Court of Appeal Order Retrial in Interflora Keyword Advertising Case

November 2014

The Court of Appeal in a very unusual move has ordered a retrial in the Interflora v Marks and Spencer PLC keyword advertising case.

The dispute between Interflora and Marks and Spencer has rumbled on now for nearly five years. In 2008, Interflora launched trade mark infringement proceedings against Marks & Spencer regarding its bidding on the 'Interflora' keyword term which triggered advertisements linking to Marks and Spencer's florist services.  None of the advertisements used the Interflora trade mark visibly in the adlinks and merely linked through to sections of the Marks and Spencer website which promoted its florist services. Marks and Spencer's actions were triggered by a relaxation of Google's policies in the UK in 2008 which allowed competitors to bid on keywords incorporating their competitor's trade mark. In May 2013,  following a referral to the Court of Justice of the European Union ('CJEU'), the High Court found in favour of Interflora finding that the 'average consumer' might presume that Marks and Spencer were part of the Interflora network of florists, when indeed they were not.

The use of trade marks in keyword advertising in the EU is to a large degree governed by the findings of the Google France decision of the CJEU in 2010 which states that trade mark infringement will be held if the ad concerned does not enable reasonably informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the brand owner or an undertaking economically connected to it or, on the contrary, originates from a third party. In the original High Court decision, Justice Arnold found that the Marks and Spencer ads did not enable the average consumer to discern that the ads were in some way not connected to Interflora. Justice Arnold relied relatively heavily in his judgement on the doctrine of 'initial interest confusion', a concept of trade mark law which has been imported into EU trade mark law from the United States. Initial interest confusion is a concept which holds that if an internet user, for example, is 'initially confused' into thinking a keyword advert is in some connected to a brand owner, and then clicks on that ad and goes through to a linked website, even if their 'confusion' is dispelled when visiting the linked website, in the case at hand that the linked website is connected to Marks and Spencer and not Interflora, trade mark infringement will still be held to have occurred.

Yesterday, the Court of Appeal heavily criticised the High Court's judge's reliance on the doctrine of 'initial interest confusion' stating in very strong terms 'the doctrine of initial interest confusion is therefore an unnecessary and potentially misleading gloss on the tests the Court has articulated'.  Further, the Court of Appeal, held that the Justice Arnold had in some way turned the onus in his original decision to the defendant having to prove that there was not trade mark infringement, when the correct approach was always for the onus to be placed on the claimant to prove that there was infringement i.e. the defendant should not have to prove a negative. The Court of Appeal also criticised Justice Arnold's decision to admit some forms of evidence by Interflora into the proceedings.

However, in a very unusual move, the Court of Appeal did not overturn the original High Court decision, but ordered a retrial. Barristers for Interflora argued that the original judge's 'errors' were of such a minor nature that the outcome of the original decision would have been no different even if the High Court had followed the Court of Appeal's reasoning. However, the Court of Appeal, which cannot retry cases on the facts, unless compelled to do so, but merely point out errors of law, argued that the 'errors' were such that original case should effectively be reheard by the High Court, who would once again re-examine the evidence and potentially re-cross examine witnesses for both parties.  In essence, the Court of Appeal ordered the High Court to have a second go hearing the case.

Lee Curtis, a trademark attorney and partner at law firm HGF stated "It is crucial to understand that the Court of Appeal has not found that the original decision was wrong. What the Court of Appeal has found is that the High Court made an over-reliance on a doctrine of trade mark law in the form of the concept of 'initial interest confusion'. Further, the Court of Appeal has found that the High Court incorrectly placed the onus on the defendant to prove there was no infringement and wrongly admitted or relied on certain bits of evidence in the proceedings. Although the Court of Appeal, could have overturned the High Court decision there and then it did not and I suspect was cautious of the fact that this is a finely balanced case very dependent on factual evidence.'

‘As a result of its findings, and given the Court of Appeal did not, and indeed cannot re-hear evidence of fact, beyond exceptional circumstances, put forward in the original decision, it effectively found that the High Court should retry the case. It is quite possible that High Court will come to the same decision as before. However, it was interesting to note that the Court of Appeal on numerous occasions quoted sections of the original High Court judge's decision which stated that bidding on a competitors trade mark as part of a keyword advertising campaign is not prohibited per se. Whether infringement is found, will always depend on the individual facts of the case at hand, and whether consumers are confused or perceive a connection between the ad and the brand owner.'

‘Although the Interflora case is very dependent on the specific structure of the Interflora network of florists i.e. a series of independent florists who co-brand under the Interflora brand, and thus it might be presumed that it was more likely that Marks and Spencer would be found to infringe Interflora's rights than had Interflora been a 'traditional' business, the case and its outcome is crucial on laying down some guidelines in the multi-billion pound keyword and pay per click advertising sector in the United Kingdom and if Marks & Spencer's win it might reinforce the relatively permissive use of bidding on competitor's trade marks in keyword advertising.'

Click here to view the full decision of the Court of Appeal.

This update was prepared by Lee Curtis, Partner at our Manchester office. Tel: +44(0) 161 247 4900

If you would like more information please contact Lee Curtis or your usual HGF representative or visit our Contact page to get in touch with your nearest HGF office.