Most entrepreneurs appreciate that a trademark is indeed a precious tool. It is that feature of a business concern which serves to distinguish or identify a trader’s goods or services from those of another. It also plays an indispensable role in the marketing of products. It stands to reason therefore that most traders seek to protect their trademark by registering such a mark in their name, be it on a country by country basis, on a Europe-wide basis or internationally.
Online selling and advertising have nowadays become the rule of the day- Mariosa Vella Cardona
The EU has promulgated its own laws which seek to harmonise the laws of member states in so far as the protection of trademarks is concerned. In fact, it has gone beyond a mere attempt at harmonisation. By granting traders the option to obtain the protection of their trademark on an EU wide basis through a single registration of their mark as a Community trademark, the EU offers an efficient and simple way whereby entrepreneurs can obtain the utmost protection of their mark in Europe.
The European Court of Justice has recently had the occasion to clarify what being a trademark owner in Europe is really all about. Briefly, the facts of the case which came before it were as follows. An American company, Interflora Inc., operates a worldwide flower-delivery network of which Interflora British Unit is a licensee. Interflora is registered as both a national trade mark in the United Kingdom and as a Community trade mark and it enjoys a substantial reputation across Europe. Marks and Spencer, an English company, offers as one of its services the sale and delivery of flowers, a commercial activity that is in direct competition with that of Interflora.
Marks and Spencer, using Google’s “AdWords” referencing service, selected as keywords the word “Interflora” and variants of such word. This means that when internet users enter the word “Interflora” or one of its variants as a search term in the Google search engine, an M & S advertisement appears. Interflora brought proceedings for trade mark infringement against M & S before the English courts. The latter courts in turn made a preliminary reference to the European Court of Justice, requesting guidance on the interpretation of EU laws in relation to the use by a competitor, within an internet referencing service, of keywords identical to a trade mark, where consent has not been given by the trade mark owner.
The European Court of Justice noted that a trademark owner is entitled to prevent a third party from using a sign identical to his own trade mark and in relation to identical goods or services, only if such use is capable of having an adverse effect on one of the functions of a mark. The court proceeded to point out that one of the essential functions of a trade mark is to guarantee to consumers the origin of the goods or services to which it relates. The other functions relate to advertising and investment. A trade mark is often also used as an instrument of commercial strategy for advertising purposes or to acquire a reputation in order to develop consumer loyalty, the court explained.
The court observed that a trade mark’s function of indicating origin is distorted where an advertisement displayed on the basis of the keyword corresponding to the trade mark does not enable internet users to ascertain whether the goods or services referred to in the advertisement are ones offered by the trademark’s owner or by a third party. However, it continued to state that the use of a sign identical to another person’s trade mark in a referencing service such as “AdWords” does not affect the advertising function of a trade mark.
The court also clarified in which circumstances, would the protection of a trade mark’s investment function be thwarted. It emphasised that the use by a competitor of a sign identical to a registered trade mark in relation to identical goods or services has an adverse effect on such a function where such a use interferes substantially with a trademark owner’s right to use his mark to acquire or preserve a reputation with his customers. In cases where a trade mark already enjoys a reputation, the investment function is adversely affected where such use effects that reputation and thereby jeopardises its maintenance.
The court observed, however, that the mere fact that a trademark owner has to adapt his efforts to acquire or preserve a reputation does not automatically entitle him to prevent a competitor from using his mark. Similarly, the trade mark owner cannot rely simply on the fact that such use by a third party may prompt some consumers to switch from goods or services bearing that trade mark.
The ECJ also noted that the choice in a referencing service, of signs identical with or similar to another person’s trade mark, where the mark enjoys a reputation, may be construed as free-riding. This would be the case where internet advertisers offer for sale, by means of the selection of keywords corresponding to trade marks with a reputation, goods which are imitations of the goods of the proprietor of those marks.
On the other hand where such advertisements merely offer an alternative to the goods or services of the proprietor of the trade mark which enjoys a reputation and not imitations, such use of the mark could be considered as fair competition, provided that the mark’s reputation is not tarnished and that the functions of the trade mark are not adversely effected.
Online selling and advertising have nowadays become the rule of the day. Together with a shift in modality as to how today’s entrepreneurs go about conducting their business, comes a change in the ways in which trademark proprietary rights may be infringed. This ruling serves to somewhat clarify where, in view of such technological advances, a trademark owner’s rights start and where they have to give way for other traders’ rights to make use of the mark.
mariosa@vellacardona.com
Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is the deputy chairperson of the Malta Competition and Consumer Affairs Authority as well as a member of the National Commission for the Promotion of Equality.