The Interflora v Marks & Spencer ruling has provided some clear and helpful guidance which not only reinforces, but also expands upon, a number of previous key CJ rulings (Google France, Bergspechte) on the subject of advertising keywords. However, some aspects remain unclear and both brand owners and competitors have been left wondering whether and how they should alter their advertising keyword strategies in order to stay in line with the European law as it stands.
Article 5(1)(a)
In Google France, as restated in Interflora, the CJ stated that use of a competitor’s trade mark as an advertising keyword could only be prevented under Article 5(1)(a) of the Trade Marks Directive (formerly 89/104/EEC, now 2008/95/EC) if the use was liable to adversely affect one of the functions of the trade mark (origin, communication, investment, advertising and quality functions – see L’Oreal v Bellure). Even though the CJ has provided some useful guidance on how to determine whether there has been an adverse effect on the origin, investment and advertising functions of a trade mark, the Court did not explore the remaining functions and how they could be affected. Further, the guidance it did provide on the origin, investment and advertising functions still requires further clarification:
Origin function: Google France, as restated by Interflora, established that the origin function of a trade mark was adversely affected if a reasonably well-informed and reasonably observant internet user could not ascertain, or could only ascertain with difficulty, whether the advertised goods or services originated from the trade mark owner, from an affiliated business or an unconnected third party. Interflora seems to add another limb to the Google France test advising the referring court to assess whether the relevant internet user is "deemed to be aware, on the basis of general knowledge of the market" that M&S and Interflora were not connected. It is unclear if this second limb is applicable in all adwords cases or is unique to this case. It is also unclear how the relevant internet user’s general knowledge of the market can be measured (bearing in mind that survey evidence is often criticised by courts) and how the well-informed, observant internet user will be identified in order to accurately establish whether confusion as to origin would occur.
Investment function: In Interflora, the Court explored, for the first time, the concept of the investment function of a trade mark which allows the trade mark owner to "acquire or preserve a reputation capable of attracting consumers and retaining their loyalty". The Court concluded that if a third party’s use interfered substantially with the owner’s use of the mark to acquire or preserve such a reputation, such use would adversely affect the investment function. Even though the Court set out the new investment function test, it only gave examples of factors which would not be sufficient to lead to a finding that there had been an adverse effect on the investment function (such as a change by the trade mark owner in its strategy to attracts its customers and a switch of some consumers to the advertiser), but did not indicate which factors would be sufficient. If losing customers is not considered to have an adverse effect on trade mark owners – then what is?
Advertising function: The ruling in Google France, as restated in Interflora, appears to say that the use of a trade mark as an advertising keyword does not adversely affect the advertising function of that mark. It is not clear whether this is supposed to be conclusive or whether circumstances could arise where the advertising function might be affected. As with the investment function test, the advertising function test is laid down by reference to the negative – the Court gives clear guidance on what is not an adverse effect on the advertising function as a result of third party use (inflated price-per-click, increased advertising efforts to maintain/enhance profile) but there is no guidance as to what factors would adversely affect the advertising function.
Article 5(2)
The CJ provided a comprehensive analysis on dilution (weakening of a mark’s ability to identify goods and services for which it is registered) and free-riding (use of a sign that without due cause takes unfair advantage of distinctive character or repute of the mark) under Article 5(2), but does this really add anything to the Google France test under Article 5(1)(a)?
In broad terms, if internet users are not confused into thinking M&S is part of Interflora’s network, M&S may well escape a challenge of dilution or unfair advantage because, according to the court, an advertiser will simply be offering a commercial alternative (provided it is not an imitation) and will therefore be using the mark within the ambit of fair competition which use would not be "without due cause". Conversely, if internet users are confused, M&S may fail on all fronts. The argument becomes somewhat circular in this respect and further clarification is needed as to the precise circumstances when it would be necessary to invoke Article 5(2) if an advertiser is already caught by Article 5(1)(a).
Let’s hope that the High Court will provide clarification on some of these issues next year.
Nick Rose is head of the IP & Technology Dispute Resolution team and Rebecca Pakenham-Walsh is a senior associate in the team
