Mixed bouquet for M&S as AG gives opinion on keyword advertising

European Union
In Interflora Inc v Marks & Spencer plc (Case C-323/09, March 24 2011), the advocate general has stated that advertisers should be able to "bid" on competitors' famous trademarks in search engine keyword advertising in order to present themselves as a commercial alternative, without being found to have taken unfair advantage of the reputation of those competitors.
 
Interflora Inc is a famous flower delivery service - if an internet user searches for it on any of the major search engines, it will appear top of the list of natural search results. On some search engines, a search for the name will also display adverts - sponsored listings - for Interflora's competitors. This is because those competitors, like Marks & Spencer, have "bid" on Interflora's name as a keyword, paying so that those looking for Interflora will also see their online offerings. This is the practice Interflora challenged, bringing proceedings in the High Court of England and Wales for infringement of their famous trademark.
 
The court referred questions to the Court of Justice of the European Union (ECJ) in 2009 (for further details please see “Questions to be referred to ECJ in INTERFLORA case”), and the advocate general has now given his non-binding opinion in advance of the ECJ’s ruling, which should arrive later this year. The reference is the latest in a series of such references in recent years - including the Google (Joined Cases C-236/08 to C-238/08)and Primakabin (Case C-558/08) decisions, which were handed down last year. Each of those decisions has, with some qualifications, broadly signalled that the practice is a lawful one, so long as consumers are not confused by the sponsored listings.
 
Given the savviness of the average internet user, it will be difficult for a trademark owner to show confusion in a typical case. However, Interflora is not a typical case, because of the nature of Interflora's business. Further, Interflora has looked to exploit the additional protection provided by trademark law to well-known trademarks, which can be deployed without having to show consumer confusion. This is the prohibition on taking, without due cause, ‘unfair advantage’ of the reputation of a trademark, a concept which has been given a very wide interpretation by the ECJ in L'Oréal v Bellure (Case C-487/07). The UK Court of Appeal then described that decision as creating a "pointless monopoly" by effectively holding that any advantage gained, at least if intentional, is unlawful. L'Oréal thus appeared to suggest that Interflora might succeed on this point, effectively reversing the more liberal Google decision and rendering this kind of advertising unlawful in many cases.
 
The advocate general's view is that it is "obvious" that Marks & Spencer is trying to take advantage of Interflora's reputation by buying sponsored listings. However, and despite the wide ruling in L'Oréal, the advocate general did not think that what Marks & Spencer is doing is unfair. In his view, Marks & Spencer is presenting itself to internet users as a commercial alternative. This, he said, is "due cause" and permissible in view of the need to promote undistorted competition and to ensure consumers can become well informed. In expressing this view, he rejected complaints by Interflora that allowing competitors to bid on its trademark makes it more expensive for Interflora itself to bid on its own trademark - thus forcing Interflora to spend more money on advertising. While this is a true consequence of the practice in some cases, the ECJ has already rejected it as a relevant consequence in the Google cases and, again, the advocate general has rejected it here.
 
The advocate general indicated that he may think differently where a sponsored listing mentions the trademark in the advertising text itself - rather than just using it as a trigger - suggesting that, in such a case, the use will have to comply with comparative advertising law (and the conditions permitting the same set out in the Misleading and Comparative Advertising Directive (84/450)).
 
The above view points to success for Marks & Spencer, but Interflora may well succeed on another ground as a consequence of its unusual business model. Interflora is not one business, but a network of independent florists. In the advocate general's view, that raises the possibility that a consumer searching for Interflora and viewing an advert for Marks & Spencer may consider that Marks & Spencer is a member of Interflora's network. In such a case, that consumer would be confused and the essential origin function of Interflora's trademark would be affected. This would amount to an infringement under the law that applies to all trademarks (as opposed to the additional protection afforded to famous marks, which brings in the ‘unfair advantage’ concept). If this view is followed by the ECJ, and the UK High Court is satisfied of the possibility of such confusion on the facts, Interflora may well ultimately prevail as a result of its unique circumstances.
 
The ECJ's case law in this area has been unpredictable and regularly criticised. There have been a number of calls for reform, including from the UK High Court and the European Commission. The advocate general acknowledged these complaints and, although he declined to get into them in detail, he suggested that they best be resolved by further European trademark legislation, rather than via case law. That call will likely be welcomed by the ECJ's critics, although new legislation may take even longer to arrive than most ECJ judgments.
 
The advocate general’s opinion is a sensible one and many will hope that the ECJ follows it, at least in its conclusions. Advertisers, including many brand owners, will welcome the advocate general’s view that keyword advertising using another's trademark should be allowed in order to present products and services as commercial alternatives. It should not be forgotten that, while famous brand owners often find their brands being used in this way, sometimes the famous brand owners want to indulge in the practice too - Marks & Spencer is as well-known as Interflora, in the United Kingdom at least.
 
The advocate general's view on the likelihood of confusion given Interflora's nature as a network of independent florists is an interesting one, but very specific to the facts of the case - while it has the potential to result in a win for Interflora, it is unlikely to impact on the majority of keyword advertising which does not generally involve businesses like that of Interflora.
 
Joel Smith and Darren Meale, Herbert Smith LLP, London

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