Interflora v Marks & Spencers Plc

JurisdictionEngland & Wales
JudgeTHE HON MR JUSTICE ARNOLD,MR JUSTICE ARNOLD
Judgment Date22 May 2009
Neutral Citation[2009] EWHC 1095 (Ch)
Date22 May 2009
CourtChancery Division
Docket NumberCase No: HC08C03440

[2009] EWHC 1095 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Before: The Hon Mr Justice Arnold

Case No: HC08C03440

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

Simon Malynicz (instructed by Pinsent Masons LLP) for the Claimants

Emma Himsworth (instructed by Osborne Clarke) for the First Defendant

Hearing dates: 27 March, 27 April 2009

Further written submissions: 1, 12, 15 May 2009

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

MR JUSTICE ARNOLD:

Introduction

1

This is another case about Google AdWords and registered trade marks. It is one of a considerable number of cases around Europe in which trade mark owners are complaining that the sale of keywords by Google to third parties infringes their rights. Such cases have been brought against both Google itself and against advertisers. Given that both European trade mark law and European law with regard to the liability of internet service providers are substantially harmonised, this is a question upon which, subject to one qualification, there ought to be a common European set of answers to the issues that arise in such cases. That common European set of answers can only be provided by the Court of Justice of the European Communities. As I shall explain below, a number of national courts around Europe have already requested preliminary rulings from that Court on a number of these issues under Article 234 EC. It is to be hoped that the Court will give a clear set of answers as soon as possible.

2

The qualification is that, as I shall explain, since May 2008 Google has had a different policy in the United Kingdom and Ireland to its policy elsewhere in Europe. That in itself is fairly remarkable given that the relevant law is, or should be, essentially the same throughout Europe. It may mean, however, that the common European set of answers must be amplified or qualified so far as the position in the United Kingdom and Ireland is concerned.

The parties

3

The First Claimant is a company incorporated in the State of Michigan, USA. It operates the largest flower delivery network in the world. The Second Claimant is a private unlimited company incorporated in England and Wales. The Second Claimant is a licensee of the First Claimant. For present purposes there is a no need to distinguish between them, and I shall refer to them collectively as “Interflora”.

4

The First Defendant is a public limited company incorporated in England and Wales. It is one of Britain's largest retailers. It retails a wide range of goods, and supplies services, both through a large number of stores and online via its website at www.marksandspencer. com. I shall refer to it as “M & S”. Among its other activities, M & S sells and delivers flowers in competition with Interflora.

5

The Second Defendant is a private limited company incorporated in England and Wales. It too sells and delivers flowers in competition with Interflora. I shall refer to it as “Flowers Direct”. By a consent order in Tomlin form dated 26 March 2009, Interflora and Flowers Direct settled the dispute between them. Since then, Interflora's claim has only concerned M & S.

6

It is worth emphasising that neither Google Inc nor Google UK Ltd nor any of Google Inc's other subsidiaries or affiliates is a party to these proceedings. I shall refer to Google Inc and its subsidiaries and affiliates collectively as “Google”.

The Trade Marks

7

Interflora is the 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 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.

8

There is no dispute as to the validity of either of the Trade Marks.

9

Nor is there is any dispute that the Trade Marks have acquired a substantial reputation in the United Kingdom and elsewhere in the Community in relation to flower delivery and the operation of a flower delivery network.

The facts

10

Save with regard to certain points identified below, there is little or no dispute between the parties as to the facts as opposed to the legal consequences of those facts. The facts as they appear from the statements of case and the evidence on the application before me are set out below. Although it is possible that the facts found at trial upon full evidence might differ in minor respects from the account which follows, I am satisfied that it is unlikely that there would be significant differences.

Interflora's flower delivery network

11

As I have said, Interflora operate the largest flower delivery network in the world. Interflora have operated their network in the United Kingdom since the 1950s. The Interflora network is a network of florists, each of which trades under and by reference to its own trade mark, but which also trades under and by reference to the Trade Marks. Orders may be placed either in person or by telephone with one member of the network (typically a member close to where the person placing the order lives) for fulfilment by another member of the network (usually the member closest to the address to which the flowers are to be delivered). The order is then transmitted from the first member to the second member. It follows that members of the network both have their own individual reputations under their own trade marks and benefit from the reputation of the Trade Marks built up by Interflora and their members. At present there are 1,773 members of the network in the United Kingdom.

12

Interflora also operate an online flower delivery service which enables orders to be placed via the internet, again for fulfilment by the member closest to the address to which the flowers are to be delivered. This is operated via a website located at www.interflora.com which resolves to country-specific websites such as www.interflora.co.uk.

M & S's flower delivery service

13

M & S operates a flower delivery service via its website which enables orders to be placed online. M & S is not a member of the Interflora network.

Google AdWords

14

Google operates a well-known internet search engine and provides a number of other services via the internet. Google's principal source of revenue is advertising. The principal way in which Google provides advertising is by means of a service Google calls AdWords. AdWords operates in the following manner.

15

When the Google search engine carries out a search, it shows the user two types of links to third party webpages in the search results. The first type, referred to as “natural” or “organic” links, are links to websites assessed to be relevant to the search query by the search engine's algorithm sorted in order of relevance. Although there are various ways in which website operators can and do seek to influence their position in the “natural” search results, in principle the ranking is an objective one based solely on relevance. By contrast, the second type of link, referred to as “sponsored links”, are a form of advertising which are displayed because the website operator has paid for them to appear. Sponsored links are generally displayed in a separate section of the search results page, at the top and/or at the side.

16

A sponsored link is displayed when the user enters one or more particular words into the search engine. These words, which are referred to as keywords, are selected by the advertiser in return for the payment of a fee calculated in the manner described below. This is often referred to as “purchasing” the keywords.

17

A sponsored link consists of three elements. The first is an underlined heading which functions as a hyperlink. That is to say, when the user clicks on the link, the user's browser is directed to the advertiser's website. The hyperlink may consist of or include the keyword or it may not. The second element consists of some promotional text, which may or may not include the keyword. The third element consists of the URL of the advertiser's website. It should be noted that the URL does not function as a hyperlink (although the user could type it or cut-and-paste it into his or her browser and access the website in that way).

18

The way in which the advertiser pays for this form of advertising is that the advertiser pays a certain amount each time a user clicks on the hyperlink in its sponsored link and thus is directed to the advertiser's website. Accordingly, the advertiser does not pay for the display of sponsored links to users who do not click on the sponsored link. The amount the advertiser pays is calculated on a “cost per click” basis for each keyword purchased subject to a maximum daily limit specified by the advertiser. If the daily limit is exceeded, the sponsored link will not be displayed.

19

More than one person can purchase each keyword. Where more than one person purchases a particular keyword, there is a bidding process whereby the advertiser who bids the highest cost per click has...

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