Page 1

This article was first published on LexisPSL IP & IT on 14 February 2014. Click here for a free 24h trial of LexisPSL.

High Court clarifies rules on brand names in adverts

14/02/2014 IP & IT analysis: When is the use of brand names in search terms a trade mark infringement? Simon Chapman, partner with Lewis Silkin LLP, advised cosmetics company Lush in its successful trade mark claim against Amazon's UK operation.

Original news
Cosmetic Warriors Ltd and another v Amazon.co.uk Ltd and another [2014] EWHC 181 (Ch), [2014] All ER (D) 92 (Feb) The Chancery Division considered a claim by Lush, a cosmetics company. Lush contended that the defendant companies, which were part of Amazon, the online retailer, had infringed its trade mark by using it to direct customers to other products similar to, but not sold by, Lush. The court held that, on the evidence, the Amazon companies had carried out the infringing acts alleged by Lush.

What is the background to this case?

Lush doesn't sell its products through amazon.co.uk. It was brought to their attention that if consumers carried out a search on Google for the word 'lush', the search results page displayed sponsored advertisements for amazon.co.uk's website. Not only that, the word 'lush' was used within the text of those advertisements. Lush also became aware that if consumers clicked on those sponsored advertisements, they were directed to the Amazon site, where they were presented with further uses of the Lush trade mark on the page. They were also presented with adverts for other competing cosmetic products that were very similar in appearance to the Lush products, but not actually Lush products. This was an irritation for Lush for two reasons: o o they felt consumers were being pushed to Amazon by sponsored advertisements and were buying products that they believed to be Lush products, but weren't Lush is a company that lives and breathes by their ethics--they did not want their customers to believe that Lush considered Amazon an appropriate place to sell their products

Lush complained to Amazon, but the parties couldn't agree a resolution and that led to a claim being brought against Amazon.co.uk Ltd and Amazon EU SARL--an Amazon company based in Luxembourg. Lush brought four claims: o trade mark infringement by virtue of the fact that Amazon were bidding on the word 'lush' as a Google AdWord and were using the word 'lush' in their sponsored advertisements which were displayed to consumers as a result of searches for the word 'lush'

Page 2

o o

trade mark infringement by virtue of the fact that Amazon were bidding on the word 'lush' through their Google AdWords accounts, which resulted in other advertisements for third party products being displayed following consumer searches for the word 'lush' trade mark infringement flowing from Amazon's use of the mark 'lush' on the Amazon website itself in conjunction with products similar to those sold by Lush lastly there was a claim that Amazon.co.uk Ltd and Amazon EU SARL were jointly liable for the wrongdoing

How does this decision follow on from other cases involving Google AdWords?
The Google France (Google France SARLv Louis Vuitton Malletier SA; same v Viaticum SA v Centre National de Recherche en Relations Humaines (CNRRH) SARL [2010] All ER (D) 23 (Apr)) and Interflora cases (Interflora Inc Marks and Spencer plc [2013] EWHC 1484 (Ch), [2013] All ER (D) 95 (Jun)) were both brought as 'double identity' cases (that the alleged trade mark infringer is using a sign identical to the registered trade mark for identical goods). In most trade mark cases where you have 'double identity' it is a slam-dunk case for the trade mark owner. However, what was determined in Google France was that there was an anomaly about search engine keyword cases in that, even if you have double identity, the test is whether or not the advertisement enables the reasonably informed and reasonably attentive internet users (or enables them only with difficulty), to ascertain whether the goods or services referred to in the advertisement originate from or are connected with the proprietor of the mark. The judge in this case characterised the test by saying, 'infringement should be found where the average consumer may erroneously think that the goods advertised emanate from the trade mark proprietor'. In Interflora, Marks & Spencer did not use Interflora's trade mark in the text of the advertisement itself, but only bid on the word 'interflora' as a Google AdWord. This caused advertisements for M&S Flowers to be displayed to consumers when they searched for the word 'interflora'. However because of the nature of its business as a network of florists, the court held that the average internet user might think that the M&S advertisement related to Interflora (or that M&S formed part of the Interflora network). The case was quite unique on its facts. Our AdWords case was in some respects more straightforward because not only were Amazon bidding on the keyword 'lush' as an AdWord, but the trade mark was on the whole used in the advert itself.

What did the court rule in relation to the different classes of alleged infringement?
In relation to adverts that used the word 'lush', the court found that double identity existed, namely use of the trade mark 'lush' in relation to cosmetics. It also found that the average internet user, when they saw the advertisement, would erroneously think that the products originated from Lush itself. Amazon argued that it was necessary to assess what happened when the internet user clicked through from the advertisement to the Amazon website, but the judge rejected that this was part of the assessment. In relation to results from the search word 'lush' that produced advertisements for cosmetic products not mentioning the word 'lush', the judge ruled that 'the average consumer could not reasonably fail to appreciate that the Amazon ad was just another ad from a supplier offering similar products to those requested by the internet searcher'. Amazon argued that the use of 'lush' within the search box on the Amazon site was not Amazon's use because it has been typed in by the consumer. The court agreed but went on to say that the predictive text box which appeared below and which suggested various search terms including 'lush bath bombs', 'lush cosmetics' and various other uses of the mark on the website, was trade mark use by Amazon. The judge decided that this was an infringement because the average internet user would erroneously think that the products being offered on the website emanated from the trade mark proprietor. The joint liability of the defendants was relevant because Amazon EU SARL is a Luxembourg-based company. The defendants claimed that Amazon EU SARL was in fact the company that operates and is responsible for the amazon.co.uk website. We questioned that not least because the first defendants name is Amazon.co.uk Ltd, and also because we had seen various documents suggesting that Amazon.co.uk Ltd was involved. The court ultimately concluded that 'I have no doubt that the first and second defendants have

Page 3

joined together and agreed to work together in the furtherance of a common plan which includes doing the acts which are complained of by the claimants'.

What effect did Lush claim Amazon's search practices had on the origin, advertisement and investment function of its trade marks?
Amazon's use damaged the origin function of the Lush trade mark because visitors to amazon.co.uk who were searching for the claimant's products were likely to be misled. In addition the court held that the 'advertising' function of the mark was damaged by Amazon because the claimant's ability to use the reputation of the mark to attract custom was diminished by Amazon's conduct. It also held that the 'investment' function was damaged because being associated with Amazon would damage the claimant's reputation for ethical trading as some consumers would regard Amazon's attitude to UK taxation as 'repugnant'. A judgment that provides such a detailed assessment of trade mark infringement with reference to each of the origin, investment and advertising functions of a trade mark is relatively unusual.

How did the court approach Amazon's reliance on the Electronic Commerce Directive 2000/31/EC?
Amazon as a business does three things: o o o it operates in a similar way to eBay--the public can use it as a platform to sell products for a moderate fee you can engage with Amazon who will help you market your product, and you then pay them a higher fee you can throw everything in with Amazon--they stock the product, deliver it and you pay them a much more significant fee for that

Amazon were arguing that all of their activities are akin to eBay's, where an e-commerce defence might apply. The judge concluded, in this case, that even where Amazon is operating in that way, it doesn't make any difference because all the products on the Amazon site are mixed up together. Those types of product in which Amazon operates as an online marketplace are not distinguished from the ones in which it has greater involvement.

What is the significance of the court's ruling that Amazon.co.uk Ltd and Amazon EU SARL are jointly liable in this case?
Amazon defended this claim, arguing that this was an attempt by Lush to embarrass them for their ongoing tax issues. They asserted that Amazon EU SARL operates the amazon.co.uk website, while Amazon.co.uk Ltd operated only as a fulfilment service provider to the Luxembourg company. The judge commented after hearing Amazon's witnesses that 'I regard the protestations that the first defendant (Amazon.co.uk Ltd) is not involved at all or is merely facilitating the doing of the infringing acts as distinct from sufficiently participating in them as being wholly unreal and divorced from the commercial reality of the situation'.

In light of this judgment, are there any limitations on how a business structures its internal search function?
Most significant is the judge's finding on the third class of infringement, relating to the presence of the 'lush' trade mark on the Amazon site. Amazon claimed that Lush's complaint in that regard was an attack on their whole business model and obviously felt that an adverse judgment would have a significant impact on their website. The reality here is that Amazon exploited the demand for the claimant's products and presented comparable products in a way that meant that consumers were unlikely to know that they weren't the real thing. The consequences here are that there are a number of online retailers who, when providing search results in response to search request for brands, need to be clear about whether or not they stock those branded products.

Page 4

What can brand owners learn from this judgment?

The law has been pretty clear for a while that if you are going to bid on a third party brand, rarely can you put that brand in the advertisement itself if you are not selling the branded goods. Interviewed by Dave Thorley. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.