Marks & Spencer has been found to have infringed Interflora’s trade mark in the UK by ‘buying’ ads triggered by Google searches for the keyword INTERFLORA.
An example of the ads Arnold J found infringing:
In Google France, the CJEU established that an advertiser would infringe a registered trade mark when its ads were triggered by a trade mark as a keyword where: 
“82 The essential function of a trade mark is to guarantee the identity of the origin of the marked goods or service to the consumer or end user by enabling him to distinguish the goods or service from others which have another origin (see, to that effect, Case C–39/97 Canon  ECR I–5507, paragraph 28, and Case C–120/04 Medion  ECR I–8551, paragraph 23).
83 The question whether that function of the trade mark is adversely affected when internet users are shown, on the basis of a keyword identical with a mark, a third party’s ad, such as that of a competitor of the proprietor of that mark, depends in particular on the manner in which that ad is presented.
84 The function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party (see, to that effect, Céline, paragraph 27 and the case-law cited).
85 In such a situation, which is, moreover, characterised by the fact that the ad in question appears immediately after entry of the trade mark as a search term by the internet user concerned and is displayed at a point when the trade mark is, in its capacity as a search term, also displayed on the screen, the internet user may err as to the origin of the goods or services in question. In those circumstances, the use by the third party of the sign identical with the mark as a keyword triggering the display of that ad is liable to create the impression that there is a material link in the course of trade between the goods or services in question and the proprietor of the trade mark (see, by way of analogy, Arsenal Football Club, paragraph 56, and Case C–245/02 Anheuser-Busch  ECR I–10989, paragraph 60).
Arnold J found on the evidence that a significant section of the public were confused and so Marks & Spencer infringed.
It is not possible to do justice in a blog post to the full range of reasons contributing to his Lordship’s conclusion. Some that stand out follow.
Arnold J accepted (at ) that the majority of UK internet users appreciated the difference between paid ads and natural or organic search results, but there was still a significant proportion of internet users in the UK who did not. His Lordship also accepted that “nowadays” the majority of consumers appreciate .
nowadays the majority of consumers appreciate [they are being presented with ads by competitors to the brand they had searched for]. But I consider that a significant proportion do not. (emphasis supplied)
Secondly, the nature of the INTERFLORA brand appears to have been crucial. As you will no doubt be familiar, INTERFLORA is a network. It operates through a network of agents who are usually (always?) branded under their own names and trade marks. Those customers who were not buying online from “interflora.co.uk” or “interflora.com”, for example, would typically go into a retail outlet operating under its own name (and which may display the INTERFLORA name and logo).
The significance of this (at  and ) was that there was great potential for those customers who realised they were dealing with Marks & Spencer when they clicked on the ad mistakenly to think it was part of the INTERFLORA network.
That potential was in fact borne out by the evidence. In particular, there was evidence from “Hitwise data” that people who (1) searched on the keyword INTERFLORA and (2) as a result clicked on a Marks & Spencer ad generated in response to the search (3) were between 44 and 106 times more likely than the average visitor to the M & S flowers site to leave the M & S site without purchasing and instead go on to an INTERFLORA site.
At  – , his Lordship accepted the propositions that:
a significant number of consumers in Segment A decided after they had clicked through to the M & S website that it was not where they wanted to be and went to the Interflora website instead. The second is that the reason for this change of mind was that those consumers had clicked through from the M & S advertisement because they assumed from the appearance of the advertisement in response to their search that M & S was part of the Interflora network, but they realised that that was not the case when they clicked through to the M & S website and saw no reference to Interflora.
and such “initial interest” confusion was itself enough for trade mark infringement.
Thus, while Google doesn’t infringe by ‘selling’ keywords, the advertiser may and, in this case on Arnold J’s findings, did.
What, if anything, does it mean for us?
First off, the judgment is full of fascinating details about the “AdWords” and “search” market and the strategies that businesses deploy. For example, it appears that Google held around 90% of the global search (and paid advertising relating to search) market, with Bing and Yahoo! trailing out of site. There are also discussions of market research reports and Ofcom studies into what consumers understand when using the internet.
It is not clear whether Arnold J’s reasoning will provide us with much assistance here. First, while EU law does not appear to require use as a trade mark to infringe, the origin function referenced by the CJEU in Google France appears similar to our concept of use as a trade mark – as a badge of origin or to identify the trade source.
Secondly, it seems doubtful that the considerations identified in  of Google France would be relevant at all under our law. The idea of examining whether the “normally informed and reasonably attentive internet users” could ascertain the trade source from the ad, or do so “only with difficulty”, indicates that the content of the advertisment may make it clear that the trade mark owner is not the source of the advertised product. However, a registered trade mark is infringed in Australia even if the trade source is made clear, for example by a disclaimer or other identifying factor. The type of analysis being engaged in under EU law is rather more like what would take place in a passing off action or action for misleading or deceptive conduct.
Thirdly, our law does recognise the idea of “initial interest confusion”, but the number of people who apparently went to M & S’ website and “clicked away” does rather highlight the difficulties with the concept as applied to web searches: clicking the back button, or even doing another web search in the browser, is not so costly as walking out of the shop, hopping back in your car and going looking for the intended destination.
Arguably, the most significant point could be the starting point identified at  – the Court of Justice’s recognition that:
keyword advertising is not inherently or inevitably objectionable from a trade mark perspective. On the contrary, the case law of the CJEU in this field recognises that, as a general rule, keyword advertising promotes competition ….
On this view, it was only the very special nature of INTERFLORA as a ‘network’ that convicted Marks & Spencer.
For example Southern Cross v Toowoomba at  but, at least in the context of misleading or deceptive conduct / passing off (yes, I know this is a post about registered trade marks) some brake may be imposed on that in at least some cases. ?
The High Court unanimously allowed the appeal. Google did not create the sponsored links that it published or displayed. Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.
French CJ, Crennan and Kiefel JJ delivered the principal judgment, Hayne J and Heydon J each delivered separate concurring opinions.
Google Inc v Australian Competition and Consumer Commission  HCA 1
The ACCC has successfully appealed the Google Adwords case for misleading and deceptive conduct.
So, for example, Alpha Dog Trainging has been operating a dogtraining business for 12 years. Dog Training Australia (Ausdog) bought ads on the keywords Alpha Dog Training through Google’s Adwords program. One ad generated was:
Alpha Dog Training
DogTrainingAustralia.com.au All Breeds. We come to you. No dog that can’t be trained.
Instead of being taken through through to Alpha Dog Training’s website, however, a user who clicked on the ad was taken through to Ausdog’s website.
A clear case of misleading or deceptive conduct by Ausdog.
Because of its role in “selecting” which ads got placed in what order, Google has also been found liable.
Prof. King, formerly an ACCC commissioner, highlights why and thinks the Court got it seriously wrong.
Dr Mark Summerfield has an interesting post demonstrating some work he and his colleagues have been doing modelling the ownership of patents in the smartphone space.
In their mobile technology landscape, or themescape, they seek to demonstrate pictorially:
Samsung appears to own key hardware patents;
Microsoft seems to own most software patents;
but Apple seems to have highly strategic patents.
The themescape also seeks to demonstrate that Google was a long way behind, but may be catching up if it gets to acquire Motorola’s patents.
Dr Summerfield does express some frustration:
It is therefore ironic – and some might say more than a little unfair – that Apple should be in a position to frustrate Samsung’s attempts to compete against its iPhone and iPad products, while the FRAND obligations associated with Samsung’s much larger patent portfolio leave it in a strategically weakened position.
In this context, it is hardly surprising that Samsung is in the Federal Court of Australia arguing that it should not be barred from obtaining an injunction against the iPhone 4S on the basis of the FRAND status of the patents which it is asserting against Apple.
But one might equally wonder why Samsung should be allowed to get injunctions on the basis of its so-called FRAND patents (assuming the fair and reasonable royalty is forthcoming) when it apparently volunteered its patents for inclusion into various standards in return for FRAND obligations? This FRAND-type issue has been around since at least the 1980s and led to this basic position.
Foss Patents also has a relatively recent round up of where many of the litigations between the various smartphone manufacturers currently sit.
Google’s placement of advertisements, generated through its AdWords program, on search results pages is not misleading or deceptive conduct contrary to s 52 TPA / s 18 ACL (I’m afraid you have to scroll down). However, the advertiser’s use of another trader’s name in the headline for an advertisement which had nothing to do with that trade was.
So for example, the Trading Post used the AdWords program to generate an ad:
www.tradingpost.com.au New/Used Fords – Search 90,000 + auto ads online. Great finds daily!
The advertisements at the URL did not have anything to do with Kloster Ford or vehicles Kloster Ford was offering for sale.
The Trading Post therefore had engaged in misleading or deceptive conduct; Google did not.
Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd  FCA 1086
Given its departmental provenance and some of the discussion in the Background Paper, it might be thought the Review is mainly targeted at the Telco Act, the Radiocommunications Act and the Communications/Media regulator. There are some interesting straws in the wind for IP however:
First, the first draft term of reference:
In light of convergence, the Committee is to review the current policy framework for the production and delivery of media content and communications services. The Committee is to:
develop advice for Government on the appropriate policy framework for a converged environment;
advise on ways of achieving it, including implementation options and timeframes where appropriate; and
advise on the potential impact of reform options on industry, consumers and the community.
In the Background Paper, there are also some interesting IP-related aspects:
So, at pp. 14-15:
Another trend affecting business models is the trend towards the ‘granular’ nature of media consumption; for example consumers can now download songs, not albums; watch specific TV shows on demand and not the linear programming of a channel, and read a single news article through an online search engine, rather than purchase and read the day’s newspaper edition. In the online world the consumer is in the driving seat of their own media and entertainment consumption patterns with more choice and control than ever before. In addition to the rise of competing online platforms and fragmentation of the consumer market, another challenge to established business models is that digital revenues are not yet matching analog ones. In 2008, NBC Universal CEO Jeff Zucker famously stated that media companies should not ‘trade analog dollars for digital pennies’24. By 2009, he quipped that this may have increased to ’digital dimes’25. While online revenues are growing and the gap is reportedly closing26, ensuring ongoing investment while balancing the difference between analog dollars and digital cents presents challenges to established media companies.
On p. 16 under the heading ‘Policy settings that encourage Australian, local, and children’s content’, the discussion about Australian content quotas imposed on tv and radio, ends:
The rise of these alternative audiovisual services and the growing fragmentation of the media market raises questions as to appropriate policy settings to ensure the ongoing production and distribution of Australian media content which reflects and contributes to the development of national and cultural identity.
And, of course, the paranoid among you out there in cyberspace, will no doubt recall the rather cavalier treatment (e.g. here and here) meted out to iiNet before it won the (first round of) the Roadshow case.
Now, you could have fun (and spend lots longer than a year) on this: e.g. Prof Gans lambasts the authors (and, I guess, indirectly the other copyright owners who have similar ideas), but (for balance) also the App Store and, of course, until the Floods came, we were all twisted up with Gerry Harvey wondering if putting a GST on online purchases (overseas) will change the fact that you can often buy things online from overseas for prices 30-40% less than in stores here. Assuming of course you can “buy”: compare the tv shows or movies or books in the iTunes store or on Kindle or audible from Australia to what you can get with a US address, maybe. Somehow, I have avoided mentioning Google so far. Wonder how many examples the Review will come up with which lead to peeling back regulation?
Now, the time for commenting on the draft Terms of Reference closed on 28 January, so the scope of the review may become clearer. Then, there will be an independent committee to conduct the review, with their report scheduled for 1st quarter 2012.