THE NAME OF THE GAME: GOOGLE ADWORDS & THE INTERFLORA CASE

THE NAME OF THE GAME: GOOGLE ADWORDS & THE INTERFLORA CASE Roman Cholij, Trade Mark Attorney, Cam Trade Marks, Cambridge, UK Introduction The Interne...
7 downloads 2 Views 204KB Size
THE NAME OF THE GAME: GOOGLE ADWORDS & THE INTERFLORA CASE Roman Cholij, Trade Mark Attorney, Cam Trade Marks, Cambridge, UK

Introduction The Internet age has greatly expanded the opportunities for trade with regard to what now seems in comparison to be a pre-historic, or pre-technological, age. Electronic or ecommerce opportunities and information society services give proprietors of trade marks greatly enhanced possibilities of growing their brands and growing their businesses with reduced risks relating to delivery of goods and payment, including through social media such as Facebook, and Virtual Worlds such as Second Life. But at the same time they are faced with new threats. Electronic marketplaces and websites offering illegal versions of their branded goods are proliferating, and other forms of perceived misuse of trade mark proprietory rights are on the rise. The challenge of the legal system, including trade mark law, is also to rise – to the challenge of either re-interpreting the law books written for a preelectronic age, or actually re-writing the law from a standpoint that allows us to embrace the actual realities of our age in a new synthesis of the balance of interests of trade mark owners and other traders, and ultimately consumers, where there is lawful freedom of expression, free competition, as well as respect for legitimate exclusive rights. It is a challenge that has been compared recently by the Advocate General (‘AG’) (L’Oréal v eBay, Case C-324/09, 9 December 2010), to the choice that had to be made by the great sailor Odysseus in the 8th century BC epic poem Homer’s Odyssey, between either taking his ship close to Scylla (a six-headed sea monster) or Charybdis (a monstrous whirlpool). Either choice would lead to loss, but it had to be a loss balanced against the gain. In the event, sailing close to Scylla would mean losing some men on the ship, but sailing by Charybdis would have meant that the whole ship would be lost. The task today is to navigate between a too aggressive enforcement of IP rights, as opposed to a too lax enforcement. Nothing illustrates more this tension in the on-going need to find new legal expressions of this balance of interests than the issue of AdWords on the Internet. The reality of abuse of rights There are objective and serious reasons for trade mark owners to seek new clarification on how they can enforce their rights to address abuse on the Internet. Sites selling counterfeit goods are a huge problem. In the L’Oréal v eBay case, for example, it was reported that one series of test purchases showed that 70% of the products bought on eBay were illegal products, being counterfeits, non-EEA products or products not intended for sale.

ECTA Secretariat, Rue des Colonies 18/24, 9th Floor, BE- Brussels, Belgium Tel 32/2-513 52 85 Fax 32/2-513 09 14 E-Mail [email protected] Internet http://www.ecta.eu A company limited by guarantee. Reg. in England and Wales No. 1520996. Reg. address: 15 Southampton Place, London WC1A 2AJ, England. VAT No. BE0851518062

In the US case brought by Tiffany Inc against eBay, 75% of the goods traded were found to be counterfeit (details and citations in fn 25 of the Advocate General’s Opinion for L’Oréal v eBay). However, there are various practical difficulties in tackling these infringements – e.g. determining the ownership of the sites, applicable legislation and jurisdictional forum, the speed at which such sites can be replaced, etc. Hence it is understandable that the focus of rights enforcement has been on the Intermediary and, in our instance, on AdWords – if you can’t stop the message, go for the messenger (Cf. AG’s Opinion Google France at [115]) Policy issue: balance needed Trade mark law was not designed to give exclusive intellectual property rights to owners, like patent law or copyright law, but only relative protection; and of course this is why there is no time restriction on the right. Trade mark rights cannot, in the words of Advocate General Poiares Maduro, (Opinion, Google France at [103]) be construed as classic property rights which exclude all other uses. He states: “The transformation of certain expressions and signs – inherently public goods – into private goods is a product of law and is limited to the legitimate interests that the law deems worthy of protection.” The law itself sets out limitations to the exclusive rights of trade mark owners, such as where there may be legitimate use in trade by others (TMD Article 6). Trade Marks are not protected in the context of non-business transactions (cf. Art 5: “... using in the course of trade”). Trade mark protection may be exhausted pursuant to Article 7 of the Directive, allowing legitimate second hand transactions. Examples of the latter are given by the Advocate General: “For example, it is conceivable that a husband wants to sell an unopened box of expensive make-up cream he has bought for his wife for Christmas after she has revealed that she is allergic to some of the ingredients. A trader may have bought a stock of trade mark protected perfumes from the bankrupt estate of a shopkeeper who had been a member of the selective distribution network of the trade mark proprietor, and wants to sell them using the services of an electronic marketplace.” (L’Oréal v eBay AG Opinion at [52]).There is also legitimate comparative advertising. In all these instances, although there may be use of a sign corresponding to the protected trade mark, these uses are not deemed to have any adverse affect on the functions of a trade mark, the primary or essential function of which is to indicate origin. This has been the consistent jurisprudence of the European Court since the ARSENAL Case (Case C-206/01 Arsenal Football Club at [45]). The promotion of information society services (under which category, as has now been clarified, internet referencing services also fall) and electronic commerce, despite the dangers of misuse, is the purpose of Directive 2000/31, or the ‘E-Commerce Directive’ (see appendix). “The limitations of liability in Articles 12, 13 and 14 of that directive aim at enabling the provision of information society services without the risk of legal liability which the service provider cannot prevent beforehand without losing the economic and technical viability of the business model. Therefore, when balancing the rights of trade mark proprietors and the obligations of information society service providers such as eBay, it is necessary to define what the service provider can rightfully be expected to do in order to prevent infringements by third parties.” (AG Opinion L’Oréal v eBay at [53].

Full Text - Roman Cholij

2

AdWord case law – where we are Three types of cases have been or are being considered by the Court of Justice and by national courts in several jurisdictions: • liability of an internet referencing service (such as Yahoo or, in particular, Google), • liability of advertisers who purchase keywords, • liability of electronic marketplaces such as eBay, which permit trading on their website where protected brands are advertised by unrelated third parties, and where protected brand keywords have also been purchased by the marketplace owners themselves to direct internet traffic. Offers of sale may be stored on the electronic market place website for sale of counterfeit, unpackaged or non-EEA sourced branded products. Currently there are two cases from the England and Wales High Court of Justice awaiting judgment before the Court of Justice with Opinions issued – ebay and Interflora (respectively L’Oréal v eBay C-324/09, 9 December 2010; and Interflora Inc v Marks & Spencer plc Case C-323/09 24 March 2011). (We are also mindful that ‘I’ve seen you twice, in a short time’ is the first line of the Abba song ‘name of the game’, which is the theme of this talk: could this be a theme of the Court of Justice referring to the references from the English High Court?...). The first deals with liability for misuse of trademarks in an electronic marketplace, the other, a competitor’s use of AdWords, is the subject of this talk. In recent times, also, we have had the seminal judgment of Google France (combined cases C-236/08; C-237/08, C238/08, 23 March 2010), dealing with the liability of an internet referencing service for use of keywords corresponding to trade marks of other persons, e.g. ‘Louis Vuitton’ for sites featuring either legitimate competitive goods and/or counterfeit or fake goods. Following on this were the judgments for BANANABAY (Eis.de GmbH v BBY Vertriebsgesellshaft, C91/09, 26 March 2010 ) and PORTAKABIN (C-558/08 Portakabin Ltd v Primakabin BV, 8 July 2010), the latter dealing with goods being resold or second hand goods, and AdWords with minor variations of spelling. What are AdWords? Google, as is well-known to all internet users, operates a search engine and provides a number of other services via the Internet. Google's principal source of revenue is advertising, principally through what it calls ‘AdWord’s. Income from this service supports its search engine, as well as a range of free applications. The way AdWords work is as follows. When the Google search engine carries out a search based on user input of search terms or ‘keywords’, it shows the user two types of links to third party web pages in the search results. The first type, referred to as "natural" links (also called "organic" links), are links to websites which are selected and ranked according to their relevance to the keywords. This is done through an automatic process using the search engine's algorithm in its underlying software program. These natural results usually fill most of the computer screen. By contrast, the second type of link, referred to as "sponsored links", is a form of paid-for advertising. Usually, sponsored links are displayed in a separate section of the search results page, either at the top/or at the side, or both. There may also be differentiation through use of a different coloured background.

Full Text - Roman Cholij

3

A sponsored link is displayed when the user enters one or more particular keywords that have been selected by the advertiser in return for the payment of a fee. This is often referred to as "purchasing" the keywords. Google operates this advertisement system under the name ‘AdWords’. Its main competitors (Microsoft and Yahoo!) operate similar advertising systems. A sponsored link consists of three elements. The first is an underlined heading which functions as a hyperlink, directing the user's browser to the advertiser's website. The hyperlink may or may not include the keyword. The second element consists of some promotional text, which likewise may or may not include the keyword. The third element consists of the URL of the advertiser's website (although this does not function as a hyperlink). The way in which Google is remunerated is as follows. The advertiser pays a certain amount each time a user clicks on the hyperlink, but not for the actual display of the sponsored link. The amount the advertiser pays is calculated on a "cost per click" basis for each keyword purchased subject to a maximum daily limit specified by the advertiser. If the daily limit is exceeded, the sponsored link will not be displayed. More than one person can purchase each keyword. Where more than one person purchases a particular keyword, there is a bidding process whereby the advertiser who bids the highest cost per click has its sponsored link displayed in the highest position. This means that popular keywords are more expensive than unpopular ones. Ranking also depends in part on how many times internet users have previously clicked on the ad’s link, as with the case for ‘natural’ results. The process for selection of keywords and advert creation is completely automated, with related keywords automatically suggested, among other optional information. The Interflora case References for a preliminary ruling from the England and Wales High Court of Justice (Chancery Division), Case no. HC08C03440, 22 May 2009, INTERFLORA INC etc and MARKS AND SPENCER PLC etc, Richard Arnold J, to the Court of Justice of the European Union; Opinion of Advocate General Jääskinen, Case C-323/09, 24 March 2011. The Interflora case is just one of the many cases around Europe and elsewhere where trade mark owners are complaining that the sale of keywords by Google to third parties infringes their rights. These cases have been brought against both Google and against advertisers. Background Until May 2008, the policy of Google in the UK and Ireland was such that if a trade mark owner objected to the purchase of the keyword corresponding to the trade mark by a third party, Google would automatically respond and block that use. Then, coincidental to a High Court judgment involving Yahoo! (20 February 2008, Victor Andrew Wilson v Yahoo! UK Limited and Overture Services Limited – Mr. SPICY) the following change was made, as announced on Google’s website: “Google has made a policy revision that applies to complaints we receive regarding trademarks in the UK and Ireland. For complaints received on or after Friday, April 4, 2008, we will no longer review a term corresponding to the trademarked term as a keyword trigger. Full Text - Roman Cholij

4

However, we will continue to perform a limited courtesy investigation of complaints regarding ad text purported to be in violation of a trademark... Beginning May 5, 2008, keywords that were disabled as a result of a trademark investigation will no longer be restricted in the UK and Ireland... Google's revised trademark policy applies to trademarks held in the UK and Ireland. We will continue to handle trademark complaints for all other countries pursuant to the existing trademark policy". This was done at a time where in other jurisdictions first instance court rulings left Google (and other search engines) liable for misuse of protected trade marks and where Google would still respond automatically in favour of the owner, as it had done previously in the UK and Ireland. Facts of the case – the parties Interflora Interflora, the Claimant, operates the largest flower delivery network in the world. It is a company incorporated in the State of Michigan, USA, with a licensee in the UK (the Second Claimant). The Defendant, Marks & Spencer (‘M&S’) is one of Britain’s largest retailers of a wide range of goods. It has a website www.marksandspencer.com through which, among other things, it delivers flowers in competition with Interflora. Google was not a party to the proceedings in this case. Interflora is the owner of a UK and Community Trade Mark (No 1329840 and 909838, respectively), covering, inter alia, natural plants and flowers in class 31; advertising/information services provided for florists in class 35, and transportation of flowers in class 39. Interflora as a commercial entity is a network of florists who are independent operators but who also operate under the brand of Interflora. Orders are placed in person or by telephone with a member of the network, or over the internet at the Interflora country-specific website, this order being then transmitted to the member closest to the point of delivery. There are over 1700 members of the network in the UK. Marks and Spencer (‘M&S’) M&S operates a flower delivery service via its website which enables orders to be placed online. It is not a member of the Interflora network. It purchased several Interflora signs corresponding to the trademark, close variants, and combinations of the trade mark with descriptive variants as follows: INTERFLORA, INTAFLORA, INTEFLORA, INTERFLORA FLOWERS, INTERFLORA DELIVERY, INTERFLORA ONLINE, INTERFLORA ON LINE, INTERFLORA OPENING TIMES, INTERFLORA SALE, INTERFLORA SHOPPING, INTERFLORA STORE, INTERFLORA UK, INTER FLORA, INTERFLORAL, INTERFLORA.CO.UK, INTERFLORA.COM, INTERFLORA CO UK, INTERFLORA COM, WWW.INTERFLORA.CO.UK and WWW.INTERFLORA.COM.

Full Text - Roman Cholij

5

At the time of the hearing the keywords triggered the following display when the respective search terms were entered by users in the Google search engine: "M&S Flowers Online www.marksandspencer.com/flowers Gorgeous fresh flowers & plants. Order by 5pm for next day delivery." Also at the time of the hearing on 27 March 2009 the sponsored link appeared in the second highest position in the sponsored links page on the search results page, straight after Interflora’s own sponsored link. At the time of preparation of this paper, 29th May 2011, this was still its position, although the advert had been slightly changed to: M&S Flowers Online - Blooming Flowers & Plants at M&S. All Prices Include Delivery Next day Delivery Before 6pm - Flowers From £20 delivery included – All Bouquets www.marksandspencer.com/FlowersShop Facts of the case – the claims The direct financial effect of the M&S purchases of Interflora’s trade mark and variants as keywords was that the cost of purchasing its own trade mark rose in 2008 from 2p a click to 28p a click in 2009. This added about $750,000 to Interflora’s costs. Interflora also claimed it had lost sales and that M&S had gained exposure and sales at Interflora’s expense. Interflora’s claims were that its rights had been infringed by M&S, for which M&S is primarily liable, and acts committed by Google, for which M&S is jointly liable. It claimed that the infringing acts included the selecting and nominating of the Interflora signs as keywords, and associating these with M&S’s own URLs in its sponsored links. M&S in turn contended that these things were performed on it’s behalf by Google as an intermediary. Interflora complained against Google that it had, among other things, presented the Interflora signs within the search bars on its website, on the summary of the search results (e.g. ‘Results 110 of about 1,170,000 for interflora’), and presenting a search results page containing M&S’s sponsored link. Interflora contended that M&S ‘procured’ these infringing acts, alternatively that the acts were committed by Google ‘pursuant to common design’ with M&S, the latter thereby becoming ‘joint tortfeasors’. Art 5(1)(a) Interflora claimed that these acts amounted to use in the course of trade of signs which are identical to the trade marks in relation to goods and services – flowers, and advertising services provided for florists and information relating to the sale of flowers, identical to those for which the trade marks are registered (hence ‘Double Identity’) – falling under Article 5(1)(a). Although not necessary to succeed under this claim, it also claimed likelihood of confusion, the advert liable to lead at least some members of the public to believe M&S is a member of Interflora’s network contrary to the fact.

Full Text - Roman Cholij

6

Art 5(2) and genericism Interflora also claimed under Article 5(2) – the use of the AdWords being detrimental to the distinctive character of its trade marks and leading to members of the public using INTERFLORA as a generic term for any flower delivery business; in addition it contended that this use takes unfair advantage of the repute of the trade marks amounting to free-riding to gain direct economic benefit, this also leading to direct costs for the owner. Relation to Google France The results of these claims were a series of questions that were sent to the Court for a preliminary ruling in May 2009. These questions, in their final form, are given in the Appendix. Some of the questions in the reference for a preliminary ruling in the Interflora case were subsequently dealt with by Google France, including whether keywords themselves were to be regarded as signs that were used in the course of trade and the extent (if any) to which Google is exempt from liability under the E-Commerce Directive. Since in a real sense, therefore, Google France, is integral to the Interflora case, it would be well to remind ourselves of the key elements of this judgment. Google France and ‘use’ of a trade mark in AdWord advertising The Court in Google France concluded (at [55] and [57]) that “the referencing service provider operates ‘in the course of trade’ when it permits advertisers to select, as keywords, signs identical with trade marks, stores those signs and displays its clients’ ads on the basis thereof, yet it did not follow from those factors that that service provider itself ‘uses’ those signs within the terms of Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94”. ... The fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign. To the extent to which it has permitted its client to make such a use of the sign, its role must, as necessary, be examined from the angle of rules of law other than Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94, such as [Section 4 of the E Commerce Directive, articles 12 to 15 entitled ‘Liability of intermediary service providers’ – see Appendix]. The judgment stated: An internet referencing service provider which stores, as a keyword, a sign identical with a trade mark and organises the display of advertisements on the basis of that keyword does not use that sign within the meaning of Article 5(1) and (2) of Directive 89/104 or of Article 9(1) of Regulation No 40/94. If, also, the part that Google as a search engine played in facilitating the infringement was purely technical and passive it could be exempt from liability as according to Article 14 of the E-Commerce Directive for information service providers, the Court ruling that the Directive: ... applies to an internet referencing service provider in the case where that service provider has not played an active role of such a kind as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned.

Full Text - Roman Cholij

7

With regard to the advertiser, the balance achieved by the Court was not to prohibit outright the use of keywords (whether they appeared on the advert or not), but only where the essential function of the trade mark might be compromised. The ‘advertising’ function of the mark was also considered as the most relevant ‘other function’ of a mark that might have been adversely affected – the use of a mark as a factor in sales promotion or as an instrument of commercial strategy. However, having to pay more for the price per click of a keyword was not deemed to necessarily be detrimental to this function. The Court concludes: Article 5(1)(a) of First Council Directive 89/104/EEC ... must be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, in the case where that advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party. In coming to this conclusion regard was had to the overall picture of how the Internet, search engines and keywords work. Thus, when a search term is entered the natural results of the search are always set out, with the order reflecting the relevance of the respective site to the term. Thus, the home and advertising page of the proprietor would usually appear in one of the highest positions if not the first place on the list. Also there is little difference, apart from the degree of exposure, between ads and natural results, each having a short message and a link. Any other conclusion would have been to tip the balance of rights too far in the proprietor’s direction. The Advocate General (e.g. at [110-113; 122]) had already pointed out that the nature of the Internet would be irreparably changed for the worse if trade mark protection were to be overextended to add the possibility of controlling keywords pointing to sites that offered legitimate activities, such as product reviews, price comparisons, sales of second-hand goods etc. Keeping with the times- concept of ‘use’ A conscious effort was being made in Google France to show that the Court was keeping up with the realities of today’s way of doing commerce over the Internet. In discussing the concept of ‘use in relation to goods and services’ the Court was at pains to point out (at [65-66]) that the list of uses found in Article 5(3) [affixing the sign to the goods or packaging ; offering the goods, or putting them on the market or stocking them; importing or exporting; using the sign on business papers and in advertising] was non-exhaustive and “was drawn up before the full emergence of electronic commerce and the advertising produced in that context”. In association with this (again, trying to keep pace with technological realities): “the fact that the sign used by the third party for advertising purposes does not appear in the ad itself cannot of itself mean that that use falls outside the concept of ‘[use] … in relation to goods or services’ within the terms of Article 5 of Directive 89/104”. Art 5(1)(a) and ‘referential’ use

Full Text - Roman Cholij

8

Protected signs corresponding to keywords are thus used in adverts which do not feature the trade mark but point the viewer to alternative goods and services. The “in relation to goods and services” of Article 5(1)(a) also refers to what has been called ‘referential or nominal use’, e.g. in comparative advertising, where the sign is used not to identity alternative goods, but for the purposes of identifying the goods of the owner in relation to the goods of the competitor (L’Oréal and Others at [52-53]). A fortiori, misleading use falsely indicating a material link between the advertiser and the goods, as in counterfeit sales, falls under Art 5(1)(a). Advocate General’s Opinion in Interflora Much of the subject matter of the questions sent for referral overlapped with what had been decided by Google France, namely a clarification of the notion of use in relation to goods and services. It was thought, however, that the question on whether keyword use fell under Article 5(2) would be useful, inter alia, in order to clarify its relationship to Article 5(1)(a). Three other questions were left even though they had already been essentially answered. Thus the Advocate General’s Opinion is really on marks with a reputation. M&S in infringement of Art 5(1)(a)? However, the AG did, in relation to Art 5(1)(a) ( whether it was for him to do so or not) give his own opinion that M&S probably was in infringement of Article 5(1)(a) and its corollary in CTMR Art 9(1). He stated (at [45] & [47]) that “In many cases display of commercial alternatives does not seem harmful for the origin function of the trade mark because the appearance of an ad in a sponsored link following the typing of a keyword identical with a trade mark does not create an association or a link between the trade mark and the good or the service promoted by the ad.” In this instance the mark INTERFLORA had gained a ‘secondary meaning’ denoting a certain commercial network of florists providing a certain type of delivery service. The conclusion? At [48] this statement is made: “Consequently, an association between the trade mark of Interflora and an identical delivery service of flowers provided by Marks & Spencer is possible and even likely in the mind of an average consumer seeking information about such services in the internet when faced with the [Adword] ad.. creating...an association that Marks & Spencer is part of the Interflora network.” Finally, was the outcome of this analysis in any way dependent on the fact that Google now no longer permitted trade mark owners to block AdWords automatically in the UK – or phrased more generically – dependent on the attitude of the referencing service provider as to the possibility of the trade mark proprietor to forbid the use of its trade marks as keywords? Answer: no. Extended trade mark protection according to Article 5(2) The law: Trade Mark Directive Art 5

Full Text - Roman Cholij

9

2. Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. The questions referred to the Court in relation to Art 5(2) are paraphrased thus: “the referring court seeks to establish the circumstances under which an advertiser using a sign identical to a competitor’s trade mark with a reputation must be regarded as acting a) in a manner detrimental to the distinctive character of that trade mark b) and/or as taking unfair advantage of the distinctive character or repute of that trade mark.” In the following section we quote various passages in extenso of the Advocate General’s Opinion on matters we believe important or highly interesting relating to the matters being discussed. Dilution The Advocate General first makes a general observation and distinction, referring to dilution in a ‘wide sense’ that comprises blurring (protecting against lose of distinctiveness and therefore value), tarnishment or degradation (endangering the reputation of the mark) and free-riding or parasitism (taking unjustified advantage of the mark – making the EU different from the US in this regard). Taken in a narrower sense, dilution only refers to blurring or ‘whittling away’ or ‘watering down’, making the mark ‘banal’ and unable to identify goods/services with a single source. On the general phenomenon of dilution the AG has this to say as a theoretical rationale [50]: “Trade mark dilution relates to the idea that the proper purpose of trade mark law should be to protect the efforts and investments made by the trade mark proprietor and the independent value (good will) of the trade mark. This ‘property-based’ approach to trade marks differs from the ‘deception-based’ idea that trade mark law primarily protects the origin function with a view to preventing consumers and other end users from erring as to the commercial origin of goods and services. The property-based approach also protects the communication, advertising and investment functions of trade marks with a view of creating a brand with a positive image and independent economic value (brand equity or good will). Consequently, the trade mark can be used for various goods and services having nothing in common apart from being under the control of the trade mark proprietor. The origin and quality functions would be protected as factors contributing to the value of the brand.” Relationship between Art 5(1)(a) and Art 5(2) In ‘Double Identity’ cases, such as in this Interflora case, there is an apparent contradiction between Art 5(1)(a) and Art 5(2) in so far as, since DAVIDOFF (C-292/00) and ADIDAS (C408/01), where identical or similar goods are included with dissimilar goods under Art 5(2) dilution cases could be decided under Art 5(1)(a) alone – this protection being, in the language of the preamble of the Directive ‘absolute’ (10th recital). The widened protection under Art 5(2) is usually motivated in case law with reference to the “communication, advertising and investment” functions of trade marks. Full Text - Roman Cholij

10

These are functions also referred to in association with Art 5(1)(a). However, the AG still firmly believes that dilution as a legal phenomenon should in all cases be analysed on the basis of Article 5(2), not least because this would allow uniform interpretation of the notions relating to dilution. But he is the first to acknowledge that the case law around Article 5 is highly problematic, many academic commentators and leading national judges also being critical. Even the EU Commission is critical of the Court’s case law in this area (see AG at [79; 58-64]. Establishing a ‘link’ In order for Article 5(2) to be applicable case law requires there to be a ‘link’ between a trade mark with reputation and a sign used by a third party (cf. INTEL at [30-31]). For the internet environment this can be problematic since keywords, unless they are truly unique (such as KODAK or COCA-COLA), do not necessarily point to one source and can correspond to different trade marks for different goods. In the words of the AG (at [70-71]: “An identical word mark is often registered by other proprietors in relation to dissimilar goods or services in the same country or abroad. Neither is such requirement inherent in the EU trade law concept of a trade mark with a reputation. There also are trade marks composed of common words or descriptive words that have gained a widespread reputation or a strong secondary meaning as a trade mark in a specific sector. Yet it would be daring to assume that an internet user who chooses ‘apple’ or ‘diesel’ as a search term is always looking for computers or jeans of a certain brand, and not for fruit or fuel. Or that the search term ‘nokia’ would always be used only in searches relating to mobile phones and never in searches relating to a town, a lake, a religious movement and a tyre brand all bearing a similar name. Equally daring would it be to assume at a general level that an enterprise buying signs as keywords in a paid internet referencing service is always targeting this or that trade mark, especially if there are several identical trade marks registered for different proprietors in different jurisdictions.” The conclusion is that, other than in rare exceptions of truly unique marks, external factors are needed to assess the existence of this link. A link between the keyword and protected mark with reputation would be made out, for example, if it were clear that the keyword had been bought by a competitor for identical or similar competing services – such as INTERFLORA for flower delivery services operated by M&S. In this case this is enough to establish a link. AdWord must be seen In addition, the mark, in the AG’s view, must have a visibility found within the sponsored link of the advertiser, and an analysis made on the basis of the context. This need for visibility can be inferred from the fact that the Court did not declare use of keywords as such to contravene the rights of the owner but linked its permissibility to the contents of the ad displayed in the sponsored link. Indeed, if this were not the case all uses of keywords with a reputation could be argued to be instances of dilution in the sense of blurring (see [87]).

Full Text - Roman Cholij

11

Degeneration In his Opinion the AG develops a notion, already part of the claim of Interflora Counsel, that a legitimate manner of referring to the risk of dilution is genericide or (in his terms) ‘degeneration’ – the trade mark becoming a generic term or a common noun. This too could be the result of a gradual loss of distinctiveness. In the AG’s words ([84-85]): “Degeneration results either from the absence of an alternative generic term denoting to the class of products of which the only or the most important representative is the good or service covered by the trade mark, or from the overwhelming success of a certain brand in a certain class of products. Degeneration especially threatens trade marks that cover a new innovation or those that are well known in specific fields. Degeneration may result from acts and omissions of the trade mark proprietor himself, for example his use of the trade mark as a generic term or his omission to develop a suitable alternative generic term in order to facilitate references to such products without using the trade mark as a generic term. However, degeneration may also result from the use of the trade mark by others in a way that contributes to its development in becoming a generic term.” In the case being examined, however, where there is not even mention of the keyword on the advert, the AG’s view is that there is no possibility of the sign acquiring an alternative meaning through loss of distinctiveness in the mind of the consumer. The conclusion [91]: “In my opinion, the use of third party trade marks as keywords in search engine advertising is detrimental to the distinctiveness of a trade mark with a reputation in cases of identical goods or services when the following conditions are met: the sign is mentioned or displayed in the ad in the sponsored link, and the marketing message or communication in the ad uses the sign in a generic sense to refer to a category or class of goods or services, and not as distinguishing between goods and services of different origins. “ Free-riding Finally, on free-riding, is M&S taking unfair advantage ‘without due cause’ of the repute of Interflora? The AG expresses himself in a surprisingly frank pro-competition manner. It is obvious, he says, ‘that Marks & Spencer is taking advantage of the repute of Interflora’s trade mark, as it is inconceivable that this selection of keywords could be explained with any other motive” [96]. And yet, he points out, this is the very purpose of keywords! “In the case of identical or similar goods or services, the purpose of presenting a commercial alternative to the goods or services protected by a trade mark with a reputation should count as due cause in the context of modern marketing relying on keyword advertising on the internet. Otherwise keyword advertising using well-known third party trade marks would be as such prohibited free-riding. Such a conclusion cannot be justified in view of the need to promote undistorted competition and the possibilities of consumers to seek information about goods and services. The point with market economy is, after all, that well-informed consumers can make choices in accordance with their preferences. I would find it inappropriate that the trade mark proprietor could prohibit such use unless he has reasons to object the ad resulting from typing of a search term corresponding to a keyword.” [99]

Full Text - Roman Cholij

12

In disagreement with L’Oréal Previous to this, along with other judges, the AG is quite open about his discomfort with the ruling of L’Oréal v Bellure: “The Court stated in L’Oréal and Others that the existence of unfair advantage is not dependent on the use being detrimental to the trade mark proprietor. I find this very problematic from the point of view of competition ... The situation of the trade mark proprietor would not improve as he by definition would not suffer any detriment because of the use, but the competitor’s situation would worsen because he would lose a part of his business. Also the situation of the consumers who had not been misled by the ad but consciously preferred to buy the competitor’s products would be impaired.” [94] The Advocate General’s view is shared, among others, by Lord Justice Jacob, recently retired England and Wales Court of Appeal Judge, who made it clear, in a strongly worded statement that he did not agree with the European Court’s ruling: “As I have said, I do not agree with or welcome this conclusion - it amounts to a pointless monopoly. But my duty is to apply it." Adding: "My own strong predilection, free from the opinion of the ECJ, would be to hold that trademark law did not prevent traders from making honest statements about their products where those products are themselves lawful." (News Report, 21 May 2010, Intellectual Property Magazine) M &S free riding? In conclusion, the AG affirms ([103-105]) that “I think that also the question of free-riding has to be analysed on the basis of the ad shown in the sponsored link. If that ad mentions or displays the trade mark, the acceptability of the use depends on whether we are faced with legitimate comparative advertising or, on the contrary, with riding on the coat-tails of the trade mark proprietor. In its ads Marks & Spencer is neither comparing its goods and services with those of Interflora (‘our goods and services are better/cheaper than those by Interflora’) nor presenting its goods as imitations or copies (‘… we are offering an Interflora type of service’) or even expressly presenting them as alternatives (‘Are you an Interflora customer? Why not try this time Marks & Spencer?’) to them. Yet the choice of keywords in search engine advertising by Marks & Spencer implies a marketing message that they offer an alternative to Interflora. However, in my opinion this does not amount to free-riding in the sense of Article 5(2) of Directive 89/104.” Conclusion The conclusion and proposal for a response to the High Court of Justice of England and Wales, Chancery Division under Article 5(2) runs as follows: (2) Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94 must be interpreted as meaning that the use of a sign as a keyword in an internet referencing service in relation to goods or services identical to those covered by an identical trade mark with a reputation also falls within the scope of application of those provisions and it can be forbidden by the trade mark owner when (a) the ad shown as a result of the internet user having typed as a search term the keyword identical with a trade mark with a reputation mentions or displays that trade mark; and Full Text - Roman Cholij

13

(b)

the trade mark

– is either used therein as a generic term covering a class or category of goods or services; – or the advertiser attempts thereby to benefit from its power of attraction, its reputation or its prestige, and to exploit the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark.

Final comment This Opinion has taken us one step further in the development of Article 5 case law as interpreted for the age of the Internet, with particular reference to keywords or Google Adwords. There is a great deal of material which provokes discussion and reflection, and which we have tried to summarise or to highlight. To what extent the Court will take on board the conclusions from the Advocate General’s analysis and follow his recommendations is eagerly awaited. For the near future at least we can expect Google AdWords to remain, in trade mark terms and following the ‘Abba’ theme of this talk, the ‘name of the game’

Full Text - Roman Cholij

14

APPENDIX 1. Advocate General’s Opinion, Case C-323/09 Interflora Inc v Marks & Spencer plc The questions referred for a preliminary ruling 30. By order of 16 July 2009, the High Court of Justice of England and Wales, Chancery Division (the ‘High Court’) referred 10 questions for a preliminary ruling, the first four of which are as follows: (1) Where a trader which is a competitor of the proprietor of a registered trade mark and which sells goods and provides services identical to those covered by the trade mark via its website (i) selects a sign which is identical … with the trade mark as a keyword for a search engine operator’s sponsored link service, (ii) nominates the sign as a keyword, (iii) associates the sign with the URL of its website, (iv) sets the cost per click that it will pay in relation to that keyword, (v) schedules the timing of the display of the sponsored link and (vi) uses the sign in business correspondence relating to the invoicing and payment of fees or the management of its account with the search engine operator, but the sponsored link does not itself include the sign or any similar sign, do any or all of these acts constitute “use” of the sign by the competitor within the meaning of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]? (2) Is any such use “in relation to” goods and services identical to those for which the trade mark is registered within the meaning of Article 5(l)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]? (3)

Does any such use fall within the scope of either or both of:

(a)

Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]; and

(b)

Article 5(2) of [Directive 89/104] and Article 9(l)(c) of [Regulation No 40/94]?

(4)

Does it make any difference to the answer to question 3 above if:

(a) the presentation of the competitor’s sponsored link in response to a search by a user by means of the sign in question is liable to lead some members of the public to believe that the competitor is a member of the trade mark proprietor’s commercial network contrary to the fact; or (b) the search engine operator does not permit trade mark proprietors in the relevant Member State … to block the selection of signs identical to their trade marks as keywords by other parties?’ 31. Following the judgment in Google France and Google and after receiving, by letter from the Registry of the Court of 23 March 2010, a request for clarification, the High Court, by decision of 29 April 2010 which was received at the Court on 9 June 2010, withdrew the 5th to 10th questions it had referred for a preliminary ruling, thus retaining only the first four questions quoted in the preceding point. The High Court also shortened question 3(b) to the wording retained in the preceding point.

Full Text - Roman Cholij

15

2. First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks Article 5 Rights conferred by a trade mark 1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: (a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered; (b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark. 2. Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. 3. The following, inter alia, may be prohibited under paragraphs and 2: (a) affixing the sign to the goods or to the packaging thereof; (b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder; (c) importing or exporting the goods under the sign; (d) using the sign on business papers and in advertising. 4. Where, under the law of the Member State, the use of a sign under the conditions referred to in 1 (b) or 2 could not be prohibited before the date on which the provisions necessary to comply with this Directive entered into force in the Member State concerned, the rights conferred by the trade mark may not be relied on to prevent the continued use of the sign. 5. Paragraphs 1 to 4 shall not affect provisions in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark

Full Text - Roman Cholij

16

Note on Article 5(1)(a) There are six conditions (or four where two conditions are subsumed: AG Google France at [68]) to be fulfilled cumulatively in order for infringement to be found under Article 5(1)(a): The conditions are: (i) there must be use of a sign by a third party; (ii) that use must be in the course of trade; (iii) it must be without the consent of the proprietor of the mark; (iv) it must be of a sign which is identical to the trade mark (v) it must be in relation to goods or services which are identical to those for which the mark is registered (vi) it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services. See Case C-206/01 Arsenal Football plc v Reed [2002] at [51], Case C245/02 Anheuser-Busch Inc v Budejovicky Budvar np [2004] at [59], Case C48/05 Adam Opel AG v Autec AG [2007 [18]-[22] and Case C-17/06 Céline SARL v Céline SA [2007] at [16] In addition, the same case law has established that use in the course of trade means use “in the course of a commercial activity with a view to gain and not as a private matter” (see Arsenal at [40], Céline SARL at [17] etc) and use of a sign “in relation to” goods or services means use “for the purpose of distinguishing” the goods and services in question, that is to say as a trade mark as such (see Case C-63/97 Bayerische Motorenwerke AG v Deenik [1999] at [38], Anheuser-Busch at [64] and Céline at [20]; and cf. Article 5(5) and Case C23/01 Robelco NV v Robeco Groep NV [2002] at [28]-[34]). 3. E-Commerce Directive Parliament and Council Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ("the E-Commerce Directive") includes the following provisions: Article 12 'Mere conduit' 1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, member states shall ensure that the service provider is not liable for the information transmitted on condition that the provider: (a) does not initiate the transmission; (b) does not select receiver of the transmission; and (c) does not select or modify the information contained in the transmission. 2. The acts of transmission and provision of access referred to in paragraph 1 include the automatic, intermediate and transient storage all the information transmitted in so far as this takes place for the sole purpose of carrying out the transmission in the communication network, and provided that the Full Text - Roman Cholij

17

information is not stored in any period longer than is reasonably necessary for the transmission. 3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States' legal systems, all requiring the service provider to terminate or prevent an infringement. Article 13 'Caching' 1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the automatic, intermediate and temporary storage of that information, performed for the sole purpose of making more efficient the information's onward transmission to other recipients of the service upon their request, on condition that: (a) the provider does not modify the information; (b) the provider complies with conditions on access to the information; (c) the provider complies with rules regarding the updating of the information, specified in a manner widely recognised and used by industry; (d) the provider does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information; and (e) the provider acts expeditiously to remove or disable access to the information it has stored upon obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or access to it has been disabled, or that a court or an administrative authority has ordered such removal or disablement. 2. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States' legal systems, of requiring the service provider to terminate or prevent an infringement. Article 14 Hosting 1. Where an information society service is provided that consists of the storage of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the information stored at the request of a recipient of the service, on condition that: (a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or (b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information. Full Text - Roman Cholij

18

2. Paragraph 1 shall not apply when the recipient of the service is acting under the authority or the control of the provider. 3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States' legal systems, of requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility for Member States of establishing procedures governing the removal or disabling of access to information Article 15 No general obligation to monitor 1. Member States shall not impose a general obligation on providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity. 2. Member States may establish obligations for information society service providers promptly to inform the competent public authorities of alleged illegal activities undertaken or information provided by recipients of their service or obligations to communicate to the competent authorities, at their request, information enabling the identification of recipients of their service with whom they have storage agreements." 4. Enforcement Directive Article 11 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights ("the Enforcement Directive") provides: Injunctions Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. Where provided for by national law, non-compliance with an injunction shall, where appropriate, be subject to a recurring penalty payment, with a view to ensuring compliance. Member States shall also ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive 2001/29/EC.

Full Text - Roman Cholij

19