Trade mark owners should remain vigilant as the Top Level Domain Space expands
By Donvay Wegierski, director at Werksmans Attorneys
The Google AdWords programme, where the highest bidders are offered third party-owned trade marks for keyword advertising, remains debated by trade mark owners. This programme is on a pay-per-click basis, also known as the sponsored link campaign, whereby an advertiser pays only when the link is clicked on.
The Google Adwords programme is a highly popular means of generating traffic to a website and helps to boost online advertising. As a general rule, foreign courts have said that the use of a trade mark as a keyword is acceptable; provided the internet user can discern that there is no connection or association of the mark with the trade mark proprietor. In considering the issue of keyword advertising and trade mark infringement, the importance of fair competition has therefore remained paramount.
Recent key ruling
On 21 May 2013, the High Court of Justice (England and Wales, Chancery Division) found in favour of Interflora, Inc (“Interflora”) ruling that Marks Spencer’s (“MS”), use of the INTERFLORA trade marks by virtue of its successful bids in the Google Adwords programme amounts to trade mark infringement. This brings to an end a four-year battle between Interflora and MS (Interflora British Unit v Marks Spencer PLC, Flowers Direct Online Limited C-323-09) and as a consequence, MS is now prevented from future bids on INTERFLORA trade marks in the Google AdWords programme.
It would be fair to infer from this judgment that the use of someone else’s trade mark in keyword advertising will now be more restricted. The Interflora ruling is however very specific because the court found that due to the manner in which the advertisements were displayed, it wasn’t evident to the “reasonably well informed and reasonably attentive internet user” that MS is not part of the Interflora network of florists.
Relevant to the ruling is that MS had purchased keywords in the Google AdWords programme. As a result, MS adverts appeared on sponsored links when internet users searched terms including “Interflora”, “Interflora Flowers”, “Interflora Delivery”, “Interflora.com” and “Interflora.co.uk” on Google. Although these adverts did not contain any references to the INTERFLORA mark and its services per se, they did offer internet users flower delivery services.
Defining the trade mark
Contextually, this judgment comes after various questions concerning the interpretation of European trade mark law were referred to the Court of Justice of the European Union (“CJEU”). Striking a balance between protecting trade mark owners while fostering competition remains paramount, and important considerations concerning the use of trade marks in keyword advertising have emerged as a result:
1. The function of a trade mark indicates origin – In so far as keyword advertising is concerned, the CJEU in its erstwhile Google France decision, introduced a test of a reasonably well informed and reasonably observant internet user to determine whether there is trade mark infringement where key word advertising is concerned.
2. In applying this test in the Interflora case, the CJEU’s ruling recognises two other functions of trade marks that should be considered when assessing whether there are any adverse effects in keyword advertising that is:-
a) the investment function meaning that a trade mark allows the owner to acquire a reputation and further attract consumers and retain their loyalty;
b) the advertising function whereby it is recognised that a trade mark is instrumental in advertising the owner’s goods and services
Consequently, the CJEU found that only when these three functions are adversely affected through use of a trade mark in keyword advertising, will there be trade mark infringement. The court, in applying this test, considered it relevant that the reasonably well informed and reasonably observant internet user could not necessarily discern from the advertisements concerned that MS was not part of the Interflora network.
It is speculated that the amount of successful claims by trade mark owners, even as a consequence of the Interflora ruling, will however be small. As a norm, internet adverts do indicate that the advert is that of a competitor and that the goods or services are those of the competitor and not the trade mark owner.
Comment
While the CJEU ruled in Interflora’s favour, the case illustrates a continued awareness of the need to foster competitive behaviour on the world wide web. Provided a reasonably well informed and reasonably observant internet user does not infer an association between the trade mark owner and advertiser, keyword advertising by virtue of using a third party’s trade mark is permitted and may not constitute trade mark infringement.
This impartial approach is no doubt necessary with the release and registration of approximately 1900 new Top Level Domains (gTLDS) which commenced at the beginning of 2013. These will include, among others, generics such as .wine and .adult; brands such as .mcdonalds; community such as .latin; and geographics, such as. joburg and .africa.
What does this mean for trade mark owners?
This gradual introduction of more domain names and more websites will increase both competitive and anti-competitive activity. The considerations herein highlight two issues which trade mark owners should heed:
1. Keyword advertising will increase – A trade mark owner should monitor any third party use of its trade marks on the internet. A registered trade mark affords the proprietor the exclusive right to use the trade mark for goods and/or services for which it is registered and consequently, any unauthorised use could constitute trade mark infringement. While it may be possible to rely on an unregistered trade mark by demonstrating goodwill and repute in the mark as a consequence of use, this may prove onerous. Proprietors of unregistered marks would be best advised to register trade marks so as to circumvent rampant online advertising.
2. Cyber-squatting will increase – Unauthorised third parties are likely to register gTLDs comprising trade marks. The damage this may cause remains unknown.
3. Trade mark owners should apply for TradeMark Clearinghouse (TMCH) validation and registration which provides two distinct advantages:
a) Sunrise period: Trade mark owners will be given preference to register a trade mark as a domain name prior to the registry opening up for the public. The Sunrise period for all new domain name registries will be at least thirty days;
b) Alert: Should an unauthorised third party register a trade mark as a domain name, the trade mark owner will be notified within the first ninety days of general registration, thus allowing the trade mark owner to take the relevant recourse
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Author: Grant Henry from Communications Advisory. Originally distributed by MyPR.co.za.
