Amazon held to have infringed Lush's trademark in keyword case

In Cosmetic Warriors Ltd v Amazon.co.uk Ltd ([2014] EWHC 181 (Ch), February 10 2014), Lush Limited's Community registered trademark was held to be infringed by Amazon's purchase and use of ‘lush’ as a keyword through Google AdWords where the sponsored link, which had been triggered by a search for ‘lush’ in Google's search engine, showed the trademark in its ad. However, Amazon's use of the same keyword was not held to infringe where the word ‘lush’ was not displayed in its online ad. The display of the word ‘lush’ in Amazon’s predictive search facility was also held to infringe, as it suggested that Amazon sold Lush’s products when no Lush products were actually on offer on Amazon.co.uk.

The claimants (collectively Lush) are the owners of the Community trademark LUSH registered in respect of cosmetics and toiletries, and are the manufacturers and suppliers of cosmetics. Lush brought trademark infringement proceedings against Amazon.co.uk Ltd and Amazon EU SARL (collectively Amazon), under Article 5(1)(a) of the Trademarks Directive (2008/95/EC) in relation to Amazon's use of its mark in Google's online AdWord sponsored link service and in the operation of the Amazon UK website.

Amazon had bid for ‘lush’ in Google's pay-per-click service and two types of sponsored links were displayed after internet users typed the word ‘lush’ in Google's search engine. The first category of sponsored links complained of featured ‘lush’ in their text, and took customers to the ‘amazon.co.uk’ website, giving them the opportunity to purchase equivalent products to Lush products. The second category of ads did not feature ‘lush’ in their text.

Lush also complained about the use of the word ‘lush’ on Amazon's UK website. One complaint related to the use of ‘lush’ in the drop-down menu displayed after consumers typed the first letters of ‘lush’. For example, if customers typed ‘lu’ in Amazon's search box, words and combinations such as ‘lush bath bombs’ or ‘lush cosmetics’ would be offered as drop-down options. The drop-down options are generated by a behaviour-based search tool.

Finally, Lush complained about Amazon's use of its trademark on the webpage reached by customers who elected not to choose to click on any of the drop down-options. Specifically, such webpage featured the word ‘lush’ four times:

1. in the search box, as typed by the customer;
2. below the search box as a ‘repeat’ of the term searched;
3. below the heading entitled “related searches” in the names of the products that prior customers also searching for ‘lush’ had bought; and
4. as an entry under the “brand” section on the left hand side of the webpage. 

With regard to trademark infringement, the judge noted that, pursuant to the Court of Justice of the European Union's decision in Google France (Case C-236/08), it was common ground that there were six conditions necessary to establish infringement under Article 5(1)(a) of the directive: (i) use; (ii) in the course of trade; (iii) without the owner's consent; (iv) of a sign identical to the trademark; (v) in relation to goods or services identical to those for which the trade mark is registered; (vi) and such that it affects or is liable to affect the functions of the mark.

In respect of Lush's complaint about the use of its mark by Amazon in Google's AdWord service, the judge found that the sponsored links which featured ‘lush’ in their title infringed. Relying on Google France, the judge ruled that the first three conditions for infringement under Article 5(1)(a) of the directive were satisfied.

The judge further considered that the average consumer reading Amazon's sponsored link entitled "Lush Soap At Amazon.co.uk" would expect to find Lush soaps available on the Amazon website and indeed would persevere in trying to find Lush products before eventually giving up. Since no Lush products were offered for sale on Amazon.co.uk, the judge held that the average consumer would be confused as to the origin of the goods advertised. The judge explained that he had based his decision on the fact that customers would think that Amazon was a "reliable supplier" of a "very wide range of goods" and consequently that customers would consider that this seller would not advertise the goods if they were not for sale.

With regard to sponsored links not containing the word ‘lush’, the judge concluded that customers would not expect the sponsored link "Bomb Bath at Amazon.co.uk" to be an advertisement for Lush goods. The judge considered that internet users were familiar with sponsored links and would have expected an advert for Lush goods to contain Lush's branding.

Turning to Amazon's uses of ‘lush’ on its own website, the judge rejected Lush's complaint relating to the use of ‘lush’ in the Amazon search box as the word had been typed by the internet user, and not Amazon.

For use by Amazon of ‘lush’ in the predictive function of its search facility (as indeed for other uses of ‘lush’ on Amazon's website),  the judge considered the first three conditions for infringement under Article 5(1)(a) of the directive to be satisfied as the word ‘lush’ was displayed as part of Amazon's own "commercial communications". The judge's view was that it did not matter that customers did not know how the options in the drop down menu of the Amazon search tool had been generated. He considered that it was irrelevant that the goods to which the customers were ultimately directed did not make any reference to ‘lush’ since the initial expectation of the customers, seeing the drop down menu, was that the products which would be offered to them would be Lush's products.

In addition, the judge found that the advertising function of the mark was affected since Lush's evidence was that they had built the reputation of their mark to attract custom, and Amazon had damaged that reputation by using Lush's trademark to sell the goods of third parties.

The judge also recognised that Lush had built an image of ethical trade and that it had refused to have its products sold on Amazon in order to preserve that image. The judge therefore found that Amazon's use affected the investment function of Lush's trademark.

The judge found that the presence of the word ‘lush’ below the search box also infringed, despite the fact that it effectively repeated the search term typed by the customer in the Amazon search box. The judge considered that the use of the word ‘lush’ under the search box affected the origin, advertising and investment of Lush's mark. He remarked that Amazon, in response to a search for ‘lush’ in its search function, could have displayed a "no results found" notice as it Amazon did not offer to sell Lush products. Instead, Amazon had displayed products on its webpage as well as the names of customers' prior related searches containing the word ‘lush’, which he considered led customers to believe that they would be able to get Lush products by clicking through. The judge therefore considered that there was confusion as to the origin of the goods and that the advertisement and investment functions were also affected. The judge made similar findings in relation to the use of "lush" in the related search results.  

Finally, in relation to the use of ‘lush’ in the ‘brands’ section on the left hand side of the page, the judge rejected the claim of infringement as he considered that the products displayed by clicking on the Lush brand were "properly branded" (although unrelated to the claimants).

Separately, the judge also found Amazon.co.uk Ltd and Amazon EU SARL to be jointly liable because they had acted in concert pursuant to a common design. Amazon.co.uk Ltd is a UK company operating fulfilment centres in the United Kingdom through which goods are dispatched. Amazon EU SARL is a Luxembourg company operating the website at ‘amazon.co.uk’. The judge considered from the evidence that Amazon EU SARL was intimately involved in the business of the UK company. The judge concluded that, on the evidence, the UK and Luxemburg companies had joined together and agreed to work together in furtherance of a common plan which included infringing Lush's trademarks, so were joint tortfeasors.

The business impact of the decision is as follows:

• It has important consequences for online retailers, not just in how they advertise, but also for the separation of marketing and fulfilment operations between different corporate entities (often registered in different territories).
• It reiterates that it is unlawful to purchase and use keywords identical to third party’s registered trademarks, where the customer is not easily able to tell whether the products originate from or are connected to the trademark owner, or are from a third party.
• It is not lawful to use a third party’s trademark in this way to promote products online which are not from the trademark owner.
• Use of an online search facility (like Amazon UK’s), which, in response to a search by a customer, suggests the names of branded products which are not in fact stocked but link through to competing products, is unlawful. This aspect of Amazon UK’s business model will need to be changed.
• Companies may not escape liability by trying to rely upon the separation of the legal entities which carry out the marketing on the website and the fulfilment of the order itself, when that artificial separation is not born out in practice.  
• Advertisers are more likely to infringe if their online ads contain a disputed trademark in their text and if customers perceive them as being reliable advertisers who would only advertise to sell goods which they actually have available.
• Advertisers are less likely to infringe if their online ads do not display the disputed trademark in their text and if customers would expect advertisements emanating from the trademark owner to display the trademark.
• Advertisers may still infringe if their ads do not feature the trademark in their text; the nature of the trademark owner's business will be taken into account in assessing infringement.

Joel Smith and Alexandra Leriche, Herbert Smith Freehills LLP, London