Interflora v M&S

Yesterday morning, the Court of Justice of the European Union (CJEU) delivered its eagerly awaited ruling on questions referred by the High Court in relation to the keyword advertising dispute between Interflora and M&S.

Brand owners (particularly those with a reputation) are likely to be happy with the decision, which opens up new lines of attack against competitors bidding on their trade marks as keywords.  However, advertisers need not be too disheartened:  though the door may have opened a little further for these types of claims, the CJEU has taken care not to let it swing open too widely.

In the High Court, Interflora, the world’s largest flower delivery network, claimed that M&S was infringing its registered trade marks by purchasing several keywords containing the mark INTERFLORA. Consumers searching on the internet using these keywords would be directed to a sponsored link to M&S’s online flower-delivery service.  Questions were referred to the CJEU to determine whether Interflora could prevent M&S from using Interflora as a keyword even though it did not appear in the sponsored link, and whether M&S’s actions took unfair advantage of Interflora’s reputation and diluted its distinctive brand.

The CJEU’s judgment builds on the foundations laid down in the Google France decision, which focused on whether keyword advertising will have an adverse effect on the ability of the trade mark to act as a badge of origin.  Applying this test in Interflora, the CJEU said that the High Court will need to establish whether the reasonably well informed internet user is deemed to be aware, on the basis of general knowledge of the market, that M&S is not part of Interflora’s network.

The CJEU then extended the Article 5(1)(a) test set out in Google France, meaning that brand owners will now be able to argue infringement where the use of a trade mark as a keyword “substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty” (described as the mark’s “investment” function). 

However, the CJEU has not made it easy for Interflora, stating that neither a switch of “some consumers” to M&S (prompted by the sponsored link), nor evidence that Interflora has unsecured loans had to adapt its efforts to maintain the reputation will be sufficient to show that the investment function has been adversely affected.  So what will be sufficient?  How is a trade mark owner to demonstrate an adverse effect on the investment function?  It will be interesting to see Interflora’s position on this when the case returns to the High Court.

The CJEU has also said that Article 5(2) applies in “double identity” cases, thereby paving the way for claims that keyword advertising takes unfair advantage of the reputation of a trade mark, and/or dilutes its distinctive character, and/or tarnishes its reputation.  Interestingly (although perhaps not surprisingly), the question of whether internet users can easily tell whether the advert is that of the competitor and not that of the trade mark owner or an economically bad credit loans linked undertaking (i.e. the Google Francetest) will be relevant in assessing whether there is unfair advantage or dilution.  In broad terms, if internet users are not confused as to the origin of the advert, this could satisfy the “due cause” test, leaving the competitor better placed to resist a challenge of infringement under Article 5(2).

On the face of it, the judgment appears to give brand owners more ammunition in their locker to aim at their competitors in the context of keyword advertising.  However, in practice the fact that the Google Francetest may make or break other elements of the claim means that brand owners’ rights may not have been extended as far as it first appears.  

It remains extremely important for advertisers bidding on trade marks as keywords to make clear to the informed internet user that their advertisement does not originate from the trade mark owner or an economically linked undertaking.  Advertisers should review their keyword advertising strategy in the light of the CJEU decision, but do not need to dive for cover just yet.