Guest Post: Flowers of the Trademark War

SpicyIP is glad to bring our readers a guest post on trademarks and keyword advertising. Harish Goel and Ashish Goel take us through a recent decision from the High Court of Justice of England and Wales. Although belated (largely due to inadvertent delays on my side - apologies to Harish and Ashish), the decision is useful at examining the interface of trademarks and new online business strategies. Ashish Goel graduated from NUJS in 2012 and Harish Goel is reading business at XLRI-Jamshedpur. Views are personal and not of employers.

Flowers of the Trademark War

Following September 2011’s preliminary hearing before the Court of Justice of the European Union (“CJEU”), the High Court of Justice of England and Wales, on May 21, handed down the much anticipated judgment in the celebrated dispute between Interflora and Marks & Spencer. This blog has previously discussed the CJEU opinion in the context of an Indian case here. The litigation – which ran roughly for five years since the filing of the claim in 2008 – ended (save as to appeal) with an interesting insight by Judge Arnold into the unauthorized use of rivals’ registered trademarks in online keyword advertising. Besides, this case is an interesting read for its in-depth analysis of strategies that businesses employ to market their products and services on the internet. 

Here is a quick recap of the facts of the case. Interflora (claimant) is a flower-delivery network in the UK and owns registered trademarks consisting of the word INTERFLORA. Marks & Spencer (defendant) is a renowned retailer and, like Interflora, operates a website to take orders for delivery of flowers. The judgment refers to a newsletter which suggests that INTERFLORA has been, for quite some time, a “top performing” keyword with maximum traffic in search engines and is searched for “30 times more frequently” than Marks & Spencer in the flower-delivery business. 

Marks & Spencer began bidding on INTERFLORA, INTERFLORA FLOWERS and it’s other variations on Google Adwords (a service provided by Google; not a party to this case) so that its flower-delivery service gets featured on Google search engine results and, that too, at a more preferable position than its competitors, including Interflora. See here for instance if you are not completely familiar with how Google Adwords works. The effect of this bidding came down heavily on Interflora’s search engine optimization (SEO) results. 

The bid on the keyword INTERFLORA by Marks & Spencer for online advertisement on Google led Interflora to bring a claim against Marks & Spencer for an infringement of its UK and Community Trade Mark INTERFLORA. Clearly, Marks & Spencer was using the trademark INTERFLORA to advertise its own flower-delivery services on Google which directed Google users (consumers) searching for the keyword INTERFLORA to corresponding links to Marks & Spencer’s website and thereby creating confusion as to the provider of the flower-delivery services. 

The advertisement which wrongly led Google users to believe that Marks & Spencer’s services were actually part of Interflora’s, and as Judge Arnold correctly held, defeated the origin function of trademark and offended s.5(1)(a) of the Trade Mark Directive as well as a.9(1)(a) of the Community Trade Mark Regulation. We shall seem a little to digress, but, the Indian Supreme Court too, while sitting on a special leave petition concerning Consim Info Pvt Ltd, arrived at a similar finding on a similar factual situation. 

Judge Arnold, while revisiting one of the most important functions of trademarks, namely, indicating the origin of goods or services, rightly noted that, the use of registered trademarks is bad in law if it does not “enable reasonably well-informed and reasonably attentive internet users” to ascertain the true origin of the goods or services. For a handy analysis of the different functions of trademarks, see the CJEU ruling (above). Judge Arnold also expressed clear dissatisfaction with Marks & Spencer’s QC on the point of confusion in the minds of the majority by making a more confident yet blunt observation: “...nowadays the majority of consumers appreciate this (referring to brand adverts on Google search engines). But I consider that a significant proportion do not.” 

While concurring with the views of the CJEU, Judge Arnold placed due reliance on the strong commercial network within which Interflora operates: the company has business tie-ups with several large retailers and other market agents, who trade under their own names and trademarks. This fact was of great significance in establishing infringement because, to quote Judge Arnold, “this makes it all the more plausible that there should be a connection between M & S’s (Marks & Spencer) flower delivery service and the Interflora network.” 

This was further corroborated by the Hitwise Custom Report that contained statistics relating to the visitors to Marks & Spencer’s website and what their responses were. The emphasis on Interflora’s commercial network is, of course, entirely appropriate in principle. But Judge Arnold failed to suggest standard practice for advertisers while competitive brand-bidding on Google Adwords.

If we read the full opinion of the CJEU and that of Judge Arnold, we will naturally notice that the purchase and subsequent use of rivals’ trademarks in keyword advertising (on online search engines) is not objectionable per se and, in fact, encourages competitive behaviour. However, the onus is on the advertiser to ensure that steps have been taken to remove all doubts from the minds of consumers and that the “advertisement is transparent as to the origin of the goods or services advertised in it.” 

This will always entail a dreary discussion on reported facts and evidence. Nonetheless, it is interesting to note, even on a cautionary note, that Judge Arnold does not set out universal principles relating to keyword advertising and this ruling may have little relevance to cases where the proprietor of the trademark follows a business model completely different from that of Interflora. We shall have to wait for future decisions to fill the void.