Interflora Inc & Anor v Marks and Spencer Plc

Factual and Procedural Background

This opinion concerns an appeal by the Defendant against multiple judgments and orders of the High Court Judge Arnold J in relation to claims brought by the Claimants for infringement of their national and Community registered trade marks for the word "interflora". The Defendant's activities involved displaying advertisements on the internet via Google AdWords triggered by search terms including "interflora" or variants thereof. The Claimants operate a flower delivery network in the United Kingdom with a substantial reputation. The Defendant, a well-known retailer, has sold flowers and operated an online flower delivery service but has never been part of the Claimants' network.

The procedural history includes multiple judgments on the admissibility of evidence, expert witness applications, and several interlocutory appeals concerning survey evidence. The main trial took place before Arnold J, who delivered a detailed judgment on the infringement claim and made further rulings on costs, the form and scope of injunctions, and the use of Google’s keyword matching algorithms. The Defendant appealed against these judgments and orders.

Legal Issues Presented

1. Whether the Defendant's use of the sign "interflora" as a keyword in internet advertising constituted use in the course of trade without the consent of the trade mark proprietor.
2. Whether such use infringed the Claimants' trade marks under Article 5(1)(a) and 5(2) of Directive 89/104/EEC and Article 9(1)(a) and 9(1)(c) of Regulation 40/94, particularly regarding the effect on the origin function of the trade mark and the likelihood of confusion.
3. The correct legal test and burden of proof applicable to trade mark infringement claims arising from keyword advertising.
4. The admissibility and weight of various forms of evidence, including academic articles, witness statements, and consumer behaviour data.
5. The appropriateness, scope, and territorial extent of injunctive relief, including the obligation to use negative matching of keywords.

Arguments of the Parties

Appellant's Arguments

• The judge erred in his application of the reasonably well-informed and reasonably observant internet user test by effectively considering a population with varying knowledge rather than a single hypothetical average consumer.
• The judge wrongly reversed the burden of proof, imposing on the Defendant the obligation to prove absence of confusion rather than requiring the Claimants to prove infringement.
• The doctrine of initial interest confusion has no place in EU trade mark law and was wrongly applied.
• The judge improperly admitted and relied on academic articles and the evidence of a witness whose opinion had been excluded.
• The Hitwise report and related evidence were misinterpreted and wrongly relied upon to infer confusion.
• The injunction granted was overly broad, lacked specificity, improperly required negative matching of the term "interflora", and extended to the entire EU without sufficient justification.
• The Defendant’s bidding on generic flower-related terms without negative matching does not constitute use of the sign "interflora" and thus cannot amount to infringement.

Appellee's Arguments

• The judge correctly applied the legal tests and principles established by the Court of Justice of the European Union (CJEU) regarding keyword advertising and trade mark infringement.
• The judge’s assessment of evidence and factual findings were reasonable and should not be disturbed on appeal.
• The Claimants established that a significant proportion of consumers were likely to be confused as to the origin of the services advertised by the Defendant.
• The injunction and its territorial scope were appropriate and consistent with EU law and relevant case law.
• The Defendant’s failure to negatively match the term “interflora” in relation to generic keywords constituted use of the sign as a keyword within the meaning of the Directive and Regulation.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by outlining the legal framework governing trade mark infringement claims under Directive 89/104/EEC and Regulation 40/94, focusing on the conditions necessary to establish infringement, including use of a sign identical to the trade mark, use in the course of trade, lack of consent, identity of goods or services, and effect on trade mark functions.

It reviewed relevant CJEU jurisprudence, particularly the Google France and Interflora (CJEU) decisions, which clarified that use of a trade mark as a keyword constitutes use in the course of trade by the advertiser. The court emphasized that infringement under Article 5(1)(a) requires an adverse effect on one of the trade mark’s functions, notably the origin function, assessed from the perspective of the reasonably well-informed and reasonably observant internet user (the average consumer).

The court rejected the trial judge’s view that the evidential burden shifts to the third party advertiser to prove absence of confusion, reaffirming that the burden of proof lies with the trade mark proprietor to establish infringement.

Regarding the average consumer test, the court explained that the average consumer is a hypothetical legal construct whose presumed expectations guide the assessment. While the test is not statistical, the court may properly consider the effect of the advertising on a significant proportion of the relevant public. The court clarified that findings of confusion among a significant section of consumers may justify a finding of infringement even if a majority are not confused.

The court disapproved the trial judge’s reliance on the doctrine of initial interest confusion, considering it unnecessary and potentially misleading in the EU trade mark context, especially in keyword advertising cases.

On evidential issues, the court upheld the trial judge’s admission of academic articles under the Civil Evidence Act but criticized the judge’s reliance on the opinion evidence of a witness whose opinion had been excluded. It also found error in the weight given to the Hitwise consumer behaviour data, given the data’s inability to reveal consumers’ state of mind or confusion, and the judge’s failure to explain his reasoning adequately after rejecting the expert’s evidence.

The court considered the Defendant’s use of Google’s keyword matching algorithms, including advanced broad matching without negative matching, and held that such conduct could amount to use of the trade mark sign in the course of trade if it had the object and effect of displaying advertisements in response to searches for the trade mark. This was consistent with CJEU jurisprudence on use in keyword advertising.

Regarding injunctive relief, the court noted the need for proportionality and recognized the competing interests of protecting trade mark rights and preserving legitimate competitive advertising. It accepted the trial judge’s reasoning on the territorial scope of the injunction, consistent with CJEU guidance that such injunctions generally extend EU-wide unless limited by evidence.

Ultimately, the court found that the trial judge’s errors, particularly on burden of proof, the application of the average consumer test, reliance on inadmissible evidence, and the weight given to consumer behaviour data, were significant enough to undermine confidence in the judgment. Accordingly, the court allowed the appeal and ordered a retrial of the infringement claims.

Holding and Implications

ALLOWING THE APPEAL AND REMITTING THE CASE FOR RETRIAL

The court’s core ruling is to allow the Defendant’s appeal against the judgments and orders of the trial judge and to remit the claims for infringement under Article 5(1)(a) of Directive 89/104/EEC and Article 9(1)(a) of Regulation 40/94 for retrial. The decision recognizes the importance of correct application of the burden of proof, the average consumer test, and proper evaluation of evidence in trade mark infringement cases involving keyword advertising.

The direct effect on the parties is that the trial judge’s findings of infringement and related orders, including the injunction, are set aside pending the retrial. No new precedent altering the substantive law is established; rather, the case underscores the necessity of careful legal and evidential analysis in complex trade mark disputes involving internet advertising.