M&S succeeds in its appeal of Interflora's High Court keyword advertising victory

6 minute read
05 November 2014

This well-known case concerns keyword advertising. It's been going on for what seems like forever - proceedings were issued in December 2008, it has been to the Court of Justice of the European Union (CJEU), and has already been to the Court of Appeal twice on the issue of survey evidence.

Today (5 November), at the third outing at the Court of Appeal, Marks and Spencer (M&S) was successful for a third time in overturning a decision of Mr Justice Arnold. This one is perhaps more significant for M&S, as it has overturned the judge's finding of infringement, with a retrial ordered.

We will be preparing a full article on the case once we have digested the Court of Appeal's 69 page judgment in a little more detail, but in the meantime, here are the highlights:

  • The Court of Appeal held that internet advertising on the basis of keywords corresponding to trade marks is not inherently objectionable because its purpose is, in general, to offer internet users alternatives to the goods or services of the trade mark proprietors.
  • When considering the average internet user, Arnold J had found that internet literacy has increased over the past five years - he held that the majority of internet users were aware of the distinction between sponsored and natural search results. However, the Court of Appeal held that the judge focused too much on the proportion of users who did not appreciate the distinction.
  • When looking at keyword advertising, the CJEU has held (in Google France and others) that advertisers bidding on third party trade marks must ensure that their advertisements enable the reasonably well-informed and reasonably observant internet user to ascertain, without difficulty, that the advertised goods or services originate not from the trade mark proprietor but from an unconnected third party.
  • Despite the fact that the onus is on the advertiser to ensure that its advertising falls the right side of the line, when it comes to proceedings, this does not mean that the burden of proof is reversed; it does not have to show that use of the sign in context is sufficiently clear that there is no real risk of confusion on the part of the average consumer as to the origin of the advertised goods and services.
  • In fact, the Court of Appeal held, the onus is on the trade mark proprietor, who must establish that "the advertisement complained of 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 by the advertisement originate from the trade mark proprietor or an undertaking economically connected to it or, on the contrary, originate from a third party".
  • In the High Court judgment, Arnold J introduced the concept of "initial interest confusion" into his analysis. Initial interest confusion is an expression that derives from the US, and as the Court of Appeal notes, it has been used to encompass a wide range of situations. It is highly controversial, and the judge defined it as "confusion on the part of the public as to the trade origin of the goods or services in relation to which the impugned sign has been used arising from use of the sign prior to purchase of those goods or services, and in particular confusion arising from the use of the sign in promotional or advertising materials". In short, use of a trade mark to draw in a potential customer by confusing them into thinking there is a link, even if, by the time of purchase, the consumer is no longer confused.
  • The Court of Appeal said that such a doctrine is "not helpful", at least in relation to use of a trade mark as a keyword. The court went as far as to say that such a doctrine could be positively misleading, describing it as an unnecessary gloss on the tests of the CJEU and it should perform no part of the analysis of the national courts in this kind of claim.
  • The main reason for this is that, as internet advertising on the basis of keywords is not inherently objectionable, it is better to view it from the point of view of the tests set out by the CJEU, which incorporate various checks and balances. The national court is required to consider the matter from the perspective of the average consumer, and decide whether the advertiser has enabled that average consumer to ascertain the origin of the advertised goods and services and so make an informed decision. This is a positive obligation; it is not the duty of such advertisers to avoid confusion.
  • The Court of Appeal allowed M&S' appeal; if the judge had not made the various errors he did, the court believes that he could have come to a very different result. The Court of Appeal decided, however, that it could not determine the issue of infringement itself, as it was not taken to all the documents, and did not hear the oral evidence. As a result, the court has remitted the case to the High Court for a retrial, and this long-running saga looks set to continue!

See our previous alerts on this case:

Interflora ® Google AdWord case opinion - a gift to internet key word purchasers? (April 2011)

Interflora v M&S: further guidance in the AdWords minefield (September 2011)

English Court of Appeal surveys the usefulness of witness evidence obtained via consumer surveys (November 2012)

Is this evidence of real value? Yes/No - Further guidance on consumer evidence in trade mark disputes from the Court of Appeal (April 2013)

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