The AdWords are words an internet user puts in to a Google search with the aim to find the product or the service he is interested in. Google, then, gives to the economical operators a payment service for the ‘referencing’ of the AdWords and the price is determined by the ‘maximum price per click’, namely the number of accesses on the selected links by the users.
More advertisers can reserve the right to use the same key word and at any time the advertisers can improve their own position in Google’s list, fixing a higher ‘price per click’ or increasing the quality of their ad.
The contention between Interflora and Marks & Spencer began because Marks & Spencer, within their service of the positioning of AdWords, reserved the key word ‘Interflora’ interfering in this way with the search engine and the trademark of Interflora itself.
In Italy, before the Tribunal of the Entrepreneurs of Venice, the same issue was raised by Obiettivo Risarcimento s.r.l., company holder of the trademark ‘obiettivo risarcimento’ (‘compensation target’) and C.O.R.O.C.A. s.r.l., company working in the same field of medic and legal services and in the management of compensation dossiers.
Inter alia, C.O.R.O.C.A. s.r.l. used the wording ‘compensation target’, which is just a small portion of the more complex figurative registered trademark of the competitor Obiettivo Risarcimento s.r.l., as a key word in the internet search of its domain name (so said ‘metatag’) with the aim of positioning and advertising its own website (so said ‘AdWords’).
According to both sentences, the Tribunal of the Entrepreneurs with the order of the 19th April 2013 in the case Obiettivo Risarcimento s.r.l. versus C.O.R.O.C.A. s.r.l. and the High Court of Justice of England and Wales in the case Interflora versus Marks & Spencer 15/18/22 April 2013, to use the key words of a competitor as key words in an internet search means an ‘infringement’ of trade mark.
The case of Interflora versus Marks & Spencer had various events and including the implication of the European Court of Justice, called to pronounce upon the prejudicial issue of the High Court of Justice of England and Wales.
The Court of Justice was called by the High Court of Justice of England and Wales upon the interpretation of Article 5 of the First Directive 89/104 on trademarks and Article 9 of Regulation No 40/94 on the Community trademark (even if then amended by the Directive 2008/95 and Regulation No 207/2009 regarding the Community Trademark).
The Court of Justice, analysing the issues brought to its attention, preliminarily has analysed the ‘trademark’s functions’ and the modes by which the AdWords infringe each function as hereafter we say:
- function of indicating origin: a key word identical with the mark implies infringement of this function ‘if the advertisement does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party’.
- advertising function: use of a sign identical with another person’s trade mark in a referencing service such as ‘AdWords’ does not have an adverse effect on that function of the trade mark ‘when that proprietor registers its own trade mark as a keyword with a referencing service provider in order to have an advertisement appear under the heading ‘sponsored links’, it will sometimes – if its trade mark has also been selected as a keyword by a competitor – have to pay a higher price per click than the competitor if it wishes to ensure that its advertisement appears before that of the competitor’.
- investment function: there is this function when the proprietor uses the mark ‘to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty’ and the use by a competitor of an identical sign for services or products identical to those for which the trademark has been registered it means infringement of the ‘investment function’.
The conclusions of the sentences of the Court of Justice are therefore:
Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94 must be interpreted as meaning that the proprietor of a trade mark with a reputation is entitled to prevent a competitor from advertising on the basis of a keyword corresponding to that trade mark, which the competitor has, without the proprietor’s consent, selected in an internet referencing service, where the competitor thereby takes unfair advantage of the distinctive character or repute of the trade mark (free-riding) or where the advertising is detrimental to that distinctive character (dilution) or to that repute (tarnishment).
Advertising on the basis of such a keyword is detrimental to the distinctive character of a trade mark with a reputation (dilution) if, for example, it contributes to turning that trade mark into a generic term.
By contrast, the proprietor of a trade mark with a reputation is not entitled to prevent, inter alia, advertisements displayed by competitors on the basis of keywords corresponding to that trade mark, which put forward – without offering a mere imitation of the goods or services of the proprietor of that trade mark, without causing dilution or tarnishment and without, moreover, adversely affecting the functions of the trade mark with a reputation – an alternative to the goods or services of the proprietor of that mark.
The English court has applied the principles adopted by the European Court of Justice to the Interflora case in the judgment issued on 21 May 2013 (Interflora Inc. v Marks & Spencer Plc  (EWHC1291 (Ch)).
Interflora had claimed that the use of the sign “Interflora” by Marks & Spencer would have affected (or had the potential to affect) the origin and investment functions of the trademark. The advertising function was not an issue.
As regards to the investment function, the English court established that “if the third party’s keyword advertising adversely affects the reputation of the trademark, as for example where the image the trademark conveys is damaged, then there is an adverse effect on the investment function”.
In this case, given the absence of evidence that the AdWords of Marks & Spencer had an adverse effect on the reputation of Interflora’s trade mark, such as to damage Interflora’s image, then the court concluded that the investment function had not been affected.
As regards to the origin function, the Court identified the following principles:
- The origin function of a trademark is adversely affected by key words advertising triggered by the trademark if the advertisement does not enable reasonably well informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the advertised goods or services originate from the trademark proprietor or from a third party;
- The onus lies upon the advertiser to ensure that the advertisement does enable such users to ascertain that without difficulty and hence that there is no real risk of such users being confused;
- It is not sufficient to establish an adverse effect that some internet users might have difficulty in grasping that the advertised goods or services are independent of the trademark proprietor. Confusion on the part of ill-informed or unobservant internet users must be discontinued;
- If the advertisement causes a significant section of the relevant class of persons wrongly to believe that the advertised goods or services are connected to the trademark proprietor, then that does establish an adverse effect;
- In the context of the present case, it is relevant to consider whether the reasonably well informed and observant internet user is aware that Marks & Spencer flower delivery service is not part of Interflora’s network and, if not, whether Marks & Spencer’s advertisements enable such a user to ascertain that.”
Applying these principles, the English Court has concluded that Marks & Spencer had infringed the Interflora trademark in accordance with Article 5(1)(a) of the Directive and Article 9(1)(a) of the Regulation. In particular, following the three factors identified by the European Court:
- It was not generally recognised that the reasonably well informed and reasonably observant internet user was aware “on the basis of their general knowledge of the market” that the service offered by M&S was not part of the Interflora’s network but was instead in competition with it;
- Marks & Spencers’s advertisements were not enabling such user to determine whether the services offered by Marks & Spencer were not offered by the Interflora network;
- The nature of the Interflora network could render particularly difficult for the user to determine whether Marks & Spencer’s service was part of that network or not.
In this case therefore the Court established that the Marks & Spencer ‘s advertisements did not enable reasonably well informed and attentive internet users, or enable them only with difficulty, to ascertain whether the service referred to in the advertisements originated from Interflora or from an undertaking economically connected with Interflora, or alternatively from a third party.
The Court considered that a substantial number of users were led to believe that the service offered by Marks & Spencer was part of the Interflora network. The use of the Interflora trademarks by Marks & Spencer therefore infringed the original function of the trademark.
The Venetian injunction, pronounced as a conclusion of a trial proceeding, unlike the statements of the European Court of Justice and the High Court of Justice of England and Wales, falls outside from evaluations regarding the function of the trademark or the AdWords.
Assuming, as a preliminary step, that the word “Obiettivo Risarcimento” has been subject of several advertising investments over time, in order to determine a good reputation for the public so as to ensure the validity of the trademark (so-called “secondary meaning”), the Court of Venice has stated the law principles already underlined by the High Court of Justice of England and Wales:
the use as a keyword of the words “obiettivo” and “risarcimento” for sponsored links, which words reproduced the hallmark of the applicant (which is obiettivo risarcimento as well) … has to be considered as an infringement behaviour because such use, obviously with a distinctive function of such services in competition, is equivalent to engage unlawfully sponsored site to someone else’s trademark, thus taking advantage of the already established reputation of the sign;
Pursuant to art. 22 of the Italian Code of Industrial Property, it is forbidden to use, notwithstanding the good faith, any distinctive sign, including expressions whose purpose is the distinctive use, as “meta tags”, from which – due to the identity or similarity to someone’s else trade mark or the identity or similarity between someone’s else business – could arise a risk of confusion for the public, so as to consist even in the simple association between the two signs, benefiting unlawfully of said good reputation.
In this view, the competitor (CO.RO.CA) has been convicted by the Tribunal of Venice “not to use, as keywords for internet searches throughout Google and in any other way on the web, the words” obiettivo risarcimento””.
It is beyond the aim of this analysis to evaluate the effectiveness and strength of the sign “obiettivo risarcimento” (which is the Italian translation of “target compensation”), which however, could theoretically be considered invalid, pursuant to art. 13 CPI for the descriptive function that said sign would take on regarding the service offered.
Instead, what matters most, are the principles mentioned above because of the fact that they can be considered quite new in the Italian case law, in fact, a first case law (well expressed by the Court of Rome in18.01.2001, with the annotation of R. Sciaudone, Riv. Dir. Ind., 2002, II, 189 and of P. Sammarco in Dir. Inf. I, 2001, see also Court of Milan 08.02.2002 AIDA 2002, and the Court of Naples 28.01.2001 in Dir. Inf. 2002) expressly excluded the “counterfeit” behaviour but admitted the possibility of punishing the conduct of a competitor only under the principles of unfair competition (art. 2598 of the Italian Civil Code), as a “parasitic” behaviour.
That is because if, on the one hand, Courts tended to exclude that the public could be misled by the use, on web pages, of distinctive trademarks for the sole purpose of leading the telematics search-engines, on the other hand was preferred to confine the application of sanctions to the cases of unlawful competition characterised by bad faith.
Recently the Italian case law and doctrine (see in particular at the Court of Milan 14.11.2005, GDI 2005 and 08.08.2007, GDI 2007) confirmed the possibility of using the principles contained in the Italian Code of Industrial Property related to the infringement of a trademark (Article 20).
That is because, as noted by the doctrine (among all see the contribution of Prof. E. Tosi), the use in the web of signs corresponding to registered trademarks has to be considered equally to the behaviour of addressing consumers’ choices, misleading them, with and illegal abuse of the awareness of others’ signs, if existent.
Arguing in these terms, any case for infringement, as the “obiettivo risarcimento” one, abstracts from evaluations of the existence of a competition relationship, for the purpose of punishing anyone, even “notwithstanding of the good faith”, used a statement which is a someone else – including non competitors – hallmark.
In particular, pursuant to art. 20 of the Italian Code of Industrial Property (CPI), will be sanctioned the playback (even partial) of a trademark, in the case of “a likelihood of confusion or association for the public” (Article 20 n. 2 CPI) or even in the case there will be an “unfair advantage for the abuse of the awareness of others’ sign” (art. 20 n. 3 CPI).
On the contrary, it has to be affirmed that the behaviour of merely reproducing the hallmark for the only purpose of describing and comparing it with other brands, such as what frequently happens in various “blogs”, or when the indication mentioned in the sign is likely to describe, by itself, the service being advertised on the website, will be considered as licit, because those conducts fall outside of the legal principles established by the abovementioned rulings.
Venice – London, 31st July 2013
Avv. Lucia Loprieno
Barbara Rizzi (Solicitor)
dott. Nicolò Romanato (dottorando presso l’Università Ca’ Foscari di Venezia)
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