W(h)ither the Consumer Interest?Search Engines and Keywords in EU Trade

Mark LawDr Dev Gangjee

Issues Considered Consumer perception - historical basis

for TM infringement1. Are consumer interests still relevant for

keyword based TM infringement? Do other interests get priority?

2. Where consumer interests are relevant, what is law’s constitutive role in building up the average consumer?

3. Does keyword litigation illustrate a broader shift away from the consumer in TM law?

A. The Problem: TMs as Keywords

1. Liability: Advertisers selecting TMs

1a. Imitations: Counterfeits; Replicas & Knockoffs

1a. Official site tops the list

1a. ‘Replica’ Site – FAQ clarifies

1b. Legitimate Competitors

1c. Comparisons & Reseller/Retailer

1c. Comparison: alternatives offered

1c. Retailer: Alternatives offered

2. Liability: Search EnginesGoogle Adwords Programme

2a. Keywords Selection Tool:Descriptive/generic category selection

2b. TMs suggested as keywords

3. Ads and Revenue Model Aim is for unbiased search: ‘Google's

mission is to organise the world's information and make it universally accessible and useful.’

Yet they sell advertising e.g. Google 97%-99% of revenue from Adwords and Adsense programmes

SEOs ‘game’ search factors Google responds by changing the criteria

for search and ranking (interventions)

4. TM Proprietor’s Objections Likelihood of Confusion Free Riding on image/effort Loss of Sales

Unfair free riding or pro-competitive side by side comparisons? Parallels with real world retail?

How do consumers interpret the presentation of sponsored results along with ‘natural’ search results?

Can we assume keyword ads/sponsored results to be inherently misleading (concepts such as initial interest confusion)?

5. Importance of Search Engines Shift to search model of navigation Free (Ad revenue) Indexing the web; getting better at it –

evolution of search engines Useful for searchers (consumers), TM

proprietors Regulatory concerns do surround search

engines, but TM law may be a blunt instrument

How does TM law organise its proprietary rights?

B. Justification & Scope of Protection

6a. Origin Function Rationale: Preserve Communicative

Function of TM Infringement of (narrow) rights to

exclusivity where D’s use of same/similar sign results in LoC

Co-incidence of Proprietor and Consumer (Public) interest; Uncluttered Information in the marketplace

Landes & Posner’s law & economics theory – encourages marketplace efficiency

6b. Origin cont. Arsenal v Reed (C-206/01)

The ‘essential function of a trade mark is to guarantee the identity of origin of the marked goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the goods or services from others which have another origin. For the trade mark to be able to fulfil its essential role in the system of undistorted competition which the [EC] Treaty seeks to establish and maintain, it must offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality..’

6c. Quality HAG II (C-10/89) (AG Jacobs)

‘Trade marks… act as a guarantee, to the consumer, that all goods bearing a particular mark have been produced by, or under the control of, the same manufacturer and are therefore likely to be of similar quality. The guarantee of quality offered by a trade mark is not of course absolute, for the manufacturer is at liberty to vary the quality; however, he does so at his own risk…’

6d. Communication/Advertising Intel v CPM (C-252/07) Jun ‘08 (AG

Sharpston)Well known ‘marks frequently perform functions which go beyond linking goods or services to a uniform source. They present a powerful image of quality, exclusivity, youth… or other reputedly desirable lifestyle attributes, not necessarily associated with specific products but capable of presenting a strong marketing message in itself.’

Image generates and retains custom

6e. Advertising cont. L'Oreal SA v Bellure NV (C-487/07) Feb

‘09 (AG Mengozzi) The ‘“communication”, investment, or

advertising functions’, which ‘arise from the fact that the investment in the promotion of a product is built around the mark’ and are, therefore, ‘values which deserve protection as such, even when there is no abuse arising from misrepresentations about either origin or quality’.”

Investment is required for this image

7. Origin Quality ImageSo what?

What is this new intangible object being created? What are the content and contours of ‘image’?

Who creates it? (Public authorship?) How plastic/fragile? (Lehman Bros.?) Image protection is good for the proprietor; but

what is the consumer or general public interest? Changes in market practice insufficient (ought

from is); Exclusivity for some takes away rights from others; affects freedoms and interest

No boundaries to ‘free riding on image’ Functions are layered but

3 protected independently; boosted by 1, 2 and ‘takes off’

C. The ECJ References

8a. Four+ References

1. France: Google v Louis Vuitton Malletier (C-236/08); Similar references in (C-237/08); (C-238/08)

2. Austria: Die BergSpechte Outdoor Reisen v Günter Guni (C-278/08)

3. Netherlands: Portakabin v Primakabin (C-558/08)

4. Germany: Eis.de GmbH v BBY Vertriebsgesellschaft mbH (C-91/09) (BANANABAY)

5. Potentially UK: Interflora Inc v Marks and Spencer plc [2009] EWHC 1095 (Ch)

8b. Six sets of Issues

1. Threshold question: Is D’s use, ‘use as a TM’/’use likely to affect the functions of a TM’? (Invisible use etc)

2. Double Identity infringement3. LoC infringement4. ‘Dilution’ infringement (Unfair Advantage)5. Defences (TM Law; ISP host safe harbour)6. Residual Role for Unfair Competition Law,

or full harmonisation via TM Law?

9. Double Identity

Art 5(1)(a) TMD. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;

9a. Purpose of this Provision? Advantage: no need to prove confusion Aimed at counterfeiters; presumed

confusion? (e.g. TRIPs) Or ‘absolute’ protection? (e.g. Benelux)

References: Invisible use, so is this ‘use of an

identical sign’ at all? If use is visible but under sponsored

links section, is confusion still presumed?

10. Likelihood of Confusion Test in Art 5(1)(b) TMD: (i) Same/similar

signs; (ii) same/similar g/s; (iii) LoC factors (distinctiveness, consumer sophistication etc)

Reference: Sponsored link context excludes LoC?

Online search behaviour (Goldman etc) Real world supermarket behaviour Initial Interest Confusion; Formalistic, box

ticking to presume confusion? Or continue to anchor the test on contextual

consumer interests and behaviour?

10a. Search: A Complex Process

Goldman ‘Deregulating Relevancy’ (2005)

Stage 1: Objective Formulation (buy something, weather?) Stage 2: Search Provider Selection (search, DNS, click link) Stage 3: Keyword Selection (poor, domain expertise) Stage 4: Search Stage 5: Results Evaluation (preview of filtering content; judging

relevancy is complex; topicality; used to some sorting; educative feedback)

Stage 6: Decision (explore results v new search/engine) Stage 7: Investigation (iterative; on track?; associative learning; ltd.

retracing costs) Stage 8: Objective Satisfaction

NB: Searchers can change provider/keyword at various stages

10b. Inferring Searcher’s Objectives from Keywords - Complex1. Searchers do a poor job of selecting keywords2. Furthermore, Objective Opaqueness – need

contextual clues for meaning (linguistics) e.g. ‘Orange’ or ‘culture’

3. Assuming TM used as signifier for a product, search = request for Pre-purchase (reviews, competitors’ products), Purchase (best price including 3P vendors), Post-Purchase (support, repair, accessories) or Community (clubs) info?

4. Or seeking news on company – employment; investor info; supplier info; general news.

5. Or seeking a 3P with the same TM; dictionary use; place name; typo etc

6. Or using TM as proxy for products

So a range of uses of the trade mark

11. Dilution – Unfair Advantage Cluster of 3 actions in Art 5(2) TMD: detrimental to

distinctive character (blurring); detrimental to repute (tarnishment); takes unfair advantage of DC or R (free riding/unfair advantage)

We live in a world of borrowing & copying So is any advantage/benefit caused by referential

use unfair, or does the advantage have to be harmful to P’s well known mark?

References: Does sale of keywords by search engine violate these provisions? Both search engine and advertiser are benefiting, but is this unfair?

Does purchase of keyword by advertiser constitute UA or are other factors required?

What about purchasing deliberate misspelling keywords? (Do you mean…)

D. L’Oreal’s logic:‘Because You’re Worth It’

Double Identity ‘Dilution’ - Unfair Advantage

12a. The facts Bellure legitimately

manufactured smell-alike perfumes

Used (a) comparison lists and (b) allusive names and packaging for its products

No LoC – different brackets of consumers; vast difference in prices

Attempt: signal qualitative equivalence of scents

Comparison lists and double identity

Packaging and UA

12b. Double Identity

Provision not based on presumed confusion

Any use which affects the functions of a trade mark (whether humble or renowned) is caught by double identity

When is the image/advertising function affected?

How does an average TM have an ‘image’?

12c. Unfair Advantage Regarding the use of allusive packaging and

names by D, mere free riding is sufficient. No need for identifiable harm.

Advantage: transference of an attractive image (assumed from existence of image and link between two signs)

Unfair: Free riding on P’s investment

So protecting investment in image, to the exclusion of any analysis of consumer interest

E. Concluding Observations

Today the EU, tomorrow…? Cautionary tale? Editing out the consumer

from TM law

Why the more extreme Functional approach? Ahistorical reboot of EU TM law in 1989

(a) political compromises in legislative drafting; (b) compromises in adjudication (single opinion; no dissents); (c) History – Civil law interpretative method

Geographical scope of EU TM law (CTM, TMD & 27 members)

Where to from here?

Review of the EU TM Regime

1. Refine the scope of infringement; re-introduce the consumer/public interest

2. Enhance defences (categorical or general)

3. Competition law steps in4. Commercial speech intervention (less

likely)