“35 … it must be borne in mind that the essential function of a trade mark is to guarantee the identity of the origin of the marked goods or service to the consumer or end user by enabling him to distinguish the goods or service from others which have another origin (judgment of23 March 2010 , Google France and Google, C-236/08 to C-238/08, EU:C:2010:159, paragraph 82 and the caselaw cited). It serves in particular to 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, which it does in order to fulfil its essential role in the system of undistorted competition (see, to that effect, the judgments of12 November 2002 , Arsenal Football Club, C-206/01, EU:C:2002:651, paragraph 48, and of12 July 2011 , L’Oréal and Others, C-324/09, EU:C:2011:474, paragraph 80). 36 The function of investment of the mark includes the possibility for the proprietor of a mark to employ it in order to acquire or preserve a reputation capable of attracting customers and retaining their loyalty, by means of various commercial techniques. Thus, when the use by a third party, such as a competitor of the trade mark proprietor, of a sign identical to the trade mark in relation to goods or services identical with those for which the mark is registered substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty, the third party’s use adversely affects that function of the trade mark. The proprietor is, as a consequence, entitled to prevent such use under Article 5(1)(a) of Directive 2008/95 or, in the case of an EU trade mark, under Article 9(1)(a) of Regulation No 207/2009 (see, to that effect, the judgment of22 September 2011 , Interflora and Interflora British Unit, C-323/09, EU:C:2011:604, paragraphs 60 to 62). 37 As to the function of the advertising of the mark, it is that of using a mark for advertising purposes designed to inform and persuade consumers. Accordingly, the proprietor of a trade mark is, in particular, entitled to prohibit a third party from using, without the proprietor’s consent, a sign identical with its trade mark in relation to goods or services which are identical with those for which that trade mark is registered, where that use adversely affects the proprietor’s use of its mark as a factor in sales promotion or as an instrument of commercial strategy (see, to that effect, the judgment of23 March 2010 , Google France and Google, C-236/08 to C-238/08, EU:C:2010:159, paragraphs 91 and 92).”
“63 In a situation in which the trade mark already enjoys such a reputation, the investment function is adversely affected where use by a third party of a sign identical with that mark in relation to identical goods or services affects that reputation and thereby jeopardises its maintenance. As the Court has already held, the proprietor of a trade mark must be able, by virtue of the exclusive right conferred upon it by the mark, to prevent such use (L’Oréal SA v eBay International AG (C-324/09) [2011] E.T.M.R. 52 at [83]). 64 However, it cannot be accepted that the proprietor of a trade mark may—in conditions of fair competition that respect the trade mark’s function as an indication of origin—prevent a competitor from using a sign identical with that trade mark in relation to goods or services identical with those for which the mark is registered, if the only consequence of that use is to oblige the proprietor of that trade mark to adapt its efforts to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty. Likewise, the fact that that use may prompt some consumers to switch from goods or services bearing that trade mark cannot be successfully relied on by the proprietor of the mark.”
“92 …, although the protection afforded by art.5(1)(a) is “absolute”, the exercise of the right conferred is reserved for cases in which the use of the sign by a third party adversely affects or is liable adversely to affect one of the functions of the trade mark, and that is so whether that function is the essential function indicating the origin of the goods or services covered by the mark, or one of the other functions, such as that of guaranteeing the quality of the goods or services concerned or that of communication, investment or advertising. … 97 Guidance on the effect on advertising function is set forth in the decision from [54]–[59]. The Court restated that the use of a sign identical to another person’s trade mark in the Google referencing service did not adversely affect the advertising function of that mark, even though it might have repercussions on the use of the mark in advertising. In this connection the Court recognised that the use of such a sign as a keyword meant that the proprietor of the trade mark might have to pay a higher price per click than the competitor if it wished to ensure that its advertisement appeared before that of the competitor. But this did not necessarily mean that the trade mark’s advertising function was adversely affected “57. However, the mere fact that the use, by a third party, of a sign identical with a trade mark in relation to goods or services identical with those for which that mark is registered obliges the proprietor of that mark to intensify its advertising in order to maintain or enhance its profile with consumers is not a sufficient basis, in every case, for concluding that the trade mark’s advertising function is adversely affected. In that regard, although the trade mark is an essential element in the system of undistorted competition which European law seeks to establish (see, in particular,Case C-59/08 Copad SA v Christian Dior Couture SA [2009] E.C.R. I-3421; [2009] F.S.R. 22 at [22]), its purpose is not, however, to protect its proprietor against practices inherent in competition. 58. Internet advertising on the basis of keywords corresponding to trade marks constitutes such a practice in that its aim, as a general rule, is merely to offer internet users alternatives to the goods or services of the proprietors of those trade marks (see, to that effect, Google France [2010] R.P.C. 19 at [69]). 59. The selection of a sign identical with another person’s trade mark, in a referencing service with the characteristics of “AdWords”, does not, moreover, have the effect of denying the proprietor of that trade mark the opportunity of using its mark effectively to inform and win over consumers (see, in that regard, Google France [2010] R.P.C. 19 at [96] and [97]).” 98 Again this is a significant passage for it shows an appreciation by the Court that internet advertising using keywords which are identical to trade marks is not an inherently objectionable practice. On the contrary, its aim is, in general, to offer to internet users alternatives to the goods or services of trade mark proprietors and it is not the purpose of trade marks to protect their proprietors from fair competition. “57. However, the mere fact that the use, by a third party, of a sign identical with a trade mark in relation to goods or services identical with those for which that mark is registered obliges the proprietor of that mark to intensify its advertising in order to maintain or enhance its profile with consumers is not a sufficient basis, in every case, for concluding that the trade mark’s advertising function is adversely affected. In that regard, although the trade mark is an essential element in the system of undistorted competition which European law seeks to establish (see, in particular,Case C-59/08 Copad SA v Christian Dior Couture SA [2009] E.C.R. I-3421; [2009] F.S.R. 22 at [22]), its purpose is not, however, to protect its proprietor against practices inherent in competition. 58. Internet advertising on the basis of keywords corresponding to trade marks constitutes such a practice in that its aim, as a general rule, is merely to offer internet users alternatives to the goods or services of the proprietors of those trade marks (see, to that effect, Google France [2010] R.P.C. 19 at [69]). 59. The selection of a sign identical with another person’s trade mark, in a referencing service with the characteristics of “AdWords”, does not, moreover, have the effect of denying the proprietor of that trade mark the opportunity of using its mark effectively to inform and win over consumers (see, in that regard, Google France [2010] R.P.C. 19 at [96] and [97]).” … 100. …the investment function does not provide a means to protect trade mark proprietors against the effects of fair competition, even if such competition means that these proprietors have to adapt their efforts to acquire or preserve a reputation capable of attracting and retaining customers … … 135 …the Court has now held in a long line of decisions that the right under art.5(1)(a) (and art.9(1)(a)), though “absolute”, is conferred to enable the trade mark proprietor to protect his interests as proprietor, that is to ensure the trade mark can fulfil its functions. The exercise of the right must therefore be reserved to cases in which a third party’s use of the sign adversely affects, or is liable adversely to affect, one of those functions.”
“82 ... the defendant deliberately uses the claimant’s trade mark as a bait to attract the consumer’s attention, and then exploits the opportunity thus created to switch the consumer’s purchasing intention to his own product or service.”
“It is sufficient for the purposes of Art.9(1)(b) to establish the existence of a likelihood of confusion in only part of the Community. The concept of ‘using in the course of trade’ is amplified by Art.9(2) in a way that appears to make it sufficient for the purpose of establishing liability under Art.9(1)(b) for there to be ‘a likelihood of confusion on the part of the public’ at any material stage or in relation to any material aspect of the commercialisation of the sign in question. From that I think it follows that ‘bait and switch’ selling can be prevented under Art.9(1)(b) on the basis that the process of buying goods or services should, from selection through to purchase, be free of the distorting effects of confusion. I mention that because Whirlpool’s claim under Art.9(1)(b) relied on the proposition that there would be a likelihood of confusion unless and until the branding of the kMix as a KENWOOD product impinged upon the consciousness of interested consumers: the shape and appearance of the kMix would initially tell them it was a ‘KitchenAid’ product and the KENWOOD branding would not tell them otherwise until after they had gone down the road of selection with a view to purchase. It is possible for a claim to succeed on that basis. However, I do not accept that in the present case there will be any initial confusion in the mind of the relevant average consumer. There will, in my view, be nothing more than an awareness that the product they are looking at is not the one it reminds them of.”
“39. Mr Bloch QC, counsel for Lush, submitted the matter was straightforward. Not only could the average consumer not tell without difficulty (cf Google France at [84] and [29.5] above) that the goods referred to in the ad did not come from Lush, but he was positively being told that the goods did come from Lush and these genuine goods could be bought on Amazon. 40. Mr Carr QC, counsel for Amazon, contended however that the matter was not so simple. He submitted that sponsored ads were a familiar feature of life to the internet user, that if that user were at all interested in the ad he would click through and in a moment he would learn that the goods had nothing to do with Lush at all. Further, he submitted that the reference in Google France to the concept of “without difficulty” embraced the notion of some inquiry being made, albeit not an inquiry of any difficulty. That simple inquiry would reveal that Amazon was not offering Lush goods but was offering equivalents. 41. Mr Carr argued that this was not a case of infringement as a result of initial interest confusion of the “bait and switch” variety (cf. Och-Ziff Management Europe Ltd v Och Capital LLP[2010] EWHC 2599 (Ch) ; [2011] F.S.R. 11 at [79]–[101] per Arnold J.), the reasons being (i) the ease with which a consumer can click away from Amazon as soon as he realises he is not being offered products of interest – contrast, for example, the physical situation of a consumer having been lured into a shop, and (ii) the familiarity the consumer has with sponsored ads including the fact that many sponsored ads are ads for competitor products. 42. In my judgment, Lush establishes infringement with respect to this class of case. I consider that the average consumer seeing the [Google] ad […] would expect to find Lush soap available on the Amazon site and would expect to find it at a competitive price. Moreover, I consider that it is likely that if he were looking for Lush soap and did not find it immediately on the Amazon site, then he would persevere somewhat before giving up. My reason is that the consumer is likely to think that Amazon is a reliable supplier of a very wide range of goods and he would not expect Amazon to be advertising Lush soap for purchase if it were not in fact available for purchase. Thus, on the facts of this case, I reject Mr Carr’s argument to the effect that the average consumer would, without difficulty, ascertain that the goods referred to by the ad were not the goods of or connected with Lush, the claimants.”
“68. … Amazon assumes the consumer is looking for Lush products, or, at least, intended to search for Lush products and thereafter, without a further indication that such products are not available, offers competing products to the consumer. In these circumstances I do not consider the average consumer would ascertain without difficulty that the products he is shown are not the Lush products of the claimants. Indeed, in my judgment it illustrates that Amazon is using the Lush trade mark as a generic indicator of a class of goods, conduct which attacks head on the ability of the mark to act as a guarantee of origin in the claimants and nobody else.”
“21 …, where a person operating in the course of trade orders, from the operator of a referencing website, the publication of an advertisement the display of which contains or is triggered by a sign which is identical with or similar to another person's trade mark, that person must be considered to be using that sign, within the meaning of Article 5(1) of Directive 2008/95 (see, to that effect, judgment of3 March 2016 , Daimler, C-179/15, EU:C:2016:134, paragraphs 29 and 30). 22 By contrast, that person cannot be held liable, under Article 5(1) of Directive 2008/95, for the independent actions of other economic operators, such as those of referencing website operators with whom that person has no direct or indirect dealings and who do not act by order and on behalf of that person, but on their own initiative and in their own name (see, by analogy, judgment of3 March 2016 , Daimler, C-179/15, EU:C:2016:134, paragraphs 36 and 37). 23 The term 'using' in Article 5(1) of Directive 2009/95 involves active conduct and direct or indirect control of the act constituting the use. … 27 In that regard, it must be noted that, in a situation where the website operators reproduce an advertisement on their own initiative and in their own name, the economic operator whose goods or services are thus promoted cannot be regarded as their customer. 30 Finally, as regards the fact, referred to in the order for reference, that, in the case which gave rise to the judgment of3 March 2016 , Daimler (C-179/15) EU:C:2016:134, the advertisement which infringed another person’s trade mark was initially lawful, whereas the advertisement at issue in the dispute in the main proceedings infringed another person’s trade mark from the outset, it is sufficient to note that that circumstance is irrelevant as regards the only question under consideration in the present reference for a preliminary ruling, which is, where an advertisement infringing another person’s trade mark is reproduced, who is using the sign which is identical with or similar to that mark.”
“84. The function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party (see, to that effect, Céline, para.27 and the case-law cited). 85. In such a situation, which is, moreover, characterised by the fact that the ad in question appears immediately after entry of the trade mark as a search term by the internet user concerned and is displayed at a point when the trade mark is, in its capacity as a search term, also displayed on the screen, the internet user may err as to the origin of the goods or services in question. In those circumstances, the use by the third party of the sign identical with the mark as a keyword triggering the display of that ad is liable to create the impression that there is a material link in the course of trade between the goods or services in question and the proprietor of the trade mark (see, by way of analogy, Arsenal Football Club Plc v Reed (C20/01) [2002] E.C.R. I-10273; [2003] R.P.C. 9, para.56, andCase C-245/02 Anheuser-Busch Inc v Budejovicky Budvar národní podnik (C-245/02) [2004] E.C.R. I-10989; [2005] E.T.M.R. 27, para.60). 86. Still with regard to adverse effect on the function of indicating origin, it is worthwhile noting that the need for transparency in the display of advertisements on the internet is emphasised in the European Union legislation on electronic commerce. Having regard to the interests of fair trading and consumer protection, referred to in recital 29 in the preamble to Directive 2000/31, Art.6 of that Directive lays down the rule that the natural or legal person on whose behalf a commercial communication which is part of an information society service is made must be clearly identifiable. 87. Although it thus proves to be the case that advertisers on the internet can, as appropriate, be made liable under rules governing other areas of law, such as the rules on unfair competition, the fact nonetheless remains that the allegedly unlawful use on the internet of signs identical with, or similar to, trade marks lends itself to examination from the perspective of trade-mark law. Having regard to the essential function of a trade mark, which, in the area of electronic commerce, consists in particular in enabling internet users browsing the ads displayed in response to a search relating to a specific trade mark to distinguish the goods or services of the proprietor of that mark from those which have a different origin, that proprietor must be entitled to prohibit the display of thirdparty ads which internet users may erroneously perceive as emanating from that proprietor.”
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“43. The damage done to the reputation of a trade mark may, in principle, be a legitimate reason, within the meaning of Article 7(2) of the Directive, allowing the proprietor to oppose further commercialisation of goods which have been put on the market in the Community by him or with his consent. According to the case-law of the Court concerning the repackaging of trade-marked goods, the owner of a trade mark has a legitimate interest, related to the specific subjectmatter of the trade mark right, in being able to oppose the commercialisation of those goods if the presentation of the repackaged goods is liable to damage the reputation of the trade mark (Bristol-Myers Squibb, cited above, paragraph 75). … 45. As regards the instant case, which concerns prestigious, luxury goods, the reseller must not act unfairly in relation to the legitimate interests of the trade mark owner. He must therefore endeavour to prevent his advertising from affecting the value of the trade mark by detracting from the allure and prestigious image of the goods in question and from their aura of luxury. … 48. In view of the foregoing, the answer to be given to the third, fourth and fifth questions must be that the proprietor of a trade mark may not rely on Article 7(2) of the Directive to oppose the use of the trade mark, by a reseller who habitually markets articles of the same kind, but not necessarily of the same quality, as the trade-marked goods, in ways customary in the reseller's sector of trade, for the purpose of bringing to the public's attention the further commercialisation of those goods, unless it is established that, given the specific circumstances of the case, the use of the trade mark for this purpose seriously damages the reputation of the trade mark.”
“54. In this respect, it must first be recalled that, according to the settled case law of the court referred to in [19] of the present judgment, use of the adverb “especially” in para.2 of art.7 of the Directive indicates that alteration or impairment of the condition of marked goods is given only as an example of what may constitute legitimate reasons (Bristol Myers Squibb at [26] and [39], and Parfums Christian Dior at [42]). 55. Accordingly, the court has already held that damage done to the reputation of a trade mark may, in principle, be a legitimate reason, within the meaning of art.7(2) of the Directive, allowing the proprietor of the mark to oppose further commercialisation of luxury goods which have been put on the market in the EEA by him or with his consent (see Parfums Christian Dior at [43], and Bayerische Motorenwerke AG v Deenik ( C-63/97) [1999] E.C.R. I-905; [1999] E.T.M.R. 339 at [49]). 56. It follows that where a licensee sells goods to a discount store in contravention of a provision in the licence agreement, such as the one at issue in the main proceedings, a balance must be struck between, on the one hand, the legitimate interest of the proprietor of the trade mark covered by the licence agreement in being protected against a discount store which does not form part of the selective distribution network using that trade mark for commercial purposes in a manner which could damage the reputation of that trade mark and, on the other hand, the discount store's legitimate interest in being able to resell the goods in question by using methods which are customary in its sector of trade (see, by analogy, Parfums Christian Dior at [44]).”
“25 … Counsel for JSC pointed out that the CJEU had gone on in Copad to hold at [59] that the trade mark proprietor could oppose the resale of goods “only if it can be established that, taking into the particular circumstances of the case, such resale damages the reputation of the trade mark [emphasis added]”