The European Union has confirmed that an advertiser who selects a competitor’s trademark as a Google Adword can be liable for "double identity" trademark infringement if consumers are unable to determine whether the advertiser is economically linked to the trademark owner.  The prospects of confusion are greater in the event the trademark concerned is a network of separate and widely varying retailers.  In addition, for the first time, it was confirmed that the use of a competitor trade mark as an Adword can also be infringed by taking unfair advantage of the trademark.

In this case, Marks & Spencer selected “Interflora” as a Google Adword, such that a sponsored link to M&S Flowers Online appeared prominently when users of Google searched for “Interflora”.  Interflora brought trade mark infringement proceedings, alleging that M&S’s use as an Adword of their registered mark INTERFLORA, and similar words, constituted both “double identity” (identical mark, identical goods) infringement and also that M&S’s acts took unfair advantage or, or were detrimental to, the distinctive character or repute of the INTERFLORA mark.

A number of questions were referred to the European Court of Justice which can be summarised as follows:

• whether the owner of a trademark is entitled to prevent a competitor from displaying, on the basis of an identical keyword, an advertisement for goods or services identical to those for which that mark is registered; and
• whether, in those circumstances, it is relevant (i) that the advertisement concerned is liable to lead some members of the relevant public to believe, incorrectly, that the advertiser is a member of the trademark proprietor’s commercial network and (ii) that the provider of the internet referencing service does not permit trademark proprietors to prevent signs identical to their trademarks being selected as keywords.

The European Court of Justice confirmed that the use by an advertiser of a competitor’s trademark as an Adword constituted potentially actionable use in the course of trade, and in relation to goods or services, even if the trademark does not appear in the ad.  It also confirmed that, for the use to be infringing, one of the essential functions of the mark must be affected. 

This would happen:

1) Where an advertiser’s ad suggested that there was an economic link between the advertiser and the proprietor of the trademark used as an Adword, or the average consumer had difficulty in determining whether the goods or services were those of the trade mark owner, the function would be adversely affected. 
However, although the use of a trademark by its owner’s competitors may increase the costs to the trademark owner if it wishes to ensure that its sponsored links appear above its competitors’, this does not on its own adversely affect the trade mark’s advertising function,

The European Court of Justice also indicated that the investment function of a mark is affected where a competitor’s use of the mark substantially interferes with the use of the mark by its proprietor to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.  On the other hand, the trademark will not be affected if the only consequence of the competitor’s use of the trademark is to oblige the trade mark owner to adapt its efforts to acquire or preserve its reputation – provided that such use respects the trade mark’s origin function.

So on the questions referred, the European Court of Justice held that

1) the use in the course of trade of a sign identical or similar to a registered mark is detrimental to the distinctive character of the mark if it contributes to turning the trademark into a generic term.  However, the use of a competitor trade mark as an Adword does not necessarily contribute to that development.

It went on to say that if the internet user can tell that the goods or services offered in the ad triggered by the Adword originate not from the proprietor of the trademark but from its competitor, the trademark’s distinctiveness would not be reduced by that use.  It would have merely drawn the consumer’s attention to an alternative product or service.


2) The Court held that, where a competitor of the proprietor of a trademark with a reputation selects that trade mark as an Adword, the purpose of that use is to take advantage of the distinctive character and repute of the trade mark, and that if the consumer buys the competitor product as a result, real advantage accrues to the advertiser.  If done without due cause, the advantage is unfair, especially where the goods offered by the advertiser are imitations of the goods of the trade mark owner.  However, where the ad does not offer a mere imitation of the trade mark owner’s goods, does not cause dilution or tarnishment and does not adversely affect the functions of the trade mark, such use will generally be fair competition and thus not without due cause.