Case C-323/09

Interflora Inc

and

Interflora British Unit

v

Marks & Spencer plc

and

Flowers Direct Online Ltd

(Reference for a preliminary ruling from the

High Court of Justice England and Wales, Chancery Division)

(Trade marks – Keyword advertising on the internet – Selection by the advertiser of a keyword corresponding to a competitor’s trade mark with a reputation – Directive 89/104/EEC – Article 5(1)(a) and (2) – Regulation (EC) No 40/94 – Article 9(1)(a) and (c) – Condition that one of the trade mark’s functions be adversely affected – Detriment to the distinctive character of a trade mark with a reputation (‘dilution’) – Unfair advantage taken of the distinctive character or repute of that trade mark (‘free-riding’))

Summary of the Judgment

1.        Approximation of laws – Trade marks – Interpretation of Regulation No 40/94 and Directive 89/104 – Right of a trade mark proprietor to prevent a third party from using an identical sign in relation to identical goods – Aim – Limits

(Council Regulation No 40/94, Art. 9(1)(a); Council Directive 89/104, Art. 5(1)(a))

2.        Approximation of laws – Trade marks – Interpretation of Regulation No 40/94 and Directive 89/104 – Right of a trade mark proprietor to prevent a third party from using an identical sign in relation to identical goods – Advertising in the context of an internet referencing service

(Council Regulation No 40/94, Art. 9(1)(a); Council Directive 89/104, Art. 5(1)(a))

3.        Approximation of laws – Trade marks – Interpretation of Regulation No 40/94 and Directive 89/104 – Trade mark with a reputation – Advertising in the context of an internet referencing service

(Council Regulation No 40/94, Art. 9(1)(c); Council Directive 89/104, Art. 5(2))

1.        It follows from the wording of Article 5(1) of First Directive 89/104 on trade marks and from the 10th 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 on the Community trade mark.

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.

That interpretation of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94 has been further clarified 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.

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.

(see paras 36-38, 40)

2.        Article 5(1)(a) of First Directive 89/104 on trade marks and Article 9(1)(a) of Regulation No 40/94 on the Community trade mark must be interpreted as meaning that the proprietor of a trade mark is entitled to prevent a competitor from advertising – on the basis of a keyword which is identical with the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor’s consent – goods or services identical with those for which that mark is registered, where that use is liable to have an adverse effect on one of the functions of the trade mark. Such use:

- adversely affects the trade mark’s function of indicating origin where the advertising displayed on the basis of that keyword does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services concerned by the advertisement originate from the proprietor of the trade mark or an undertaking economically linked to that proprietor or, on the contrary, originate from a third party;

- does not adversely affect, in the context of an internet referencing service having the characteristics of the service at issue in the main proceedings, the trade mark’s advertising function;

- adversely affects the trade mark’s investment function if it 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.

With regard to the function of indicating origin, 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.

With regard to the advertising function, 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 Union law seeks to establish, its purpose is not, however, to protect its proprietor against practices inherent in competition. 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.

So far as the investment function is concerned, it cannot be accepted that the proprietor of a trade mark may – in conditions of fair competition that respect the trade mark’s function as an indication of origin – prevent a competitor from using a sign identical with that trade mark in relation to goods or services identical with those for which the mark is registered, if the only consequence of that use is to oblige the proprietor of that trade mark to adapt its efforts to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty. Likewise, the fact that that use may prompt some consumers to switch from goods or services bearing that trade mark cannot be successfully relied on by the proprietor of the mark.

(see paras 45, 57-58, 62, 64, 66, operative part 1)

3.        Article 5(2) of First Directive 89/104 on trade marks and Article 9(1)(c) of Regulation No 40/94 on the Community trade mark 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.

(see paras 93-95, operative part 2)