In a judgment seen by Out-Law.com, Mr Justice Arnold said that M&S had failed to make it clear enough that the services it was promoting did not belong to Interflora. He said a "reasonably well-informed and reasonably observant internet user" would have been confused as to which company was behind the ads.
M&S had bought the right for its ads to be displayed in Google's search listings when it purchased terms such as 'Interflora' and 'Interflora flowers' through Google's AdWords programme. The AdWords system operates by allowing companies to buy the right for their ads to appear beside the natural results when certain terms are searched for.
In 2008 Interflora launched a legal challenge to M&S' right to use its trade marks in this way, but the Court of Justice of the European Union (CJEU) determined that companies can make use of rivals' trade marks in keyword advertising under certain circumstances. Such use would be legitimate providing that the function of the trade mark is not undermined by the advert by confusing internet users into thinking that the goods are being sold by the trade mark owner rather than the advertiser, the CJEU said.
However, the High Court said that M&S' adverts had undermined the 'Interflora' mark and continue to do so.
"As at 6 May 2008, the M&S advertisements which are the subject of Interflora’s claim did not enable reasonably well-informed and reasonably attentive internet users, or enabled them only with difficulty, to ascertain whether the service referred to in the advertisements originated from the proprietor of the trade marks, or an undertaking economically connected with it, or originated from a third party," Mr Justice Arnold said in his judgment.
"On the contrary, as at 6 May 2008, a significant proportion of the consumers who searched for 'interflora' and the other signs, and then clicked on M&S’s advertisements displayed in response to those searches, were led to believe, incorrectly, that M&S’s flower delivery service was part of the Interflora network," the judge said. "Thus M&S’s use of the signs had an adverse effect on the origin function of the trade marks. Furthermore, I conclude that this is still the case even now. It follows that M&S has infringed the trade marks under [the EU Trade Mark Directive and Community Trade Mark Regulations]."
Pinsent Masons, the law firm behind Out-Law.com, acted for Interflora in the case. Iain Connor, an intellectual property expert at Pinsent Masons, said: "it seems prescient that in the week of the Chelsea Flower show, the court has decided in favour of Interflora ruling that M&S infringed the ‘Interflora’ trade mark by using the trade mark to promote M&S flowers on the internet using the Google AdWords programme".
Under the EU's Trade Mark Directive and Community Trade Mark Regulations, trade mark owners can prevent competitors 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" without their consent.
Mr Justice Arnold said that the CJEU had made it clear that "it is the responsibility of the advertiser to ensure that the advertisement is transparent as to the origin of the goods or services advertised in it".
The judge had considered the case from the perspective of an 'average consumer'.
EU case law requires courts to consider "the presumed expectations of an average consumer who is reasonably well-informed and reasonably observant and circumspect" when determining whether the use of a trade mark has been misleading. A "significant number of persons" have to have been confused in order for the use to be deemed as misleading.
Separately, though, the CJEU previously determined that the function of a trade mark can only be said to have been "adversely affected" where "reasonably well-informed and reasonably observant internet users" are unable to determine whether goods or services advertised "originate" from a trade mark owner or not, or can only do so "with difficulty".
M&S argued that EU case law had created a "single meaning rule" which meant that the use of signs could only be said to be interpreted in a single way under trade mark law even where there is a difference of opinion among consumers about that use. However, Mr Justice Arnold rejected this argument.
"The fact that many consumers of whom the average consumer is representative would not be confused [by the use of a trade marked sign] does not mean that the question whether there is a likelihood of confusion is to be answered in the negative if a significant number would be confused," Mr Justice Arnold said.
In determining what constituted an 'average consumer' for the purposes of this case, Mr Justice Arnold assessed whether internet users would be able to distinguish between paid-for keyword advertising and natural search results.
The judge said that "the majority of internet users" would have been aware of the distinction when M&S began bidding on keyword terms that referenced 'Interflora' on 6 May 2008. This number would have "steadily increased" subsequently, he added.
However, the judge said that there was still a "significant proportion" of UK internet users that "do not appreciate" that paid-for advertisements on search engine results pages appear there "because the advertisers have paid for the advertisements to be triggered by a keyword consisting of or related to the search term entered by the user".
Mr Justice Arnold chose to discount how "ill-informed or unobservant" internet users would have perceived M&S' use of the 'Interflora' signs in its keyword advertising. He also elected to ignore how an "experienced and technically literate internet user who knows precisely how Google AdWords operates and is aware of the issues" would have perceived the adverts.
The 'average consumer' would have been confused as to the origin of the services advertised by M&S and therefore Interflora's trade mark rights were infringed, he said.
Editor's note 22/05/13: A quote from Iain Connor of Pinsent Masons was added to the story.