Keyword search advertising has become an essential marketing tool for many companies. Google's 'AdWords' service operates it as follows: Internet users search the web using particular words (keywords); the search results page displays a list of websites best corresponding to the keywords and separately, on the side, some sponsored links. Advertisers can select one or more keywords in response to a search for which their sponsored link will appear. But are advertisers free to choose any keywords? The European Court of Justice gave its guidance in its recent case of Interflora v Marks & Spencer [2012] E.T.M.R. 1.

Case facts

Interflora operates a worldwide flower-delivery network and registered its name as a trade mark. Using AdWords, M&S selected the word 'Interflora' and some of its variations as keywords. Consequently, when Internet users searched the web for 'Interflora', an advertisement of M&S's flower delivery service appeared besides the search results under the heading 'sponsored links'. Interflora brought a claim for trade mark infringement, but the High Court of Justice stayed the proceedings and referred certain legal questions to the ECJ. Some of the guidelines formulated by ECJ (some of which had been established in earlier ECJ jurisprudence) are summarised below.

Legal principles

A trade mark owner may prevent others from using its mark as a keyword for goods or services identical to those covered by the mark registration, only if this may adversely affect one of the functions of the mark: in particular, the essential function of guaranteeing origin, the investment function and the advertising function. This may occur if the advertisement suggests to internet users that the advertised goods or services originate from the owner of the mark or that there is an economic link between these two entities. For example, if M&S's advertisement led users to believe that M&S's flower service was part of Interflora's network, this could indicate infringement. To reduce the chances of confusion, the advertisement text prompted by the keyword search should not contain the keyword itself. The advertising function is not adversely affected merely by consumers being offered an alternative supply, even though the trade mark owner may have to spend more on advertising.

The investment function relates to the owners acquisition of a reputation, but is not affected merely by the owner having to adapt its efforts to do so, or by consumers switching to other suppliers.

Keyword advertising is also infringing if its effect is 'tarishment', 'dilution' or 'free-riding' 'without due cause' of a mark with an established reputation, or if it interferes with the mark owner's ability to maintain such reputation. However, such effect on reputation may be difficult to prove. Dilution will not take place where the consumers can establish the origin of the goods and the use of the mark does not contribute to its becoming generic. Free-riding will not take place if the advertisement offers goods and services alternative to those covered by the mark, as opposed to their 'mere imitation', there is no dilution, and no interference with the guarantee of origin. Neither will it be sufficient for the trade mark owner to show that its own advertising costs increased as a result of its mark being used by a competitor for keyword advertising.

The ECJ left it to the High Court to apply the above legal principles to the facts of Interflora's case and the outcome is expected later this year.

Food for thought...

Companies advertising via 'AdWords' or similar services should choose and use the keywords carefully. In principle, using keywords including or resembling competitors' trade mark is not prohibited, but it should not mislead consumers, or affect the reputation and the functions of the mark. If in doubt, taking legal advice may be the best way to avoid liability for trade

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