• A Bright Autumn Spray of Adword Issues for the ECJ

    Google's policy on adwords in the UK is on course at last for the ECJ, following a decision by the High Court to ask for guidance in Interflora Inc. and Ano. v Marks & Spencer PLC and Ano. [2009] EWHC 1095 (Ch). Brand owners feeling its costly effects are already impatient for the ECJ's pronouncements on keyword issues, pending resolution for nearly two years across the EU.

    Court says it with flowers

    Google's practice of selling keywords for Internet search engine advertising is well-known.

    In the UK, however, Google shielded trademark owners for a time from competitor opportunism by refusing to sell keywords to third parties where the words were notified to it as being registered trademarks. That all changed in May 2008, however, when Google announced that it would no longer refuse to sell keywords in the UK on that basis.

    The well-known international flower delivery network Interflora felt the tangible effects of this change. Like many brand owners, it paid Google to display a sponsored ad when users searched for the keyword INTERFLORA. Following Google's change in policy, however, Interflora found itself bidding for the same keyword against others, including the British retailer Marks & Spencer. Consequently, the cost per-click rose and in the 9 days preceding Valentine's Day Interflora saw the cost of its pay-per-click advertising rise from 2p per click in 2008 to 23 - 28p per click in 2009.

    Interflora sued Marks & Spencer for trademark infringement, arguing that M&S was using an identical trademark for identical goods and services, and that its activities took unfair advantage of, and/or were detrimental to, the distinctiveness or repute of the well-known INTERFLORA brand.

    The High Court noted the vexing "threshold questions" of whether the sale and/or purchase of adwords constituted "use" of a trademark and, if so, in relation to what goods or services. In addition, the parties disputed whether some of the activities complained of were carried on by M&S or by Google itself, who had not been sued, and whether M&S were secondarily liable for the acts of Google.

    In the Court's view, these issues could not be resolved without guidance from the ECJ, before whom 6 other references on similar issues were already pending. Most did not involve claims against advertisers directly, however, and none raised the issue of Google's specific practice in the UK.

    Consequently, the Court decided to stay the proceedings in Interflora and to refer separate questions to the ECJ, in order to ensure that the specific issues of relevance were addressed.

    Comment

    Since 2008, Google's sale of registered trademarks as adwords has prompted references to the ECJ from France, Germany, Austria, the Netherlands and now the UK. In all, some 6 cases were pending, with Interflora now the seventh.

    Decisions in some of the cases were expected in early June, but were delayed amid speculation that the ECJ wanted to consolidate some or all of the pending references and issue a single ruling, or at least to deal with them all simultaneously to ensure a comprehensive and consistent approach. At the time of going to press the rulings were still awaited, but it seems unlikely that any questions referred in Interflora will be swept up with the initial batch given their lateness in joining the fray.

    If the ECJ finds that a third-party advertiser can be liable for trademark infringement by buying a keyword, Interflora's case for infringement, particularly that based on unfair advantage, should be strong.

    Competitor advertisers would not bid on their rivals' trademarks as keywords if it did not allow them to ride on the coat-tails of a rival's success in marketing and promotion, and advantage derived in this way was held unfair by the ECJ in the recent watershed decision, L'Oreal SA et al. v Bellure NV et al. (Case C-487/07).

    This is, however, a big "if," for the threshold questions of whether there is use in such circumstances and, if so, by whom and in relation to what are so fundamental that it is virtually impossible to predict the outcome of any case involving adwords until after the ECJ's views are known.

    Brandowners and advisors alike are therefore eagerly awaiting the Court's determinations. For some who are feeling the effects of Google's policy, the wait has already been long enough.