England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		29 April 2010

MR. JUSTICE ARNOLD :

Introduction

1. By order dated 16 July 2009 I referred the following questions to the Court of Justice of the European Union under Article 234 EC, now Article 267 TFEU:

"(1) Where a trader which is a competitor of the proprietor of a registered trade mark and which sells goods and provides services identical to those covered by the trade mark via its website (i) selects a sign which is identical (in accordance with the Court's ruling in Case C-291/00) with the trade mark as a keyword for a search engine operator's sponsored link service, (ii) nominates the sign as a keyword, (iii) associates the sign with the URL of its website, (iv) sets the cost per click that it will pay in relation to that keyword, (v) schedules the timing of the display of the sponsored link and (vi) uses the sign in business correspondence relating to the invoicing and payment of fees or the management of its account with the search engine operator, but the sponsored link does not itself include the sign or any similar sign, do any or all of these acts constitute 'use' of the sign by the competitor within the meaning of Article 5(1)(a) of First Council Directive 89/104/EEC of 21 December 1988 ('the Trade Marks Directive') and Article 9(1)(a) of Council Regulation 40/94 of 20 December 1993 on the Community trade mark ('the CTM Regulation')?

(2) Is any such use 'in relation to' goods and services identical to those for which the trade mark is registered within the meaning of Article 5(1)(a) of the Trade Marks Directive and Article 9(1)(a) of the CTM Regulation?

(3) Does any such use fall within the scope of either or both of:

(a) Article 5(1)(a) of the Trade Marks Directive and Article 9(1)(a) of the CTM Regulation; and

(b) (assuming that such use is detrimental to the distinctive character of the trade mark or takes unfair advantage of the repute of the trade mark) Article 5(2) of the Trade Marks Directive and Article 9(1)(c) of the CTM Regulation?

(4) Does it make any difference to the answer to question 3 above if:

(a) the presentation of the competitor's sponsored link in response to a search by a user by means of the sign in question is liable to lead some members of the public to believe that the competitor is a member of the trade mark proprietor's commercial network contrary to the fact; or

(b) the search engine operator does not permit trade mark proprietors in the relevant Member State of the Community to block the selection of signs identical to their trade marks as keywords by other parties?

(5) Where the search engine operator (i) presents a sign which is identical (in accordance with the Court's ruling in Case C-291/00) with a registered trade mark to a user within search bars located at the top and bottom of search pages that contain a sponsored link to the website of the competitor referred to in question 1 above, (ii) presents the sign to the user within the summary of the search results, (iii) presents the sign to the user by way of an alternative suggestion when the user has entered a similar sign in the search engine, (iv) presents a search results page to the user containing the competitor's sponsored link in response to the entering by the user of the sign and (v) adopts the user's use of the sign by presenting the user with search results pages containing the competitor's sponsored link, but the sponsored link does not itself include the sign or any similar sign, do any or all of these acts constitute 'use' of the sign by the search engine operator within the meaning of Article 5(1)(a) of the Trade Marks Directive and Article 9(1)(a) of the CTM Regulation?

(6) Is any such use 'in relation to' goods and services identical to those for which the trade mark is registered within the meaning of Article 5(1)(a) of the Trade Marks Directive and Article 9(1)(a) of the CTM Regulation?

(7) Does any such use fall within the scope of either or both of:

(a) Article 5(1)(a) of the Trade Marks Directive and Article 9(1)(a) of the CTM Regulation; and

(b) (assuming that such use is detrimental to the distinctive character of the trade mark or takes unfair advantage of the repute of the trade mark) Article 5(2) of the Trade Marks Directive and Article 9(1)(c) of the CTM Regulation?

(8) Does it make any difference to the answer to question 7 above if:

(a) the presentation of the competitor's sponsored link in response to a search by a user by means of the sign in question is liable to lead some members of the public to believe that the competitor is a member of the trade mark proprietor's commercial network contrary to the fact; or

(b) the search engine operator does not permit trade mark proprietors in the relevant Member State to block the selection of signs identical to their trade marks as keywords by other parties?

(9) If any such use does fall within the scope of either or both of Article 5(1)(a) of the Trade Marks Directive/Article 9(1)(a) of the CTM Regulation and Article 5(2) of the Trade Marks Directive/Article 9(1)(c) of the CTM Regulation:

(a) does such use consist of or include 'the transmission in a communication network of information provided by a receipt of the service', and if so does the search engine operator 'select or modify the information', within the meaning of Article 12(1) of European Parliament and Council Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('the E-Commerce Directive')?

(b) does such use consist of or include 'the automatic, intermediate and temporary storage of information, performed for the sole purpose of making more efficient the information's onward transmission to other recipients of the service upon their request' within the meaning of Article 13(1) of the E-Commerce Directive?

(c) does such use consist of or include 'the storage of information provided by a recipient of the service' within the meaning of Article 14(1) of the E-Commerce Directive?

(d) if the use does not consist exclusively of activities falling within the scope of one or more of Article 12(1), 13(1) and 14(1) of the E-Commerce Directive, but includes such activities, is the search engine operator exempted from liability to the extent that the use consists of such activities and if so may damages or other financial remedies be granted in respect of such use to the extent that it is not exempted from liability?

(10) If the answer to question 9 above is that the use does not consist exclusively of activities falling within the scope of one or more of Articles 12-14 of the E-Commerce Directive, may the competitor be held jointly liable for the acts of infringement of the search engine operator by virtue of national law on accessory liability?"

2. The background to the reference is set out in full in my judgment dated 22 May 2009 [2009] EWHC 1095 (Ch), [2009] ETMR 54. As discussed in that judgment, this is one of a considerable number of trade mark disputes concerning keyword advertising around Europe. In several of those cases questions had been referred to the Court of Justice concerning the interpretation of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks ("the Trade Marks Directive"), now codified as European Parliament and Council Directive 2008/95/EC of 22 October 2008, and of corresponding provisions in Council Regulation 40/94 of 20 December 1993 on the Community trade mark, now codified as Council Regulation 207/2009/EC of 26 February 2009. For the reasons I gave in that judgment, I decided to refer questions as well. The reference was subsequently allocated case number C-323/09.
3. Since then the Court of Justice has delivered judgment on two of the earlier references. On 23 March 2010 the Grand Chamber of the Court of Justice gave judgment in Joined Cases C-236/08 to C-238/08 Google France SARL v Louis Vuitton Malletier SA BAILII: [2010] EUECJ C-236/08. On 25 March 2010 the First Chamber of the Court of Justice gave judgment in Case C-278/08 Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmüller GmbH v Günter Guni and trekking.at Reisen GmbH BAILII: [2010] EUECJ C-278/08.
4. In addition, I have been informed that the Court of Justice will give judgment in Case C-91/09 Eis.de GmbH v BBY Vertreibsgesellschaft mbH next week. Since there has not, so far as I am aware, been a hearing or an Advocate General's Opinion in that case, I infer that the judgment will be by way of reasoned order. It appears that Case C-558/08 Portakabin Ltd v Primakabin BV is still pending. As I understand the position, there has been a hearing in that case, but the Advocate General's Opinion is still awaited.

The request for clarification

5. On 23 March 2010 the Registrar of the Court of Justice wrote to this Court to inform it that the Court had decided pursuant to Article 104(5) of the Rules of Procedure, to request clarification of the reference. The request is in the following terms:

"In the case in question, the national court is requested to state whether, in the light of the Court's judgment of 23 March 2010 in Joined Cases C-236/08 to C-238/08 Google France and Google, it wishes to maintain its reference for a preliminary ruling.

If it does so wish, it is requested to provide the following clarification:

- Does Question 3(b) seek to establish under which circumstances an advertiser which makes use, as an AdWord, of a sign identical to the well-known trade mark of a competitor must be regarded as acting in a manner detrimental to the distinctive character of that trade mark (dilution) and/or as taking unfair advantage of the distinctive character or repute of that trade mark (free-riding)?

- Does the introductory sentence of Question 9 ('If any such use does fall within the scope of either or both of Article 5(1)(a) of the Trade Marks Directive/Article 9(1)(a) of the [Community Trade Mark] Regulation and Article 5(2) of the Trade Marks Directive/Article 9(1)(c) of the [Community Trade Mark] Regulation') mean that, in view of the national court, Articles 12 to 14 of the E-Commerce Directive are of no relevance to the resolution of the case in the main proceedings if it is established that there is no 'use' within the meaning of Article 5 of the Trade Marks Directive and/or Article 9 of the Community Trade Mark Regulation, on the part of the search engine operator? Does the national court wish to retain that introductory sentence of Question 9, having regard, in particular, to paragraph 57 of the abovementioned judgment in Google France and Google?"

6. The Court of Justice asked for a reply to its request by 30 April 2010 at the latest.

Transparency

7. If I may say so, I regard the request for clarification as a helpful step in the dialogue between the Court of Justice and the national courts. As the request indicates, it is appropriate for this Court to take stock in the light of the Court of Justice's judgment in Google France. Furthermore, if the questions referred do not sufficiently clearly articulate the points on which this Court needs assistance from the Court of Justice, then this Court should endeavour to make them clearer.
8. That said, I wish to record that I would have found it easier to respond constructively to the Court of Justice's request if the procedures of the Court of Justice were more transparent in certain respects. Apart from supplying a copy of its judgment in Google France, the Court of Justice did not provide any information to assist this Court to answer its request. In particular, it did not provide any information as to the status of the related references. Nor did it provide copies of any written observations filed by the parties, the Commission or the Member States.
9. The parties have assisted me by providing the information about the related references set out in paragraph 4 above. They have also assisted me by supplying copies of the written observations that have been filed on the present reference. Counsel for Marks & Spencer drew particular attention to the submissions made by the European Commission in its observations, which he contended were significant for the reasons explained below. Because the Court of Justice no longer publishes Reports for Hearing and written observations are not publicly available, however, I do not know whether the Commission made the same or similar submissions in the Google France case. I therefore do not know whether the Court of Justice has already considered and rejected those submissions. If written observations were made publicly available in the way that, for example, briefs to the US Supreme Court are, this kind of problem would not arise.
10. I note that in his Opinion in Joined Cases C-514/07P, C-528/07P and C-532/07P (BAILII: [2009] EUECJ C-514/07_O ) Kingdom of Sweden v Association de la Presse Internationale ASBL Advocate General Poiares Maduro advised the Court of Justice to reverse the judgment of the Court of First Instance in Case T-36/04 [2007] ECR II-3201 regarding the right of access to pleadings lodged by the Commission in pending proceedings before the Court. In particular, he recommended that pleadings in closed cases should normally be accessible. If the Court of Justice were to follow that advice, it would be a step towards resolving difficulties of the kind mentioned above.

Should the reference be maintained?

11. Interflora's position is that, contrary to its previous expectations, the guidance given by the Court of Justice in its judgment in Google France is sufficient to enable this Court to deal with the present case. Accordingly, Interflora suggests that I should withdraw the reference. Marks & Spencer's position is that the guidance given by the Court of Justice in its judgment in Google France is not sufficient to enable this Court to deal with the present case. Accordingly, Marks & Spencer suggests that I should maintain the reference at least so far as questions 1-4 are concerned.

Questions 5-10

12. It is convenient to begin with questions 5-10. Interflora accepts that:

i) It is clear from the judgment of the Court of Justice in Google France that the answer to question 5 is "no": a search engine operator does not "use" the sign in question by such acts.

ii) It follows that there can be no primary liability on the part of Google for trade mark infringement in the circumstances of the present case.

iii) It also follows that Marks & Spencer cannot be jointly liable in respect of any acts of trade mark infringement by Google.

iv) Therefore questions 6-10 do not arise.

13. In the light of Interflora's acceptance of these matters, Marks & Spencer does not suggest that questions 5-10 need to be maintained.
14. Accordingly, I shall withdraw questions 5-10.

Questions 1-4

15. Counsel for Interflora submitted that it is clear from the judgment of the Court of Justice in Google France that:

i) The answer to questions 1 and 2 is "yes".

ii) The answer to question 3(a) is that such use is within the scope of Article 5(1)(a) if the use affects or is liable to affect one of the functions of the trade mark, in particular the origin function.

iii) The answer to question 3(b) is "yes" on the assumption stated.

iv) The answer to question 4(a) is yes, since in those circumstances the origin function is affected.

16. He also submitted that, although question 4(b) had not been answered by the judgment in Google France, it was no longer necessary for this question to be answered.
17. Counsel for Marks & Spencer submitted that it was still necessary for questions 1-4 to be answered. He concentrated in particular on question 3. In summary, he argued as follows. In the present state of the Court's jurisprudence, liability for trade mark infringement under Article 5(1)(a) of the Trade Mark Directive depends critically on whether the impugned use of the sign affects or is liable to affect one of the functions of the trade mark. For inter alia the reasons given in my judgment in L'Oréal SA v eBay International AG [2009] EWHC 1094 (Ch), [2009] ETMR 53 at [283]-[306], it is unclear precisely what the content of this criterion is. Since the date of that judgment, the Court of Justice in Case C-487/07 L'Oréal SA v Bellure NV (BAILII: [2009] EUECJ C-487/07 ) has held that an effect on any of the functions of the trade mark, and not just the origin function, is sufficient to sustain a claim under Article 5(1)(a): see in particular [58], [63] and [65]. This has done little to clarify (i) precisely what the functions of a trade mark are which may be affected by use of a sign, (ii) precisely what is required in order to establish that such functions are liable to be affected in order to found a claim under Article 5(1)(a) and (iii) what the relationship is between a claim under Article 5(1)(a) and a claim under Article 5(2) in a double identity case (i.e. identical mark/sign and identical goods/services). Accordingly, counsel for Marks & Spencer submitted that question 3 should be maintained. So far as question 3(b) is concerned, he submitted that in the light of subsequent events it would be of assistance to delete the parenthesis (i.e. "(assuming that such use is detrimental to the distinctive character of the trade mark or takes unfair advantage of the repute of the trade mark)"), which he suggested was in effect what the Court's request for clarification amounted to.
18. In support of these submissions, counsel for Marks & Spencer prayed in aid the observations of the Commission on the present reference. In those observations the Commission expressed concern that the existing jurisprudence of the Court of Justice (in particular Case C-48/05 Adam Opel AG v Autec AG [2007] ECR I-1017 at [18]-[22], Case C-533/06 O2 Holdings Ltd v Hutchison 3G Ltd [2008] ECR I-4231 and L'Oréal v Bellure) might not have defined the precise scope of the exclusive rights of trade mark proprietors with the required degree of clarity, and suggested that the Court of Justice should take the opportunity presented by this reference to clarify these issues. Furthermore, the Commission suggested that the Court should reconsider its judgment in L'Oréal v Bellure. As I understand its observations, the Commission considers that Article 5(1)(a) is restricted to use which affects or is liable to affect the origin function of the trade mark, while use which only affects or is liable to affect other functions may only be prohibited under Article 5(2).
19. I note that the Commission's observations post-date the Court of Justice's judgment in L'Oréal v Bellure, but pre-date the Court of Justice's judgment in Google France. If the Commission had made similar submissions in Google France, then one would probably have to conclude that they had been rejected by the Court of Justice: see the judgment at [75]-[79]. Given the sequence of events I have referred to, however, the Commission may not have made such submissions in that case. For the reasons explained above, I am uncertain as to whether the Commission did so or not. If the Commission did not make such submissions in that case, then I respectfully suggest that they merit consideration by the Court of Justice.
20. In these circumstances, I am not convinced that the judgment in Google France provides as much clarity on these issues as is desirable. I therefore consider that question 3 should be maintained. I accept that it is desirable for this purpose to clarify question 3(b). My answer to the Court's request for clarification of that question is "yes": question 3(b) does seek to establish under which circumstances an advertiser which makes use, as an AdWord, of a sign identical to the well-known trade mark of a competitor must be regarded as acting in a manner detrimental to the distinctive character of that trade mark (dilution) and/or as taking unfair advantage of the distinctive character or repute of that trade mark (free-riding). As counsel for Marks & Spencer suggests, this clarification can be effected by simply deleting the parenthesis in question 3(b).
21. On the assumption that question 3 is maintained, counsel for Marks & Spencer submitted that questions 1, 2 and 4 should be maintained as well. Although he was disposed to accept that it was clear from the judgment in Google France that some of the acts listed in question 1 amounted to "use" of the sign by the advertiser "in relation to" the relevant goods or services, he submitted that it was not clear whether all the acts listed amounted to "use", or if so whether they were use "in relation" to the goods or services. As for question 4, he submitted that answers to these questions may help to elucidate the answer to question 3. I accept those submissions.
22. Accordingly, I will maintain questions 1-4 save that question 3(b) is clarified as set out in paragraph 20 above.