Google several AdWords containing the name "interflora". This meant that advertisements for M&S's flower delivery service would be displayed on the SERP whenever an internet user entered the search term "interflora" (or similar terms) on the Google search engine.

Prior to May 2008, Google would block a keyword from being purchased as an AdWord by a third party if the trade mark owner notified Google that the keyword had been registered as a trade mark. On 5 May 2008, Google changed its policy for the UK and Ireland and ceased to block keywords registered as trade marks.

On 6 May 2008, M&S started bidding on "interflora" and other keywords relating to "interflora" - this had the effect of triggering the display of advertisements for M&S's Flowers Online service on the SERP. Notably, the advertising text in the M&S advertisement did not incorporate or reference the Trade Marks - there was no reference to Interflora.

In January 2012, Interflora implemented a "golden box" brand defence strategy - ensuring that all Interflora related sites appeared in the shaded box and ensuring that M&S's advertisements were excluded. This meant that Interflora incurred additional bidding costs payable to Google, but as a result M&S's share of internet traffic declined.

The claim

In 2008, Interflora brought proceedings against M&S alleging infringement of the Trade Marks under Article 5(1)(a) and Article 5(2) of the Trade Mark Directive¹. Article 5(1)(a) of the Trade Marks Directive (89/104/ EC) confers on a trade mark proprietor the right to prevent third parties using (without consent) 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". Article 5(2) provides that a proprietor may prevent all third parties not having his consent from using in the course of trade "any sign which is identical with or similar to the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark".

There was no dispute between the parties concerning the validity of the Trade Marks nor did M&S dispute that Interflora had acquired a substantial reputation in the UK and elsewhere in the European Union in relation to flower delivery and the operation of a flower delivery network.

European Case Law

Case law of the Court of Justice of the European Union ("CJEU") has established that a trade mark proprietor can only succeed in a claim under Article 5(1)(a) of the Directive if six conditions are satisfied:

(i) There must be use of a sign by a third party within the relevant territory;

(ii) The use must be in the course of trade;

(iii) Use must be without the consent of the proprietor of the trade mark;

(iv) It must be of a sign which is identical to the trade mark;

(v) It must be in relation to goods or services which are identical to those for which the trade mark is registered; and

(vi) It must affect or be liable to affect the functions of the trade mark (following Case C-206/01

Arsenal Football plc v Reed [2002] ECR I-10273, Anheuser-Busch, Case C-48/05 Adam Opel AG v Autec AG [2007] ECR I-1017, Case C-17/06 Céline SARL v Céline SA [2007] ECR I-7041 and Case C-62/08 UDV North America Inc v Brandtraders NV [2009] ECR I-1279).

By the time of the trial, there was no dispute as to the first five conditions and it was common ground between Interflora and M&S that the signs used by M&S were identical to the Trade Marks.

The sixth condition is satisfied if the use of the sign affects or is liable to affect one of the functions of the trade mark, the functions being:

• Origin;
• Advertising;
• Investment; and
• Communication

following Case C-487/07 L'Oréal SA v Bellure NV [2009] ECR I-5185 at [58]-[64].

The Decision

The Judge, Mr Justice Arnold, concluded that, as at the relevant date of 6 May 2008:

• M&S's advertisements did not enable reasonably well-informed and reasonably attentive internet users to ascertain whether the service referred to in the advertisements originated:
  • from Interflora;
  • an undertaking economically connected with Interflora; or
  • a third party.

Therefore such users would not know that M&S flower delivery service was in competition with, rather than part of the Interflora network; there was nothing in Marks and Spencer's advertisements to inform the user that Marks and Spencer's flower delivery service is not part of the Interflora network.

• The nature of the Interflora network made it difficult for the reasonably well-informed and reasonably observant internet user to determine whether M&S's service is part of the Interflora network.²
• A significant proportion of internet consumers (who carried out a Google search for "interflora" and then clicked on M&S's advertisements) were led to believe that M&S's flower delivery service was part of the Interflora network.
• As a result, M&S's use of the purchased AdWords had an adverse effect on the origin function of the Interflora trade marks.

Accordingly, M&S infringed Interflora's Trade Marks under Article 5(1)(a) of the Trade Marks Directive and Article 9(1)(a) of the Regulation.

Points of note

The judge made the following points of note in his judgment:

• Third party keyword advertising is not inherently or inevitably objectionable from a trade mark perspective. On the contrary, CJEU case law recognises that keyword advertising promotes competition.
• The case law of the CJEU establishes that M&S's use of the purchased AdWords adversely affects the origin function of the Trade Marks if M&S's advertisements do not enable reasonably wellinformed and reasonably observant internet users, or enable them only with difficulty, to ascertain whether M&S's flower delivery service originates from Interflora, or an undertaking economically connected with Interflora, or originates from a third party.
• M&S's advertisements must be considered from the perspective of the reasonably well-informed and reasonably observant internet user, initially as at 6 May 2008.
• The average reasonably well-informed and reasonably observant internet user is not particularly technically literate, does not know precisely how AdWords operate and is not aware of the issues.
• In considering what constitutes a reasonably well-informed and reasonably observant internet user, the judge said that although internet literacy has steadily increased in recent years, even now a significant proportion of internet users in the UK do not appreciate that, unlike the natural search results, the advertisements appear on the SERP because the advertisers have paid for the advertisements to be triggered by a keyword consisting of or related to the search term entered by the user.
• It is the responsibility of the advertiser to ensure that the advertisement is designed and presented in a manner which does enable the reasonably informed and reasonably observant internet user without difficulty to ascertain the origin of the goods or services advertised.
• M&S made no attempt to adduce any direct evidence of consumer reaction to its keyword advertising. This did not mean that it should be inferred that the evidence would have assisted Interflora's case but it did mean that M&S could not rely upon such evidence to rebut the conclusions drawn from the evidence before the court.

Comment

This ruling does not mean the end of services offering cost per click advertising.

Although Google no longer operates a trade mark complaints procedure in the UK by which trade mark owners can apply to block their trade marks being chosen as keywords, other search engines, such as Microsoft's Bing and Yahoo!, do offer such services. Thus the decision will not be of current practical relevance to all search engines.

There were several points of law that were not raised by M&S - in particular the issue of comparative advertising that could have an impact on any future case.

The overall "take" is that there is nothing in the judgment that appears detrimental to the interests of trade mark owners wishing to protect their rights - and the judgment certainly does not give a blanket right to third parties to use another's trade mark as a keyword. Nor does it prohibit the use of trade marks as keywords. Rather the judgment indicates that if a third party's trade mark is used as a key word, any content appearing on the screen of the person conducting the search (other than the natural results of that search) must make it clear that such content does not originate from (or is not economically connected with) the trade mark owner.

This will have marketeers scratching their heads before any purchase, trying to ensure that there could be no implication of connection. For some brands, with obvious public rivalry like Coca Cola and Pepsi, the argument may be harder to run simply because they are so publicly not connected. For more borderline cases, the choice of advertising text becomes key, especially balancing the desire for snappy creative with the need to make clear there is no connection. How this will work in practice remains to be seen. Interesting times may still be ahead!

It is clear that the use of keywords in advertising on the internet should be properly controlled - and any policy in this respect carefully reviewed and adhered to. This is particularly the case where it may be expected that the advertisements shown as a result of the use of keywords will be seen in more than one jurisdiction.

Footnotes

1. The Trade Mark Directive in force in May 2008 was numbered 89/104/EEC. It was replaced by a codified version, 2008/95/EC with effect from 28 November 2008. The alleged infringements started when the original Directive was in force, and (as the judge noted) there is no reason to think that the codification has changed the law in any relevant respect. u

2. As the judge noted, Interflora has commercial agreements in place with several large retailers (including Tesco and the Co-Op. It is a feature of the Interflora network that members trade under their own names and therefore it makes it more plausible that there should be a connection between M&S delivery service and the Interflora network.

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