Cosmetic Warriors Win Trade Mark Battle Against Retail Giant Amazon

Background

It has, to date, been difficult for businesses to show trade mark infringement in the use of services such as Google AdWords. Google AdWords is an online advertising service which allows bidders to place an advertisement on the Google results page when certain keywords are entered into the search engine by consumers. This is known as 'keyword advertising'.

There has been controversy previously, as demonstrated in the Interflora v Marks & Spencer case, over the use of keywords that are trade marked in relation to goods or services. On the basis that search engine operators are often not using the trade marks in the course of trade themselves, there has been a lack of clarity in relation to what constitutes trade mark infringement and given the costs involved, it is often avoided. 

In Cosmetic Warriors Ltd and another v Amazon.co.uk Ltd and another, the court has taken the opportunity to clarify the circumstances in which the use of a trade mark in relation to keyword advertising and website search results will constitute an infringement. The court has importantly demonstrated that it is not afraid of finding against major e-commerce retailers such as Amazon.

The three classes of alleged infringement

John Baldwin QC, sitting as a deputy judge, held that Amazon.co.uk Ltd and Amazon EU SARL (together 'Amazon') had infringed the Community trade mark 'Lush' belonging to Cosmetic Warriors Ltd and Lush Ltd, (together 'Lush') under Article 5(1)(a) of the Trade Marks Directive 2008/95 EC.

Lush brought three classes of alleged infringement:

  • the first class concerned keyword advertising by Amazon through the Google AdWords service which included the trade mark 'lush';
  • the second class concerned keyword advertising by Amazon through the Google AdWords service which did not expressly include the trade mark 'lush'; and
  • the third class concerned search results delivered on Amazon's own website when a consumer entered the word 'lush' into the search bar.

Importantly, in the first two classes of alleged infringement, there was no overt message to explain that Lush products were not available for purchase on the Amazon website. The deputy judge noted that, following the Google France case, keyword advertising could constitute use of the trade mark in the course of trade. The question to be asked is, whether one of the functions of the trade mark is adversely affected by that use.

The first class of infringement – sponsored adverts for Amazon containing "Lush"

Amazon had secured keyword advertising to generate a sponsored link to its website when a consumer typed the word 'lush' into the search bar of the Google search engine. The deputy judge held that the average consumer would expect to find Lush products available on Amazon's website as a result of seeing the sponsored advertisement. The reasoning for this judgment pivoted on the consumer's perception of Amazon as a reliable supplier of a wide range of goods, which would not advertise products that it did not have available for purchase. It was therefore held that Amazon had infringed Lush's trade mark in this class.

The second class of infringement – sponsored adverts for Amazon that did not contain 'lush'

The deputy judge held (distinguishing the facts of Interflora v Marks & Spencer) that the average consumer was aware of sponsored links and would view Amazon's advertisement as just another company offering similar products to those searched for. The deputy judge acknowledged that consumers would expect an advertisement for Lush products to include reference to the word 'lush', therefore he rejected Lush's allegation of infringement.

The third class of infringement – use of 'lush' on Amazon's website

The third class of alleged infringement (and arguably the most important to Amazon) concerned the search results delivered on Amazon's own website when a consumer entered the word 'lush' into the search bar. The deputy judge highlighted the two issues to this infringement – the use in the course of trade and whether this affected the function of the trade mark. Amazon argued that the consumer was at the core of the Amazon search process and that Lush's attempt to remove that control would restrict competition. The deputy judge contended that:

 "the right of the public to access technological development does not go as far as to allow a trader such as Amazon to run rough shod over intellectual property rights".

The deputy judge held that when a consumer chooses to type the word 'lush' into the Amazon search engine, Amazon was not using this trade mark in the course of trade. However, in the instances where Amazon's sophisticated software was utilised to predict a consumer's search terms or create a repeat of the word in the related searches line, this was use in the course of trade. The deputy judge noted expert evidence that the average consumer would expect that the products suggested via a drop-down menu would be the original products and not those of competitors.

The third class of alleged infringement therefore centred on whether the use of Lush's trade mark by Amazon damaged the origin, advertisement and investment functions of the trade mark. The deputy judge held the following:

  • Origin - The average consumer would not be able to ascertain, without difficulty, that the goods which were displayed did not originate from Lush. This situation was different to the sponsored advertisements in the first two classes of alleged infringement as a consumer on Amazon's website has an initial expectation that the products were original Lush products.
  • Advertisement - Amazon's use of the trade mark to attract consumers' attention to third party goods without qualification was damaging to Lush's reputation and marketing efforts. 
  • Investment - Lush operated an ethical trading business which had consciously avoided selling its products on Amazon due to its unethical reputation, perceived by many consumers.

The impact of the decision

This judgment has given welcome clarity on several points. Use in the course of trade in relation to the online marketplace has been further discussed. The deputy judge stated that it was clear from the cases of Google France and L'Oreal v eBay  (although different on the facts) that if third party sellers were using the trade mark on their goods and Amazon was merely the online marketplace, it would not be using the trade marks in the course of trade. As Amazon was both the designer and operator of its search engine which it used to maximise sales, the deputy judge was satisfied that this was a commercial communication by Amazon. This extended beyond a service which enabled customers of its website to display signs corresponding to trade marks. This did therefore constitute use in the course of trade.

The deputy judge also clarified the use of trade marks in keyword advertising through services such as Google AdWords and also on a company's own website. Three key points can be taken from the decision:

  • third party trade marks cannot be used as a keyword and in the related sponsored advertisement when the goods under that trade mark are not available for sale on the advertiser’s website;
  • third party trade marks may be used as keywords as long as the sponsored advertisement does not incorporate those trade marks, the reason being that consumers are familiar with sponsored advertisements from competitors; and 
  • use of a third party’s trade mark as a search term on the advertiser’s website may infringe the third party’s rights if the goods under those trade marks are not available for sale. In fact advertisers should go one step further and make the customer aware that the goods are not available on the advertiser’s website.

The wider effect of this judgment may be minimal, noting that Amazon is intending to appeal the decision. However, in the interim this case indicates that sponsored links and AdWords can be used in relation to competitor's goods but use of a trade mark should be avoided.  As the deputy judge placed weight on the reliability and wide product range offered by Amazon, it is evident that the expectations attached to the average consumer are still likely to vary on a case-by-case basis. For businesses who are concerned that larger retailers' advertising may capitalise on their trade marks, this case should encourage them to look into how their trade marks are being used and consider whether such use should be challenged.

This case does demonstrate the court's willingness to take a bold approach to the activities of one of the largest online retailers. This judgment offers greater clarity and peace of mind to businesses in relation to when they may be successful in litigation and therefore should incur the extensive costs of issuing proceedings. It will be interesting to see how Lush fares if this decision is simply the first pitched battle of a continuing conflict.

For further information on the issues raised in this article, please contact Tim Richards, Partner at tim.richards@michelmores.com or Associate David Thompson at david.thompson@michelmores.com.