Interflora v M&S - Adwords are ok says Court of Appeal

In what circumstances does keyword advertising amount to trade mark infringement?  Theo Savvides, a partner at Bristows LLP, considers the Court of Appeal decision in Interflora Inc and another v Marks and Spencer plc [2014] EWCA Civ 1403, [2014] All ER (D) 55 (Nov)

A brief background to this long-running dispute

M&S is one of the best-known retailers in the UK and has sold flowers online since at least 2000. Interflora is the operator of the well-known flower delivery network. M&S advertises its flowers online and uses the Google AdWords service, so that when users of Google’s search engine enter ‘interflora’ as a search term, an advertisement appears which promotes the M&S flower service and has a link to M&S’s website, though the word ‘interflora’ does not appear in the advertisement itself. Interflora sued M&S for trade mark infringement.

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© Danard Vincente

The case has been running for just short of six years. Over this time it was referred to the Court of Justice of the European Union (CJEU) before then proceeding to trial. The CJEU ruled that the test for liability focused on the manner that the advertisement was presented in response to the trade mark search term. The key question was whether M&S’s advertisement on the Google search engine results page enabled the reasonably observant and attentive internet user to ascertain whether the goods or services referred to in the advertisement come from the trade mark proprietor (or a linked entity) or from a third party.

The High Court found that M&S infringed on the basis that those who searched ‘interflora’ and then clicked on the advertisement were led to believe incorrectly that M&S’s flower service was part of the Interflora network. In coming to this decision, the judge held that M&S had the onus of proving that the advertisement was clear that the goods or services advertised did not come from the trade mark owner or an entity connected with the trade mark owner.

This decision has now been overturned by the Court of Appeal because the court below was found to have made errors of law, as well as erring in its application of the evidence. In view of this, the Court of Appeal remitted the matter for a retrial.

On what grounds did M&S bring this appeal?

It argued that the judge had:

  1. wrongly applied a reverse burden of proof on the defendant to prove that its advertisement was clear as to the origin of the goods or services advertised
  2. misapplied the ‘reasonable internet user’ test laid down by the CJEU by considering a range of individuals rather than a single reasonably observant and attentive internet user, and setting the bar for inclusion so low that it only excluded those who were ill-informed or unobservant
  3. incorrectly decided that initial interest confusion was sufficient to establish liability
  4. granted an injunction which was too broad in being EU-wide, which lacked the required specificity and precision, and which required M&S to negative match the word ‘interflora’ on all non-trade mark keyword campaigns to prevent its advertisements from being delivered in response to a search including the word ‘interflora’ as a result of Google’s advanced broad matching function that enables an advertisement to be delivered in response to a search term even though the term is not one of the advertiser’s AdWords

How did the Court of Appeal identify the ‘reasonable internet user’ in trade mark infringement cases and how does this differ from the High Court’s approach?

The Court of Appeal found that in considering the test, it makes no difference whether the question is asked and answered from the perspective of the single hypothetical well-informed and observant internet user or whether that hypothetical person provides the benchmark for identifying the population of internet users whose views are material. To this end, it found that the judge was entitled to have regard to the effect of the advertisements on a significant section of the relevant class of consumers. However, it warned that only discounting the views of internet users who were ill-informed or unobservant ran the risk of setting the bar too low. The Court of Appeal stressed that it was only the effect of the advertisements on internet users who are reasonably well-informed and reasonably observant that must be taken into account.

What was the Court of Appeal’s view on the relevance of the doctrine of initial interest confusion in this case?

The Court of Appeal found that the judge had erred in placing reliance on initial interest confusion. This is a concept arising where the average consumer’s initial confusion might be dispelled prior to the point of sale, but the consumer might continue with the purchase despite no longer being confused. The Court of Appeal said the only test to consider if the functions were affected was the ‘reasonable internet user’ test set out by the CJEU. It went on to say that the doctrine of initial interest confusion was a ‘potentially misleading gloss’ which should form no part of the analysis of trade mark infringement, at least in keyword advertising cases.

What was the Court of Appeal’s view on M&S’s other grounds of appeal?

The Court of Appeal held that the judge had been entitled to apply an EU-wide injunction. In coming to this decision the court considered the Court of Justice’s decision in DHL Express France SAS v Chronopost SA [2011] All ER (D) 105 (Apr), holding that in considering whether to apply an EU-wide injunction the court must:

  1. bear in mind that the injunction may only prohibit uses which are liable to affect the functions of the trade mark
  2. limit the injunction if it finds that the acts of infringement are only in a part of the EU

As to the form of the injunction granted, the Court of Appeal declined to make a finding as the case was to be remitted to the High Court and this matter could be left to the judge if infringement were found. In coming to this point, the Court of Appeal indicated that the judge should apply a proportionality assessment that takes into account:

  1. the need to ensure the protection of the trade mark proprietor’s rights and to provide an appropriate deterrent having regard to the principles of equivalence and effectiveness, balanced against
  2. the right of the advertiser to engage in legitimate competitive keyword advertising and the potential chilling effect of an injunction upon that right

Finally, the Court of Appeal held that the judge had been correct in finding that there could be trade mark infringement where an advertisement was delivered in response to a search for a trade mark term when the advertiser had not bid on the term as an AdWord but the advertisement had been delivered as a result of Google’s advanced broad matching function. The Court of Appeal made clear that in assessing whether an advertiser has used the trade mark in these circumstances, the court would need to have regard to whether the object and effect of the advertiser’s activities had been to trigger the appearance of its advertisements in response to searches for the trade mark term.

Does the judgment help to clarify uncertainties around the legality of keyword advertising?

The Court of Appeal repeatedly made the point that keyword advertising was not inherently or inevitably objectionable. The policy behind this is that trade mark rights should not prevent fair competition where the aim of the advertiser is to offer alternatives to the goods or services of the trade mark proprietor.

Perhaps the most important aspect of the Court of Appeal’s judgment was to overturn the reverse burden that the judge at first instance had held lay on M&S. In coming to this decision, the Court of Appeal stressed that it was not the advertiser’s duty to avoid infringement. This finding on burden redresses the balance for legitimate advertisers. There has been a shift back in their favour on the basis that though advertisers have to exercise caution in ensuring an advertisement does not infringe, the burden is not on them to prove that they do not infringe.

However, ultimately what matters when preparing an advertisement or opposing one, is what is written in the advertisement and how the average consumer perceives it in the context of the search engine results page. Whether there is infringement will ultimately depend upon the reasonable internet user’s perception of the advertisement and how it is presented.

Originally published on WIPIT’s sister site, LexisPSL IP&IT.

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