Keyword Advertising – a Bloomin’ Nightmare?

One of the legal problems with keyword advertising is that keywords are often identical or similar to registered trade marks and, if you don’t get it right, you can be dragged into costly trade mark infringement proceedings.

The Interflora v M&S case

Some guidance on how to avoid this was given in last year’s High Court ruling that M&S (Marks & Spencer plc) had infringed Interflora’s trade marks in its keyword advertising campaign by bidding on keywords identical to the Interflora trade marks, even though none of them featured in the triggered adverts.

However, in a rare move the Court of Appeal has ordered a re-trial of the dispute and in doing so has altered the way internet advertisers and brand owners should think about online campaigns.

M&S bid on a keyword that was an Interflora registered trade mark to trigger an M&S advert that ran like this:

“M&S Flowers Online

Beautiful Fresh Flowers & Plants.

Order by 5.00 p.m. for Next Day Delivery.

www.marksandspencer.com/flowers”

Interflora sued M&S for trade mark infringement.

The decision

The High Court originally held that this infringed Interflora’s trade marks because M&S had not proved that the advert enabled a reasonably well-informed and reasonably observant internet user searching “Interflora” to tell that M&S’s flower delivery service was not part of the Interflora network. In reaching this decision the judge had proceeded on the basis that, to escape infringement, M&S had the burden of proving that its adverts were sufficiently clear so that there was no real risk of confusion on the part of the average internet user and it had failed to discharge that burden.

In deciding that there was a likelihood of confusion on the part of the average internet user, the judge had also relied on instances of “initial interest confusion”. This is where the consumer has initially been attracted or diverted to the advert, or initially confused but at the point of purchase the internet user’s initial confusion has been dispelled and he/she knows that the goods or services he/she is buying are not the brand owner’s goods or services. The Court of Appeal has ruled that this initial interest confusion may not be relied upon to establish that there is a likelihood of confusion in relation to the advert. The test is whether the advert enables the average consumer to ascertain the origin of the goods or services being advertised, in order to make an informed decision at the point of sale.

The Court of Appeal was “far from confident” that the judge would have come to the same conclusion had he correctly analysed the legal test for infringement and correctly assessed the evidence. The judge’s (incorrect) approach to the burden of proof had likely influenced his assessment of all of the evidence – and so affected all of his findings.

The Court of Appeal concluded that it was not in a position to determine the question of infringement itself because it had not heard the witnesses or seen the evidence placed before the High Court. So it had no alternative but to order a re-trial (to be heard by a different judge).

Useful points

Application of the legal rules is still evolving and we wait to see if the case reaches a second trial for more insight into how the Court will apply the rules, but internet advertisers and brand owners can take the following useful points from the Court of Appeal decision:

1. The correct test for infringement in keyword advertising cases is whether or not the advert enables normally informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to in the advert originate from the trade mark owner (or someone connected with it) or, on the contrary, from someone entirely unconnected with the trade mark owner.

1. Failure on the part of the advertiser to “negatively match” against another’s trade mark (when bidding on a generic keyword, such as “florist”) might constitute use of that trade mark for the purposes of trade mark infringement law, but this will depend on all the circumstances (including the length of time involved and whether the advertiser’s bidding had been done with the intention and effect of using the rival brand to trigger the display of its own advert). Even if it does, however, this will still not lead to a finding of infringement unless it can be shown that the advert does not satisfy the test described above.

1. The burden is on the brand owner to prove that the third party advert does not satisfy that test (and not the other way round).

1. “Initial interest confusion” does not play any role in the test for infringement. An advertiser does not have any duty to avoid confusion as such, it just needs to take care to ensure that its adverts do enable average internet users to establish whether the goods or services originate from the advertiser as opposed to the brand owner (as otherwise it may be held liable for infringement).

1. When assessing the advert for confusion, the Court may have regard to its effect on a significant section of the relevant class of consumers and even if many consumers are not actually confused, the advert may still infringe.