Interflora faces fresh call to prove M&S keyword infringement

Interflora brought an action against Marks & Spencers (M&S) due to the retailer’s identical use of its well-known INTERFLORA UK and Community trademarks. The High Court previously ruled in favour of Interflora, but in November M&S appealed and the case has now been remitted back to the High Court.

Key messages (for retailers)

Keyword advertising is not inherently or inevitably objectionable from a trademark perspective. Retailers and advertisers are entitled to purchase keywords to promote their products and offer consumers attractive alternatives to goods already being offered for sale. This is fair competition in the market.

It is not the duty of retailers or advertisers to avoid confusion. A rights holder wishing to complain needs to show that the relevant advertisements do not enable the average consumer to determine the origin of the advertised goods or services and so make an informed choice.

The concept of ‘initial interest confusion’ (ie, temporary confusion that a consumer may experience in relation to the origin of a product or service which is dispelled before the purchase) has been discredited under EU trademark law. The Court of Appeal suggested that initial interest confusion does not signify an adverse effect to a trademark’s origin function or establish a likelihood of confusion. Instead, in deciding whether the use of a sign has an adverse effect on the origin function, the test is to adopt the average consumer’s perspective on whether an advertisement enables the consumer to identify the origin of the advertised goods or services.

Identifying the average consumer as a benchmark from which to assess infringement involves a qualitative global assessment of the facts of the case. Here, the ‘average consumer’ is “a reasonably well-informed and observant internet user”.

Facts

In 2008 M&S purchased a number of keywords from Google’s AdWords service to promote its online flower delivery service, including the word and variants of ‘interflora’. A Google search for ‘Interflora’ triggered the display of an M&S advertisement promoting M&S Flowers Online, which appeared as the second-highest result (following Interflora’s own) in sponsored search results.

Interflora brought an action for infringement of its UK and Community trademarks on the basis of M&S’s identical use of its well-known INTERFLORA UK and Community trademarks (Article 5(1)(a) of the EU Trademarks Directive), and claimed dilution and unfair advantage caused to the reputation of its brand (Articles 5(1)(c) and 5(2) of the directive).

In order to prove trademark infringement under Article 5(1)(a), Interflora was required to demonstrate that M&S’s keyword use constituted use of a sign in relation to goods or services that were identical to its own, and that such use affected or was liable to adversely affect one of the functions of the INTERFLORA trademarks – that is:

• the origin function, designating the trade origin of Interflora goods;
• the advertising function; or
• the investment function.

To prove unfair advantage under Article 5(2), Interflora needed to show detriment to the distinctive character or repute of the INTERFLORA mark, without due cause. The mere use of a keyword by a competitor to draw internet users’ attention to alternative products would be insufficient to show dilution, tarnishment or an adverse impact on the functions of Interflora’s trademarks.

High Court decision on keyword advertising

In May 2013 the High Court of England and Wales found that M&S had infringed Interflora’s registered trademarks under Article 5(1)(a) of the directive and Article 9(1)(a) of the EU Community Trademark Regulation. The court confirmed that a significant proportion of consumers searching for ‘interflora’ who clicked on the online M&S advertisement were led to believe, incorrectly, that the M&S flower delivery service formed part of the Interflora network and, as a result, that M&S’s use had an adverse effect on the origin function of the INTERFLORA marks. However, the trial judge was not convinced that M&S’s activities had taken unfair advantage of the distinctive character or repute of Interflora’s trademarks under Article 5(2) of the directive.

Court of Appeal decision

The Court of Appeal has now allowed M&S’s appeal, remitting the case back to the High Court, having analysed a number of key concepts.

Defining the ‘average consumer’

The Court of Appeal confirmed that national courts must conduct a qualitative assessment when identifying the average consumer of the goods or services in a trademark infringement claim. The average consumer test is designed to provide the court with a benchmark from which to assess infringement. The Court of Appeal reaffirmed the High Court’s decision to consider the impact of M&S’s advertisement through the eyes of a reasonably well-informed and observant internet user. It also confirmed that while the trial judge was right to consider the potential impact of M&S’s advertisement on a significant class of consumers, a court’s final finding on infringement should be based on a global assessment of the facts, rather than just the question of whether a majority of consumers would be confused.

No reversal of burden of proof in infringement proceedings

The Court of Appeal rejected Justice Arnold’s suggestion that, in order to bring a double identity claim under Article 5(1)(a) of the directive, the onus of proving infringement should be reversed, such that a third party using a sign in relation to goods or services that are identical to those of a rights holder should be obliged to prove that there is no risk of confusion as to the origin of its advertised goods or services.

Following Google France, the Court of Appeal confirmed that the onus of proof lies on a mark proprietor to establish that a keyword advertisement does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to in the advertisement originate from the rights holder. While advertisers should ensure that their advertisements enable the average consumer to ascertain the actual origin of the goods or services, the burden of proof that they have not done so lies with the rights holder.

Doctrine of initial interest confusion discredited

The applicability of the ‘initial interest confusion’ doctrine – referring to the initial confusion that a consumer may experience in relation to the origin of a product or service which is dispelled prior to purchase, but nonetheless results in a purchase – was also considered.

The Court of Appeal suggested that it is not helpful to rely on a controversial doctrine derived from US trademark law where it has been used to encompass a broad range of situations. The court referred to the doctrine as an unnecessary and potentially misleading gloss on the required test that the European Court of Justice has already articulated – namely, in deciding whether the use of a sign has an adverse effect on the origin function of a trademark, the national court must decide, adopting the average consumer’s perspective, whether an advertisement enables the average user to ascertain the origin of the advertised goods or services.

Points on procedure and errors in judgment

Interflora sought to rely on consumer research to prove, among other things, that the average internet user would have been unaware of the distinction between natural and paid-for (ie, sponsored) search results and that, statistically, internet users searching for ‘interflora’ who clicked through to the M&S Flowers Online site were more likely to visit the Interflora website afterwards, thus demonstrating initial interest confusion.

On the basis of Interflora’s evidence, the High Court concluded that internet users searching for ‘Interflora’ and subsequently clicking through to the M&S website mistakenly believed that M&S’s flower delivery service formed part of the Interflora network. The Court of Appeal disagreed, as it doubted the evidentiary strength of some of the statistical data provided. It also argued that because of the High Court’s approach to the burden of proving trademark infringement, its assessment of the evidence would likely be affected, thus influencing its findings.

The Court of Appeal acknowledged that it is not for appellate courts to interfere with the findings of trial judges. However, it was compelled to do so in the circumstances due to a lack of confidence in the High Court’s stance on burden of proof and its application of the ‘initial interest confusion’ doctrine.

Use of generic keywords constitutes indirect use of ‘interflora’

In conclusion, the Court of Appeal considered M&S’s use of generic flower-related key terms without negatively matching the word ‘Interflora’. The terms had the same effect as M&S’s other keywords, such that when an internet user searched for ‘Interflora’, the M&S advertisement would still be displayed.

The High Court considered that use of flower-related terms could still constitute indirect use of the sign ‘Interflora’ as a consumer searching for the Interflora name would still be presented with an M&S search result. The Court of Appeal confirmed this position, stating that the selection of a generic key term by M&S should not be considered in isolation from other keyword matches. As the object and effect of M&S’s activities were to trigger the display of its own advertisements via an ‘Interflora’ search result, bidding on the generic flower-related terms constituted use by M&S of the interflora sign within Articles 5(1) and (2) of the directive.

Conclusion

In its second judgment issued on November 12 2014, the Court of Appeal confirmed that it had correctly identified the infringement issues for retrial and proposed that, in the circumstances, the case be put before a different judge of the Chancery Division of the High Court.

Now that the case has been remitted back to the High Court for retrial, we can hopefully expect some definitive guidance on these matters.