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Interflora Inc v. Marks and Spencer plc - the story continues

Interflora Inc v. Marks and Spencer plc - the story continues

06/11/14

The latest judgement in the ongoing dispute between Interflora Inc (“Interflora”) and Marks and Spencer plc (“M&S”) has been handed down by the Court of Appeal for England and Wales.  The judgement overturns Mr. Justice Arnold's previous findings in favour of the Claimant on its claim for infringement of national and Community trade mark registrations protecting the INTERFLORA trade mark.

The case concerns M&S’s use of the Google Adwords service, specifically its competitive bidding activity on the word “interflora”, combinations of “interflora” and descriptive terms, Interflora’s domain names/URLs and close variants thereof.  Interflora’s case is that this activity amounts to trade mark infringement.

The decision is wide ranging, but for trade mark owners the key elements are set out below.

Negative Matching

Interflora objected not only to M&S’s bidding activity on the word “interflora” (and variants thereof) but also its bidding activity on generic terms (for example “flowers”) without excluding matches that include a specific sign, for example “interflora”.  This is referred to as ‘negative matching’. 

The trial judge Mr Justice Arnold found that M&S’s failure to exclude such matches in this manner constitutes use of the trade mark “…albeit in a less direct way..”.  The Court of Appeal heard submissions from M&S that in so finding he had erred; in failing to exclude such matches there has been no selection of “interflora” as a keyword by M&S, which is an essential requirement of liability and contradicts the lawfulness of bidding activity on generic terms. 

However these submissions were rejected.  “The choice and selection as a keyword cannot be considered in isolation and as an activity separate and distinct from the Google algorithms and match types used in relation to them.  Further, account must also be taken of the opportunity available to the trader  to negatively match.”  The trial judge had taken into account all of the relevant circumstances and had properly found that the trader had used the sign in the course of trade.

Average Consumer

In his decision the trial judge found that the majority of internet users as at 6 May 2008 were aware of the distinction between the M&S advertisements and the Interflora network, and that the proportion of users aware of this distinction since then has steadily increased.

M&S argued that this should have led the trial judge to conclude that there was no infringement according to the reasonably well-informed and reasonably observant internet user test, but that he misapplied this test by converting a hypothetical average person with an objectively defined standard of knowledge and insight, into a population of individuals with varying degrees of knowledge and insight.  

The Court held that:

- in the context of internet advertising, the average consumer and the average internet user are one and the same

- the average consumer in any context is a hypothetical person

- the average consumer test is not a statistical one. The Court must exercise its own judgement to determine the average consumer’s perceptions, giving due consideration to all the relevant circumstances

- the court is not precluded from having regard to the effect of the accused conduct upon a significant proportion of consumers, of whom the average consumer is representative

On this basis the Court held that the judge was entitled to have regard to the effect of the advertisements upon a significant section of the relevant class of consumers, and he was not barred from finding infringement by a determination that the majority of consumers were not confused.

Onus of Proof

The Court of Justice in Google France enunciated a new test to assess whether a Defendant’s use of keyword advertising had adversely affected the origin function of a specific trade mark; the function of indicating the origin of a trade mark is adversely affected if the advert does not enable users, or enables them only with difficulty to ascertain whether the goods or services originate from the trade mark owner, an economically linked party, or a third party. 

In Datacard v Eagle Technologies Ltd, Arnold J had interpreted this new test as being one of a likelihood of confusion, but with a reversed onus and had applied (and defended) that interpretation at trial. 

However the Court of Appeal refused to agree that the Court in Google France had set out a likelihood of confusion test or that the burden of proof could be imposed upon the third party. “….it seems to us that , as a matter of principle, the burden of establishing the necessary elements of a claim for trade mark infringement must normally lie upon the party making the allegation, and that is so as a matter of EU or English law.”  The burden of proof in legal proceedings does not follow from the requirement that third parties must create adverts that enable users to ascertain whether the goods or services originate from the trade mark owner.

Initial Interest Confusion

Initial interest confusion occurs where the consumer is confronted by the offending use prior to purchase and is confused, but after further consideration the initial confusion is dispelled and the consumer proceeds to purchase the offending goods or services. Arnold J introduced this concept into his analysis of the evidence of a witness, and a report prepared by that witness, relied upon by Interflora at trial.  Arnold J accepted that, even if consumers who were initially confused by the M & S advertisement ceased to be confused after they had clicked through to the M & S website, this did not detract from  Interflora 's case for two reasons. First, if there was initial confusion, it was probable that some consumers would remain confused after clicking through. Secondly, and in any event, such initial interest confusion was sufficient to establish Interflora’s case.  In doing so, Arnold J held that initial interest confusion is equally relevant to show an adverse effect on the origin function of the trade mark in the context of a double identify case

The Court held that it was not helpful to import this doctrine into EU trade mark law, at least so far as it applied to use of signs identical or similar to a trade mark as a keyword in an internet referencing service, and it has the potential to positively mislead. It should not be part of the analysis of our national courts in claims of this nature. The judge was wrong to approach the matter in this context.

The Court held that the test in determining whether the accused sign has an adverse effect on the origin function has been set out clearly by the Court of Justice. The national court must, from the perspective of the average consumer, consider whether the advertiser has enabled that average consumer to ascertain the origin of the advertised goods or services and so make an informed decision. The Court emphasised that it is not the duty of the advertiser to avoid confusion.

Following this judgement the case has been remitted to the High Court for retrial.