Interflora Inc. and Interflora British Unit v Marks & Spencer plc and Flowers Direct Online Ltd.
Date: 2011-09-22
22. It is settled case-law that the Court may order the reopening of the oral procedure in accordance with Article 61 of the Rules of Procedure if it considers that it lacks sufficient information or that the case should be examined on the basis of an argument which has not been the subject of debate between the parties (see, inter alia, Case C-284/06 Burda [2008] ECR I‑4571, paragraph 37, and Case C-221/09 AJD Tuna [2011] ECR I‑0000, paragraph 36).
24. So far as the criticisms of the Advocate General’s Opinion are concerned, it should be recalled that, under the second paragraph of Article 252 TFEU, it is the duty of the Advocate General, acting with complete impartiality and independence, to make, in open court, reasoned submissions on cases which, in accordance with the Statute of the Court of Justice of the European Union, require the Advocate General’s involvement. In carrying out that task, the Advocate General may, where appropriate, analyse a reference for a preliminary ruling by placing it within a context which is broader than that strictly defined by the referring court or by the parties to the main proceedings. The Chamber hearing the case is not bound either by the Advocate General’s Opinion or by the reasoning on which it is based (see Case C‑229/09 Hogan Lovells International [2010] ECR I‑0000, paragraph 26, and AJD Tuna , paragraph 45).
30. As the Court has already stated, the sign selected by an advertiser as a keyword in the context of an internet referencing service is the means used by the advertiser to trigger the display of its advertisement and is thus used in the course of trade within the meaning of Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94 (Joined Cases C‑236/08 to C-238/08 Google France and Google [2010] ECR I-2417, paragraphs 49 to 52, and Case C‑278/08 BergSpechte [2010] ECR I‑2517, paragraph 18).
31. That is, furthermore, use in relation to the advertiser’s goods or services, even where the sign selected as a keyword does not appear in the advertisement itself ( BergSpechte , paragraph 19, and order of 26 March 2010 in Case C‑91/09 Eis.de , paragraph 18).
32. Nevertheless, the proprietor of the trade mark cannot prevent the use of a sign identical to its trade mark as a keyword unless all the conditions provided for to that end in Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94 and by the case-law relating thereto are met.
33. The case in the main proceedings falls within the situation referred to in Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, namely the so-called ‘double identity’ situation, in which use by a third party of a sign identical with the trade mark is made in relation to goods or services which are identical with those for which the trade mark is registered. Indeed, it is not in dispute that M & S made use in relation to its flower-delivery service, of, inter alia, the sign ‘Interflora’, which is in substance identical with the word mark INTERFLORA, registered for flower-delivery services.
34. In that situation, the proprietor of the trade mark is entitled to prevent that use only if it is liable to have an adverse effect on one of the functions of the mark ( Google France and Google , paragraph 79, BergSpechte , paragraph 21; see also Case C‑487/07 L’Oréal and Others [2009] ECR I‑5185, paragraph 60, and Case C-558/08 Portakabin [2010] ECR I‑0000, paragraph 29).
35. Interflora submits that that condition must, in accordance with an already established body of case-law, be understood as meaning that paragraph 1(a) of Article 5 of Directive 89/104 and of Article 9 of Regulation No 40/94  protects the trade mark proprietor against any adverse effect on any of the functions of the mark. According to M & S, however, such an interpretation does not follow unambiguously from the case-law and risks creating an imbalance as between the interest in protecting intellectual property and the interest in free competition. The European Commission, for its part, submits that paragraph 1(a) protects the trade mark proprietor solely against acts affecting the mark’s function of providing an indication of origin. In its submission, the trade mark’s other functions can, at most, play a role in the interpretation of Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94, which concern the rights conferred by trade marks with a reputation.
36. It follows from the wording of Article 5(1) of Directive 89/104 and from the tenth recital in the preamble thereto that the laws of the Member States have been harmonised inasmuch as the exclusive right conferred by a trade mark affords the proprietor of the mark ‘absolute’ protection against the use by third parties of signs which are identical with that mark in relation to identical goods or services, whilst, where there is not identity on two counts, only the existence of a likelihood of confusion enables the proprietor to rely successfully on its exclusive right. That distinction between the protection conferred by Article 5(1)(a) and that provided for in Article 5(1)(b) was espoused, so far as the Community trade mark is concerned, by the seventh recital to, and Article 9(1) of, Regulation No 40/94.
37. Although the European Union legislature described as ‘absolute’ the protection against the unauthorised use of signs identical with a trade mark in relation to goods or services identical with those for which the mark is registered, the Court has put that description into perspective by stating that, as extensive as it may be, the protection conferred by Article 5(1)(a) of Directive 89/104 is intended solely to enable the trade mark proprietor to protect its specific interests as proprietor of the mark, that is to say, to ensure that the trade mark can fulfil its functions. The Court has concluded that the exercise of the exclusive right conferred by the trade mark must be reserved to cases in which a third party’s use of the sign adversely affects, or is liable adversely to affect, the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods (see Case C‑206/01 Arsenal Football Club [2002] ECR I‑10273, paragraph 51).
38. That interpretation of Article 5(1)(a) of Directive 89/104 has been restated on many occasions and applied in relation to Article 9(1)(a) of Regulation No 40/94 (see, inter alia, as regards Directive 89/104, Case C‑17/06 Céline [2007] ECR I‑7041, paragraph 16, and Case C‑533/06 O2 Holdings and O2 (UK) [2008] ECR I‑4231, paragraph 57, and, as regards Regulation No 40/94, the order in Case C‑62/08 UDV North America  [2009] ECR I‑1279, paragraph 42, and Google France and Google , paragraph 75). There has been further clarification of that interpretation to the effect that those provisions enable the proprietor of the trade mark to rely on its exclusive right where there is, or is liable to be, an adverse effect on one of the functions of the trade mark, irrespective of whether the function concerned is the essential function of indicating the origin of the product or service covered by the trade mark or one of the other functions of the mark, such as that of guaranteeing the quality of that product or service or that of communication, investment or advertising ( L’Oréal and Others , paragraphs 63 and 65, and Google France and Google , paragraphs 77 and 79).
39. With regard to the functions of the trade mark other than that of indicating origin, it should be noted that both the European Union legislature – by using the words ‘in particular’ in the tenth recital to Directive 89/104 and in the seventh recital to Regulation No 40/94 – and the Court – by using since its judgment in Arsenal Football Club the words ‘functions of the trade mark’ – have indicated that a trade mark’s function of indicating origin is not the only function of the mark that is worthy of protection against injury by third parties. They have thus taken into account the fact that a trade mark is often, in addition to an indication of the origin of the goods or services, an instrument of commercial strategy used, inter alia, for advertising purposes or to acquire a reputation in order to develop consumer loyalty.
40. Admittedly, a trade mark is always supposed to fulfil its function of indicating origin, whereas it performs its other functions only in so far as its proprietor uses it to that end, in particular for the purposes of advertising or investment. However, that difference between the essential function of the trade mark and its other functions can in no way justify – when a trade mark fulfils one or more of those other functions – excluding from the scope of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94 acts adversely affecting those functions. Likewise, there are no grounds for holding that only trade marks with a reputation are capable of having functions other than that of indicating origin.
41. It is in the light of both the foregoing considerations and the more detailed interpretative guidance provided below that it will be for the referring court to consider whether the condition of an adverse effect on one of the functions of the trade mark is met.
42. With regard to the use, in the context of an internet referencing service, of signs identical to trade marks as keywords in relation to goods or services identical to those for which the trade mark is registered, the Court has already held that, in addition to the function of indicating origin, that of advertising may prove relevant (see Google France and Google , paragraph 81). That consideration is equally valid in this instance, Interflora having, however, also claimed that its trade mark’s ‘investment’ function has been adversely affected.
44. The question whether a trade mark’s function of indicating origin is adversely affected when internet users are shown, on the basis of a keyword identical with the mark, a third party’s advertisement, such as that of a competitor of the trade mark proprietor, depends in particular on the manner in which that advertisement is presented. That function is adversely affected 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 ( Google France and Google , paragraphs 83 and 84, and Portakabin , paragraph 34). In such a situation, which is, moreover, characterised by the fact that the advertisement appears immediately after the trade mark has been entered as a search term and is displayed at a point when the trade mark is, in its capacity as a search term, also displayed on the screen, the internet user may be mistaken as to the origin of the goods or services in question ( Google France and Google , paragraph 85).
45. Where a third party’s advertisement suggests that there is an economic link between that third party and the proprietor of the trade mark, the conclusion must be that there is an adverse effect on that mark’s function of indicating origin. Similarly, where the advertisement, while not suggesting the existence of an economic link, is vague to such an extent on the origin of the goods or services at issue that reasonably well-informed and reasonably observant internet users are unable to determine, on the basis of the advertising link and the commercial message attached thereto, whether the advertiser is a third party vis-à-vis the proprietor of the trade mark or whether, on the contrary, it is economically linked to that proprietor, the conclusion must be that there is an adverse effect on that function of the trade mark ( Google France and Google , paragraphs 89 and 90, and Portakabin , paragraph 35).
46. It is for the referring court to assess whether, on the facts of the dispute before it, the trade mark’s function of indicating origin as described in the preceding paragraphs is, or is liable to be, adversely affected (see, by analogy, Google France and Google , paragraph 88).
54. With regard to the advertising function, the Court has already had occasion to state that 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 ( Google France and Google , paragraph 98, and BergSpechte , paragraph 33).
56. In particular, 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 ( Google France and Google , paragraph 94).
57. However, the mere fact that the use, by a third party, of a sign identical with a trade mark in relation to goods or services identical with those for which that mark is registered obliges the proprietor of that mark to intensify its advertising in order to maintain or enhance its profile with consumers is not a sufficient basis, in every case, for concluding that the trade mark’s advertising function is adversely affected. In that regard, although the trade mark is an essential element in the system of undistorted competition which European law seeks to establish (see, in particular, Case C‑59/08 Copad  [2009] ECR I‑3421, paragraph 22), its purpose is not, however, to protect its proprietor against practices inherent in competition.
58. Internet advertising on the basis of keywords corresponding to trade marks constitutes such a practice in that its aim, as a general rule, is merely to offer internet users alternatives to the goods or services of the proprietors of those trade marks (see, to that effect, Google France and Google , paragraph 69).
59. The selection of a sign identical with another person’s trade mark, in a referencing service with the characteristics of ‘AdWords’, does not, moreover, have the effect of denying the proprietor of that trade mark the opportunity of using its mark effectively to inform and win over consumers (see, in that regard, Google France and Google , paragraphs 96 and 97).
Adverse effect on the ‘investment’ function
60. In addition to its function of indicating origin and, as the case may be, its advertising function, a trade mark may also be used by its proprietor to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.
61. Although that function of a trade mark – called the ‘investment function’ – may overlap with the advertising function, it is none the less distinct from the latter. Indeed, when the trade mark is used to acquire or preserve a reputation, not only advertising is employed, but also various commercial techniques.
62. When the use by a third party, such as a competitor of the trade mark proprietor, of a sign identical with the trade mark in relation to goods or services identical with those for which the mark is registered substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty, the third party’s use must be regarded as adversely affecting the trade mark’s investment function. The proprietor is, as a consequence, entitled to prevent such use under Article 5(1)(a) of Directive 89/104 or, in the case of a Community trade mark, under Article 9(1)(a) of Regulation No 40/94.
63. In a situation in which the trade mark already enjoys such a reputation, the investment function is adversely affected where use by a third party of a sign identical with that mark in relation to identical goods or services affects that reputation and thereby jeopardises its maintenance. As the Court has already held, the proprietor of a trade mark must be able, by virtue of the exclusive right conferred upon it by the mark, to prevent such use (Case C-324/09 L’Oréal and Others [2011] ECR I‑0000, paragraph 83).
68. With regard, first, to the applicability of the rules set out in Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94, it is settled case-law that, even though those provisions make express reference only to the situation in which use is made of a sign which is identical with, or similar to, a trade mark with a reputation in relation to goods or services which are not similar to those for which the trade mark is registered, the protection provided for there applies, a fortiori , also in relation to use of a sign which is identical with, or similar to, a trade mark with a reputation in relation to goods or services which are identical with or similar to those for which the mark is registered (see, inter alia, Case C‑292/00 Davidoff [2003] ECR I-389, paragraph 30; Case C‑408/01 Adidas-Salomon and Adidas Benelux [2003] ECR I-12537, paragraphs 18 to 22, and Google France and Google , paragraph 48).
70. With regard, second, to the extent of the protection conferred on proprietors of trade marks with a reputation, it is clear from the wording of the abovementioned provisions that the proprietors of such marks are entitled to prevent the use by third parties, in the course of trade, without their consent and without due cause, of signs identical with or similar to those trade marks where that use takes unfair advantage of the distinctive character or the repute of the trade mark or is detrimental to that distinctive character or repute.
71. The exercise of that right by the proprietor of the trade mark with a reputation is not conditional upon there being a likelihood of confusion on the part of the relevant section of the public ( Adidas-Salomon and Adidas Benelux , paragraph 31, and Case C‑487/07 L’Oréal and Others , paragraph 36). Moreover, in so far as Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94 require there to be some degree of similarity between the trade mark at issue and the sign used by the third party, it is sufficient to note that that condition is met in the present case, given the close correspondence between (i) the sign ‘Interflora’ and the variants used by M & S and (ii) the trade mark INTERFLORA.
72. The types of injury against which Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94 provide protection are, first, detriment to the distinctive character of the trade mark, second, detriment to the repute of that mark and, third, unfair advantage taken of the distinctive character or the repute of the mark, just one of those types of injury sufficing for the rule set out in those provisions to apply (see Case C‑487/07 L’Oréal and Others, paragraphs 38 and 42).
73. Detriment to the distinctive character of a mark with a reputation, also referred to as, inter alia, ‘dilution’, is caused when that mark’s ability to identify the goods or services for which it is registered is weakened, whilst detriment to the repute of the mark, also referred to as, inter alia, ‘tarnishment’, is caused when the goods or services for which the identical or similar sign is used by the third party may be perceived by the public in such a way that the trade mark’s power of attraction is reduced (see Case C‑487/07 L’Oréal and Others, paragraphs 39 and 40).
74. For its part, the concept of ‘taking unfair advantage of the distinctive character or the repute of the trade mark’, also referred to as, inter alia, ‘free-riding’, relates not to the detriment caused to the mark but to the advantage taken by the third party as a result of the use of the identical or similar sign. It covers, in particular, cases where, by reason of a transfer of the image of the mark or of the characteristics which it projects to the goods identified by the identical or similar sign, there is clear exploitation on the coat-tails of the mark with a reputation (Case C‑487/07 L’Oréal and Others, paragraph 41).
84. As the Court has already held, an advertiser which has selected in an internet referencing service a keyword corresponding to another person’s trade mark intends that internet users who enter that word as a search term should click not only on the links displayed which come from the proprietor of the trade mark, but also on the advertising link of the advertiser ( Google France and Google , paragraph 67).
89. It is clear from those particular aspects of the selection as internet keywords of signs corresponding to trade marks with a reputation which belong to other persons that such a selection can, in the absence of any ‘due cause’ as referred to in Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94, be construed as a use whereby the advertiser rides on the coat-tails of a trade mark with a reputation in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of its own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark. If that is the case, the advantage thus obtained by the third party must be considered to be unfair (Case C‑487/07 L’Oréal and Others , paragraph 49).
90. As the Court has already stated, that is particularly likely to be the conclusion in cases in which 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 ( Google France and Google , paragraphs 102 and 103).