The European Court of Justice has set legal precedent by clarifying the scope of trademark protection in the EU. On 22 September the Court ruled in the case of Marks and Spencer vs. Interflora and issued a judgement that severely affects competitors who try to take advantage of a protected trademark by misusing internet referencing services.
The case concerned the use of the Google ‘AdWords’ referencing service (offering pay-per-click advertising and site-targeted advertising for text, banner, and rich-media ads) by Marks and Spencer, one of the main retailers in the United Kingdom. Marks and Spencer selected in Google ‘AdWords’ as keywords the word „interflora“ and several variants on that word, thus referencing its competitor, the American company Interflora Inc, a worldwide flower-delivery network.
Consequently, when users would search for ‘Interflora’ in the Google search engine, advertisements for Marks and Spencer would appear.
Upon action being brought against Marks and Spencer for trade mark infringement by Interflora, the High Court of Justice of England and Wales turned to the Europan Court of Justice with several questions on the nature of trademark in the circumstances at hand.
Use of identical keywords can undermine the investment function
In response the Court expanded on its ruling of March 2010 (judgement in Joined Cases C-236/08 to C-238/08 Google France and Google Inc. et al. v Louis Vuitton Malletier et al) in which it held that Google had not infringed trademark law by allowing advertisers to purchase keywords corresponding to their competitors trademarks as long as internet users could easily establish from which undertaking the goods or services covered by the ad in question originated.
The Court, with judge prof. Marko Ilešič serving as rapporteur, now added that that the function of indicating origin be in some cases adversely affected by the use of a keyword that is identical to a protected trademark. The Court held that the use of keywords that are identical to protected trademarks can undermine the investment function of a reputed trademark and can prevent the proprietor from attracting consumers and retaining their loyalty, entitling the proprietor in question to take action against such use.
The High Court of Justice of England and Wales must now therefore examine if Interflora’s reputation and customer retention was threatened by the actions of Marks and Spencer.
Degree of uncertainty
The Court also clarified that when it comes to online advertisements based on keywords corresponding to trademarks that are offering an alternative to the goods covered by the trademark (and not a mere imitation of the trademarked goods), such use falls within the scope of fair competition and cannot be subject to complaints by the trademark holder.
Iza Junkar, intellectual property lawyer with Hogan Lovells, finds the judgement to be rather controversial. She told Aphaia Blog: “I think this decision brings a degree of uncertainty into trademark law. The introduction of an investment function of the trademark, which, perplexingly, overlaps, but does not coincide with the advertising function, is sure to lead to a flurry of fresh litigation and will inevitably require new preliminary references to be made even for cases which up until now seemed fairly straightforward.”