High Court finds that Amazon infringed LUSH trade mark

Practical Law UK Legal Update 8-557-4305 (Approx. 8 pages)

High Court finds that Amazon infringed LUSH trade mark

by Practical Law IP&IT

Background

Article 5(1)(a) of the Trade Marks Directive (89/104/EEC, now replaced by consolidated Directive 2008/95/EC) provides that the proprietor of a registered trade mark may prevent third parties from using in the course of trade any sign which is identical to his mark in respect of goods or services which are identical to those for which the mark is registered.

A claim under Article 5(1)(a) can only succeed if the use affects or is liable to affect the functions of the trade mark, which include its origin, advertising, investment and communication functions (see, in particular, Case C-487/07 L'Oréal SA v Bellure NV [2009] ECR I-5185; Legal update, ECJ ruling in L'Oréal smell-alike perfume trade mark case).

Google France SARL, Joined Cases C-236/08, C-237/08 and C-238/08 established that where an advertiser bought a keyword that was similar to a trade mark, the trade mark's function of indicating origin would be adversely affected if the ad did not enable normally informed and reasonably attentive internet users, or enabled them only with difficulty, to ascertain whether the goods or services referred to in the ad originate from or were connected with the proprietor of the mark or, on the other hand, from a third party (see Legal update, ECJ ruling in Google France AdWords case).

Facts

Cosmetic Warriors Ltd and Lush Ltd (together, Lush) were, respectively, the registered proprietor and exclusive licensee of a Community trade mark for the sign LUSH for cosmetics and toiletries, including soap, in class 3.

The claimants brought trade mark infringement proceedings against Amazon.co.uk Ltd (first defendant) and Amazon EU SARL (second defendant) (together, Amazon). The first defendant, Amazon EU SARL, a Luxembourg company, operates the website at www.amazon.co.uk, while the second defendant, Amazon.co.uk Ltd operates fulfilment centres located in the UK through which goods sold by the website are dispatched to customers.

It is not possible to buy Lush's products from www.amazon.co.uk. (Amazon do sell certain Lush-branded products, such as Lush Hair extensions, from a third party supplier. However, these goods bore the Lush mark because they were outside the scope of Lush's trade marks.)

Amazon had bid on certain keywords, in particular ones including "lush", within the Google AdWords service so as to trigger a sponsored link advertisement appearing on the Google search engine results page whenever a consumer typed "lush" into the search box. Lush brought proceedings for infringement of the LUSH trade mark against Amazon under Article 5(1)(a) of the Directive in respect of the following classes of alleged infringements.

Sponsored link advertisements which showed the LUSH mark in several places, such as the following which appeared as a result of a search for "lush":
- Lush Soap at Amazon.co.uk
- www.amazon.co.uk/lush+soap
- amazon.co.uk is rated *****
- Low prices on Lush Soap
- Free UK Delivery on Amazon Orders.
Sponsored link advertisements which did not show the LUSH mark, but which did show references to equivalent or similar products to those sold by Lush, such as the following which appeared as a result of a search for "lush cosmetics bath bomb":
- Bomb Bath at Amazon.co.uk
- www.amazon.co.uk/bomb+bath
- amazon.co.uk is rated *****
- Low prices on Bomb Bath
- Free UK Delivery on Amazon Orders.
A consumer who clicked on the relevant link in the advertisements was taken to the amazon.co.uk website and presented with the opportunity to browse or purchase equivalent products. There was no overt message to the effect that the Lush Soap or Lush Cosmetics Bath Bomb, respectively, were not available for purchase on the Amazon website.
The use of LUSH in search results which appeared on the amazon.co.uk website when a consumer typed the word "Lush" into that site's search facility. In particular:
- if a consumer searched for the word "Lush" in the relevant "department" of Amazon's UK site, after the letters "lu" were typed, a drop down menu appeared and various options were offered such as "lush bath bombs" or "lush cosmetics" or "lush hair extensions", the consumer being offered the opportunity to click on one of these options whereupon a new page would appear. In the case of a consumer clicking on "lush bath bombs" or "lush cosmetics" the new page would offer similar products to those available from Lush without any overt reference to the Lush item not being available.
- If the consumer continued to type in LUSH into the search bar and searched the site, a page would be displayed (see image below). Within this page:
- the uppermost instance of Lush was by the consumer making an entry into the search box;
- the second uppermost (adjacent the word Beauty and surrounded by double quotation marks) was arranged to occur by Amazon and was intended to be a repeat of the consumer request;
- the third uppermost (following the heading "Related Searches") was arranged to occur by Amazon and was a list of searches to indicate to the consumer what prior consumers, also searching for Lush, had also searched;
- the entry for Lush under "Brand" at the left-hand side was arranged by Amazon, to indicate to the consumer what brands may be searched for in the Beauty category; and
- the list of products in the body of the web page were products which Amazon hoped would be of interest to a consumer searching for Lush products; none of them were Lush's products and the promotion for Lush Hair Extensions was not seen until page 4 or so.

Image 1 within High Court finds that Amazon infringed LUSH trade mark

Lush also alleged that both defendants were joint tortfeasors in connection with the matters complained of.

Decision

John Baldwin QC, sitting as a Deputy Judge of the Chancery Division, held that:

Those sponsored advertisements for Amazon, triggered by keywords including "Lush", which included the LUSH mark, infringed Article 5(1)(a) of the Directive, while those advertisements that did not include the LUSH mark were not infringing.
The use of the LUSH mark complained of on the Amazon site infringed Article 5(1)(a), since it amounted to use in the course of trade by Amazon in relation to the relevant goods, and affected the origin, advertisement and investment functions of the mark, save that the use of "Lush" in respect of "Brands" on the right-hand side of the Amazon results page did not amount to infringement, because the link went through to properly branded Lush products.
The first and second defendants were joint tortfeasors.

The deputy judge's reasoning is summarised below.

Use of Lush sign on Amazon site

The deputy judge said that he had to consider each type of use of the sign Lush separately, with respect to two issues:

Whether the use was a use in the course of trade by Amazon in relation to the relevant goods.
If so, whether it was such as to affect the function of the trade mark.

Amazon argued that it had made no use of the Lush sign, relying on L'Oréal SA v eBay, Case C-324/09 (see Legal update, ECJ rules on L'Oréal v eBay reference). The deputy judge said that it was clear from L'Oréal SA v eBay that if third-party sellers were using the LUSH mark on their goods and were using the Amazon site merely as an online market place, then Amazon would not be using the mark. However, that was not the case. None of the products offered on Amazon bore the LUSH trade mark (those that did bear the Lush mark, such as Lush Hair Extensions, did so because they were outside the scope of Lush's trade marks).

Amazon also argued that its search engine placed the consumer in control of the search process and that Lush were seeking to remove that control from consumers and thereby restrict or hinder competition. It urged that intellectual property rights should not be exercised in a way which unduly interfered with the basic right of the public to access technological development. The deputy judge rejected this argument saying that this right of the public to access technological development did not go so far as to allow a trader such as Amazon to ride rough shod over intellectual property rights.

Drop down menu appearing when "lu" typed into search engine

The deputy judge found that:

Use of mark in course of trade. The menu content would inform the average consumer that if he were looking for Lush Bath Bombs on Amazon, he would find them by clicking on that menu item. Amazon had therefore used the Lush sign in the course of trade in relation to the relevant goods, since it had used the sign as part of a commercial communication that it was selling the goods on its website.
Whether function of mark affected. The use affected the origin, advertisement and investment functions of the LUSH mark:
- Origin function. In circumstances where there was no overt indication whatsoever that LUSH products were not available for purchase on the Amazon site, and where the consumer had been informed (from the drop down menu) that Lush Bath Bombs were available, the deputy judge said that he did not consider that the average consumer would ascertain without difficulty that the goods to which he was directed did not originate from Lush. He did not think that the absence of any reference to LUSH on the display of the goods themselves, which Amazon relied on, carried the day for them, since the consumer's initial expectation was that the products were Lush products (because of the uses made of Lush on the web page and the context).
- Advertisement function. The use affected the mark's advertisement function because Lush used the LUSH mark to indicate to consumers that goods bearing the mark were their goods. Lush relied on the reputation of the mark to attract custom. That quality of attracting custom was bound to be damaged by the use by Amazon of the LUSH mark to attract the attention of consumers to, and attempt to sell to them, the goods of third parties whilst at the same time making no effort to inform the consumer that the goods being offered were not in fact the goods of Lush.
- Investment function. The use affected the mark's investment function because Lush was a successful business which had built up an image of ethical trading. It said that it wished to preserve this image and had taken the decision not to allow its goods to be sold on Amazon because of the damage that it perceived there would be to that reputation. The deputy judge noted that the first defendant's senior manager had accepted that some consumers would regard Amazon's attitude to, for example, UK taxation as repugnant. There was no material which was sufficient to question the wisdom of Lush's decision not to permit its goods to be sold on the amazon.co.uk website.

Repeat of word "Lush" just below the search box and in the Related searches line

The deputy judge found that these uses of "Lush" amounted to use of the trade mark in relation to relevant goods, since it was a commercial communication by Amazon to aid the sales by Amazon of non-Lush cosmetics. The use complained of clearly damaged the origin, advertisement and investment functions of the LUSH trade mark, for the same reasons as given earlier. The deputy judge emphasised that there was no notice to the effect that the search returned no results for Lush. The deputy judge also highlighted as important that the Related searches line referred to "lush bath bombs", "lush cosmetics" and "lush products". He considered that the average consumer would think that these related search items were being presented by Amazon in order to be helpful and that if the consumer clicked on one of them he would indeed find either Lush Bath Bombs or Lush Cosmetics or Lush Products.

Use of "Lush" under the heading "Brands"

Amazon also used "Lush" under the heading "Brands" on the left-side of the page displayed in response to a search under the word "Lush". Clicking on the item revealed Lush Hair Extensions and other Lush branded products, all being properly (so far as this case is concerned) branded and none of them had anything to do with the claimants, Lush. The judge said that any claim in relation to this use failed.

Joint tortfeasance

The deputy judge found that the first and second defendants had joined together and agreed to work together in the furtherance of a common plan which included doing the acts which were complained of by Lush, so as to be joint tortfeasors. Among other things, the deputy judge highlighted that:

The first defendant was intimately involved with the second defendant's website. For example, it provided a number of services which supported the operation of the second defendant's web business. It was plain that the first defendant was intimately involved with optimizing the website, so that it appeared organically in response to search items, and also with the adwords aspect of the second defendant's business in the UK.
The first defendant provided marketing, legal accounting and other services which supported the operation of the second defendant's web businesses. Furthermore documents disclosed showed contractual arrangements between the defendants whereby the first defendant provided pre-sale marketing services as well as post-sale services. Other documents, for example from the legal department, showed that the first defendant held itself out as responsible for the operation of the amazon.co.uk site.
The first defendant carried out fulfilment services for the second defendant, that is to say, it was responsible for getting the goods to the customer and dealing with customer service and returns handling.

Comment

This judgment raises many points of interest, in particular regarding the extent to which search results generated on a company's own website when a third party's trade mark is searched for may amount to trade mark infringement. The findings on this point were of particular concern to Amazon, who argued that it went to the root of its business model, since Amazon's software is developed based upon analysis of consumers' use of Amazon's website, so that consumers who search for a particular term will be shown products which previous consumers who have entered that term have gone on to browse or purchase.

Amazon contended that Lush were seeking to remove the consumer control of the search process that its search facility allowed, and restrict competition, and that intellectual property rights should not be exercised so as to unduly interfere with public access to technological development. The deputy judge gave this argument short shrift, stating that this right of access did not go so far as to allow a trade such as Amazon to "ride rough shod over intellectual property rights, to treat marks such as Lush as no more than a generic indication of a class of goods to which the consumer might have an interest".

With regard to the claims regarding Amazon's use of the LUSH trade mark, or expressions including it, to trigger sponsored advertisements for the Amazon site, the court found that advertisements that did not contain the LUSH mark did not infringe Article 5(1)(a) because consumers were familiar with sponsored ads from competing suppliers. The deputy judge confirmed that Interflora v Marks & Spencer turned on its facts, in particular the fact that the Interflora mark referred to a network of members. This will be of interest to advertisers, since (while each case will ultimately turn on its specific facts) it suggests that, so long as keyword linked advertisements do not contain the third party's trade mark, they will not infringe Article 5(1)(a).

The case is also interesting with regard to the court's analysis of what was required to affect the origin, investment and advertisement functions of a trade mark.

It is also notable that the deputy judge, following the Court of Appeal's approach in Interflora v Marks & Spencer [2013] FSR 21 (see Legal update, Court of Appeal lays down new guidelines on survey evidence in Interflora v M&S case), did not consider that the results thrown up by search engines required expert evidence or the evidence of consumers. Rather, he made up his own mind and, in particular, reached his conclusions regarding trade mark infringement without referring to any of the evidence of confusion to which Lush drew attention, since he said that it was difficult to evaluate this evidence without knowing about the particular consumers concerned or their circumstances.

Case

Cosmetic Warriors Ltd and another v amazon.co.uk Ltd and another [2014] EWHC 181 (Ch), 10 February 2014 (John Baldwin QC, sitting as a Deputy Judge of the Chancery Division; Michael Bloch QC, Simon Malynicz and Simon Atkinson (instructed by Lewis Silkin LLP) for the claimants; Henry Carr QC and Thomas Mitcheson (instructed by Edwards Wildman Palmer UK LLP) for the defendants).

End of Document

Also Found In

Resource ID 8-557-4305

Published on 13-Feb-2014

Resource Type Legal update: archive

Jurisdiction

United Kingdom