In this report we look at the use of keyword advertising and liability of ISPs considered in two High Court decisions, Interflora v Marks & Spencer and L’Oréal v eBay; interpretation of class headings in trade mark specifications considered in Daimler v Sany.
|Application (and where applicable, earlier mark)
- alcoholic beverages, namely wines produced in the Stellenbosch district, South Africa (33)
- glassware etc (21)
The ECJ dismissed the appeal by Waterford Wedgewood against the CFI’s decision that that there was no likelihood of confusion under Article 8(1)(b) between the marks.
The ECJ confirmed that a likelihood of confusion was possible, despite a low degree of similarity between the marks, where the goods and services were very similar and where the earlier mark was highly distinctive. However, the interdependence of those factors did not mean that a complete lack of similarity could be fully offset by the strong distinctive character of the earlier mark. In contrast to Article 8(5), Article 8(1)(b) provided that the likelihood of confusion presupposes that the goods or services are identical or similar. The CFI made a detailed assessment of the goods in question and concluded that although there was a degree of “complementarity” between glassware and wine, they were not similar. As such, a necessary condition to establish a likelihood of confusion was lacking.
|Application (and where applicable, earlier mark)
- meat, poultry and game, meat extracts, charcuterie (29)
- sugar, rice, preparations made from cereals (30)
- providing food and drink, temporary accommodation (43)
The CFI upheld the BoA’s finding that the mark was devoid of distinctive character under Article 7(1)(b).
The BoA was correct to find that the 3D mark applied for consisted of an arrangement of five separate sausages, the ends of which were linked. The BoA correctly rejected the Applicant’s submission that the mark was distinctive because its shape was different to the form in which sausages were usually presented to the consumer (i.e. individually); gathering sausages together by their ends in order to store and sell them together was common practice in the trade.
Although the shape was similar to the shape of a pretzel, it was not completely identical and therefore the average consumer would perceive it merely as a collection of linked sausages. As the goods were everyday consumer goods, the average consumer would not perceive the shape applied for as an indication of origin.
|Application (and where applicable, earlier mark)
CK CREACIONES KENNYA
- various leather goods (18)
- clothing, footwear, headgear (25)
- goods and services in various Classes (including 18 and 25)
- various goods in Classes 18 and 25
(Spanish national mark)
The CFI dismissed the appeal, upholding the decision of the BoA that there was no likelihood of confusion between the marks under Article 8(1)(b).
The overall impression created by the earlier marks was dominated by the element CK whereas that created by the trade mark applied for was dominated by the element CREACIONES KENNYA. The CFI concluded that there were visual, phonetic and conceptual differences between the marks and therefore the BoA did not err when it found the marks not similar. Accordingly, the BoA was correct to conclude that there was no likelihood of confusion. This finding could not be called into question by the identity of the goods.
Calvin Klein’s submission that the mark applied for would be perceived as one of its sub-brands was dismissed. Sub-brands should share a common dominant element with the principal mark. That was not the case here.
|Application (and where applicable, earlier mark)
- various stationery goods (16)
- clothing, footwear, headgear (25)
- education; providing of training; entertainment; sporting and cultural activities (41)
- various clothing goods (25)
(Spanish national registration)
The CFI annulled the BoA’s decision and in doing so held that there was no likelihood of confusion between the marks under Article 8(1)(b).
The CFI found that, whilst there was a strong conceptual similarity between the elements KINGS and KING, overall the marks displayed only a slight degree of conceptual similarity in that the mark applied for contained the element LA and a coat of arms decorated with a crown, a lion and a sun.
The CFI agreed with the BoA that the overall visual impression of the marks was one of dissimilarity. The shield of the mark applied for, and the figurative elements on the shield, enabled it to be differentiated without difficulty.
The CFI also agreed with the BoA’s finding that the marks had a high degree of phonetic similarity since the dominant elements of the marks (KINGS and KING) would be phonetically similar when pronounced by Spanish consumers.
However, the CFI held that the BoA had erred in its global assessment of the likelihood of confusion. Given the visual and conceptual differences between the marks (particularly the visual differences given their importance when buying clothing), the average Spanish consumer would not associate the marks in such a way that he might believe that they designated two lines of clothing from the same manufacturer. There was therefore no likelihood of confusion.
Decisions not yet in English
Reporter’s note: Due to the increasing numbers of ECJ and CFI decisions which are handed down in languages other than English, decisions not given in English will now be reported in a shorter form unless they are of key importance.
|Application (and where applicable, earlier mark)
- apparatus for recording, transmission or reproduction of sound or images, data processing equipments and computer (9)
- insurance and financial services (36)
- IT (38)
The CFI found that the marks were devoid of distinctive character under Article 7(1)(b). In addition, no distinctive character had been acquired by use under Article 7(3).
The appeal against the decision of the BoA to reject the applications was thus dismissed by the CFI.
|Application (and where applicable, earlier mark)
- apparatus for recording, transmission or reproduction of sound or images, data processing equipments and computer, swipe cards (9)
- insurance and financial services (36)
- IT (38)
The marks were devoid of distinctive character in relation to all goods and services except those in Classes 9 and 38 unconnected to cards (such as debit, credit and other electronic payment cards).
The appeal against the decision of the BoA to reject the applications was thus allowed in relation to those goods and services only and dismissed for the remainder of the goods and services under Article 7(1)(b).
Scope of Protection of State Emblems
American Clothing Associates SA v OHIM (AG Colomer for the ECJ; Joined Cases C-202/08 and C-208/08; 12.05.09)
The AG recommended that the ECJ set aside the CFI’s judgment in this case in so far as it held that Article 7(1)(h), in conjunction with Article 6ter of the Paris Convention, did not apply to service marks.
The CFI partially allowed an appeal to overturn the BoA’s refusal to register a sign (below, left) applied for by American Clothing Associates SA for various goods in Classes 18 and 25 and services in Class 40, on the basis that it gave rise to an impression on the part of the public that it was linked to the maple leaf emblem of Canada (below, right) which was protected under Article 6ter of the Paris Convention.
Article 6ter of the Paris Convention (which is incorporated into the Regulation at Article 7(1)(h)) prohibits the registration of trade marks comprising or containing, inter alia, state emblems. The CFI held that on a proper construction of Article 6ter, the prohibition applied only in respect of applications for goods; service marks were excluded. Accordingly, the BoA’s refusal in respect of Class 40 was overturned. The addition of the letters RW to the maple leaf device did not stop Article 6ter applying.
In the AG’s opinion, the CFI misinterpreted the aim of the Paris Convention and the reference to it in Article 7 of the Regulation. The AG opined that the essential aim of the Paris Convention was to uphold the principle of national treatment and to provide a ‘minimum requirement’, not a ‘uniform law’. It only required Contracting States not to register trade marks which are identical to, or contain, a national emblem. However, those States were free to extend the scope of protection to service marks. The AG concluded that the extension of the protection of national emblems to service marks therefore derived from national or Community legislation.
The AG considered recitals seven and nine of the preamble to and Article 1(1) of the Regulation and concluded that the Regulation contained no provision which distinguished between signs which designated goods and those which designated services. Further, he stated that the European legislature treated the two types of sign in the same way in the Regulation and it therefore made no sense to claim that its intention was to restrict the protection of national emblems specifically for services, which constituted the most important sector of economic activities in all Member States. The AG concluded that Article 7(1)(h) of the Regulation must be understood to refer to the ground for refusal of registration in Article 6ter of the Paris Convention, rather than to the scope of its protection.
The AG also concluded that he did not share the view of the CFI, that when the European legislature drafted the Regulation, it was aware that the reference in Article 7(1)(h) restricted the protection for national symbols, leaving them unprotected with respect to service marks. Contrary to what was suggested by the CFI in its judgment, it was unlikely that no Member State would have noticed the reduction in protection for national emblems, particularly given the sensitivity of governments in respect of national emblems and the fact that the Regulation had to be unanimously approved in accordance with Article 235 of the EEC Treaty (now Article 308 EC).
Elio Fiorucci v OHIM; Edwin Co. Ltd (CFI (Fifth Chamber); T-165/06; 14.05.09)
Elio Fiorucci was a fashion designer who achieved certain renown in the 1970s in Italy. Following financial difficulties, an administrator was appointed in respect of his company, Fiorucci SpA, and the entirety of the company’s assets were transferred to Edwin Co. Ltd. For several years Fiorucci and Edwin collaborated.
Edwin registered ELIO FIORUCCI as a CTM for a range of goods in Classes 3, 18 and 25 and some years later Fiorucci applied for revocation of the mark under Article 50(1)(c) and a declaration of invalidity under Article 52(2)(a). The cancellation division allowed the application under Article 52(2)(a) without finding it necessary to rule on Article 50(1)(c). Edwin successfully appealed to the BoA which held that Article 52(2)(a) did not apply. The alleged infringement under Article 50(1)(c) was also rejected. Fiorucci appealed to the CFI. The CFI rejected the appeal under Article 50(1)(c) but allowed the appeal under 52(2)(a).
The CFI held that, ELIO FIORUCCI, was not, of itself, liable to mislead the public as to the origin of the goods for which it was registered. Further, because there was no evidence of the public being misled by the use of the mark since registration, the CFI held that the mark should not be revoked under Article 50(1)(c).
The CFI referred to the ECJ’s decision in Emanuel (C-259/04). Just because a trade mark corresponds to the name of the designer and first manufacturer of the goods bearing that mark, it does not mean that the mark is liable to mislead the public, particularly where the goodwill associated with the mark has been assigned. That conclusion still held where only the family name of the designer had been assigned and not the first name but where the mark consisted of both the family name and the first name.
Furthermore, even if the average consumer might be influenced in his act of purchasing the goods by imagining that the person to whose name the mark corresponded was involved in its design, the characteristics and the qualities of the product remained guaranteed by the undertaking which owned the trade mark.
Under Article 52(2)(a) OHIM may declare a CTM to be invalid if its use can be prohibited by a national law. The relevant national law in this instance (Article 8(3) of the Codice della Proprietá Industriale) provided that, if they are well known, personal names may be registered as trade marks by the proprietor or with his consent.
The CFI rejected the BoA’s findings that the Italian provision:
(i) was not applicable because it applied only where the renown attached to a person’s name resulted from a ‘first use outside the market’; and
(ii) allowed a controlled (i.e., subject to the consent of the person concerned) migration of a patronymic from the field (of politics, sport etc) in which he was hitherto famous to the purely commercial sector.
The Italian provision did not lay down any condition other than that relating to the well known character of the personal name concerned. The BoA committed an error of law in its interpretation of the Italian provision. As a result of that error it (incorrectly) ruled out the application of that provision to Fiorucci’s name, even though it was not disputed that it was the name of a well known person.
The CFI therefore annulled the BoA’s decision. However, the CFI did not grant the declaration sought by Fiorucci because it would ‘upset’ the institutional balance on which the division of jurisdiction between OHIM and the CFI was based.
Restitutio in Integrum: Time-Limits
Aurelia Finance v OHIM (CFI (Eighth Chamber); T-136/08; 13.05.2009)
On 24 August 2004, Aurelia Finance SA (the “Applicant”) was granted a CTM for the word mark AURELIA for various services in Class 36. The registration was due to expire on 19 June 2006, and the request for renewal together with the renewal fee was required to be submitted and paid before 2 July 2006. If such deadline was not met, the deadline could be extended until 2 January 2007 provided an additional fee was paid for late payment. The renewal period expired and, on 22 January 2007, OHIM informed the Applicant that the mark had been removed from the Register.
The circumstances which resulted in the failure to renew the mark were as follows: the Applicant had appointed a specialist firm providing trade mark renewal services (the “Specialist Firm”). The Specialist Firm had a computerised database system which generated warning letters for trade mark renewals. In this instance an employee of the Specialist Firm had failed to enter certain data concerning the Applicant into the database which was necessary for the correct operation of this system and as a result no notification was sent to the Applicant.
On 5 March 2007, the Applicant filed an application at OHIM for restitutio in integrum pursuant to Article 78(1). OHIM dismissed the application. The Applicant’s appeal to the BoA was dismissed. The Applicant then appealed to the CFI.
The Applicant submitted that it had satisfied the requirement to exercise due care by employing the Specialist Firm. In rejecting this, the CFI held that, although Article 78(1) required that the due care be exercised by the proprietor, if the proprietor delegated administrative tasks relating to the mark’s renewal, it must ensure that person can provide the necessary assurances for the proprietor to be satisfied that such tasks will be carried out correctly. The delegated person acts on behalf of and in the name of the proprietor and is therefore required to exercise due care just as much as the proprietor. The question to be addressed was therefore whether the Specialist Firm had exercised all due care required by the circumstances.
The Applicant raised a number of submissions that the standard of care in connection with trade mark renewals should be low, all of which were rejected by the CFI.
The Applicant further submitted that the system used by the Specialist Firm met the requirements of the OHIM guidelines for a system of internal control and monitoring of time limits to be put in place that generally excludes the involuntary non-observance of time limits. The Applicant argued that the employee’s failure to input the required data was exceptional. The CFI confirmed that in order for restitutio in integrum to be granted it required exceptional circumstances that were unforeseeable. However, human errors in inputting data cannot be regarded as exceptional or unforeseeable and that the system should have provided a mechanism capable of identifying and correcting such errors. The CFI dismissed the appeal.
Jurado Hermanos, SL v OHIM (CFI (Second Chamber); T-410/07; 12.05.09)
Café Tal de Costa Rica SA registered the mark JURADO as a CTM for goods in Class 30 and subsequently granted Jurado Hermanos an exclusive licence in respect of that mark, provided that the licence was to remain valid for 48 years.
The registration was due to expire on 25 April 2006 and OHIM sent letters to both Café Tal de Costa Rica and Jurado of this which explained how to renew the registration. OHIM did not receive an application for renewal and removed the mark from the register.
Jurado filed for an application for restitutio in integrum under Article 78(1), submitting that it had not received OHIM’s letter. OHIM rejected the application on the basis that Jurado had failed to show that it had exercised all due care in the circumstances. The BoA dismissed Jurado’s appeal without considering whether Jurado had met the condition of showing due care. Instead, it held that, since Jurado had not been expressly authorised by the proprietor of the trade mark to apply for the renewal, it was not entitled to apply for re-establishment of its rights in that connection.
The CFI dismissed the appeal. The BoA did not err in holding that, under Article 78(1) read in conjunction with Article 47(1), Jurado was not a party to the proceedings for the renewal of the registration of the mark because it had not been expressly authorised by Café Tal de Costa Rica to apply for the renewal. A mere licence to use the mark did not automatically make Jurado a party to the renewal proceedings. Express authorisation was necessary and could not be implied from an exclusive licence. Jurado had not provided any evidence of express authorisation and therefore the condition set out in Article 78(1) was not fulfilled.
Omnicare v OHIM; Astellas Pharma (CFI (Third Chamber); T-277/06; 07.05.09)
Omnicare filed a notice of appeal on 30 January 2006 against the Opposition Division’s decision to reject its application for registration of OMNICARE as a CTM. On 27 March 2006, the Registry of the BoA informed Omnicare that it had not received the notice of appeal. When the notice of appeal was re-submitted by Omnicare on 30 March, the Registry informed Omnicare that its appeal was unlikely to be admissible as the two month time limit for lodging an appeal had already expired (the time limit had expired on 30 January; the date on which the first notice of appeal had been submitted by Omnicare).
On 30 May 2006, Omnicare filed an application for restitutio in integrum pursuant to Article 78. The BoA rejected the application, citing the provisions in Articles 78(5) and 78(a) as a bar to relief. In particular, the BoA concluded that, when read together, Article 78(5) and 78a excluded restitutio in integrum when the unobserved time limit is the time limit to file an appeal.
The CFI annulled the decision of the BoA. It held the BoA’s assessment that the mandatory time limit for filing an application (laid down in Article 42) and the time limit for filing an appeal (laid down in Article 59) were put on the same footing, both excluding restitution in intergrum, was incorrect. The Court’s decision was based on the following: (i) there was an absence of express reference to Article 59 in the list of exclusions in Article 78(5); (ii) doubt was cast on the BoA’s reasoning based on a successive series of exclusions by the fact that Article 42 was also referred to in Article 78a; and (iii) Article 78(5) should be interpreted strictly. Omnicare’s application for restitutio in integrum was referred back to OHIM for a decision.
Protected Designation of Origin / Protected Geographical Indication
Alberto Severi, in his own name and representing Cavazzuti e figli SpA, now known as Grandi Salumifici Italiani SpA v Regione Emilia-Romagna (AG Sharpston for the ECJ; C-446/07; 07.05.09)
The region of Emilia-Romagna in Italy imposed a penalty on Cavazzuti SpA, now Grandi Salumifici Italiani SpA (“GSI”), for using the name SALAME TIPO FELINO (in English, ‘Felino-type Salami’) on the label of its salami sausage in a way that was misleading to customers, thus infringing Article 2 of Directive 2000/13 relating to labelling, presentation and advertising of foodstuffs (as transposed into national law in Italy). GSI produced the salami in Modena, also situated in the Emilia-Romagna region but some 50km from Felino, and had done so since approximately 1970.
GSI applied to the Tribunale Civile di Modena for the penalty to be overturned on the grounds that the name SALAME FELINO was generic and had been used for a number of years in good faith outside Felino, including in respect of a collective trade mark registered by a group of local producers. The Tribunale Civile stayed proceedings and asked the ECJ for guidance on, inter alia: (i) whether a geographical name for which the submission of an application for registration as a protected designation of origin (“PDO”) or a protected geographical indication (“PGI”) has been rejected or blocked, must be considered generic at least throughout the period during which such rejection or blocking remains effective; and (ii) whether the name of a foodstuff which was evocative of a place, but which was not registered as a PDO or PGI, may be legitimately used by producers who had used it in good faith and uninterruptedly for a considerable period since before the entry into force of Regulation 2081/92 on the protection of PDOs and PGIs. An application had been made for recognition of SALAME FELINO as a PGI, but at the time of the reference the name had not been registered.
In answering (i), the AG concluded that a name cannot be assumed to be generic within the meaning of Regulation No 2081/92 until an application for protection of the name as a PDO or PGI had been rejected by the Commission on the ground that the name had become generic. In assessing whether GSI had misled purchasers within the meaning of Article 2 of Directive 2000/13, in the absence of an assessment by the Commission under Regulation No 2081/92, the AG concluded that the referring court may take into account characteristics of the name that would be considered by the Commission in assessing whether the name was generic and may have regard to the Court’s case-law on this point.
In answering (ii), the AG concluded that the name of a food product which was evocative of a place, but not registered as a PDO or PGI, may legitimately be used provided that the name was not used in a way which was likely to mislead the average reasonably well informed, observant and circumspect consumer contrary to Article 2 of Directive 2000/13.
In deciding that question, the national court should have regard to whether the consumer could be misled as to the provenance or another characteristic of the product. The court should evaluate whether the name, as it appeared on the labelling, was specific to a region or had become the general name used to designate a product with particular characteristics. Submissions similar to those made to the Commission in an application for, or opposition to, protection under the Regulation could be taken into account. The AG also considered that regard could be had to the length of time during which the name had been used as it was an objective factor which might affect the expectations of the reasonable consumer but that the (subjective) good faith (or otherwise) of the producer was irrelevant. The AG commented that under Article 2 of Directive 2000/13, a label which used a name suggesting or indicating provenance could perhaps be said to be prima facie misleading if the product was entirely produced elsewhere and had no link to the geographical territory indicated at any point during the process of manufacture. The AG concluded that regard should be had to the presentation of the packaging, in particular the positioning and size of a geographical name and the description of the place of manufacture, as even if the geographical name was intended to advertise characteristics of a foodstuff, the labelling must ‘tell the whole truth’.
Decisions of the High Court
Interpretation of class headings in trade mark specifications
Daimler AG v Sany Group Company Ltd* (Mr Geoffrey Hobbs QC;  EWHC 1003 (Ch); 14.05.09)
Geoffrey Hobbs QC (sitting as a Deputy High Court Judge) dismissed Daimler’s application for summary judgment in an action for trade mark infringement and passing off. The passing off case is not referred to again in this summary, the Deputy Judge commenting that it was unlikely to succeed if the trade mark infringement case did not succeed.
Daimler owns two UK trade marks and one CTM in respect of each of the signs shown below, the goods for which the marks are registered being specified by giving the Class headings for Classes 7 and 12.
The Defendant, Sany, applied to register in the UK the figurative mark reproduced below in relation to certain goods in Classes 7 and 12.
Daimler sought to prevent Sany from using the mark on the basis that such use would give rise to a likelihood of confusion on the part of the public under Section 10(2)(b) and that it would take unfair advantage of or be detrimental to the distinctive character or repute of Daimler’s marks under Section 10(3). Sany admitted that it had sold construction machinery, including self-propelled and truck mounted machinery, in the UK under its mark but claimed that there was too low a degree of similarity between the marks and too low a degree of similarity between its goods and those for which Daimler’s registrations could legitimately be retained, for there to be infringement.
Sany counterclaimed for part cancellation of Daimler’s trade marks on the ground of non-use. As the Deputy Judge noted, there was a real issue as to the degree of precision with which the retained list of goods should be defined. He had previously expressed the view in WISI Trade Mark  RPC 13 and DATASPHERE Trade Mark  RPC 23 that the aim should be to arrive at a fair specification by identifying and defining not the particular examples of goods for which there has been genuine use, but the particular categories of goods they could realistically be taken to exemplify. This seemed to be consistent with the case law of the CFI (in Mundipharma Case T-256/04; Armour Pharmaceutical Case T-483/04; and Reckitt Benckiser (Espana) Case T-126/03) but it was possible that the two might not fully accord.
The process of revision of the specifications was influenced by two issues of law. Firstly, the specification of goods had to be interpreted as at the date that the trade mark was obtained (not necessarily an easy exercise with marks dating back to the 1930s and 1950s). Secondly, there was the question of how to interpret the specification when the mark was registered by reference to the class heading only.
The Deputy Judge observed that, in relation to the latter, there was an inconsistency in approach between OHIM and the IPO. OHIM’s practice is to accept class headings as being claims to registration in respect of all goods within that heading whereas the IPO objects to wide and vague specifications. In his view, there was no room for such divergent approaches to co-exist within the framework established for the co-ordinated protection of trade marks in Member States and at Community level. For the present purpose, it was sufficient to note that there was a real issue which Daimler could not avoid simply by electing on an ad hoc basis not to rely on the broader approach to interpretation.
Daimler’s application for summary judgment was made on the pragmatic basis that the degree of similarity between its marks and Sany’s mark was so great as to justify a finding of infringement by reason of the existence of a likelihood of confusion in relation to such of Sany’s goods as could be correlated with those of the kind for which the protected marks would remain registered in Class 12. Daimler suggested the following list: truck mounted concrete pumps, truck mounted concrete stationary pumps, concrete truck mixers, excavators, hydraulic crawler cranes, truck mounted cranes and truck chassis.
The Deputy Judge refused the application for summary judgment. Firstly, the criteria for determining whether there is similarity of goods conducive to the existence of a likelihood of confusion had not been settled by the ECJ (or as Mr Hobbs QC put it, it continued to be “somewhat loosely defined”). Secondly, and as part of the first argument, the extent to which Daimler’s marks had actually been used in relation to truck mounted machinery and equipment so as to function as a badge of trade origin in relation to the assembly of the whole was open to question on the evidence. These questions could not be resolved in a summary adjudication. Further, it was an open question whether the similarities between the marks were outweighed by the differences between them. The evaluation of similarity (under both Sections 10(2) and 10(3) would be more soundly based if it were made in the light of the whole of the evidence adduced at trial.
Reporter’s note: The Deputy Judge referred in a footnote in his judgment to both Richard Ashmead’s article ‘IC class headings and the scope of EU registrations’ published in CIPA Journal Vol. 38 pp.257 to 260 (April 2009) and to the Report of the Trade Marks Committee on the Conflict between Interpretation of Class Headings between the IPO and OHIM published in CIPA Journal Vol. 38 p.157 (March 2009).
Liability of Internet Service Providers
Interflora, Inc. and Interflora British Unit v Marks and Spencer Plc and Flowers Direct Online Ltd* (Arnold J  EWHC 1095 (Ch); 22.05.09)
In this “AdWords” case, Arnold J decided to refer questions to the ECJ. Although a number of national courts around Europe had already requested preliminary rulings from the ECJ on a number of the issues arising out of Google AdWords, it was felt that these would not necessarily provide the answers needed to settle this dispute. Arnold J declined to order the First Defendant (“M&S”) to undertake to cease bidding on the Interflora Signs as keywords during the period for which the proceedings were stayed.
The First and Second Claimants (collectively referred to as “Interflora”) operate a flower delivery network. M&S’s activities include the sale and delivery of flowers, in competition with Interflora. Shortly before the hearing, Interflora and the Second Defendant, Flowers Direct, settled their dispute.
Interflora owns a UK trade mark and CTM for the word mark INTERFLORA (“the Marks”), registered in respect of various goods and services including natural plants and flowers, advertising services for florists and information services relating to the sale of flowers.
Google derives revenue from advertising, principally by means of a service called “AdWords”. When a Google search is carried out both “natural” links (links to websites assessed to be relevant by the search engine’s algorithm) and “sponsored links” are displayed. Sponsored links are paid for by the website operator. On 5 May 2005, Google changed its policy in the UK to allow third parties to bid for keywords registered as trade marks without restriction, including for use in relation to goods or services for which the trade marks are registered (Google’s policy is different for other Member States). M&S admitted that it purchased the keyword INTERFLORA and a number of variations (collectively termed the “Interflora Signs”). These keywords triggered the appearance of M&S’s sponsored link at the second highest position in the results page, immediately after Interflora’s own sponsored link.
Interflora claimed that the Marks were infringed both by acts committed by M&S (for which M&S were primarily liable) and by acts committed by Google (for which M&S were liable as joint tortfeasors). Google was not a party to the dispute. The acts committed by M&S included selecting the Interflora Signs as keywords, associating those keywords with M&S’s URLs and using the Interflora Signs in business correspondence relating to the invoicing and payment of fees and/or the management of an AdWords account. The acts committed by Google included presenting a search results page containing M&S’s sponsored link in response to a user entering an Interflora Sign.
Interflora claimed that these acts were an infringement within the meaning of Section 10(1) and, in the alternative, Section 10(3). M&S denied that any of the acts complained of fell within the scope of these sections. In relation to the acts which Interflora said had been committed by Google, M&S denied that Google were primarily liable and that, in addition, Google was protected by Articles 12-15 of Directive 2000/13/EC (the E-Commerce Directive). Finally, M&S denied joint liability.
M&S applied to stay the proceedings pending the ruling of the ECJ upon the six existing references (from the Cour de Cassation C-236/08, C-237/08 and C-238/08; from the Oberster Gerichtshof C-278/08; from the Hoge Raad der Nederlanden C-558/08 and from the Bundesgerichtshof C-91/09). On an adjournment, Arnold J invited the parties to consider whether questions should be referred to the ECJ. When the hearing resumed, Interflora submitted that questions should be referred to the ECJ, but that the consequential stay should be conditional upon M&S undertaking to cease bidding on the Interflora Signs as keywords during the stay.
It was common ground that guidance from the ECJ would at some point be necessary to resolve the dispute. Arnold J commented that the issues as to whether there was “use” and if so whether it was “in relation to” identical goods and services were matters of considerable difficulty given the present state of the ECJ’s jurisprudence. Further, Arnold J felt that there was a real possibility that the ruling by the ECJ on the existing references would not clearly resolve all the issues of law arising in the present case and if the case proceeded to trial it was likely that the trial judge would conclude that guidance from the ECJ was required. Thus, the choice came down to making a reference now, or leaving it to the trial judge to make a reference. If a reference was made now, it would reduce the delay in resolving the dispute and may obviate the need for trial altogether, or at least reduce its scope. Although the facts had not been fully determined, Arnold J was satisfied that the factual situation was sufficiently clear to enable the questions of law which arose to be posed and answered. Accordingly, Arnold J concluded that the better course was to make a reference now.
Regarding Interflora’s contention that M&S should be required to cease bidding on the Interflora signs during the stay, Arnold J noted that this amounted in substance to an application for an interim injunction. Arnold J held that this was not justifiable, for two reasons. Firstly, Interflora had delayed in commencing proceedings for almost 7 months and had only asked for M&S to be restrained in this way after M&S applied for a stay. Secondly, Interflora had not suggested that M&S should be so restrained pending trial if the case were to simply proceed to trial in the ordinary way.
Arnold J has given the parties the opportunity to address him orally before finalising the questions, allowing them time to consider his judgment in L’Oréal v eBay (see below) which was also handed down on 22 May 2009.
L’Oréal S.A. & Ots v eBay International AG & Ots* (Arnold J;  EWHC 1094 (Ch); 22.05.09)
This was one of a number of test cases brought by L’Oréal in courts around Europe which raised issues regarding the liability of eBay Europe for trade mark infringements committed by its users and whether eBay Europe itself committed infringement by using trade marks in relation to infringing goods. Arnold J decided to make a reference to the ECJ and will hear further submissions from the parties in due course on the precise formulation of the questions.
The four Claimants in the action were all referred to as “L’Oréal”. The First, Second and Third Defendants were subsidiaries of eBay, Inc. (referred to as “eBay Europe”). The Fourth to Tenth Defendants were individuals who were alleged to have sold infringing products through eBay Europe. The marks in issue were L’Oréal’s 14 UK trade marks and 2 CTMs (the “Trade Marks”) which were either word marks or barely stylised word marks, except for CTM 4046785 which was a device mark. L’Oréal divided the marks into two classes: the “Lancôme Marks” consisting of LANCÔME, RENERGIE, DEFINICILS and AMOR AMOR and the “Link Marks” which consisted of DEFINICILS together with the remaining Trade Marks not included in the first group.
L’Oréal made three principle allegations against eBay Europe:
a. eBay Europe were jointly liable for infringements of the Trade Marks committed by the Fourth to Tenth Defendants (who were liable under Article 5(1)(a) of the Trade Marks Directive). L'Oreal did not allege that eBay Europe were primarily liable in respect of the offer for sale or sale of the goods in question.
b. eBay were primarily liable for the use of the Link Marks (i) in sponsored links on third party search engines and (ii) on the website www.ebay.co.uk (“the Site”), in both cases in so far as such use was in relation to infringing goods. It was admitted by eBay that they had purchased keywords consisting of the Link Marks from Yahoo!, MSN and Google. This had the effect that a search on, say, Google using a Link Mark caused a sponsored link to the Site to appear. If the user clicked on this sponsored link, he was taken to a display of search results on the Site. Use of the Link Marks on the Site arose from the Site enabling users to browse and search for items and refine their search including by reference to a list of brand names.
c. If the court found that Forth to Tenth Defendants had committed infringements, L’Oréal were entitled to an injunction against eBay Europe to restrain future infringements by virtue of Article 11 of Directive 2004/38/EC (the Enforcement Directive), even if eBay were not themselves liable for trade mark infringement.
Arnold J held as follows:
1) The Fourth to Tenth Defendants had infringed the Trade Marks. In the case of the Fourth to Eighth Defendants, the goods they sold were put on the market in the USA and L’Oréal did not consent to those goods being put on the market within the EEA. In the case of the Ninth and Tenth Defendants, the goods they sold were counterfeits.
In so finding, Arnold J set out the six conditions which the ECJ had established for a finding of infringement under Article 5(1)(a) of the Trade Marks Directive as follows:
(i) there must be use of a sign by a third party;
(ii) the use must be in the course of trade;
(iii) it must be without the consent of the proprietor of the trade mark;
(iv) it must be of a sign which is identical to the trade mark;
(v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and
(vi) it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.
Arnold J rejected eBay’s submission that Article 5(1) is confined to use by a third party of a sign in relation to the third party’s goods. Article 5(1) extends to use by a third party of a sign in relation to the trade mark proprietor’s goods as is clear from the wording of Article 7 and cases such as BMW v Deenik C-63/97.
Arnold J commented that the ECJ’s case law was unclear in relation to whether and if so what the sixth condition added to the fifth condition (see list above); if the sixth condition did add something, it was unclear whether damage to functions other than the origin function could be relied upon to support a claim under Article 5(1)(a), and if so in what circumstances; and if damage to functions other than the origin function could be relied on, it was unclear what the relation was between Article 5(1)(a) and Article 5(2) in double identity (identical sign and identical goods) cases. He suggested that the difficulty would be dispelled if it were recognised that the sixth condition added nothing to the fifth.
2) Whether the sale on the Site of testers and dramming bottles (large containers from which small 5 ml aliquots can be taken for supply to consumers as free samples) which were not intended for sale to consumers amounted to an infringement of the Trade Marks depended upon questions of interpretation of Article 7(1) as to which the law was unclear. L’Oréal submitted that the judgment of the Bundesgerichtshof in Case I ZR 63/04 Perfume Tester Bottles reported in English at  ETMR 9 in which it was held that in similar circumstances the trade mark rights were exhausted under Article 7(1) was wrong and both parties made submissions based on the ECJ’s decision in Peak Holding AB v Axolin-Elinor AB, Case C-16/03 to support their differing points.
Although eBay Europe accepted that the sale of unboxed products which lacked a list of ingredients and/or a best before date contravened the Cosmetics Products (Safety) Regulations 2004, it submitted that did not constitute ipso facto a legitimate reason for L’Oréal to oppose further commercialisation of the goods. In this, eBay Europe relied upon Boehringer II, and upon the subsequent decision of the Court of Appeal in Boehringer Ingelheim KG v Swingward Ltd  EWCA Civ 83,  ETMR 36 and the opinion of Advocate General Stix-Hackl in Zino Davidoff, Joined Cases C/415/99 and C-416/99. In relation to the latter, Arnold J was of the opinion that the questions which were referred by Laddie J and considered by the Advocate General, but not the ECJ, remained questions on which guidance from the ECJ was required.
Although these questions were academic so far as the acts committed by the Fourth to Tenth Defendants were concerned, they were potentially relevant to the question of what relief, if any, to which L’Oréal were entitled.
3) In relation to the infringements committed by the Fourth to Tenth Defendants, Arnold J was in no doubt that it would be possible for eBay Europe to do more to prevent or at least minimise sales of counterfeit and other infringing products on the Site. However, this did not mean that they were legally obliged to do so. The issue of whether eBay Europe were liable as joint tortfeasors was most acute in relation to non-EEA goods, particularly in the case of the International Site Visibility facility which provided a specific mechanism for foreign sellers to target UK buyers. Nevertheless, the facility was capable of being used in a manner which did not infringe third party rights. Given that (i) eBay Europe were under no legal duty to prevent infringement and (ii) facilitation with knowledge and an intention to profit was not enough, eBay were not liable as joint tortfeasors (either by procurement or by participation in a common design).
4) Whether eBay Europe had infringed the Link Marks by use in sponsored links and on the Site in relation to infringing goods again depended upon a number of questions of interpretation of the Trade Marks Directive upon which guidance from the ECJ was required. Arnold J considered the issues under the following headings:
(i) Use? Arnold J was of the opinion that there was “use” of the signs in question in that the sponsored links constituted advertisements placed by eBay Europe falling within Article 5(3)(d) of the Trade Marks Directive albeit that they were displayed to the user by Google in response to a search request. Further, there was also “use” on the Site, although this was more like a heading in classified advertising and less like the actual advertisement itself. However, due to the current uncertainty over this and related questions in the Interflora v M&S case (see above), he was not able to say that this was acte clair.
(ii) In relation to? Arnold J considered that there was some degree of nexus between the use of the sign in the sponsored link and the purportedly infringing goods in that clicking on the sponsored link lead the user directly to listings for goods by reference to the sign which included the infringing goods. In the present state of the ECJ’s jurisprudence, it was arguable that this constituted use “in relation to” infringing goods.
(iii) In the course of trade? eBay Europe did not dispute this if there was use of the signs in the UK (see below).
(iv) In the United Kingdom? It was common ground that the mere fact that a website is accessible in the UK does not mean that an advertisement on that website constitutes use of that sign in the UK. It has to be aimed or targeted at consumers in the UK (Euromarket Designs v Peters  FSR 288) and 800-FLOWERS  FSR 697 (affirmed  EWCA Civ 721,  FSR 191). Where both price and postage were stated in sterling, and it could be inferred that the sellers were either UK sellers or non-UK sellers who had registered on the Site, the listings were clearly targeted at UK consumers. Less clear was the situation where the price was stated in sterling, in italics, indicating that it had been converted from a foreign currency “from eBay international sellers”. However, it appeared that this was not due to a worldwide search, but due to a country-specific package (a predecessor of International Site Visibility) and therefore Arnold J held that the listings were clearly targeted at UK consumers. It was immaterial that the sellers relied upon eBay to convert their prices into sterling rather than doing it themselves. Arnold J held that he would have come to the same conclusion even if the results had appeared following a worldwide search.
(v) Infringing use? Arnold J considered that L’Oréal was right when it submitted that the sponsored links infringed where they related to listings for non-EEA goods. Class International v Unilever Case C-405/03, Montex Holdings v Diesel Case C-281/05 and the judgment of the Court of Appeal in Eli Lilly v 8PM Chemists  FSR 12 were distinguishable as being cases on the transit of goods under customs procedures. Again, however, the law was not acte clair.
5) Whether eBay Europe came within the hosting defence in Article 14 of Directive 2000/31/EC (the E-Commerce Directive) was another matter upon which guidance from the ECJ was needed.
6) As a matter of domestic law the court had power to grant an injunction against an intermediary such as eBay Europe by virtue of the infringements committed by the Fourth to Tenth Defendants. However, the scope of the relief which Article 11 of the Enforcement Directive required national courts to grant in such circumstances was unclear and thus another matter upon which guidance from the ECJ was required.
Katharine Stephens, Zoe Fuller and Alice Sculthorpe
Reporter’s note: We are grateful to our colleagues at Bird & Bird LLP for their assistance with the preparation of this report: Claire Chapman, Clare Wilson, Deborah Niel, Gina Brueton, Hilary Atherton, Mary Smillie, Nick Boydell, Phillipa Lambert, Tom Snaith and Victoria Evans
ECJ and CFI decisions can be found at http://curia.eu.int/en/content/juris/index_form.htm and the reported cases marked * can be found at http://www.bailii.org/databases.html#ew