On 10 February 2014, Mr John Baldwin QC, sitting as a Deputy Judge of the Chancery Division, delivered a noteworthy judgment concerning the use of trademarks in keyword advertising and in the search results returned by website search tools.

On 10 February 2014, Mr John Baldwin QC, sitting as a Deputy Judge of the Chancery Division, delivered a noteworthy judgment concerning the use of trademarks in keyword advertising and in the search results returned by website search tools.

This judgment followed a bitter dispute between the prominent online retailer Amazon, and the high street cosmetics brand Lush, well known for its colourful soaps and bath bombs.

Lush was the exclusive licensee of Community Trade Mark 1388313 for the word "Lush" in respect of cosmetics and toiletries in class 3. The aptly named Cosmetic Warriors Limited was the proprietor. For the purposes of the judgment the two were not treated as distinct.

As a matter of principle, Lush did not allow Amazon to sell its products. Lush disagreed with Amazon's environmental policy and felt their customers might object to Amazon's tax practices. This dispute focused on what happens when a user seeks genuine Lush products that are not available through Amazon.

The infringing uses

The uses of Lush's mark complained of were divided in to three classes.

The first two classes concerned where a consumer types the word Lush in to a search engine. Amazon had bid on Google AdWords, including "lush", so that a sponsored advertisement for Amazon would appear alongside the search results.

The first class

The first class showed the word "lush" within the sponsored advertisement:

Lush Soap at Amazon.co.uk
www.amazon.co.uk/lush+soap
amazon.co.uk is rated *****
Low prices on Lush Soap
Free UK Delivery on Amazon Orders.

The second class

The second class did not show the word "lush", but it did show reference to products similar to those sold by Lush:

Bomb Bath at Amazon.co.uk
www.amazon.co.uk/bomb+bath
amazon.co.uk is rated *****
Low prices on Bomb Bath
Free UK Delivery on Amazon Orders.

The third class

The third class concerned the results shown when a user typed the word Lush in to the search facility on Amazon's website.

If a user types the letters "lu" then a drop down menu will appear with search options such as 'lush bath bombs' or 'lush cosmetics'. If the user clicks on these, a page will load showing products similar to Lush's products. However, the results do not indicate that Lush products are not available.

If the user searches for the full text "Lush", a page will be returned which displays "Lush" as the text searched and displays the names of Lush products in the related searches field (please see the image below).

The page also displays products which Amazon thought might be of interest to the customer searching for "Lush". Some of these products are stocked and sold directly by Amazon, some are sold by third parties but fulfilled by Amazon, and some are sold and fulfilled by third parties.

How Amazon works

The first and second classes

Based on Amazon's analysis of consumers' behaviour on its website, it uses software to automatically select AdWords to bid on. This is how the AdWords for "lush" and "bath bomb" came to be selected. The adverts displayed are then compiled automatically from templates.

(The operation of Google AdWords is discussed further by Arnold J in Interflora Inc v Marks and Spencer plc [2009] EWHC 1095 (Ch).)

The third class

Amazon's analysis is also used to inform the results on its search tool. However, if a search is made for products that are not stocked by Amazon or its third party retailers, the results will only list alternative products. There is no mention that Amazon could not find the product searched for. Crucially, the Deputy Judge noted that the average consumer would not be aware of this practice.

Use affecting trade mark functions

Lush argued that Amazon's practices affected the origin, advertisement and investment functions of its trade mark. The question for the court was whether any of Amazon's uses of the mark affected these functions:

The first class

The court dealt with the first class of advertisements quickly and succinctly. Applying Google France (Google France (Case C-236/08) [2010] RPC 19), this was an infringement. The average consumer would not expect Amazon to be advertising using the Lush mark if Lush goods were not available for purchase.

The second class

For the second class, consumers would be familiar with sponsored adverts and would be accustomed to seeing a competitor's adverts when using a search engine to look for goods. Furthermore, consumers would expect that if the advert shown was for Lush, it would include the "Lush" mark.

The court again dealt with this class swiftly; given that the consumer had these expectations, this was not an infringement.

The third class

The third class of infringements represented a more difficult problem. This category goes to the very root of Amazon's business model and was submitted to be by far the most important class. The court examined each incident of the "Lush" mark appearing on the search results page separately:

Use by consumer's typing

The first of these uses was when consumers typed "Lush" into the Amazon search tool. The Deputy Judge found that this plainly could not be a use in the trade mark sense. It could not infringe.

Use in the drop down search tool

Infringement was found by the use of "Lush" in the recommended search drop down box that appeared when a user began typing "lu".

The average consumer would be unlikely to know how the drop down menu worked and he would have expected to find Lush products when he clicked on the results in that menu.

Amazon used the "Lush" mark as a generic indicator of a class of goods. This damaged the origin function of the trade mark.

The advertising function was damaged by Amazon using the "Lush" mark to attract the attention of consumers, and by attempting to sell them the goods from third parties. Furthermore, Amazon had made no effort to indicate that the results returned would not be Lush's products.

The investment function was also damaged by Amazon's implication that it sold Lush goods. It was Lush's decision not to permit its goods to be sold by Amazon.

Use in the "related searches" line

Infringement was found in repeating the word "Lush" just below the search box and above the Related Searches line. The court again highlighted the point that the search displayed no indication that no Lush products were available. The average consumer would assume that the related searches would lead him to Lush products.

Use under the heading 'Brands'

Finally, Amazon also used Lush under the heading 'Brands' in a drop down menu on the left hand side of the webpage. Clicking this revealed the genuine Lush products available through Amazon, few that they were. This was not an infringement.

Confusion

The court did note that that there had been evidence of actual confusion put before it. However, given its other findings, the court felt no need to discuss this evidence further.

Lessons from this case

What appears to be a very wide reaching judgment is in fact narrower than it first looks.

The decision on AdWords raised no new complexities.

The third class of infringement is the most interesting part of the judgment. In short, if an internet user searches a shopping website by using a term that is the subject of registered trade mark protection, then this might amount to an infringement if the search results do not identify the fact that products bearing the mark are not available and instead returns competitor products.

However, some may consider there to be a slight tension in the judgment in seeking to distinguish between the second and third classes of advertisement. For Google advertisements not featuring the word Lush, the court appeared to adopt a fairly pragmatic position when concluding that there was no infringement. Consumers were deemed to understand how Google AdWords worked and would expect competitor adverts to appear.

Such consumers however were expected not to understand that a search on Amazon's site might return only competitor's goods. This can be rationalised on the market knowledge to be imputed to the "average consumer." However, over time, it may be that just as consumers have grown to understand the practice of AdWords, they may grow to understand practices like Amazon's too.

Ultimately, this decision goes some way to ensuring that search results will be made easier and clearer for consumers.