The England and Wales High Court (Chancery Division) that when retailer M&S used competitor Interflora’s trade-marked company name in M&S’ Google Adword keyword purchase, they infringed the trade-mark.

To briefly explain the digital function at issue, M&S included the keyword “Interflora” in their list of purchased Google Adwords. Thus, when Google search engine users typed in the search term “Interflora”, the results included in the “sponsored links” section an ad for M&S.

The Honourable Mr. Justice Arnold made clear that the use of the trade-marked word alone was not sufficient to justify trade-mark infringement, but this threshold was met as part of a larger internet advertising scheme to confuse customers into thinking that Interflora was part of or somehow related to M&S.

As Justice Arnold wrote,

M & S advertisements which are the subject of Interflora's claim did not enable reasonably well-informed and reasonably attentive internet users, or enabled them only with difficulty, to ascertain whether the service referred to in the advertisements originated from the proprietor of the Trade Marks, or an undertaking economically connected with it, or originated from a third party. On the contrary, as at 6 May 2008, a significant proportion of the consumers who searched for ‘interflora’ and the other Signs, and then clicked on M & S's advertisements displayed in response to those searches, were led to believe, incorrectly, that M & S's flower delivery service was part of the Interflora network. Thus M & S's use of the Signs had an adverse effect on the origin function of the Trade Marks. [Editor's note: bolded highlights are my own]

The High Court ruling means that M&S “Interflora” in future Google AdWord purchases. It also means that companies – especially in the European Union (EU) – would be wise to avoid purchasing competitors' trade-marked terms if the subsequent sponsored links do not clearly separate the trade-marked search term from the subsequently advertised sponsored link for fear of similar litigious reprisal.

We at IPilogue have been this specific flower titan legal battle as well as other Google AdWord verdicts around the world.

of the key decisions in the Google Adwords space in Canada and across the world provides a chronological perspective to the legal community’s coming to terms with this new digital disquiet.

Summary

A consensus seems to be emerging in Canada and elsewhere. Outright use of a competitor’s trade-mark in a Google AdWord purchase is not an infringement. It’s the further attempt to mislead customers by posing as or related to that trade-marked competitor. Put another way, the only arguable safe place to use a trade-mark that you don’t own is in the AdWord purchase itself – use it anywhere further in the advertising process, for example in the sponsored ad listing or the site that the sponsored ad links to, and you’re liable to get into hot water.

Commentary

From my perspective, the most fascinating part of the debate has got to be �ҴǴDz�����’s play to position itself as the neutral, non-liable service provider. Given the recent decision by the Australia court – and if we think of the Paris court decision as a bit of an outlier – most courts seem favourable to �ҴǴDz�����’s interpretation of their role.

My ongoing question to the Google public relations team – whether we’re talking AdWords or or the issues – is simple. Just because you’re working within the letter of the law, does that mean it’s the right course for your company?

My humble conclusion is that this isn't the case.

Squeezing out every last AdWord dollar at the expense of ugly legal battle headlines and general disappointment by the members of the business community who value their trade-marks is, in my opinion, not worth it in the long run. A company’s reputation and goodwill are valuable. Google has always been rich in both, so it probably has no idea what it looks like to wear down either. With �ҴǴDz�����’s current path of profits before public relations, the company may very well find out.

The post Interflora – The Latest Legal Decision in the Blossoming Google AdWords Debate appeared first on IPOsgoode.

On September 22, 2011, the European Court of Justice handed down on a series of trade mark related questions spurred by the long running dispute between international flower delivery network Interflora and English retailer Marks and Spencer. The case stemmed from a complaint raised by Interflora that Marks and Spencer used �ҴǴDz�����’s “AdWords” service to create internet advertisements targeting keywords such as ‘Interflora’, ‘Interflora Flowers’, and ‘Interflora.com’.

This use of Interflora related keywords by Marks and Spencer meant that when users visited sites where the name Interflora appeared, ads for Marks and Spencer’s own flower delivery services would be displayed. Interflora Inc. owns a trade mark on the word ‘Interflora’, and as a result, brought an action against Marks and Spencer alleging that their use of words identical to Interflora’s trade mark is unlawful.

The High Court of Justice (England and Wales), Chancery Division, which heard Interflora’s case for trade mark infringement referred questions to the Court of Justice on a series of issues related to the use of keywords identical to a trade mark, without the consent of the trade mark proprietor, by a competitor within an internet referencing service. It is important to note that the European Court of Justice’s decision does not decide the case between Interflora and Marks and Spencer, it simply clarifies the law for the High Courts of each of Europe’s member states.

As outlined in a by the court, because the use of a keyword can only be prevented by a trade mark owner if it is liable to have an adverse effect on one of the functions of that mark, each of the functions of a trade mark were examined and outlined in the course of considering the case. These functions included the origin-indicating function, the advertising function, and for the first time, the investment function of a trade mark.

In dealing with the origin-indicating function of a trade mark, the court followed its decision in Google France (). The Google France case was previously covered by the IPilogue here. In Google France, the court observed that the test to determine whether a trade mark has been infringed should consist of an evaluation of whether a reasonably well informed and observant internet user is able, based on general market knowledge, to determine whether the goods or services referred to by an advertisement originate from the proprietor of the trade mark. Applied to the Interflora v Marks and Spencer case, this element of the trade mark evaluation becomes a question of fact for the lower courts related to whether Marks and Spencer’s advertisement enabled an internet user to recognize whether or not Marks and Spencer is a member of the Interflora network.

Considering the advertising function of a trade mark, the court ruled that a rise in the cost-per-click of advertising online due to a competitor’s use of a trade mark keyword was not sufficient in every case to conclude that the advertising function of a company’s trade mark had been adversely affected. The court also commented that there is nothing wrong with a company using an internet advertising service to create competition by offering alternatives to a particular product of service; however, the trade mark owner must not be prevented from using their mark to attract customers.

The European Court of Justice recognized the investment function of a trade mark for the first time in this judgement. The court ruled that the investment function of a trade mark is adversely affected when use of the mark by a competitor substantially interferes with the owner’s ability to create or preserve a reputation capable of attracting customers and retaining loyalty with the trade mark. This consideration of the investment function of a trade mark was followed by a clarification of the scope of “dilution” (detracting from the distinctive character of a trade mark) and “free-riding” (taking unfair advantage of the distinctive character of a trade mark). The court ruled that choosing to duplicate a trade mark without due cause when selecting keywords for internet advertising may be construed as “free-riding”; however, the court made clear that this was intended to deal with cases where internet advertisers were selling replica and imitation goods by using the trade mark as a keyword to attract potential customers.

Ultimately, the European Court of Justice ruled that the decision in this case would come down to a finding of fact by lower courts as to whether or not Marks and Spencer adversely affected one of Interflora’s trade mark’s functions. However, as re-iterated in the court’s , “Where [an] advertisement displayed on the internet on the basis of a keyword corresponding to a trade mark with a reputation puts forward an alternative to the goods or services of the proprietor of the trade mark with a reputation – without offering a mere imitation of the goods or services of the proprietor of that trade mark, without causing dilution of the trade mark or detriment to its repute, and without adversely affecting the functions of the trade mark – such use falls, as a rule, within the ambit of fair competition in the sector for the goods or services concerned.”

It will be interesting to see how the High Court in the UK decides the case of Interflora v Marks and Spencer based on this ruling.

The post Flower Powers – ECJ Rules On Interflora v Marks And Spencer appeared first on IPOsgoode.

Online keyword advertising, using internet search engines such as Google and Yahoo!, continues to be a highly contentious area of the law.�� Litigation involving trademark infringement by competing companies in keyword advertising campaigns continues in Canada and around the world.�� In Canada, it appears that competing companies are allowed to utilize each others’ respective trademarks as keywords for online advertising so long as the trademark does not appear within the sponsored link or advertisement ().�� On the surface, advertisers have great latitude to use competitors’ trademarks for keyword ads.�� Yet many jurisdictions around the world attempt to prevent ads that mislead customers or damage competitors’ trademarks.��

The European Court of Justice (ECJ) has addressed the issue of misleading keyword advertising on internet search engines in Portakabin Ltd and Portakabin BV v Primakabin BV.��

The plaintiff, ., is a manufacturer and supplier of mobile buildings and is the owner of the PORTAKABIN trademark for goods in both metal and non-metal buildings, parts and building materials.�� The defendant is a competing company that also manufactures and markets its own mobile building units, such as work shelters or temporary offices.�� Primakabin is also engaged in selling and leasing used units, including those manufactured by Portakabin.

The basis of the claim against Primakabin is that it paid to have its web address and company description posted as a sponsored link when users of Google typed in 'Portakabin' or misspellings of the word.�� The heading of Primakabin’s ad, which appeared once one of those words was entered into the search engine, was ‘new and used units’. Later Primakabin changed this to ‘used portakabins’.

Portakabin commenced its action against Primakabin seeking an injunction to prevent the use of its trademark as a keyword for Primakabin’s advertisements on �ҴǴDz�����’s internet search engine.  Portakabin also sought relief from Primakabin’s use of its trademark when advertising second-hand Portakabin units.   Portakabin’s claim alleged that Primakabin greatly benefited from online keyword advertising using the PORTAKABIN trademark to market used Portakabin models.�� Portakabin also stated that the use of its trademark as a keyword and within Primakabin’s ads mislead customers, ultimately damaging the value of the PORTAKABIN mark.

In response to the reference from the national court, the ECJ provided guidance to help determine when trademark owners may prevent the use of the mark by an advertiser.�� The ECJ stated that “a trade mark proprietor is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that mark…where that advertising does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it”

Building upon this test the ECJ clarified when a trademark owner may restrict the use of a mark as keywords for internet search engines, that was used without the consent of the owner and is identical with, or similar to the owner’s trademark.

The European indicates that the owner of a trademark is entitled to prevent use, without the owner’s consent, of that mark should the use adversely affect the function of that trademark.�� The Court, referring to case law, explained that if the ad suggests there is an economic link between the advertiser and trademark owner, or the ad is vague to the extent that the origin of the goods or services is thought to be linked to the trademark owner, the conclusion must be that there is an adverse effect on that function of the trade mark.

However, in contrast the ECJ indicated that the trademark owner “cannot oppose that use of the sign, identical with its mark, if that use is not liable to cause detriment to any of the functions of that mark”.�� This assessment, by the ECJ, indicates that the core of the national courts analysis must be to determine if the average internet user would be misled to think that the source of Primakabin’s advertisement was Portakabin.

If the national court finds that the ad does not allow the average internet user, or enables them only with difficulty, to determine whether the goods or services advertised originate from the trade mark owner or from a third party, it is unlikely that the advertiser can claim not to be aware of the ambiguity caused by the ad.�� The ECJ advised, in this circumstance, that because the advertiser has full knowledge of its economic sector and chose keywords corresponding to another company’s trade mark, the advertiser cannot, in principle, claim to have acted in accordance with honest practices in industrial or commercial matters.

Despite the potential that Primakabin’s advertising campaign has to mislead internet users, the ECJ observed that the sale of second-hand goods under a trade mark is a well-established form of business, with which the average consumer will be familiar.�� As a result, the ad will likely not create the impression that the reseller and the trademark owner are economically linked or that the ad is seriously detrimental to the reputation of that trademark.�� The ECJ concluded its explanation stating that without using the trademark, the reseller who markets second-hand goods under another person’s trade mark, will have difficulty communicating such information to his potential customers without using that mark.

The ECJ then went on to analyze how Primakabin’s conduct, as a reseller of used Portakabin units, influences the plaintiff’s claim.�� Portakabin claimed that Primakabin had removed any reference to the trademark PORTAKABIN from the used mobile buildings which it was selling and replaced it with the wording ‘Primakabin’.�� This practice of rebranding was later confirmed by Primakabin.��

When a product is rebranded by a reseller, without the consent of the trademark owner and resulting in the trademark of the manufacturer being entirely concealed, the ECJ advised the national court that the trademark owner is entitled to prevent the reseller from using that mark in its advertisements.�� The ECJ continued, stating that the use of the trademark by the reseller, in this circumstance, would damage the essential function of the trademark, which is to indicate the original origin of the goods.

This reference to the ECJ clarifies the ability of keyword advertisers to utilize competitor’s trademarks.�� The national court must now consider if Primakabin’s keyword advertisements mislead internet users as to the origin of the advertised goods.�� The national court must also weight Primakabin’s business practices of occasionally rebranding Portakabin’s units when determining if the value of the PORTAKABIN trademark has been damaged.��

Advertising on internet search engines should allow broad use of keywords, including trademarks, to provide customers the ability to view as wide a spectrum of products as possible.�� It is appropriate that the ECJ holds that advertisers may utilize trademarks as keywords for search engine ads, while granting trademark owners the ability to prevent the use of their mark in ads that mislead internet users, or damage the value of the trademark. This ECJ opinion appropriately outlines the boundaries that limit keyword advertisers from utilizing competitor’s trademark while balancing the rights of trademark owners and advertisers.

The post Keyword Advertising: When are competitors allowed to use your trademark? appeared first on IPOsgoode.

Luís Miguel Poiares Maduro, the Advocate General of the European Court of Justice (ECJ), concluded in a recent recommendation to the ECJ that �ҴǴDz�����’s AdWords system does not violate trademarks when it allows advertisers to select trademarks as keyword triggers for its advertisement service.

�ҴǴDz�����’s is a service that allows advertisers to create ads that are displayed alongside Google search results (i.e. the “Sponsored Links” on the right side). These ads are triggered by specific keywords found in user search queries. What is controversial about this system is the fact that Google has allowed trademarked keywords (e.g. brand names) to be used with its service without permission from the trademark owners. Not only is there the claim that Google would be profiting from the use of an unauthorized use of a trademark, there is growing fear that the ability for any advertiser to choose these trademark keywords may lead to potential damages in lost profit and reputation (e.g. counterfeit products sold on the advertisers' websites).

There have recently been three actions taken against Google Inc. by various brand holders in the EU (, , and ). The French Cour de Cassation has referred a number of questions regarding the interpretation of �ҴǴDz�����’s use of trademarks in its AdWords service to the European Court of Justice. These three cases have since been reviewed by the Advocate General together as a single case ()

One of the main issues in all three cases was the interpretation of the rights conferred by a trademark provision found in . The provision provides that registered trademarks (and similarly ) are given protection against any unauthorized use of signs which are identical or similar to the trademark in relation to the goods and services provided, and to which there is possible confusion from the public as to the original source.

Google has argued that since the keywords are not affixed to goods nor do they conduct their business activity under them, that the use of keywords does not constitute a ‘sign’ and thus cannot be considered an infringement of trademark. It was in Poaires Maduro’s opinion that such a narrow interpretation was not what the policymakers had envisioned when drafting the provision. Keywords which correspond to trademarks can also be said to be representing those marks.

Despite this fact, Poaires Maduro stated that AdWords had not met the threshold for trademark infringement on the basis that the selection of keywords was not in the same form of goods and services as the trademark according to Article 5 (i.e. the selection of keywords was used to attract advertisers to �ҴǴDz�����’s own advertising services). He also stated that the risk of confusion for the public as to the original source of the trademark was not a sufficient concern stemming from the mere appearance of advertisements alongside the search result. Internet consumers are conscious and knowledgeable enough to understand that other sites other than the trademark holder’s site may appear in the advertisement slots.

Poaires Maduro was also careful to point out that the trademark proprietors’ push for a more expansive reach of trademarks (i.e. even a mere possibility that a system may be used by a third party to infringe a trademark makes the system in itself an infringement), would be going beyond the scope of trademark rights. An internet user’s access to information regarding the trademark should not be restricted to or by the trademark owner.

Poaires Maduro does make the conclusion that while not directly at fault in the advertisement system, Google profiting from its AdWords service means that it is no longer a neutral information vehicle. �ҴǴDz�����’s “pecuniary interests” with its advertisers removes it from the immunity of providing the “natural results” presented by the search engine. As such, Google may be liable for the content that it places in the advertisement space if trademark owners can prove specific instances of damage.

While the Advocate General’s recommendation carefully straddles the boundaries of the ‘freedom of expression v. freedom of commerce’ concepts, his recommendations are not binding on the ECJ. This is of some relief to opponents of the AG’s recommendation, who see the recommendation as a step-backwards in the development of commerce and trademark law and hope that the ECJ will consider the ramifications of such an outcome (read more about these concerns ). The ECJ must still examine the case and the final decision is not expected until early next year – however, about 80 per cent of AG recommendations are upheld by the ECJ.

The post EU Advocate General: �ҴǴDz�����’s AdWords system does not violate trademarks appeared first on IPOsgoode.