While I thought that Bugatti was a car brand, it turns out it is (also) since 1989 a registered trade mark in Australia for,amongst other things, men’s clothing. Originating in Canada, there is also a line of men’s clothing under the label BUGATCHI UOMO. Products bearing this brand have been coming into Australia since 1991. Shine Forever, however, has been importing the line since 2010. Tracey J has ruled that Shine Forever has been infringing the BUGATTI trade mark.
Unsurprisingly, Tracey J rejected Shine Forever’s argument that it was not using BUGATCHI UOMO as a trade mark. According to Shine Forever, the Estex case meant that the Canadian supplier, as the manufacturer of the products, was using the BUGATCHI UOMO trade mark in Australia and not Shine Forever. Nice try, but no cigar.
Shine Forever also tried to rely on the s 122(1)(f) and (fa) defences. There is no infringement if:
(f) the court is of the opinion that the person would obtain registration of the trade mark in his or her name if the person were to apply for it; or
(fa) both:
(i) the person uses a trade mark that is substantially identical with, or deceptively similar to, the first-mentioned trade mark; and
(ii) the court is of the opinion that the person would obtain registration of the substantially identical or deceptively similar trade mark in his or her name if the person were to apply for it; or
For most of the preparatory steps and the trial, Shine Forever maintained it was the person entitled to rely on the defence. However, in the course of submissions the director (self-)representing Shine Forever sought to argue that the Canadian supplier was the person entitled to the defence. Tracey J would not let Shine Forever change its case at that stage. The interesting thing here is that Tracey J said:
54 Like s 123, s 122 operates as a qualification or exception to s 120(1). It provides a defence to “a person” who may otherwise contravene s 120(1) by infringing a registered trade mark. The “person” which is alleged, in the present proceeding, to have contravened s 120(1) is Shine Forever. It is, therefore, the “person” referred to in the prefatory words of s 122(1). The various references, in paragraphs (f) and (fa), to “the person” plainly refer to the person against whom infringement of s 120(1) is alleged and who seeks to invoke one or more of the defences available under s 122(1). In this case that person is Shine Forever, not BUA.
55 As Shine Forever did not seek to contend that it had defences under paragraphs (f) and (fa), these provisions do not assist it.
This probably means that, because Shine Forever was arguing the Canadian supplier was using the trade mark, it couldn’t then argue it was the person referred to in s 122.
Wonder why it couldn’t do that in the alternative?
Now, usually where a local importer or retailer is selling goods bearing a foreign manufacturer’s trade mark, the foreign manufacturer is the owner of the trade mark. Does Tracey J’s approach therefore also mean that, on the strict terms of the provision, the importer or retailer who gets sued for infringement could never rely on the defence when the person who would be entitled to get registered is the foreign supplier?
Last month, the Full Court overturned the trial Judge’s ruling that Modena had infringed Cantarella’s registered trade marks for ORO and CINQUE STELLA for coffee. Instead, revoking the registrations on the basis that they were not capable of distinguishing. Barrister Sue Gatford provides another guest post explaining why.
In 2000 Cantarella, the vendor of Vittoria coffee, applied for and obtained registration in Australia and elsewhere of the Italian words ORO and CINQUE STELLE as trade marks. Translated into English ORO means GOLD and CINQUE STELLE means FIVE STAR. Cantarella had used these words (and others) in Australia for various of its coffee blends for a very long time.
An Italian company, Molinari, had used ORO and CINQUE STELLE for its coffee for a similarly long time, and since 1997 had imported that coffee into Australia. Many other coffee companies, including Lavazza and Coffee Mio, use ORO to describe one or more of their coffee products. On the evidence, no-one other than Cantarella and Molinari appear to have used CINQUE STELLE.
In 2011 Cantarella sued Modena, Molinari’s Australian importer. It alleged that the Café Molinari Oro and Café Molinari Cinque Stella products that Modena imported and sold in Australia were infringing Cantarella’s registered trade marks. The Federal Court initially agreed. Last month though, the Full Court overturned that decision and ordered the cancellation of Cantarella’s trade marks.
The judgment revisits the long standing and often quoted test, set out by Kitto J in Clark Equipment, for determining when a mark is inherently adapted to distinguish, viz:-
[T]he question whether a mark is adapted to distinguish [is to] be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives — in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess — will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.[1]
In Clark Equipment registration of the word MICHIGAN for tractors that came from Michigan, USA was refused. The High Court considered that as Michigan was a well known manufacturing centre at a later time other traders might, without improper motive, want to use the word Michigan in describing other tractors they wanted to sell.
Similarly, the Full Court said that Italy being a common source of coffee and the Italian language having invaded the English language in the coffee sphere with words such as cappuccino, cafe latte and the like, it was likely that other traders would, without improper motive, be likely to want to use descriptive Italian words, including ORO and CINQUE STELLE, in relation to their coffee.
The Full Court considered that the trial judge put too much emphasis on the fact that Australian consumers generally (the so called “ordinary English-speaking people in Australia”) were unlikely to know what ORO and CINQUE STELLE meant. Rather, the Court said, the proper enquiry was whether other traders would want to use those words. The Full Court was less concerned than the trial judge with whether the English meaning of the words was widely understood (How many people who order a cappuccino know what the word cappuccino means in English?) but did point out that Italian was the second most widely spoken language in Australia in any event.
In terms of the appropriate legal test, the Full Court said that the reference to “the common right of the public” by Kitto J in Clark Equipment was a reference to the common right of other traders as a sub-section of the public.[2] Crucially, they found that the evidence supported a finding that ORO and CINQUE STELLA were:-
“known in the coffee trade according to their ordinary signification as words descriptive of the quality of coffee products and have been used in that sense, although not as trade marks, for a significant period of time extending well before Cantarella’s registration of its marks and afterwards”.[3]
Interestingly, the Court did not differentiate between the evidence of the use by other traders of ORO (there were many) and the evidence as to the use by other traders of CINQUE STELLE (there were none). This is perhaps because the test is what other traders might want to do, not what they have actually done. So while proof of actual use is convincing proof of a (fulfilled) desire to use, an absence of actual use is equivocal – it may just mean that other traders haven’t as yet decided to use the particular word or words, not that they won’t ever decide to use them.
So it would seem that the Australian coffee world can resume use of the descriptive splendour of the Italian language without fear of trade mark infringement for the time being. The Clark Equipment test as clarified by the Full Court in Modena is also alive and well.
Back in June, the Full Court, upheld the trial Judge’s conclusion that Knott was engaging in misleading or deceptive conduct, and passing off, by using the Winnebago “logos” to promote RVs of its (Knott’s) manufacture that had nothing to do with Winnebago USA. Because the breach was in the nature of “passing off” rather than trade mark infringement and because Winnebago USA had sat on its hands for 25 years allowing Knott to build up some goodwill of its own, however, the Full Court was prepared to grant an injunction only to restrain use of WINNEBAGO and the Winnebago logos by Knott which did not adequately disclaim association with the USA.
The Full Court has now handed down its decision about the form of that disclaimer:
without:
(f) where the name, mark or logo is used on one or more vehicles or in a document (including any print advertisement or webpage), stating in any relevant document (including any print advertisement or web page) or on any vehicle, clearly and prominently, and reasonably proximate to any name, mark or logo:
(i) (where the name, or mark or logo is used on or in relation to a single vehicle) “This vehicle was not manufactured by, or by anyone having any association with, Winnebago of the United States”; or …
In addition, radio and television commercials must have a prominent voiceover of no less than 10 seconds’ duration stating:
These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States.
Also, Knott will be required to obtain a signed acknowledgement from each purchaser, hirer etc. that he or she has been informed the vehicles was “not manufactured by, or by anyone having any association with, Winnebago of the United States.”
Given the 25 year delay, the Full Court was not prepared to countenance allowing Winnebago USA to take an account of Knott’s profits.
The Full Court did, however, remit the matter back to the trial judge on the question of damages (limited to the six years before the proceeding was brought), but with an important rider.
Winnebago USA wants to argue that its damages should be a reasonable royalty on the use of its rights. The Full Court noted that other Full Court authority [1] appeared to stand in the way of that approach, but there might be scope for that to be revisited in light of the New South Wales Court of Appeal’s consideration of remedies for the unauthorised use of property in the context of conversion.[2]
The rider: before Winnebago USA gets to try this argument, it has to satisfy the trial Judge that there is “some prospect of a substantial (that is, real) award.”
adidas has successfully sued Pacific Brands for infringing its “3 stripes” trade mark through the sale of three styles of shoes with 4 stripes; but failed in respect of six other styles. Three other styles settled before action, 2 without admissions.
adidas relied on 2 registered trade marks, TM No 131325 dating from 1957 and TM No 924921 dating from 2002. (If you have been on Mars for the last 50 years) you get the basic picture from TM No 924921:
TM 924921
registered for “footwear including sport shoes and casual shoes” in class 25. There is also an endorsement:
Trade Mark Description: The trademark consists of three stripes forming a contrast to the basic color of the shoes; the contours of the shoe serves to show how the trademark is attached and is no component of the trademark. * Provisions of subsection 41(5) applied.*
First, accepting that the stripes played a decorative role, Robertson J nonetheless found that Pacific Brands used all the stripe combinations on the shoe styles in issue as trade marks. In reaching this conclusion, his Honour was heavily influenced at [64] by the evidence [1] that sports shoe manufacturers typically placed their trade marks on the side of the shoe. Consistently with orthodoxy, it was nothing to the point that consumers might not know which manufacturer was actually behind the product or that other trade marks such as “Grosby” also appeared on the shoe.
The Airborne Shoe illustrates why Robertson J held some styles infringed:
Airborne shoe
The fact that there were 4 stripes rather than 3 tended against a finding or infringement. However, that was outweighed by the overall impression conveyed. At [235], his Honour explained:[2]
this shoe is deceptively similar to the applicants’ trade marks. I note in particular the parallel equidistant stripes of equal width (with blue edgings) in a different or contrasting colour to the footwear, running from the lacing area to the instep area of the shoes.
In contrast, the shoes found not to infringe were all found not to convey the sense of equidistant stripes against a contrasting background, let alone a sub-set of three “parallel” stripes.[3]
Perhaps, most strikingly, the Basement style at [282] conveyed the idea of two sets of two stripes rather than three or four equidistant stripes.
Basement shoe
Next, the Boston shoe:
Boston shoe
did not convey the idea of a group of stripes against a contrasting background:
there are four stripes rather than three and an obvious slightly wider gap between the second and third stripes. That is the first point. I do not conclude that there are two groups of two stripes. In addition, the inclusion of panels in the shoe of a similar colour to the stripes (black or close to black), and the stitched-in element of contrasting colour (white) extending behind the stripes, mean that as a matter of impression there is no deceptive similarity with the applicants’ trade marks. There is no sufficiently clear impression of the stripes forming a contrast to the basic colour of the shoes or being a colour different from that of the article of footwear to which the stripes were applied.
The idea of four stripes with the central pair “bridged” extended through into the Apple Pie Pink style at [296]:
Apple Pie shoe
Robertson J also found that the Stingray Black style did not infringe:
Stingray Black shoe
At [305], his Honour explained:
there are four “stripes”; the stripes taper to a narrower end towards the sole of the shoe and are therefore not of equal width; the gaps between the stripes are not equal and taper towards the top of the shoe at the lacing; and the four stripes have a curved element and are therefore not parallel. The features of the applicants’ trade marks relied on by the applicants in relation to this shoe are not those which give rise to the dominant visual impression of the trade marks as three parallel equidistant stripes of equal width. This shoe does not create the visual impression of three parallel equidistant stripes of equal width.
A couple of other points
First, Robertson J did not buy adidas’ invitation to infer an intention to infringe, or at the very least “to sail too close to the wind”[4] from an alleged pattern of copying. Pacific Brands withdrew two shoe styles said to be the foundation of this pattern without any admission of liability. A third style, the Stringray boot was withdrawn with an admission, but his Honour regarded that matter as resolved.
Secondly, adidas made an interesting attempt to bolster its case on infringement by the use of a survey. The survey purported to show that some 14%, 34% and 19% of those shown three different styles “similar” to Pacific Brands’ styles identified adidas as the source of the product because of the presence of stripes.
The survey was conducted online. Each participant was shown one of four images of a leg with a shoe style on its foot. (Three were intended to be versions of Pacific Brand styles; one, the control, was unmarked.) The participants were then asked a series of questions including:
B1. Who do you think makes this shoe?
B2. Why do you say that? Please be specific and explain the reasons for your answer in question B1.
Robertson J, however, accorded the survey little weight in making his assessment. There were a variety of reasons for this. These included, first, at [196] that the showing of the images online did not sufficiently replicate or correspond to the experience of the consumer in the market place (apparently this is known as “ecological validity”). Secondly, at [205] question B1 was impermissibly leading. Thirdly, at [210]-[211] the “control leg” was inadequate for the purpose because the absence of decoration signalled to some consumers that it was not sourced from a major brand.
Even though (or perhaps because) the trade mark infringer was self-represented at trial, this short case includes two important cautions that it is as well to keep in mind.
Mr King ran some boxing events with some training and the like under the name “White Collar Boxing”. The problem was that Delta Metallics already owned the trade mark for “White Collar Boxing” in respect of those services. Delta Metallics sued and eventually obtained judgment on the liability questions by default. Mr King then provided an affidavit declaring that he made some $12,253 in profits. Delta Metallics elected to pursue an account of profits and the trial judge ultimately awarded it that sum.
Without going into all the procedural aspects of the appeal: the cautionary points:
(1) If you want to argue that you shouldn’t have to account for the profits because you are an innoncent infringer, you need to get that innocence established at the liability stage of the proceeding. (Unless you make special provision for it somehow), you won’t get the chance when quantum is being determined.
(2) If you are an infringer (and don’t make out the innocence defence), you are required to account only for those profits made by reason of the infringing conduct.[1] As a result, you may not be liable to account for all the profits you made if you can satisfy the Court that some of the profits did not derive from the use of the trade mark. Mr King couldn’t rely on this on the appeal because he had not tried to argue it at the trial (see [50]-[54]).
The Registrar of Trade Marks has successfully applied for dismissal of ADJR Act proceedings challenging decisions to revoke registrations and the acceptance of trade marks.
The Registrar used her powers under section 84A to revoke the registration of 8 of FPInnovation’s trade marks. Then the Registrar used her powers under s 84C to revoke their acceptance. (The Group A trade marks.[1]) The Registrar also used her powers under s 38 to recoke the acceptance of four other applications. (The Group B trade marks.) According to the judgment, the decisions to revoke registration and acceptance were all based on the ground that the trade marks were likely to deceive or cause confusion, contrary to s 43.
Section 84D confers a right of appeal to the courts[2] from a decision to revoke registration under ss 84A and 84C. there is no appeal from a decision to revoke acceptance under s 38. In the normal course, however, the trade mark would go through the examination process and a decision to refuse an application would also be subject to an appeal to the courts under s 35.[3] These “appeals” of course are really hearings de novo on the merits rather than appeals proper.
FPInnovation did not choose to exercise these appeal rights: instead it sought judicial review under the ADJR Act – that is, a challenge essentially to the “procedural” soundness of the decisions.[4]
The Registrar successfully applied to have the ADJR Act proceedings dismissed under s 10(2) and s 16 on the basis that the options for “appeals” which allowed for determinations on the merits provided a more suitable and efficacious avenue for review. Cowdroy J explained the purpose of the legislative scheme:
The legislative purpose is, as Katzmann J said at [67] in 1–800-Flowers, clear. Parliament intended with respect to decisions to revoke the acceptance of applications for registration ‘that any challenges be made to the decision to refuse or limit registration, not to the anterior decision to revoke acceptance’. The intent with respect to decisions to revoke the registration of trade marks is equally as clear; that is, the affected trade mark owner should file an appeal under s 84D. Such processes are, in the words of Finn J in Wyeth Australia at [44], ‘deliberately contrived’ by the legislature. It is against this background that the Court must consider the prejudice claimed by FPInnovation.
Cowdroy J considered thar any prejudice FPInnovation suffered from any defects in the decision-making process to revoke registration and/or acceptance should be cured by the subsequent decisions on the merits. In addition:
FPInnovation contends that certain factual findings would again have to be contended for should re-examination of the trade mark applications occur. Whilst this is true, it is a necessary consequence of the process of review intended by Parliament. It also ensures that the central issue in the overall dispute between the parties is resolved, namely whether the trade marks should ultimately be registered, and as a corollary, whether those trade marks in relation to the categories for goods and services for which they were, or were proposed to be, registered are likely to deceive or cause confusion. These are questions that the Court cannot entertain on judicial review.
They were for marks in class 36 such as KFH, Kuwait Finance House and amislamic. (Revocation of acceptance seems at best implied by s 84C(5). So may be, it was under s 38.) ?
That is, the Federal Court or the Federal Circuit Court. ?
Given the terms of s84C(5), re-examination would seem to be mandatory on revocation under s 84A. ?
As of last month, 4 new gTLDs had already been approved but more than 1,000 have made it passed the “initial evaluation stage”. Private auctions for new gTLDs where there is more than one applicant are starting.
The new gTLDs aren’t here yet but scary as it is, this is going to happen.
So, if you are a brand owner – or advise brand owners – and you haven’t been thinking about how you are going to deal with this, Jonathan’s post really serves as a timely warning to get your thinking cap on:
are you going to try and register any (and if so which) of your trade marks in any of these new gTLDs?
what steps are you going to take, if any, to make sure someone else is not registering one (or more) of your trade marks in one of these new gTLDs?
If you have tried to buy, sell or rent property in Australia in the last 10 years (at the least!), like some nearly 7 million other Australians you have no doubt come across realestate.com.au, the web-portal run by REA Group. Real One also competes in that space.[1]
Bromberg J held that the uses both in the first line and the second line of the advertisment infringed. In contrast to his Honour’s rejection of the claim for misleading or deceptive conduct, Bromberg J explained at [241]:
In my view, the display of the term “realestate1.com.au” in the heading of a sponsored link would have been regarded by many consumers to be the trading and domain name of the business whose link it was. One of the central distinguishing features of REA’s realestate.com.au trade marks is the idea that the term “realestate.com.au” is both a brand name and a domain name at the same time. When Real Estate 1 used “realestate1.com.au” as a trading name, it took up that precise idea. In that context consumers are likely to pay substantive attention to “.com.au” because it serves the function of identifying the brand whose domain name is also being used as a brand. The whole of the domain name is likely to be read or at least scanned. In a circumstance such as that, there was in my view, a real danger of confusion on the part of a consumer familiar with REA’s realestate.com.au trade marks. That principally arises because in a scanning process of the kind which can occur on a search results page, the “1”, which is not very distinct in the context of a domain name in ordinary type face, is likely to be missed by some consumers.
First, his Honour distinguished Perram J’s proposition in the Solahart case that usually one can ignore the inclusion in a sign of elements like “www” and “.com.au” as merely “accoutrements” of the domain name system and so not matters that the public would pay attention to. Unlike the situation before Bromberg J, however, that observation was not made in a context where the .com.au element formed part of the registered trade mark.[5]
Second, I can certainly see that the bold “headline” (the first line) in Real One’s advertisment is plainly being used as a trade mark. But the use in the second line???
Yes, I know that cases have held that domain names / URLs are the Internet’s equivalent of a sign or billboard. That can certainly be true and, in the first line of the advertisement, the URL is plainly being used in that way, but surely with respect in the second line the URL is no more than an address.
Third, one might express some alarm that anyone can stop someone else using the term “real estate” (in connection with real estate services). There are, after all only 387 other registered trade marks in class 36 alone which include the words “real estate”. On the Internet, there is also at the least realestateview.com.au. Bromberg J’s first answer in [241] above is that it was not just the use of “real estate” that gave rise to liability: it was the use of that term and “.com.au” in combination and the comparative insignificance of the “1” in Real One’s URL.
Bromberg J did, however, recognise the problem and said at [247]:
As my conclusions demonstrate, registration of REA’s realestate.com.au marks has effectively given REA a monopoly over two highly descriptive terms when used in combination. Those terms are likely to be the most common terms on a search results page where a search has been conducted for a residential real estate portal. The protection conferred by REA’s trade marks over the use of “realestate” and “.com.au” in combination, provides REA with a monopoly over the term “realestate” in circumstances where its rivals seeking also to use “realestate” or a close variant thereof as a second-level domain, do not forego the advantages of using “.com.au” in their domain names. The natural advantage of a domain name which incorporates “realestate” to the commercial success of property portals will be apparent from observations I have already made. There is also a natural advantage in the use of the suffix “.com.au”. It is troubling that terms that are highly descriptive of a particular area of commerce and which provide significant commercial advantage should not be readily available for use by all who seek to participate in that commerce. However, in the absence of a successful challenge to the registration of REA’s realestate.com.au trade marks, whilst that may be troubling, REA is nevertheless entitled to the protection of the monopoly which has been conferred upon it.
The question has to be asked, however, on what basis could REA group’s logo be revoked or refused registration? Given the device elements (and the large number of other, competing devices), it would surely be held to be capable of distinguishing. The “good” old days (i.e., before the 1995 Act) were at least better in this respect: the Registrar could impose disclaimers to ensure these sorts of monopolies should not arise.
Two short points in conclusion:
His Honour did also find that Real One’s “real commercial” logo infringed REA group’s registration for its “real commercial” logo.
It would seem that Real One is still able to operate from its “.net.au” URL.
Bromberg J found at [258] that the principal of Real One adopted the name to pressure REA group into buying him out at some point, but also went on reluctantly to find no accessorial liability (akin to authorising). ?
For simplicity, I will treat that term as covering the actions for misleading or deceptive conduct (now under s 18 of the ACL formerly known as s 52 of the Trade Practice Act 1974) which, of course, was really the focus of that part of the case. ?
The number doesn’t seem to be identified, but TM Nos 811931 and 1075935 are for the mark in black and white and TM No. 1478263 is for the colour version reproduced in his Honour’s reasons. ?
Also contrast this result with the Thredbo Resort’s failure to stop ThredboNet using Thredbo in domain names to market rental accommodation at Thredbo village: Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2013] FCA 563 – Thredbo Resort having only pending opposed applications. ?
Decision under the UDRP have reached similar positions. ?
Following last week’s post where Arnold J found Marks & Spencer liable for buying ads on the keyword INTERFLORA because of the initial interest confusion, the 10th Circuit Court of Appeals in the USA has heavily qualified when (perhaps that should be “if” or “if ever”) initial interest confusion can constitute trade mark infringement in the USA.
It involved Lens.com buying ads on the keyword, 1800contacts, for contact lenses.
The 10th Circuit upheld the trial judge’s exclusion of a consumer survey proferred by 1-800 Contacts to establish confusion. There were a number of reasons for its rejection including its flawed methodology. The 10th Circuit went on to conclude that the approximately 7% confusion shown by the survey would be insufficient to rise to trade mark infringement under US law. Accepting that each case depended on its own facts, the 10th Circuit endorsed the general proposition that:
The great weight of authority appears to be that “[w]hen the percentage results of a confusion survey dip below 10%, they can become evidence which will indicate that confusion is not likely.” 6 McCarthy § 32:189 at 32-440 (emphasis added by 10th Circuit).
One wonders whether an Australian court, which must ascertain whether a [substantial][OR a significant] number of the relevant audience might be caused to wonder, would be so robust as to conclude that 5% or 7% of the market was not a substantial (or significant) number?
Professors Goldman and Tushnet identify a range of reasons to regret the 10th Circuit’s decision not to drive a stake through the heart of initial interest confusion. Prof. Goldman does speculate, in particular, whether measuring “click-throughs” as a proxy for confusion could ever cross the 10% threshold.
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:
CLICK to enlarge
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: [1]
“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 [1998] ECR I–5507, paragraph 28, and Case C–120/04 Medion [2005] 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 [2004] 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[2] contributing to his Lordship’s conclusion. Some that stand out follow.
Arnold J accepted (at [316]) 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 [297] and [299]) 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 [304] – [306], 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.[3]
Secondly, it seems doubtful that the considerations identified in [84] 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.[4]
Thirdly, our law does recognise the idea of “initial interest confusion”,[5] 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 [288] – 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 [5] 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. ?
