A new episode in Interflora v Marks and Spencer battle
Last week on Wednesday, the Court of Appeals for England and Wales (Lords Justices Patten and Kitchin and Sir Colin Rimer) at [2014] EWCA Civ 1403 announced its highly-awaited judgement on the case of Interflora, Inc., Interflora British Unit v Marks and Spencer PLC Flowers Direct Online Limited. This was a well-known case concerning keyword advertising. The importance of the case lies in the fact that the Court was expected to draw appropriate enclosure lines around use of rival trade marks as keywords in Google’s algorithm, which ultimately leads customers to access the competitor’s web link. More specifically, the issue at stake in the case was the use of Interflora’s registered trade mark, inter alia the word “INTERFLORA,” as an adword by Marks and Spencer (M&S). The proceedings alleging infringement and passing-off were initiated in December 2008. Since then, the case has been to the Court of Justice of the European Union (CJEU), and has already been to the Court of Appeal twice on the issue of survey evidence. For the whole history of the case noted by the IPKat click here.
At the third review by the Court of Appeal, Marks and Spencer (M&S) succeeded in its appeal of Interflora's High Court keyword advertising victory. The ruling of the Court of Appeal opened a new episode in the litigation, more significantly in favour of M&S, as it has overturned the Mr Justice Arnold's finding of infringement, with a retrial ordered. The judgment of the court was delivered by Kitchin LJ.
For the purposes of starting a discussion, here are some highlights:
The Court of Appeal held that the use of trade marks as adwords is not inherently objectionable because its purpose is, in general, to offer internet users alternatives to the goods or services of the trade mark proprietors (para 98).
When considering the average internet user, the learned judge had found that internet literacy has increased over the past five years and therefore he concluded that the majority of internet users were aware of the distinction between sponsored and natural search results (para 179). However, the Court of Appeal thought that the judge focused too much on the proportion of users who did not understand the distinction (para 180-181).
When looking at keyword advertising, the CJEU has held (in Google France and others) that advertisers bidding on third party trade marks must ensure that their advertisements enable the reasonably well-informed and reasonably observant internet user to ascertain, without difficulty, that the advertised goods or services originate not from the trade mark proprietor but from an unconnected third party. However, when it comes to the burden of proof in proceedings, the Court found that that Arnold J fell into error in holding that it is reversed for claims under Article 5(1)(a) of the Directive and Article 9(1)(a) of the Regulation. According to the Court, the advertiser does not have to show that use of the sign in context is sufficiently clear that there is no real risk of confusion on the part of the average consumer as to the origin of the advertised goods and services. In fact, the Court of Appeal held, the onus is on the trade mark proprietor, who must establish that "the advertisement complained of does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the trade mark proprietor or an undertaking economically connected to it or, on the contrary, originate from a third party"(Para 151).
In the High Court judgment, Arnold J introduced the concept of "initial interest confusion" into his analysis. Initial interest confusion is a concept that emanates from the US trade mark law. It has been used to encompass a wide range of situations. It is highly controversial, and the judge defined it as "confusion on the part of the public as to the trade origin of the goods or services in relation to which the impugned sign has been used arising from use of the sign prior to purchase of those goods or services, and in particular confusion arising from the use of the sign in promotional or advertising materials" (Para 154). In essence, use of a trade mark to draw in a potential customer by confusing them into thinking there is a link, even if, by the time of purchase, the consumer is no longer confused.
The Court of Appeal underlined that such a doctrine is "not helpful." The court additionally said that such a doctrine could be positively “misleading”, describing it as an unnecessary gloss on the tests of the CJEU and it should perform no part of the analysis of the national courts at least in relation to claims on use of a trade mark as a keyword (Para 158).
The Court of Appeal held that, as internet advertising on the basis of keywords is not inherently objectionable, it is essential to assess it from the point of view of the tests declared by the CJEU, which incorporate various checks and balances. It is necessary for the national court to consider the matter from the perspective of the average consumer, and to decide whether the advertiser has enabled that average consumer to ascertain the origin of the advertised goods and services and so make an informed decision. This is, in effect, a positive obligation; it is not the duty of such advertisers to avoid confusion (Para 156).
For these reasons, the Court of Appeal allowed M&S' appeal. The Court thinks that if the trial judge had not made the various errors he did, he could have come to a very different conclusion. As a result, the court has remitted the case to the High Court for a retrial, and this protracted battle looks set to continue on different principles!
However, more comments from our members will be appreciated so as to fully make sense of the Court of Appeal's 69 page judgment.
By Hasan Yilmaztekin
