The long running dispute between Interflora and UK retailer, Marks & Spencer ("M&S"), over the bidding by M&S on the keyword (and registered trade mark) "Interflora" took another turn today as the UK Court of Appeal handed down its Judgment overturning the first instance decision by Mr Justice Arnold in favour of Interflora.
In what may be the first ever trade mark infringement case sent for a re-trial in the UK, the Court of Appeal has today allowed Marks & Spencer's appeal and remitted to the High Court for retrial the claims of trade mark infringement under Article 5(1)(a) of the Directive (as implemented in section 10(1) of the Trade Marks Act 1994) and Article 9(1)(a) of the Regulation.
After identifying various errors of law made by the trial judge, the Court of Appeal said it could not be confident that the judge would have come to the same conclusion if the errors had not been made. It acknowledged that appellate courts should not interfere with findings of fact made by trial judges unless compelled to do so, and should be very cautious in differing from an evaluative or qualitative assessment made by a trial judge. It also acknowledged the guidance given by the Court of Justice in its decision in this case.
The Court of Appeal considered, but in the end rejected, the possibility that it should simply determine the issue of infringement for itself, with obvious benefits in terms of time and cost. It decided that it could not do so as it had not reviewed all the documents, and had not had the benefit of hearing the oral evidence of the witnesses. In a case of considerable importance to the parties, in which they had invested substantial time and resources, there was no alternative but to allow the appeal and remit the case for retrial.
Following Google France the critical question to be answered in a case involving keyword advertising was whether or not the advertisement enabled normally informed and reasonably observant internet users, or enabled them only with difficulty, to ascertain whether the goods or services referred to in the advertisement originated from the proprietor of the trade mark or an undertaking economically connected to it or from a third party.
The national court must therefore assess, for example, whether or not the use of words such as “M&S Flowers” in an advertisement was sufficient to enable a reasonably well-informed and reasonably observant internet user who had entered search terms including the word “interflora” to tell that the flower-delivery service offered did not originate from Interflora or an undertaking economically linked to Interflora.
The Court of Appeal considered the following issues:
The average consumer
The average consumer was not some form of mathematical average but rather a notional person whose presumed expectations are to be taken into account by the national court in assessing the particular question it is called upon to determine.
In deciding a question of infringement of a trade mark, and determining whether a sign has affected or is liable to affect one of the functions of the mark, whether there is a likelihood of confusion or association, or whether there is a link between the mark and the sign, the national court is required to make a qualitative assessment. It must make that assessment from the perspective of the average consumer and in accordance with the guidance given by the Court of Justice. A finding of infringement was not precluded by a finding that many consumers, of whom the average consumer is representative, would not be confused.
In the circumstances of this case the Court of Appeal considered 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.
No reversed onus of proof
Many commentators have been troubled by the notion from European case law that the same test of likelihood of confusion should be applied under Article 5(1)(a) (and Article 9(1)(a)) and under Article 5(1)(b) (Article 9(1)(b)). In Datacard v Eagle Technologies Ltd  the trial judge (Arnold J) considered that the best way to make sense of the case law was to interpret the decision in Google France as laying down a likelihood of confusion test but with a reversed onus. In other words, in a case of double identity (identical marks and identical goods and services), in order to show an effect on the origin function of the mark, there was a test of likelihood of confusion but with a reversed onus i.e. the onus lay upon the third party to show that the use of the sign in context was sufficiently clear that there is no possibility of confusion on the part of the average consumer as to the origin of the advertised goods or services. The Court of Appeal disagreed with the judge's view, rejecting what it saw as a reformulation of the conventional likelihood of confusion test, and it strongly rejected the imposition of a burden of proof upon the third party.
The Court of Appeal said that third party advertisers using a trade mark as a keyword must take care to ensure that their advertisements enable average internet users to ascertain whether the goods or services originate from the trade mark proprietor or an unconnected third party. If they fail to do so, they may be found to have infringed the trade mark. The judge’s error was that he wrongly elided the burden of proof in legal proceedings with the need in practice for third party advertisers to craft their advertisements with appropriate clarity.
Initial interest confusion
The controversial doctrine of initial interest confusion was considered in detail by the trial judge in Och-Ziff Management Europe Ltd v OCH Capital Ltd 2010. This occurs where the consumer's initial confusion might be dispelled before the point of sale but he nevertheless continues with the purchase despite no longer being confused. The Court of Appeal ruled that it was not helpful to import this doctrine into EU trade mark law, at least so far as it applied to the use of a sign the same as or similar to a trade mark as a keyword in an internet referencing service, and it had the potential positively to mislead. The national court was required to consider the matter from the perspective of the average consumer, and to decide 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 it was not the duty of such advertisers to avoid confusion. The doctrine of initial interest confusion was therefore an unnecessary and potentially misleading gloss on the tests set out in European case law and should perform no part in the analysis of national courts.
Procedural irregularities and errors on the evidence
Interflora had sought to rely upon evidence in academic papers, particularly studies of consumer behaviour, to support their argument that reasonably well-informed and observant internet users were not all sophisticated users of search engines who knew precisely what Google were doing with regard to paid advertising. Also relied upon was evidence from an employee of the online digital marketing company which managed the online paid search advertising strategies and campaigns for Interflora in the UK. He was not an expert witness. By attaching weight to his opinion and assessment the judge had fallen into error.
Overall the Court of Appeal considered that the judge’s approach to the burden of proof had likely influenced his assessment of all the evidence and consequently affected all his findings.
The judge’s assessment was that the majority of consumers who clicked on M & S’s advertisements did so because they had been persuaded to take their custom to M & S and not because they believe that M & S is part of the Interflora network. Nevertheless, that did not exclude the possibility that a significant proportion did believe that there was a connection between M & S and Interflora. In his overall conclusion, the judge held that a significant proportion of the consumers who searched for "interflora" (and like signs) and then clicked on M & S's advertisements displayed in response to those searches, were led to believe, incorrectly, that M & S's flower delivery service was part of the Interflora network. The Court of Appeal found that such a finely judged decision depended heavily upon those particular findings in relation to which the judge had fallen into error, as well as on inadmissible evidence.
The Court of Appeal concluded that the bidding by M & S on generic flower related terms without negatively matching the word “interflora” may be characterised as use by M & S of the sign “interflora” within the meaning of Article 5(1) and (2) of the Directive (and Article 9(1) of the Regulation). Whether it did or not depended upon an assessment by the judge of all the circumstances, including the length of time for which the impugned activities have been carried on. If the object and effect of M & S’s activities was to trigger the appearance of its advertisements in response to searches for “interflora” then this would justify a finding that M & S has used the sign “interflora” as a matter of trade mark law. This would not itself be sufficient to establish infringement because it must also be shown that the advertisements did not enable the average consumer to ascertain whether the goods or services referred to originated from Interflora in the light of all relevant circumstances.