For an update please see Part 2
With the increasing importance of the internet in commerce trademark law is having to catch up with new ways of advertising, in particular Google Adwords. The ongoing Interflora v Marks & Spencer case looks as though it might have a serious impact on using trademarks as Adwords.
There have been a number of recent cases relating to Google Adwords, a service where someone pays for their advert to appear when a person searching on Google enters a certain word or combination of words.
Interflora is bringing a trademark infringement action against Marks & Spencers on the basis that M&S have been bidding on the trademark ‘interflora’ to promote their own flowers. This action was started in 2008, but is only now coming to fruition.
The European Court of Justice (ECJ) has answered several questions raised by national courts in trademark infringement proceedings related to Adwords in previous cases, but the law is still far from settled.
So where are we at the moment? (October 2010)
An essential requirement for infringement is ‘use in the course of trade’.
Thus far the ECJ has held that Google selling a trademarked Adword is not use in the course of trade by Google, but it is used in the course of trade for someone to buy an Adword. The reason of this is that Google are not using the trademark in the course of their ‘commercial communications’ with the public, whereas the person buying the Adword is.
Thus, Google are not directly liable for trademark infringement but the person buying the Adword can be.
This seems to be logical. If someone sells me advertising space in their newspaper I can run whatever sort of libellous adverts I like to: so and so is a wretched what-not. The person selling the advertising space is not liable for my misuse of that space and cannot be held responsible for libel.
So how does this interpretation of ‘use in the course of trade’ relate to the infringement provisions?
For simplicity let’s look at this in the context of trademark infringement in the UK. What constitutes trademark infringement is set out in section 10 of the Trademarks Act 1994.
Section 10 has three main parts, and we’ll look at each of these in turn.
Section 10(1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
So if someone buys a trademarked Adword to promote identical goods/services to those covered by the trademark then they should be held to be infringing? Simple it would seem?
Apparently not. The ECJ decided that even if someone uses an identical mark for identical goods/services there is no infringement unless the ‘advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party’.
In other words there has to be some confusion on the part of the public as to whether or not the goods/services are coming from the trademark owner or a third party.
But this isn’t part of section 10(1), it’s part of section 10(2):
Section 10(2) A person infringes a registered trade mark if he uses in the course of trade a sign where because –
(a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or
(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.
So the ECJ is asserting a requirement for infringement under s.10(1) that normally only previously existed under s.10(2).This seems to be a further creeping extension of the idea put forward by the ECJ that for infringement to occur one of the ‘functions’ of the trademark must be compromised, in this instance the ‘origin function’. However, it seems that the ECJ has extended the idea of compromising a function of a trademark to the extent that it essentially means a risk of confusion.
Allegedly the European Commission thinks that the ECJ is wrong in asserting that there should be a likelihood of confusion for section 10 (1) actions, and is pressuring them to correct this. Which is where things get interesting, as the s.10(1) ground is being revisited in the Interflora case where M&S purchased the Adword ‘interflora’ to promote its own flower business.
The questions referred to the ECJ by the UK court can be found here.
So it’s possible the ECJ might go back on its previous ruling and remove the requirement for confusion in a section 10(1) action for Adwords. If they do relinquish the requirement for a likelihood of confusion then it seems fairly certain Interflora will win.
Interflora is also bringing an action under s.10(3):
Section 10(3) A person infringes a registered trade mark if he uses in the course of trade in relation to goods or services a sign which is identical with or similar to the trade mark, where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
This has to our knowledge not yet been tested in relation to Adwords, and if Interflora can successfully argue that M&S have taken unfair advantage of their reputation or that M&S’s use is detrimental to the distinctive character of their trademark then they might succeed on this ground along with s.10(1). It seems there might be good arguments that the M&S use take unfair advantage of the Interflora reputation as people searching for Interflora are being offered M&S’s flowers.
What’s the future?
If Interflora are successful under either s.10(1) or s.10(3) then this case may herald the end of bidding on Adwords that are competitor’s trademarks, unless there is a valid reason (as discussed in the Portakabin v Primakabin case, which is outside the scope of this article).
The above is a simplification of a very complex issue, about which there seems to be much confusion, even on the part of the ECJ. However, and in summary, the law is still essentially undecided on the permissibility of using trademarked Adwords.
Until the Interflora judgement (hopefully) clarifies the situation we would advise anyone against using their competitors’ trademarks as Adwords unless they have a valid defence to trademark infringement.
If you need any advice on using trademarks as adwords please do not hesitate to contact us.
Article continued in Part 2.
