In what will be a setback for most brand-owners, the European Court of Justice has today clarified the circumstances in which bidding on a competitor's brand as a Google Adword may amount to trade mark infringement. In short, it held that this could only be prevented if reasonably informed consumers were likely to be confused or there was a serious chance that the mark would be diluted.

The decision is part of a long-running case brought by Interflora against Marks & Spencer over the latter's practice of bidding on the adword "Interflora" to trigger its own advertisements. The European Court has not said who has won or lost the case, and has now sent it back to the English High Court to decide. But it has provided guidance as to whether there could be an infringement at all.

This is that the main functions of the trade mark may be affected by such use only if it 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".

The Court also indicated that the value of the mark may be damaged if the trade mark owners' own value in the mark and its ability to use it to attract customers is interfered with.

While Interflora may eventually win this particular case because the nature of its service and network means consumers might reasonably think that Marks & Spencer is part of that network, the case is unlikely to be of assistance to many other brand-owners who are trying to stop their competitors bid on their brands as keywords. It is also a helpful decision for Google and other search engines as a different outcome could have damaged the market for AdWords.

The decision could have a profound impact on trade law more generally if courts start using a similar approach in other types of trade mark disputes too. The next battleground may be trying to apply the "reasonably well-informed and observant" user test to bricks and mortar cases. If such a test were used, then some cases may have been decided differently.

22 September 2011