Thursday 12 April 2012

The selection and use of a reputed trademark as a keyword with “due cause” does not constitute infringement of the rights of the trademark holder. Judgment of the CJEU of 22 September 2011, Interflora (C-462/09).

1.    Background.  Interflora, the famous network of independent florists with whom clients may place orders in person, on the telephone or via the Internet, brought legal action in the United Kingdom against Marks & Spencer (one of the main retailers in the United Kingdom) for having selected the registered trademark INTERFLORA, as well as other variants, as a keyword, which meant that when the term “Interflora” was entered into the Google search engine, Marks & Spencer advertisements appeared under the heading “sponsored links”.  The text of the advertisement did not, however, include the term “Interflora”, but it did contain references to M&S and <>.  The High Court of Justice (England & Wales), Chancery Division, stayed the proceedings and referred a number of questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling.  All of the questions were aimed at elucidating the extent to which Marks & Spencer’s conduct might constitute infringement of Interflora’s trademark rights.

2.    Findings.  The CJEU first of all refers to the doctrine enshrined in the judgments of 23 March 2010 (joined cases C-236/08 to C-238/08 Google) and 25 March 2010 (case C-278/08 BergSpechte), and stresses that the sign selected by an advertiser as a keyword constitutes use in trade.  The court confirms that the use of the mark is made in relation to the advertiser’s goods or services, even where the sign selected as a keyword does not appear in the advertisement itself, and in order for the trademark holder to be able to prevent such use, the existence of a double identity situation, as described in Article 5.1(a) of the “Trademark Directive”, will not suffice; rather, the use must have, or be liable to have, an adverse effect on the functions of the mark (the essential function ofguaranteeing the origin of the product to consumers and the advertising function), as well as the newly-coined trademark’s “investment” function which, despite overlapping with the advertising function to a certain degree, refers to the measures taken by a trademark holder “to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty”.

The second part of the judgment analyses the dispute from the standpoint of Article 5.1(b) of the “Trademark Directive” and from the perspective that the INTERFLORA trademark has a reputation.  The court finds that the holder of a reputed trademark is entitled to prevent the use of its mark by third parties where that use takes unfair advantage of the distinctive character or the repute of the trademark or is detrimental to that distinctive character or repute.  Based on case-law arising from the judgments handed down in cases C-408/01 Adidas and C-487/07 L'OrĂ©al, the court holds that the selection of a sign identical or similar to a reputed trademark as a keyword within the context of an Internet referencing service does not necessarily contribute to a reduction in the sign’s distinctive character and its becoming a generic term.

In the final part of the judgment, the CJEU states that a trademark with a reputation selected within the context of an Internet referencing service by a party other than the trademark holder can be construed as having been used with due cause and within the scope of healthy and fair competition where the sponsored link advertisement proposes an alternative to the goods or services of the trademark holder without offering a mere imitation of the trademark holder’s goods or services, without causing dilution or tarnishment, and without adversely affecting the functions of the trademark in question. 

3.    Remarks.  This judgment once again tackles the boundaries of legality in the use of third-party trademarks as keywords, although it introduces two new aspects in respect of previous judgments.  On the one hand, it refers to the trademark’s “investment” function and, on the other hand, it tackles the dispute from the standpoint of a trademark with a reputation.  The court once again defends the principle of free competition, but provides the national courts with a series of guidelines and tools so that they can resolve any disputes arising between trademark holders (including holders of reputed trademarks) and those who select those marks as keywords based on the wording of the sponsored link and its content.

Author: Luis Baz

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