Posts Tagged ‘UK’

Keywords – Marks & Spencer infringes INTERFLORA TM

Monday, July 15th, 2013

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:

Keyword search results

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.

Interflora Inc v Marks and Spencer plc [2013] EWHC 1291 (Ch)


  1. See also [226] – [267] (esp.) of Arnold J’s judgment  ?
  2. Embracing some 318 paragraphs! His Lordship does start drawing the threads together at [295].  ?
  3. See *e.g. Optical 88 (No 2)* at [212].  ?
  4. See *e.g. Optical 88 (No 2)* at [99] and Crazy Ron’s at [86] – [88].  ?
  5. 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.  ?
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Property in the proceeds of infringement

Thursday, February 7th, 2013

In a decision which no doubt has some further distance to run, Newey J (sitting in the Chancery Division of the High Court in England) has ruled that the owner of copyright does not have a proprietary interest in the proceeds (read profits) made by an infringer of the copyright.

Harris et al. are alleged to be the person (or persons) behind the Newzbin file sharing sites which, amongst other things, have been found to infringe the movie studios’ copyrights in a range of films (here and here, where Arnold J ordered the ISPs to block access).

In December last year, the Newzbin sites appear to have closed down, claiming they had run out of money.

Having obtained freezing orders (formerly called Mareva injunctions) against the assets of the defendants (such as the house in which Mr Harris lives and the Maclaren car he parks in its driveway), the movie studios sought “proprietary injunctions” over the assets as well. This seems to involve a court determination that the assets in question were the property of the movie studios rather than the defendants. For example, Newey J explained the difference between the (already in place) freezing order and the injunctions now sought by reference to Millett LJ’s description:

“The courts have always recognised a clear distinction between the ordinary Mareva jurisdiction and proprietary claims. The ordinary Mareva injunction restricts a defendant from dealing with his own assets. An injunction of the present kind, at least in part, restrains the defendants from dealing with assets to which the plaintiff asserts title. It is not designed merely to preserve the defendant’s assets so as to be available to meet a judgment; it is designed to protect the plaintiff from having its property expended for the defendant’s purposes”.

The movie studios based their argument on observations in the Spycatcher cases that Peter Wright may have held the rights in Spycatcher on constructive trust for the Crown in view of his breaches of duties of confidence and fidelity.

Newey J seems to have rejected this claim partly on the basis that there were cases binding on him (albeit apparently disapproved by the Privy Council) ruling that there was no such proprietary interest and partly on the basis that s 18 of the Copyright Act 1956 had expressly deemed the copyright owner to be the owner of infringing copies and provided remedies in conversion and detention. That remedy, however, had been repealed by the Copyright Design and Patents Act 1988 as unjust and unfair.

There are some interesting issues for Australians.

First, the conversion/detention remedy on the basis of deemed ownership has not been repealed (but is now discretionary) – see s 116 (but the Full Court may not be too keen on the remedy – see [94] of French and Kiefel JJ (as their Honours then were).

Secondly, in Lenah Game Meats, Gummow and Hayne JJ did say at [102]:

A cinematograph film may have been made, as in Lincoln Hunt, in circumstances involving the invasion of the legal or equitable rights of the plaintiff or a breach of the obligations of the maker to the plaintiff. It may then be inequitable and against good conscience for the maker to assert ownership of the copyright against the plaintiff and to broadcast the film. The maker may be regarded as a constructive trustee of an item of personal (albeit intangible) property, namely the copyright conferred by s 98 of the Copyright Act[96]. In such circumstances, the plaintiff may obtain a declaration as to the subsistence of the trust and a mandatory order requiring an assignment by the defendant of the legal (ie statutory) title to the intellectual property rights in question[97]. Section 196(3) of the Copyright Act provides that an assignment of copyright does not have effect unless it is in writing signed by or on behalf of the assignor.

Gaudron and Callinan JJ also agreed.

Newey J considered, however, that:

i) The point under consideration (viz. whether copyright in a film made unlawfully was subject to a trust) was rather different to that with which I am concerned (viz. whether a copyright owner has a proprietary claim to the fruits of infringement); and

ii) The Australian approach to constructive trusts is by no means the same as that in this jurisdiction. In particular, as the Full Court of the Federal Court of Australia noted in Grimaldi v Chameleon Mining NL (No. 2) [2012] FCAFC 6 (in paragraph 574)

His Lordship’s second point may be thought to be a second factor why an Australian court might take a different approach to his Lordship’s conclusion.

As to the first point, one might well think, if such a constructive trust arose, that the trustee would have to account for the fruits of the use of the trust property and possibly even handover such fruits as were still in his possession.

Finally, the Privy Council’s rejection of the authority binding on Newey J (and the determination of the movie studios) may well indicate that Newey J’s decision is just the first step in the war.

Twentieth Century Fox Film Corporation v Harris [2013] EWHC 159

Lid dip: Fiona Phillips

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A third case of extradition

Monday, January 23rd, 2012

The 1709 blog has a good summary of the arrest of Megaupload.com’s Kim “Dotcom” in New Zealand for allegedly copyrights in the USA.

Case 1 (Hew Griffiths aka ‘bandido’)

Case 2 (Richard O’Dwyer)

Meanwhile, some controversy is brewing because the FBI has seized the domain name and apparently blocked any access to the site even by those who have stored material legitimately in the service. Does that mean we all need to start worrying what will happen if our online back-up service is being used by alleged pirates too?

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Extraditing (alleged) copyright criminals

Wednesday, January 18th, 2012

The internet is all a twitter over the prospect that a 23 year old British subject, Richard O’Dwyer, may be extradited from the UK to the USA to face criminal charges for copyright infringement.

Well guess what, it has happened before albeit from this far away destination.

Mr Griffiths has apparently served his time (in both Australia and the USA) and had this to say to an enterprising journalist.

Lid dip: Graham Dent for the boing boing link!

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How much to pay for an infringement

Monday, June 27th, 2011

Over at the Fortnightly Review, Ass. Pro. David Brennan takes issue with the economists who argued that Larrikin should not have been paid any damages for the Kookaburra infringements.

The economists’ argument seems to have been that Larrikin didn’t lose any sales as a result of Men at Works’ infringements and so suffered no loss.

Damages under s 115(2) of the Copyright Act are compensatory: that is, they are calculated to compensate the copyright owner for the loss suffered as a result of the infringement. One way to measure that may be the profit the copyright owner lost on sales which typically applies where the copyright owner and the infringer are competing in the same market. One problem with this is that the figure for lost sales must be discounted to reflect infringements by the infringer which would never have been sales made by the copyright owner. So for example in Autodesk v Cheung, the infringer gave the pirate copies away for free while the copyright owner’s genuine software programs sold for hundreds of dollars.

Another measure often used is the licence fee approach, particularly applicable where the owner exploits the copyright by licensing. So, Autodesk wanted the licence fees it would have been paid as if Cheung had taken out a distribution agreement like its other distributors. Wilcox J was not prepared to order damages at a reasonable royalty level because, as is typically the case, there was no way Autodesk would have licensed Cheung or, for that matter, that Cheung would have paid for a licence from Autodesk. In that situation, Wilcox J felt that the basis for a reasonable royalty — the price a hypothetical willing (but not overly anxious) licensor and a hypothetical willing (but not overly anxious) licensee would have struck — could not apply.

While some courts at first instance have been willing to use a ‘reasonable royalty’ as a basis, Wilcox J’s concerns have been endorsed by Black CJ and Jacobson J in Aristocrat.

It is interesting to contrast this approach with the way the courts in the UK have dealt with it. Relying on some “old” patent cases (including a House of Lords decision), the Court of Appeal in Blayney (trading as Aardvark Jewellery) v Clogau St David’s Gold Mines was willing to use a “notional royalty” as the measure of the damages. The foundation of this approach was a rejection of the idea that the only loss suffered by the copyright owner was lost profits. Thus, in Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, Lord Shaw expressed the principle:

wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, of price or hire. If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: “Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise.

and applied it in the context of patent infringement:

If with regard to the general trade which was done, or would have been done by the Respondents within their ordinary range of trade, damages be assessed, these ought, of course, to enter the account and to stand. But in addition there remains that class of business which the Respondents would not have done; and in such cases it appears to me that the correct and full measure is only reached by adding that a patentee is also entitled, on the principle of price or hire, to a royalty for the unauthorised sale or use of every one of the infringing machines in a market which the infringer, if left to himself, might not have reached. Otherwise, that property which consists in the monopoly of the patented articles granted to the patentee has been invaded, and indeed abstracted, and the law, when appealed to, would be standing by and allowing the invader or abstractor to go free. In such cases a royalty is an excellent key to unlock the difficulty, and I am in entire accord with the principle laid down by Lord Moulton in Meters Ld. v Metropolitan Gas Meters Ld. (28 R.P.C. 163). Each of the infringements was an actionable wrong, and although it may have been committed in a range of business or of territory which the patentee might not have reached, he is entitled to hire or royalty in respect of each unauthorised use of his property. Otherwise, the remedy might fall unjustly short of the wrong.

The Meters case was referred to by Wilcox J, but it does not seem that Watson, Laidlaw was cited to his Honour.

Now, of course, the 19th century considerations of a horse owner and “borrower” seem “quaint” in the age of Gogle and P2P torrents. But is the principle really so different?

It appears that the third member of the Court in Aristocrat, Rares J, may well have been willing to adopt the Watson, Laidlaw approach, but the evidence failed to provide a basis for any “judicial” estimate.

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iTunes Match and making Prof. Lessig’s case

Friday, June 17th, 2011

Recap: Prof. Lessig’s argument.

You will remember that Michael Speck from Music Industry Piracy Investigations was outraged by Apple’s pending iTunes Match service and, in particular, the part where the service would in your iCloud account copies of music on your hard drive which had not been bought through iTunes.

At the time, it wasn’t clear (at least to me) whether Apple was going all gung-ho and just offering this unilaterally or had the agreement of the record companies to this.

Of course, if the record companies had agreed to this, it would be rather hard for them, or their representative, to complain about the pirate’s charter.

Jonathon Bailey, at Plagiarism Today, reports here that Apple is in fact offering the service in the USA with the agreement of the record companies. He also goes on to discuss indications that this is all part of a clever new strategy by the record companies to combat piracy – one of the indications he identifies includes recent reports that the music industry in Australia is not pursuing a 3 strikes policy (at least as strongly) as the movie industry.

Swerving to another aspect: the iTunes Match service Steve Jobs announced was for the USA only. Media reports suggest it will take up to 12 months for the service to be extended to the UK and speculate other countries will have similar delays.

Copyright is, of course, a territorial right and there are often different owners and licensees for different territories (i.e., countries). Thus, just because you have consent from the (or a) copyright owner in one country does not give you rights to do the same thing with the corresponding copyright in another country. No doubt, therefore, a large part of any delay will be attributable to the need to negotiate separate arrangements with the owners of copyright in different territories.

So the delay reported in the media should come as no surprise. That shouldn’t come as too much of a surprise to those in Australia who monitored, for example, how long it took for the iBookstore to get any “in copyright” content. Perhaps, if Mr Speck’s view is representative of the views of the copyright owners in Australia, the wait would be even longer – what an economist might describe as “infinitely long”.

All of which goes to highlight, as representatives around the world assemble in Geneva to debate extending copyright and introducing limitations for visually impaired readers, why are we still dealing in the 21st century with territorial rights for electronic rights which can be accessed virtually instantaneously from virtually anywhere in the world?

Oh, perhaps it’s not just an electronic “problem”. This product is advertised for sale in the USA for US$399. You can buy it here for AUD$699 or (depending on exchange rate fluctuations) approximately US$736. (By the way, I am certainly not recommending that you do buy the product from either source, I have no experience with it.) Almost makes you wonder where’s Prof. Fels?

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“right of repair”

Sunday, December 12th, 2010

The JIPLP blog has a succinct online article, by Brian Whitehead and Richard Kempner, analysing Floyd J’s decision in Schütz (UK) Limited v Werit UK Limited, Protechna SA [2010] EWHC 660 on whether a defendant’s activities amounted to permissible repair or reconditioning of a patented product or infringement.

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Substantial part of a video game

Friday, November 13th, 2009

The UK Court of Criminal Appeal has dismissed an appeal against a criminal conviction for selling modchips to enable Sony Playstations, Nintendo and Microsoft to play counterfeit games.

The 1709 [delete mouthfull of title] blog has a detailed report.

Those of us living in the autochthonous realm hidden away in the summer sun may find some interest in the reasons why the playing of the (counterfeit) games would result in a reproduction of a substantial part of the copyright – a point doubted or left open in Stevens v Sony [2005] HCA 58 at [80] – [99].

However, a considerable degree of caution will be required:

First, (what I guess constitutes a plurality of) the High Court has already ruled that a single image (or “frame”) from a film is not (or is not necessarily) a substantial part – at least of a television broadcast (Network Ten v Nine Network):

Secondly, as Stevens v Sony shows, Australia has very definitely embarked on its own course in relation to technological protection measures and this whole area of “meta” copyright.

Thirdly, at least 3 of the judges in the IceTV case resoundingly declared that it is not appropriate to test substantiality by reference to the taking of  the skill and effort of the author. Well, that is what they said; whether or not it is what they did is another matter. The 3 judges in the other judgment, of course, appear very much to have applied that misappropriation of the skill and effort (in expression) approach.

Those of you who are political philosophers or constitutional scholars may also look with some bemusement, or perhaps appreciation, on the Court of Criminal Appeal’s thundering against the idea of leaving to that engine of democracy, otherwise known as the jury, such recondite questions as copyright infringement, when perfectly well-trained Chancery judges were ready and waiting to serve. Of course, those of us who practise in the civil jurisdiction where IP cases are usually heard might well be horrified by the prospect of trying to present such a case to 12 men and women good and true!

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Google and facilitating or authorising

Monday, July 20th, 2009

DesignTechnica operates bulletin boards. The plaintiff alleged that some postings on the bulletin boards defamed it. In addition to suing DesignTechnica, the plaintiff sued Google for libel by reproducing snippets of the (allegedly) defamatory material in search results.

Eady J, sitting in the Queen’s Bench Division,  dismissed the plaintiff’s claims against Google on the grounds that Google did not publish the material.

The case obviously turns on the requirements for an action in defamation. Of potential interest in an intellectual property context, however, is that his Lordship noted that the generation of the snippets was automatic, not volitional. Thus, his Lordship analagised Google’s position to the position of someone who merely ‘facilitated’ infringing intellectual property conduct rather than ‘authorised’ it.

In the course of his judgment, his Lordship explained:

54.  The next question is whether the legal position is, or should be, any different once the Third Defendant has been informed of the defamatory content of a “snippet” thrown up by the search engine. In the circumstances before Morland J, in Godfrey v Demon Internet, the acquisition of knowledge was clearly regarded as critical. That is largely because the law recognises that a person can become liable for the publication of a libel by acquiescence; that is to say, by permitting publication to continue when he or she has the power to prevent it. As I have said, someone hosting a website will generally be able to remove material that is legally objectionable. If this is not done, then there may be liability on the basis of authorisation or acquiescence.

55.  A search engine, however, is a different kind of Internet intermediary. It is not possible to draw a complete analogy with a website host. One cannot merely press a button to ensure that the offending words will never reappear on a Google search snippet: there is no control over the search terms typed in by future users. If the words are thrown up in response to a future search, it would by no means follow that the Third Defendant has authorised or acquiesced in that process.

In addition, Eady J noted that Google had promptly blocked access to specific URLs, but could not reasonably be expected to block all search results which could include the (allegedly) infringing snippets.

Metropolitan International Schools Ltd v DesignTechnica [2009] EWHC 1765 (QB).

Lid dip: Prof Goldman

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Patenting software in the UK (Europe)

Thursday, October 23rd, 2008

The UK Court of Appeal has apparently broadened the scope to patent computer software:

Symbian Limited v. Comptroller General of Patents [2008] EWCA Civ 1066

Paul Cole guest posts at Patently-O. IPKat extensively here.

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