Google Adwords / « Interflora » decision of the CJEU C-323/09
14.10.2011
The Court of Justice of the European Union (CJEU) issues, on September 22, 2011, a new judgement relating to the use of the “Google Adwords” service (CJEU, Sept. 22, 2011 22, Interflora Inc. c/ Marks & Spencer plc., C-323/09).
This referencing service proposed by the company Google Inc. allows to all economic operator to publish, in return of a financial counterparty, an advertisement with an Internet link when the user of the Google search engine enters one or several specific terms.
These advertisements are posted above of the result list of the Google search or on the right side, generally on a beige background.
The case in question opposes the american company Interflora Inc., specialized in the flower delivery, and the company Marks & Spencer (M & S), the famous English retailer.
The latter offers notably services of flower delivery which are, obviously, in competion with that of Interflora.
However, as part of the “Google Adwords” service, M & S selected the terms and expressions “INTERFLORA”, “INTERFLORA FLOWER”, “INTERFLORA DELIVERY” or “INTERFLORA.COM” for the publication of an advertisement relating to its services of flower delivery.
In consequence, when the Internet user will enter these different keywords during a Google search, an advertisement presenting the services of M & S will appear.
It is important to note that the trademarks INTERFLORA have a strong reputation in United Kingdom and in a lot of European countries.
Interflora decided to bring proceedings for trademark infringement against M & S before the High Court of Justice.
The latter addresses several preliminary issues to the CJEU.
Such proceedings allows to a national court of a member state of the European Union to interrogate the CJEU about the interpretation of the Community law. The CJEU does not deliver a judgement. The national court has to do it in accordance with the responses of the CJEU. These answers can be also consider by other national courts as part of similar cases.
That is the reason for which the present decison is crucial since “Google Adwords” service is the first source of income of the company Google Inc. Thus, this decision could jeopardize the economic model of the most important player of the Internet sector or, on the contrary, reinforce it.
First of all, the CJEU reminds in its decision of September 22, 2011, that “the proprietor of the trade mark is entitled to prevent that use only if it is liable to have an adverse effect on one of the functions of the mark”.
Furthermore, the CJEU indicates that the principal function of a trademark is “the function of indicating origin”, even if other functions can be attributed, notably “the advertising function” or “the investment function”.
Thus, the CJEU analysed if, as part of a “Google Adwords” advertisement, the use by a third party, and notably a competitor, of a trademark of others as keyword affects the different functions of a trademark.
The case law in similar dispute indicates that there is damage to the function of indicating origin when “the advertisement does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement 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 the case in point, the Community judge considers that “the relevant public comprises reasonably well-informed and reasonably observant internet users. Therefore, the fact that some internet users may have had difficulty grasping that the service provided by M & S is independent from that of Interflora is not a sufficient basis for a finding that the function of indicating origin has been adversely affected”.
In addition, although the CJEU estimates that the owner of the trademark will “intensify its advertising in order to maintain or enhance its profile with consumers”, it is not sufficient “for concluding that the trade mark’s advertising function is adversely affected”.
Indeed, such advertisements have for simple aim “to offer internet users alternatives” to the goods or services of the proprietors of the trademarks and that “the selection of a sign identical with another person’s trade mark, in a referencing service (…) does not, moreover, have the effect of denying the proprietor of that trade mark the opportunity of using its mark effectively to inform and win over consumers”.
Lastly, according to the CJEU, the investment function of a trademark can be affected if its use by a competitor “it substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty”.
Besides, “in a situation in which the trade mark already enjoys (…) a reputation, the investment function is adversely affected where use by a third party (…) affects that reputation and thereby jeopardises its maintenance”.
Consequently, the use of a trademark by a competitor cannot be forbidden “if the only consequence of that use is to oblige the proprietor of that trade mark to adapt its efforts to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty”.
Henceforth, the High Court of Justice will inspect if the use of the sign INTERFLORA by M & S violates the right of the company Interflora and affects the different functions of a trademark.
Insofar as the trademarks INTERFLORA have a significant reputation, the High Court of Justice also interrogated the CJEU about notions concerning the protection of the well-known trademark such as the “dilution” (detriment to the distinctive character of a trademark) and the “free-riding” (unfair advantage taken of the distinctive character or the repute of the trademark).
First of all, the Court of Justice of the European Union considered that the use of the well-known trademark INTERFLORA by M & S can lead the dilution of this trademark if this use “gradually persuades internet users that the word is not a trade mark designating the flower-delivery service provided by florists in the Interflora network but is a generic word for any flower-delivery service”.
In consequence, the CJEU suggests to the High Court of Justice to determine if the distinctive nature of the trademark in question is not reduced by the use of M & S or if this use only enables to draw the Internet user’s attention to the existence of an alternative product or service to that offered under the trademark INTERFLORA, but without reducing the distinctive nature of the latter.
Secondly, the CJEU estimates that the use by a competitor of a well-known trademark as keyword as part of a referencing service on Internet would be considered as free-riding only if the goods in question are “imitations” of goods of the trademark’s owner. Thus, this kind of use could be authorized if the goods or services in question are solely similar.
The Community judge concludes indicating that “the proprietor of a trade mark with a reputation is not entitled to prevent, inter alia, advertisements displayed by competitors on the basis of keywords corresponding to that trade mark, which put forward – without offering a mere imitation of the goods or services of the proprietor of that trade mark, without causing dilution or tarnishment and without, moreover, adversely affecting the functions of the trade mark with a reputation – an alternative to the goods or services of the proprietor of that mark”.
For the judge, “such use falls, as a rule, within the ambit of fair competition in the sector for the goods or services concerned and is thus not without ‘due cause’”
In consequence, the High Court of Justice must concentrate its analysis on the different points defined by the CJEU, namely if the use of the sign INTERFLORA by M & S affects the functions of indicating origin, publicity or investment of the Interflora ‘s trademarks, if this use leads to an alteration of the distinctive nature of these trademarks and, lastly, if the services presented in the advertisement of M & S represent a real alternative for consumers and not a basic imitation.
The interpretaion of the High Court of Justice will be really important, notably for Google Inc., since a potential authorization of the use of the trademarks of competitors as keywords could increase the income from “Google Adwords”.
Indeed, the trademark proprietors will publish many advertisements under keywords corresponding to their trademarks in order to limit the apparition of rival advertisements when an Internet user will enter their trademarks on Google.
