Interflora, Inc. and Another v Marks and Spencer Plc and Another

JurisdictionEngland & Wales
CourtChancery Division
JudgeThe Hon Mr Justice Arnold,Mr Justice Arnold
Judgment Date12 June 2013
Neutral Citation[2013] EWHC 1291 (Ch),[2013] EWHC 1484 (Ch)
Docket NumberCase No: HC08C03340

[2013] EWHC 1291 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Rolls Building

Fetter Lane, London, EC4A 1NL

Before:

The Hon Mr Justice Arnold

Case No: HC08C03340

Between:
(1) Interflora, Inc.
(2) Interflora British Unit
Claimants
and
(1) Marks and Spencer Plc
(2) Flowers Direct Online Limited
Defendants

Michael Silverleaf QC and Simon Malynicz (instructed by Pinsent Masons LLP) for the Claimants

Geoffrey Hobbs QC and Emma Himsworth QC (instructed by Osborne Clarke) for the First Defendant

Hearing dates: 15 18 and 22 April 2013

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

The Hon Mr Justice Arnold Mr Justice Arnold

Contents

Topic

Paragraphs

Introduction

1–2

The Trade Marks

3–4

The witnesses

5–17

Interflora's witnesses

5–10

M & S's witnesses

11–17

Factual background

18–165

The UK flower market

18–20

Interflora

21–65

Inc

21–22

FTD

23

Fleurop

24

Trade mark licences

25

IBU

26–30

The Interflora network in the UK

31–39

Interflora orders in the UK

40–47

The international Interflora network

48–49 IBU's marketing 50

IBU's keyword advertising

51–53

Interflora brand recognition

54

Interflora customer demographics

55

IBU's commercial partnerships

56–62

Interflora's trade mark enforcement efforts

63–64

Flowers Direct

65–68

Flying Flowers

69

M & S

70–86

M & S's marketing

75

M & S brand recognition

76

M & S customer demographics

77

Loyalty and Customer Insight

76–77

M & S's online service

78

M & S's sales of flowers in store

79

M & S's flower delivery service

80–86

Google AdWords

87–111

Common features

90–99

The May 2008 policy change

100–104

Changes since May 2008

105–111

Bing and Yahoo!

112

Hitwise

113

Searches for "interflora"

114–115

M & S's use of keyword advertising prior to 5 May 2008

116–117

M & S's reaction to Google's policy change

118–132

The growth in M & S's keyword advertising

133

The advertisements which are the subject of the claim

134–137

Effect of Google's policy change on IBU's keyword advertising costs

138–141

Internet literacy generally

142–147

Consumer understanding of keyword advertising

148–160

Incidence of competitive brand keyword bidding

161–165

The law

166–287

Legal context

166–171

The relevance of TRIPS

172–174

Date of assessment

175–176

Article 5(1)(a) of the Directive/Article 9(1)(a) of the Regulation

177–180

Article 5(1)(b) of the Directive/Article 9(1)(b) of the Regulation

181–185

Article 5(2) of the Directive/Article 9(1)(c) of the Regulation

186–193

The "average consumer"

194–224

The effect of keyword advertising on the origin function

226–267

Google France

226–241

BergSpechte

242–247

BANANABAY

248

Portakabin

249–256

L'Oréal v eBay

257–260

Interflora (CJEU)

261–266

Summary

267

The effect of keyword advertising on the advertising function

268–269

The effect of keyword advertising on the investment function

270–274

Keyword advertising and detriment to the distinctive character of the mark

275–277

Keyword advertising, unfair advantage and due cause

278–281

Case law of other Member States concerning keyword advertising

282–287

Assessment

288–323

General points

288–293

Article 5(1)(a)/Article 9(1)(a): effect on the origin function?

294–319

Factors mentioned by the CJEU

294–298

Matters relied upon by Interflora

299–310

Matters relied upon by M & S

311–317

Conclusion

318–319

Article 5(1)(a)/Article 9(1)(a): effect on the investment function?

320

Article 5(2)/Article 9(1)(c): dilution

321

Article 5(2)/Article 9(1)(c): unfair advantage and due course

322–323

Comparative advertising?

324–325

Conclusion

326

Introduction

1

The Claimants (collectively "Interflora") operate the best known flower delivery network in the United Kingdom. They own registered trade marks consisting of the word INTERFLORA. The First Defendant ("M & S") is a very well known retailer. Both parties operate internet websites which take orders for the delivery of flowers. Google operates the best known internet search engine in the UK. M & S pays Google to display advertisements for its flower delivery service on the search engine results page (or SERP) when an internet user uses Google's search engine to search for "interflora" and similar terms (a form of advertising variously referred to as "keyword advertising", "paid search advertising", "pay per click (or PPC) advertising" and "search engine advertising"). Interflora contend that M & S thereby infringes Interflora's trade marks. M & S deny any infringement.

2

This dispute raised complex issues of European trade mark law as well as issues of fact. Accordingly, at a relatively early stage of the proceedings, I referred 10 questions of interpretation of the relevant legislation to the Court of Justice of the European Union by an order dated 22 May 2009 for the reasons given in my judgment of that date: [2009] EWHC 1095 (Ch), [2009] ETMR 54 ("my first judgment"). Subsequently, I withdrew 6 questions by an order dated 29 April 2010 and modified one of the other questions for the reasons given in my judgment of that date: [2009] EWHC 925 (Ch). The CJEU answered the remaining questions in its ruling in Case C-323/09 given on 22 September 2011 [2011] ECR I-0000, [2012] ETMR 1 ("Interflora (CJEU)"). Since then I have heard a series of case management applications, two of which resulted in appeals to the Court of Appeal: [2012] EWCA Civ 1501, [2013] ETMR 11 ("Interflora (CA I)") and [2013] EWCA Civ 319 ("Interflora (CA II)"). The case was finally tried before me in April 2013. I must now find the relevant facts and apply the law as stated by the CJEU to those facts. Because the length of time for which this litigation has been pending, I must make findings with regard to the period from May 2008 to the present.

The Trade Marks

3

The First Claimant Interflora, Inc. ("Inc") is the registered proprietor of the following registered trade marks ("the Trade Marks"):

i) United Kingdom Trade Mark No. 1329840 INTERFLORA registered with effect from 16 December 1987 in respect of various goods and services in classes 16, 31, 35, 38, 39, 41 and 42. These include "natural plants and flowers" in class 31, "advertising services … provided for florists" and "information services relating to the sale of … flowers" in class 35, "transportation of flowers" in class 39.

ii) Community Trade Mark No. 909838 INTERFLORA registered with effect from 19 August 1998 in respect of various goods and services in classes 16, 31, 35, 38, 39, 41 and 42. These include "natural plants and flowers" in class 31, "advertising services … provided for florists" in class 35, "transportation of flowers" in class 39 and "information services relating to the sale of … flowers" in class 42.

4

There is no dispute as to the validity of either of the Trade Marks. Nor does M & S dispute that the Trade Marks have acquired a substantial reputation in the United Kingdom and elsewhere in the European Union in relation to flower delivery and the operation of a flower delivery network.

The witnesses

Interflora's witnesses

5

Michael Barringer has been the Marketing Director of the Second Claimant Interflora British Unit ("IBU") since 2003. He is in charge of all Interflora advertising and marketing in the UK. He gave evidence about IBU's flower delivery business and its reputation and about IBU's keyword advertising.

6

Ann Bampton is the Marketing Projects Manager at IBU. She has been with IBU in various roles for over 35 years. She gave evidence concerning the history of the Interflora brand and the nature of the Interflora network.

7

Nicholas Priest is the Director of Interflora Services at IBU, which is responsible for all members. He joined IBU in January 2009. He gave evidence concerning the members of the network and IBU's relationship with them.

8

Rhys Hughes is President of IBU. He has been Chief Operating Officer since August 2006 and President since May 200He is Managing Director of the UK and Irish operations, among other territories. He gave unchallenged evidence about the transformation of IBU from a trade association into a commercial organisation and about his communications with Sir Stuart Rose and Marc Bolland (former Chairman and current CEO of M & S respectively) concerning this dispute.

9

Adam Rose is Head of Paid Search, UK, at Croud Inc Ltd, an online digital marketing company which manages IBU's keyword advertising. He gave evidence about Interflora's keyword advertising and the impact of M & S's keyword advertising on Interflora.

10

Anang Pandya is a Senior Custom Analyst at Experian Hitwise (as to which, see below). He gave evidence about an analysis of Hitwise's data he carried out on behalf of Interflora for the purposes of these proceedings.

M & S's witnesses

11

Steven Bond is Director of Customer Insight and Loyalty at M & S. He gave evidence concerning the history of the M & S business and its reputation, and specifically the M & S flower business and its reputation.

12

Jack Lemon is an Online Marketing Manager responsible for all UK search engine advertising activity on behalf of M & S. He gave evidence about search engine advertising and about M & S's Google AdWord accounts relating to "interflora" and other variant terms, as well as other flower-related accounts.

13

Anna Del Gesso is Head of Customer Service Centres for M & S. She gave evidence based on searches...

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