England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Rolls Building Fetter Lane, London, EC4A 1NL
		12 June 2013

MR JUSTICE ARNOLD :

Introduction

1. On 21 May 2013 I handed down my judgment after the trial of this matter ([2013] EWHC 1291 (Ch), "the trial judgment"), concluding that M & S had infringed Interflora's Trade Marks. On 23 May 2013 I heard argument with respect to a number of consequential issues, one of which concerned the form of the injunction sought by Interflora. I reserved my decision on that question.
2. At the hearing, Interflora sought an injunction in the following form:

"1. The Defendant must not (whether acting by its directors, officers, servants or agents or any of them or otherwise howsoever) infringe United Kingdom Registered Trade Mark number 1329840 or Community Mark number 909838 whether by doing the following acts or otherwise howsoever, that is to say arranging for its sponsored link advertising to appear on any search engine results page by:

1.1 Bidding on any term comprising or containing the word INTERFLORA or any term differing only colourably therefrom, including, without limitation, any term listed in Exhibit JRL 25 to the Witness Statement of Jack Lemon for the Defendant dated 12 March 2013;

1.2 Failing to negative match any such term.

2. The aforesaid injunction shall have effect in the United Kingdom in relation to United Kingdom Registered Trade Mark number 1329840 and shall have effect throughout the territory of the European Union in respect of Community Mark number 909838."

3. M & S did not resist the grant of an injunction, but contended that it should be in the following form:

"1. The Defendant must not (whether acting by its directors, officers, servants or agents or any of them or otherwise howsoever) infringe United Kingdom Registered Trade Mark number 1329840 or Community Mark number 909838 by doing the following acts , that is to say:

1.1(a) Selecting the word INTERFLORA or any word differing from it in respects which are so insignificant that they may go unnoticed by the average consumer of flowers or flower delivery services for use as a keyword to trigger the display of its sponsored link advertising for flowers or flower delivery services on any search engine results page; and

1.1(b) Arranging for its sponsored link advertising for flowers or flower delivery services to be displayed on any search engine results page in response to any such keyword in a form which does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the flowers or flower delivery services referred to by the advertisement originate from the Claimants or an undertaking economically connected to them or, on the contrary, originate from the Defendant.

1.2 For the purposes of the foregoing injunction:

(1) The 'Signs' referred to in paragraph [135] of the Judgement delivered on 21 May 2013 under reference [2013] EWHC 1291 (Ch) shall be regarded as words differing from the word INTERFLORA in respects which are so insignificant that they may go unnoticed by the average consumer of flowers or flower delivery services; and

(2) Sponsored link advertising for the Defendants flower or flower delivery services which includes the text 'Try M&S for a change' or 'Use an alternative. Flowers by M&S' or text to the same substantive effect shall not be regarded as advertising in a form which does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the flowers or flower delivery services referred to in the advertisement originate from the Claimants or an undertaking economically connected to them or, on the contrary, originate from the Defendant.

2. The foregoing injunction shall have effect in the United Kingdom in relation to United Kingdom Registered Trade Mark number 1329840 and shall not have effect outside the United Kingdom in respect of Community Trade Mark number 909838."

4. In the oral argument before me, the difference between these two formulations was treated as giving rise to two main issues. In preparing this judgment, however, I have realised that one of the points made by counsel for M & S in his skeleton argument indicates that the trial judgment did not deal with one aspect of Interflora's claim as clearly as it perhaps should have done (a matter which neither side raised when the trial judgment was circulated in draft). Accordingly, I shall address that first.
5. I would also like to take this opportunity to clarify something I said in the trial judgment at [187]. Having referred at [186] to the fact that the protection under Article 5(2) of the Directive/Article 9(1)(c) of the Regulation extends to cases in which a sign identical with or similar to the trade mark is used in relation to goods or services which are identical with, similar to or not similar to those covered by the trade mark, I said at [187] that four requirements must be satisfied for infringement. If one includes the requirement that the sign be identical with or similar to the trade mark, of course, there are five requirements.

Broad matching without negative matching

6. It can be seen that one of the differences between the respective drafts is that paragraph 1.2 of Interflora's proposed injunction refers to "failing to negative match any such term", whereas M & S's proposal does not. In his skeleton argument for the hearing on 23 May 2013 counsel for M & S submitted as follows:

"13. With regard to paragraph 1.2 of Interflora's proposed draft Order, it must be noted that there is no determination in the Judgment to the effect that failing to negative match (as opposed to positively matching) a keyword can constitute 'use' of a registered trade mark for the purposes of infringement under Article 5(1)(a) TMD/Article 9(1)(a) CTMR.

14. The answers to the questions referred to the CJEU in Case C-323/09 Interflora are all expressed in terms of a keyword 'which has been selected in an internet referencing service'."

7. Interflora's claim mainly concerns M & S's bidding on the Signs by exact match, phrase match and broad match. In addition, however, Interflora complain that M & S also bids on other flower-related terms without negative matching "interflora" (see the trial judgment at [135]). As a result of Google's advanced broad matching algorithm, this can have the result that, when a consumer searches for "interflora", an M & S advertisement is displayed because M & S has bid on, for example, "flower delivery" (see the trial judgment at [96]).
8. At [178] of the trial judgment I stated that there was no dispute that the first five conditions required for infringement under Article 5(1)(a)/Article 9(1)(a) were all satisfied in the present case, which was what I understood to be the position from the arguments presented at trial (and which was not queried by M & S when the trial judgment was circulated in draft). Thus it was my understanding that M & S accepted that it used the sign "interflora" within Article 5(1)(a)/Article 9(1)(a) by arranging for the display of an M & S advertisement whenever an internet user searched for "interflora", whatever the precise keyword and matching algorithm that M & S had chosen to bid on.
9. It appears from paragraphs 13 and 14 of counsel for M & S's skeleton argument quoted above, however, that M & S disputes that it uses the sign "interflora" when it bids on other flower-related keywords by broad matching without negative matching "interflora".
10. As counsel for M & S rightly points out, the CJEU's keyword advertising decisions all refer to the advertiser selecting a keyword which is identical or similar to the trade mark. For example, in Google France the Court of Justice stated:

"51. With regard, firstly, to the advertiser purchasing the referencing service and choosing as a keyword a sign identical with another's trade mark, it must be held that that advertiser is using that sign within the meaning of that case-law.

52. From the advertiser's point of view, the selection of a keyword identical with a trade mark has the object and effect of displaying an advertising link to the site on which he offers his goods or services for sale. Since the sign selected as a keyword is the means used to trigger that ad display, it cannot be disputed that the advertiser indeed uses it in the context of commercial activity and not as a private matter."

See also BergSpechte at [18]-[19], BANANABAY at [17], Portakabin at [27], L'Oréal v eBay at [86]-[87] and Interflora (CJEU) at [31].

11. I accept that the position is different, and less straightforward, in the scenario presently under consideration, because in this scenario M & S has not selected a keyword which is identical with, or even similar to, the Trade Marks. Nevertheless, I consider that M & S does "use" the sign "interflora", albeit in a less direct way. What M & S is doing has the object and effect that a search by a consumer for "interflora" results in the display of M & S's advertisement. Thus the SERP will contain both the sign "interflora" and M & S's advertisement. In my judgment it is immaterial that this is achieved by a technical means which does not involve M & S selecting "interflora" itself as a keyword. I would add that I do not consider that this reasoning is inconsistent with what the CJEU said in Interflora (CJEU) at [47].
12. Furthermore, there can be no dispute that M & S does this in the context of commercial activity and not as a private matter. Thus the use is "in the course of trade". Nor can there be any dispute that the use is "in relation to" goods and services identical to goods and services for which the Trade Marks are registered.
13. On the other hand, it seems to me that paragraph 1.2 of Interflora's draft injunction extends beyond Interflora's pleaded case. Interflora's pleaded case on broad matching without negative matching only relates to "interflora" and not the other Signs: see paragraph 10.10 of the Re-Amended Particulars of Claim. Furthermore, the evidence does not establish that, if M & S broad matches (say) "flowery delivery" and negative broad matches "interflora", then a search for "interflora" will trigger an M & S advertisement because M & S has not negatively matched (say) "intaflora".

Specificity of the injunction

14. The conventional form of injunction to restrain trade mark infringement granted by this Court is a general injunction: "the defendant must not infringe Trade Mark No -". It is not usual to specify the particular acts which are restrained. It will be noted, however, that both of the rival drafts set out above do specify the particular acts which are to be restrained. When I asked counsel for Interflora about this, he stated that Interflora would be content with an injunction in conventional form and did not pursue the request for a more specific injunction. By contrast, counsel for M & S resisted the grant of an injunction in conventional form.
15. In Coflexip SA v Stolt Comex Seaway MS Ltd [1999] FSR 473 Laddie J held in a patent case that the injunction to restrain infringement should specify the particular acts restrained. His decision was overturned by the Court of Appeal ([2001] RPC 9), which granted an injunction in the conventional general form for reasons which Aldous LJ expressed as follows:

"18. When deciding what is the appropriate form of injunction in a patent action, it must be borne in mind that the injunction is being granted to prevent apprehended use of the patentees' statutory monopoly, as defined in his claim. The decision as to form is taken against the background of the claim having been construed by the court as between the parties. That, of course, does not happen in other intellectual property cases. An injunction which just restrained breach of confidence would not be appropriate for many reasons, including because the extent of the confidential information would not have been determined. In passing-off cases a change of circumstance can alter the representation made and therefore the injunction normally sets out the act which is to be prevented, qualified by such words as 'so as to pass-off'.

19. The judge seemed to believe that injunctions which restrained infringement of a patent were broad injunctions: but they equate to the statutory right given; a right which has been held to have been validly granted and infringed. The injunction granted by the judge would allow the defendant to do other acts even though they may infringe. The defendant in those circumstances would be better off in that a change from that which is described and shown in the process description would allow him to continue in business without having to seek guidance from the court before adopting the change. The advantage to the defendant of only having the injunction cover a particular article or process is clear. If he makes a change he will not be in breach and it will be up to the patentee to bring another action. However, the disadvantage to the patentee is equally clear. To obtain an injunction he has to establish his monopoly and that it has been infringed, and the judge must conclude that further infringement is apprehended. From his point of view, it is the infringer who should seek guidance from the court if he wishes to sail close to the wind. In the normal course of events that would be reasonable.

20. The usual form of injunction which protects the right established by the patentee, with its ambit construed by the court, does in general provide a fair solution. However, each case must be determined on its own facts and the discretion exercised accordingly."

16. Article 3 of European Parliament and Council Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights now provides:

"Article 3

General obligation

1. Member States shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays.

2. Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse."

17. In Case C-235/09 DHL Express France SAS v Chronopost SA [2011] ECR I-2801 at [58] the Grand Chamber of the CJEU confirmed that remedies for trade mark infringement must comply with the requirements of Article 3(2).
18. Counsel for M & S's first submission was that Article 3(2) required the Court to ensure that remedies were proportionate and that a general injunction was disproportionate. In support of this submission, he cited Vestergaard Frandsen A/S v Bestnet Europe Ltd [2011] EWCA Civ 424 in which Jacob LJ said at [56]:

"I should add a word about the Judge's references to proportionality and the passage of time. Whether or not conventional English law principles as to the grant of an injunction embody that concept (I rather think they do, though the now fashionable word 'proportionate' is not to be found in the older case law), in the case of enforcement of an intellectual property right, the requirement is explicit. The Enforcement Directive (2004/48/EC) by Article 3(2) inter alia requires that measures to enforce intellectual property rights shall be proportionate. It is accepted that a claim for misuse of technical trade secrets such as the present is a claim to enforce an intellectual property right. So the Judge was right to consider proportionality. "

19. Counsel for Interflora disputed that Article 3(2) required this Court to reconsider its practice of granting general injunctions. He cited what Jacob and Etherton LJJ said in Grimme Landmaschinenfabrik GmbH & Co KG v Scott [2010] EWCA Civ 1100, [2011] FSR 7 in the context of injunctions to restrain infringement under section 60(2) of the Patents Act 1977:

"134. First, the form of injunction. Normally, having found infringement of a valid patent, the English court grants an injunction in general terms; it simply restrains the defendant 'from infringing patent No ….', see Coflexip SA v Stolt Comex Seaway MS Ltd [2001] R.P.C. 9 . It might be suggested (though Mr Fernando did not in this case) that this practice should be different in the case of contributory infringement where what is sold by the defendant does not itself infringe and has a non-infringing use. The suggestion might be that the court should modify the injunction so as to try to spell out what it is that the defendant can do. We would not have thought that normally appropriate: it will be up to the defendant to work out how to ensure that there is no ultimate infringement. Of course, if he does take reasonable steps but they turn out unexpectedly to be ineffective, enforcement of the injunction by launching proceedings for contempt of court instead of a fresh action for infringement may be inappropriate: see Multiform Displays v Whitmarley Displays (formerly Reay & Davis) (No.4) [1957] R.P.C. 137 .

135. The German courts may have a different practice—attempting to tailor the injunction in advance. That sort of merely procedural consideration seems to us to be essentially a matter purely for a national court, which makes its decision in the context of its own national procedural rules and legal culture."

20. I accept that Article 3(2) requires that any remedy granted by way of relief for trade mark infringement must be proportionate. In my view it does not follow that this Court's normal practice of granting a general injunction is contrary to Article 3(2), since it is not necessarily the case that a general injunction is disproportionate, although there may be specific circumstances in which a general injunction would be disproportionate.
21. Counsel for M & S argued that general injunctions were always disproportionate because they had a chilling effect: the risk of contempt of court meant that the defendant had to be very cautious when deciding how to comply with the injunction even though the res judicata effect of the underlying judgment only applied to the specific infringements found proved in that judgment. In my view this is a point which formerly had considerable force. More recently, however, it has been recognised that there is a procedural solution to this problem, which is the availability of declaratory relief. In Hotel Cipriani Srl v Fred 250 Ltd [2013] EWHC 70 (Ch), [2013] EMTR 18 the claimants applied for a declaration that certain acts had contravened a general injunction and the second defendant applied for a declaration that certain proposed acts would not contravene the injunction. Thus the parties were able to obtain a ruling from the court as to the effect of the injunction without the need for fresh proceedings and without the heat of a contempt application.
22. In any event, I do not think it would be appropriate for a first instance judge to depart from the established practice of this Court. That is properly a matter for the appellate courts to consider.
23. In the alternative to his first submission, counsel for M & S submitted secondly that it was settled that the Court had a discretion to impose a specific injunction in an appropriate case and that this was such a case. I accept that the Court does have such a discretion. The cases in which the discretion has been exercised are mainly, if not exclusively, cases about parallel imports. The leading example is Oracle America Inc (formerly Sun Microsystems Inc) v M-Tech Data Ltd [2012] UKSC 27, [2012] 1 WLR 2026. In that case the defendant complained that Sun had been operating a policy of refusing to supply information which would enable independent resellers to discover whether any particular equipment was first put on the EEA market by or with Sun's consent. Accordingly Kitchin J (as he then was) granted an injunction which was described by Lord Sumption giving the judgment of the Supreme Court at [10] as follows:

"In the form that Kitchin J granted it, the injunction restrained only the marketing by M-Tech within the EEA of Sun's trade-marked goods which had not previously been marketed there by Sun or with its consent. There is a proviso designed to ensure that Sun does supply information about the provenance of goods potentially affected by the injunction. Its effect is that the injunction is not to apply to goods marketed by M-Tech unless Sun have confirmed within ten days of being told the serial and part numbers of the goods in question that their records show that they have not been put on the EEA market by them or with their consent."

24. It is not easy to discern from the decided cases the principles which the courts have applied when granting a specific injunction of this kind. In my view the key principle is that of proportionality. In parallel import cases, the courts have recognised that a general injunction may be disproportionate because the defendant is dealing in genuine trade marked goods and because in some circumstances it may be difficult for the defendant to be sure whether the goods are in free circulation within the EEA or not. Thus a general injunction may operate as a barrier to legitimate trade.
25. Neither of those considerations applies in the present case. On the contrary, M & S has deliberately engaged in conduct which, as its disclosure documents confirm, it has always known there was a risk might be found to infringe Interflora's trade marks. In those circumstances, I think the starting point is that Interflora are entitled to protection against further invasions of their trade mark rights.
26. Furthermore, I have concluded that M & S has infringed the Trade Marks by use of quite a long list of Signs and by means of a variety of matching algorithms. In my view it would not be easy to distil those conclusions into a brief specification of prohibited acts without the risk of doing injustice to either party. I have already pointed out that paragraph 1.2 of Interflora's draft goes beyond its pleaded case. More importantly, perhaps, paragraph 1.1 of Interflora's draft assumes that bidding by M & S on Interflora-related keywords inevitably amounts to an infringement. As I believe should be clear from the trial judgment, that is not what I have concluded. Rather, what I have concluded is that triggering of advertisements of the kind set out in the trial judgement at [136] by such bidding is an infringement. That does not exclude the possibility that differently-worded advertisements would not infringe because they would enable reasonably well-informed and reasonably circumspect internet users without difficulty to ascertain that M & S's flower deliver service is not part of Interflora's network: see the trial judgment at [266] and [296].
27. This point is highlighted by paragraph 1.2(2) of M & S's draft. This assumes that advertisements containing the wording "Try M & S for a change" or "Use an alternative" would not infringe because they would enable reasonably well-informed and reasonably circumspect internet users without difficulty to ascertain that M & S's flower deliver service is not part of Interflora's network. I have made no such finding in the trial judgment, however. Counsel for M & S relied upon some observations made by counsel for Interflora in the latter's opening submissions at trial as supporting this proviso. As counsel for Interflora pointed out, however, the burden of those submissions was that M & S had not tried to word its advertisements in a way which would inform reasonably well-informed and reasonably circumspect internet users that M & S's flower delivery service is not part of Interflora's network. Counsel for Interflora did not concede that such wording would be effective, and there is no evidence before the court as to what its effect would be. In my judgment it would not be proper for me to decide whether advertisements worded in that way would have the desired effect without giving both parties the opportunity to adduce evidence directed to that issue.
28. I would add that paragraph 1.2(2) of M & S's draft does not propose wording such as "Try an alternative to Interflora". The reason for this is that Google's current trade mark policy in the UK and Ireland enables trade mark proprietors to object to the use of their trade marks in the text of advertisements (as opposed to use of them as keywords) unless the advertisement is by a reseller of the trade mark proprietor's goods or by a provider of information or the proprietor consents or the word is descriptive and is used descriptively. I do not know whether M & S has asked Interflora to consent to advertisements containing wording of that kind. If M & S were to do so, and Interflora were to refuse their consent, then an issue might arise as to the propriety of Interflora seeking to restrain infringement by M & S while preventing M & S from adopting what might be a means of avoiding infringement. That in turn might provide a justification for the court to grant a qualified injunction; but at present no such issue has arisen.
29. I have considered whether to grant an injunction in the form of M & S's draft, but without the proviso in paragraph 1.2(2). In my view there are two problems with this draft, however. The first is that it does not address Interflora's complaint about broad matching without negative matching "interflora". The second and more important problem is that, even in the case of positive matching, M & S's proposed wording does not actually specify with precision what it is that M & S must not do. In effect, it amounts to saying "M & S must not do things which do not comply with the test laid by the CJEU". Thus the parties would have to look to the trial judgment to find out what the practical effect of the injunction was. In my view that would defeat a key purpose of granting a specific injunction, which is to enable the effect of the injunction to be made clear in the wording of the injunction itself without reference to the underlying judgment.
30. Accordingly, I have come to the conclusion that a general injunction would not be disproportionate or create a barrier to legitimate trade in the circumstances of the present case. If issues arise as to the effect of differently-worded advertisements to those considered in the trial judgment, such issues can and should be resolved on an application for declaratory relief in the light of evidence directed to such issues.

Geographical scope of the injunction

31. One of the Trade Marks is a UK trade mark, while the other is a Community trade mark. Interflora seek an EU-wide injunction to restrain infringement of the Community Trade Mark. M & S contends that the injunction should be limited to the UK.
32. In DHL the CJEU ruled at [39]-[45] and [50] that a prohibition against further infringement or threatened infringement of a Community trade mark "must, as a rule, extend to the entire area of the European Union". It recognised, however, that there could be exceptions to that rule:

"46. However, the territorial scope of the prohibition may, in certain circumstances, be restricted. The exclusive right of a Community trade mark proprietor, as provided for under Article 9(1) of Regulation No 40/94, is conferred in order to enable that proprietor to protect his specific interests as such, that is, to ensure that the trade mark is able to fulfil its functions. The exercise of that right must therefore be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark (see, to that effect, Joined Cases C-236/08 to C-238/08 Google France and Google [2010] ECR I-0000, paragraph 75 and the case-law cited).

47.       It follows, as the European Commission has pointed out, that the exclusive right of a Community trade mark proprietor and, hence, the territorial scope of that right, may not extend beyond what that right allows its proprietor to do in order to protect his trade mark, that is, to prohibit only uses which are liable to affect the functions of the trade mark. The acts or future acts of a defendant (namely the person whose use of the Community trade mark is complained of) which do not affect the functions of the Community trade mark, cannot therefore be prohibited.

48.       Accordingly, if a Community trade mark court hearing a case in circumstances such as those of the main proceedings finds that the acts of infringement or threatened infringement of a Community trade mark are limited to a single Member State or to part of the territory of the European Union, in particular because the applicant for a prohibition order has restricted the territorial scope of its action in exercising its freedom to determine the extent of that action or because the defendant proves that the use of the sign at issue does not affect or is not liable to affect the functions of the trade mark, for example on linguistic grounds, that court must limit the territorial scope of the prohibition which it issues."

33. The last paragraph quoted envisages two possible exceptions. The first is where the trade mark proprietor only complains about acts of infringement or threatened infringement in part of the EU and thus only seeks an injunction covering that part. That is not the case here. The second is where the defendant proves that use of the sign does not affect, and is not liable to affect, the functions of the trade mark in certain Member States other that the State or States in respect of which the trade mark proprietor has established infringement. (I would comment in passing that this is another example of the CJEU explicitly imposing a burden of proof on the defendant: see the trial judgment at [233]-[241]. I would also comment that the Court's reference to "linguistic grounds" is a reminder that it is settled law that the average consumer for the purposes of Community trade marks speaks different languages in different Member States (and, where appropriate, different languages in the same Member State), which is yet another reason why there can be no single meaning rule: see the trial judgment at [194]-[224].)
34. Counsel for M & S correctly pointed out that in the trial judgment I had explicitly assessed Interflora's claim by reference to reasonably well-informed and reasonably observant internet users in UK and had made no finding with regard to internet users in other Member States. He submitted that in those circumstances the injunction should be confined to the UK.
35. Counsel for Interflora submitted that this provided no basis for restricting the injunction to the UK, because M & S had adduced no evidence to show that internet users in other Member States had different characteristics to, or interpreted M & S's advertisements in a different manner than, UK users.
36. Counsel for M & S accepted that M & S had not adduced any such evidence. He nevertheless relied upon the fact that courts in other Member States, and in particular the BGH in Germany, had concluded that there was no infringement in keyword advertising cases (see the trial judgment at [285]). He accepted that a contrary conclusion had been reached in some countries, in particular Austria (see the trial judgement at [284]). He submitted that, at worst from M & S's perspective, the injunction should extend to those other Member States whose superior courts had made findings of infringement. As counsel for Interflora submitted, however, the conclusions of the foreign courts were based on the specific facts of the individual cases before them and on the evidence adduced in those cases. They were not considering the facts of the present case, nor did they have the benefit of the evidence adduced in this case.
37. Given that M & S has not proved that use of the Sign does not affect, and is not liable to the affect, the functions of the Community Trade Mark in Member States other than the UK, I conclude that the general rule stated by the CJEU should be applied. Accordingly, I shall grant an EU-wide injunction in respect of the Community Trade Mark.

Conclusion

38. For the reasons given above, I shall grant a general injunction to restrain infringement of the Trade Marks. In the case of the Community Trade Mark, the injunction will be EU-wide.