Trade Mark Infringement and Honest Concurrent Use in Keywords Advertising

This article will examine Mr. Justice Carr’s recent judgment in Victoria Plum Ltd v Victorian Plumbing Ltd & Others [2016] EWHC 2911 (Ch), handed down on 18 November 2016. The main issue before the Court concerned the defence of honest concurrent use in the context of keywords advertising.

Keywords Advertising

Online advertising has become an indispensable marketing strategy for businesses nowadays.

One of the most popular services for online advertising is Google AdWords, which allows businesses to display brief advertisements to internet users based on the search engine terms (otherwise known as “keywords”) pre-selected and bid by the businesses.

Whilst keywords advertising is not inherently objectionable, concerns may arise when an advertiser uses and bids for a competitor’s trade mark as a keyword in order to cause its advertisement to appear on the Google search results page when a consumer searches for their competitor’s trade mark.

This is particularly so, and trade mark infringement might be found, if such bidding of a third party’s trade mark as a keyword would cause the average internet user to wrongly perceive the origin of the goods or services so advertised to be originated from the trade mark proprietor.

Trade Mark Infringement in Keywords Advertising  

In Hong Kong, it has been held that there is a serious question to be tried for use of a trade mark as a Google Adword on the basis that such use would adversely affect the origin and investment functions of the mark in question (see Pandora A/S & Other v Glamulet International Ltd & Others HCA 2941/2015, unrep., dated 26 July 2016 at para. 117 per DHCJ Sakhrani).

Insofar as UK and EU case law is concerned, the early case of Reed Executive Plc v Reed Business Information Ltd [2004] RPC 40 concerned the use of the word REED as a keyword for generating advertising online and as a metatag on the website. Based on the particular evidence before the Court, the trade mark infringement claims and the passing off claim were rejected. Jacob LJ raised the questions as to whether the use of a trade mark as a metatag or as an advertising keyword would constitute use and whether such use would be capable of affecting the functions of a trade mark since consumers would not be aware of such use by the defendant.

Jacob LJ’s questions were addressed in Google v Louis Vuitton C-236/08, C-237/08 and C-238/08 [2010] RPC 19 where the Court of Justice of the European Union (“CJEU”) held that bidding on a mark identical with another’s trade mark as a keyword would constitute use in the context of commercial activity. The CJEU further held that the use of a third party’s mark as an advertising keyword would affect the origin or other function of the mark “where that advertisement did not enable an average internet user, or enabled that user only with difficulty, to ascertain whether the goods or services referred to therein originated from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.” (see H30).

After Google v Louis Vuitton, the case of Cosmetic Warriors v Amazon.co.uk Ltd [2014] FSR 31 examined whether the trade mark “Lush” was infringed when Amazon bid on certain keywords including “Lush” within the Google AdWords service so that Amazon’s advertisement would appear on the Google search engine results page when internet users google “Lush”. John Baldwin QC, sitting as Deputy Judge, held that Lush’s trade mark had been infringed on the basis that the average consumer, looking for Lush soap on the Amazon site, would be unable to ascertain that the goods referred to by the ad were not the goods of or connected with Lush.

Honest Concurrent Use in Keywords Advertising

In Victoria Plum Limited, the Claimant and the First Defendant are bathroom retailers which have been operating exclusively or primarily online. Both had been trading under similar names since 2001.

  • The Claimant traded under the name “Victoria Plumb”, for which it obtained a trade mark registration. The Claimant later changed its name to “Victoria Plum” in July 2015. For the purposes of this case, both parties accepted that nothing turned on the omission of the letter “b” from “Plumb”.
  • The First Defendant traded under the name “Victorian Plumbing”.

The co-existence of both parties came to a head in late 2012 when the First Defendant substantially increased its bidding on the Claimant’s name Victoria Plumb and minor variations of that name as keywords.

The Claimant’s allegations of infringement were based on two categories of search engine advertisements displayed as a result of the First Defendant’s bidding activity:

  • Advertisements that include the Claimant’s trade mark “Victoria Plumb” as a result of Google’s “dynamic keyword insertion” service. This service automatically uploads the consumer’s search term into the advertisement posted by the advertiser if the said term has been purchased.
  • Advertisements that contain the terms “Victoria Plumbing” and/or “Victorian Plumb” and/or “Victorian Plumbing”. The Claimant did not seek to restrain the First Defendant’s use of the name “Victorian Plumbing”.

In relation to the first set of advertisements, the First Defendant conceded that those advertisements constituted trade mark infringement and submitted to judgment and an injunction against further infringement.

However, with respect of the second set of advertisements, while the Defendants admitted that the signs “Victorian Plumbing”, “Victorian Plum” and “Victoria Plumbing” are confusingly similar to the Claimant’s marks, they sought to rely on the defence of honest concurrent use.

The Use Complained Of

 In this case, Carr J found that the signs complained of, that is the signs that the First Defendant bid on as keywords, are identical to, or immaterially different from the Victoria Plum(b) marks. Applying Google v Louis Vuitton, Carr J held that the First Defendant’s bidding activity constituted use of the Claimant’s trade mark in the course of trade.

Whether Use Adversely Affect the Origin Function of the Trade Mark

The next issue Carr J examined was whether such use is likely to affect the origin function of the Claimant’s trade marks.

The Judge considered the test set down by the CJEU in Google v Louis Vuitton, namely whether the second set of advertisements enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from Victoria Plum(b) or an undertaking economically connected to it or, on the contrary, originate from a third party.

It was found that the First Defendant’s bidding activity which led to the display of the second set of advertisements constituted trade mark infringement on the basis that those advertisements did not allow the normal internet user to make such determination without difficulty.

Honest Concurrent Use

Carr J also noted that the CJEU in the Budweiser case (see Budějovický Budvar Narodni Podnik v Anheuser-Busch Inc. C-482/09; [2012] RPC 11) held that, in the context of an invalidity application, where there has been a long period of honest concurrent use of two trade marks and that use neither has nor is liable to have an adverse effect on the essential function of the earlier trade mark, then the proprietor of an earlier trade mark cannot obtain the cancellation of an identical later trade mark.

Upon further reference to the Court of Appeal’s consideration of the Budweiser case, Carr J stated that confusion arising from two undertakings honestly using the same or closely similar marks for a long period of time may have to be tolerated.

However, it was ultimately found that the defence of honest concurrent use could not apply to the First Defendant’s bidding of the Claimant’s trade marks (or minor variation thereof) as keywords for the following reasons:

  • The defence can only entitle a defendant to continue to use its own name or mark but does not allow for the use of the Claimant’s mark.
  • Since the First Defendant has never used the Victoria Plum(b) marks other than bidding on them as keywords, it cannot claim honest concurrent use of those marks because it cannot be said that the marks in question have become the exclusive guarantee of origin of both the Claimant and the First Defendant.

Carr J went on to consider whether the acts complained of by the First Defendant were “honest”. He concluded that such use could not be said to be “honest” because the First Defendant’s acts were inconsistent with its “duty to act fairly in relation to the legitimate interests of the trade mark proprietor” since the decision to increase spending on bidding the Victoria Plum(b) keywords exacerbated the level of consumer confusion and encroached upon the Claimant’s goodwill.

In the premises, the First Defendant is liable for infringement of the Claimant’s “Victoria Plum(b)” trade marks.

Counterclaim: Passing Off

The Defendants counterclaimed for passing off. They contended that the Claimant’s bidding on the name “Victorian Plumbing” as a keyword which caused advertisements containing the text “Victoria Plum(b)” to be displayed must constitute passing off.

The Counterclaim was held to be successful. Carr J found that the First Defendant had sufficient goodwill in the name “Victorian Plumbing” to enable it to bring a passing off action against the use of that name by the Claimant.

Notwithstanding the fact that the Claimant’s bidding activity was much smaller than the First Defendant’s and the finding of a lower likelihood of confusion amongst internet users searching for “Victorian Plumbing” than those looking for ‘Victoria Plum(b)”, Carr J found that there is a propensity for confusion when internet users looking for “Victorian Plumbing” are presented with the Claimant’s advertisements for a business that is unconnected with the First Defendant.

Carr J then held that there was misrepresentation by the Claimant since a substantial proportion of the relevant public are likely to have been misled into believing that the Claimant is, or is connected with, the First Defendant. In the premises, a likelihood of damage was found.

This holding is significant, as it appears to be the first UK case where passing off has succeeded in the context of keywords advertising dispute.

Conclusion

Carr J’s judgment provides welcome exposition on the application of the honest concurrent use defence in the context of keywords advertising.

One noteworthy take-away from this judgment is that where two undertakings have co-existed and traded under same or similar names for a long period of time, it is important for both undertakings to maintain the status quo and not to carry out activities which would potentially further the level of consumer confusion and encroach on each other’s goodwill.

More importantly, when engaging in keywords advertising, businesses should ensure that their advertisements are clear so as to avoid the average internet users from having difficulties ascertaining the origin of the goods or services in question.

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