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In 2009, the British High Court was asked to weigh in on the long-standing dispute between Interflora and Marks and Spencer, which centered on Marks and Spencer's bidding on 'Interflora' as a Google AdWords keyword. It referred the matter to the European Court of Justice (ECJ).

The Advocate General ECJ has finally answered: Marks and Spencer violated Interflora's trademark.

If the ECJ accepts the Advocate General's findings, it will pretty much be settled: in Europe, bidding on the name or trademark of a competitor will be little more than a strategy for getting sued.

Not surprisingly, Interflora is pleased. In a statement, an Interflora representative writes:

Interflora is very encouraged by the Advocate General’s findings which, if followed by the Court of Justice of European Union, will strengthen consumer protection.

Such a ruling will enable brand holders across Europe to deliver quality service and ensure that trade marks guarantee the origin of the goods bought by consumers online.

Obviously, there's an argument to be made that bidding on a trademark meets the definition of infringement. Earlier this year, a court in the United States came to a similar conclusion, and even awarded damages for lost profits.

Infringement or not, however, the suggestion that consumers are somehow confused by these AdWords ads is questionable.

After all, it's hard to imagine that a significant number of consumers performing a search for 'Interflora' and clicking on an ad for Marks and Spencer are not going to realize that they're not on the Interflora website.

The truth of the matter is that for most companies, bidding on competitors' trademarks is probably a waste of money anyway, assuming of course that you're not intentionally trying to confuse the origin of goods (eg. with a misleading landing page, etc.).

Is it possible that a consumer searching specifically for 'Interflora' might click on a Marks and Spencer ad and make a purchase? Sure. But this is probably not a prime advertising opportunity.

From this perspective, I can't help but think that Interflora may be doing Marks and Spencer a favour by denying it the ability to spend money on ads that aren't likely to be the best performing anyway.

Patricio Robles

Published 25 March, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2392 more posts from this author

Comments (19)

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Matthew Curry

Matthew Curry, Head of Ecommerce at Lovehoney

Hey Patricio, not sure that I agree with the statement about bidding on competitors' trademarks probably being a waste of money. Certainly for most competitive markets, the ability to get competitor's customers eyeballs, explain the differences between you and your competitor, and establish yourself as an alternative, could be financially rewarding.

Hypothetically, if your proposition is strong enough, you could have a higher conversion rate on that term than your competitor does.

over 5 years ago

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Heiner

Now how does this fit to the decisions of the European Court of Justice? Isn't this the complete opposite again?

over 5 years ago

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Bob

Certainly not a waste of money (unless of course you get sued). If you offer a viable alternative then not only will the traffic convert, but the clicks themselves are generally cheaper than bidding on highly competitive generic terms.

over 5 years ago

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Simon

I agree with Matthew, surely it isn't a waste of money. Take car insurance comparison sites, all the aggregators offer exactly the same service, so why woudn't moneysupermarket want to appear when someone queried 'gocompare'?

Just checked the keyword tool, as I expected branded terms were much cheaper than generic phrases such as 'car insurance'.

over 5 years ago

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Paul Maddock

This ruling winds me up a little bit. What exactly is this ruling protecting consumers from? All PPC ads clearly belong to one domain or another, I fail to see how they're infringing on a trademarked term. After all it's meant to be about a trade marked term, not a 'trademarked' space.

Competitor bidding isn't something I usually advocate, but I fail to see how a ruling like this would protect consumers.

Also, Interflora have terrible reviews http://www.reviewcentre.com/reviews54587.html which cheered me up significantly.

over 5 years ago

Jonathan Beeston

Jonathan Beeston, Director, New Product Innovation, EMEA at Media & Advertising Solutions, Adobe

Patricio, your conclusion is wrong. Ads on competitors' keywords are worth it, that's why so many companies engage in the practice.

Granted, it's not huge volume and losing it won't bankrupt any one, but it's definitely profitable to do.

over 5 years ago

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Jeremy Brown

Patricio, those last 3 paragraphs are incorrect.

Competitor terms are generally profitable.

Many, many people do online research before buying. The ability to research competitors is essential for consumers.

Showing up on competitor terms is comparable to Pepsi showing up on the same shelf as Coke in the supermarket. You may go into the store to buy Coke, but change your mind when you see that Pepsi is on sale.

This decision by the Advocate General is short-sighted and anti-consumer.

over 5 years ago

Paul North

Paul North, Head of Content and Strategy at Mediarun

I think this is an interesting legal argument. To what extent can a company claim a right to people who search for their brand name? I can think of many reasons why people might be searching for a company's name. It doesn't necessarily imply that they intend to visit that company's site. In the natural results, search engines will display several other sites that are not owned or controlled by the company because they are deemed relevant to that search term by the algorithm.

I'm inclined to think that if a searcher clicks on a competitor's ad and buys from them instead, it's at least partly because the competitor had a more compelling offer. All's fair in love and advertising...

over 5 years ago

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Andrew Tibber

It would be wrong to conclude (as the title of this article implies) that if the ECJ agrees with the Advocate-General then buying a competitor's trade mark as a keyword will automatically be trade mark infringement.

The ECJ has already held (in the case of Google France)that a paid-for ad triggered by a competitor's keyword may be trade mark infringment if it "does not enable an average internet user ... to ascertain whether the goods or services referred to in the ad originate from the proprietor of the trade mark".

Paid-for ads that include a reference to the competitor trade mark in the ads themselves may therefore be exposed to claims for trade mark infringement, but the situation with ads that make no reference to the trade mark is far less clear.

The Interflora opinion confirms that the act of buying a competitor trade mark as a keyword by itself is NOT trade mark infringement, and that there would be no justification for the ECJ to prohibit such activity in view of the need to promote undistorted competition.

However, the case of Interflora concerned very distinct facts: Interflora operates a worldwide flower delivery network made up of individual florists. In those circumstances, the Advocate-General found there was a risk that a paid-for ad triggered by the Interflora trade mark could confuse consumers into believing that the advertiser was a member of the Interflora network, whether or not the mark Interflora was actually mentioned in the ad.

If the ECJ follows the opinion, other trade mark proprietors who operate similar commercial networks to Interflora may have a stronger case to prevent their trade marks being used as keywords.

However, for other trade mark proprietors the opinion does not change the existing law, and in fact strengthens the position of advertisers. The Advocate-General has confirmed that it is not so-called "free riding" to purchase a 3rd party trade mark as a competitor and that sponsored links can be a legitimate form of competition.

over 5 years ago

Christopher Rose

Christopher Rose, PPC Marketing Director at Rose Digital Marketing

This appears to be a completely stupid ruling.

1. If I have a retail outlet, I can legitimately sell brands and advertise that in a newspaper or other offline medium, so why not online?

2. What about all the businesses that are legitimately selling brands? Are they going to be prevented from advertising that they sell particular brands or products?

over 5 years ago

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Mike Harding

OK but what about a store that caries branded product from suppliers and is a reseller? Will campaigns featuring product brands the stores sells now be classed as a trade mark infringement?

over 5 years ago

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John Onion

Agree with the comments above, sorry Patricio but I think you made the wrong call. Often searches are based on a brand because the searcher is unaware of (or hasn't considered) competitor services. I don't think that they are 100% brand loyal. By bidding on a competitor’s term you are still apturing an audience looking for your services at the time they are looking to purchase.

-I disagree with the decision, however. Can only liken it to a situation where if someone in a crowded market shouts "Does anyone know where Pete's fruit and veg stall is?" would it be illegal for someone else to shout "No but I've got fruit and veg over here"

over 5 years ago

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Andrew Tibber

Mike, Christopher

This opinion, if followed, would NOT prevent retailers from using trade marks of the goods they are selling to advertise those goods, provided such use is in accordance with honest commercial practices and does not fall foul of misleading adverting regulations.

over 5 years ago

Christopher Rose

Christopher Rose, PPC Marketing Director at Rose Digital Marketing

Andrew, you try telling that to Google!

If this decision does go through, I am pretty certain that they will simply ban advertisers from using such terms due to the difficulties involved in establishing exactly who is "in accordance with honest commercial practices and does not fall foul of misleading adverting regulations".

The last time this was an issue, they had a process of requiring advertisers to get written permission from the trademark rights holders, which was painfully difficult to get done for most people and effectively impossible in practice for most businesses.

over 5 years ago

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Andrew Tibber

Google's policy permits use of ads for resale of trademarked goods or services provided such use is not confusing. It clarifies confusion as follows:

"The landing page of the ad must sell (or clearly facilitate the sale of) the goods or services corresponding to a trade mark term. The landing page must also clearly demonstrate that a user is able to purchase the goods
or services corresponding to a trade mark."

over 5 years ago

Christopher Rose

Christopher Rose, PPC Marketing Director at Rose Digital Marketing

True enough, Andrew, but if a trademark holder registers that trademark with Google, that does not apply and Google is notoriously fickle in how it views these things. They have changed their policies many times...

Then there is the whole matter of certain trademark terms that have become generic, effectively forming a vast grey area.

Another key issue here is that once again law is being extended where it might not necessarily need to go. As you are a lawyer, I suspect your views may vary...

over 5 years ago

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Andrew Tibber

I act for both advertisers and trade mark holders, and in my experience there is confusion on both sides as to the extent to which use of trade marks as keywords and in visible ad text can and cannot be prohibited. It is an evolving area of law and a potential legal minefield - if anyone reading this would like advice, please feel free to contact me.

over 5 years ago

Christopher Rose

Christopher Rose, PPC Marketing Director at Rose Digital Marketing

And obviously there is confusion between what constitutes dialogue and what is spam-esque self-promotion!

;-)

over 5 years ago

Joel Chudleigh

Joel Chudleigh, Director at Deep Foot Prints Online Marketing Ltd

Hi Patricio
Sorry, but I also think that you made some poor calls on this article, originally starting with the title - it is misleading - you are stating a fact and at this stage it is just an opinion of one (very influential I will give you) person.
Anyway, I was looking into this the other day and started looking around Google's policies pages and noticed that they have removed the page/s detailing their policies on brand bidding! Maybe they were only there temporarily following their May 2008 UK trademark policy change or have they recently decided to try and lay low and out of the firing line on this one?
I also think that brand bidding is fine in many circumstances; it is good healthy competition and if it didn't make commercial sense for competitors then they wouldn't do it. How to stop it? Improve your product/service and the customer service that surrounds it.
Google own the search results pages and no brand owns a page in there even if it is their brand term results page. It is a grey area but I am on the side of competition in this case.

over 5 years ago

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