Victoria Plum v. Victorian Plumbing – Trade Mark Infringement in the context of Keyword Advertising

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Victoria Plum Limited v. Victorian Plumbing Limited [2016] EWHC 2911 (Ch)

This High Court ruling handed down by Justice Carr is one of very few English cases tackling the issue of trade mark infringement in the context of keyword advertising, as well as the coexistence of two parties with confusingly similar names.

Background of the Dispute:

Both parties are large bathroom retailers which started trading in 2001. The Claimant, Victoria Plum (previously Victoria Plumb), owns several EUTM and UK Registrations for VICTORIA PLUMB. The Defendant, Victorian Plumbing, had been purchasing the Claimant's name (and variations of their name) as keywords from Google so that a search for those keywords would trigger an ad for their goods and services within the search results.

As a result, the Claimant brought proceedings against the Defendant, claiming that the Defendant's bidding activities amounted to trade mark infringement of their registered marks. In response, the Defendant brought a counterclaim for passing off against the Claimant, who had also been purchasing the Defendant's name as a keyword to advertise their goods and services.

Keyword Advertising:

Advertisers commonly purchase keywords from Google on a pay-per click-basis, whereby they bid on the maximum price they are willing to pay each time someone searches for these keywords and clicks through to their ad and website. This price determines the position of the ad within the search results, along with the click-through-rate, which is the proportion of users who click through to the sponsored ad after typing in the keyword into Google's search engine.

Trade Mark Infringement and Keyword Advertising:

In his judgement, Justice Carr provides a very useful summary of the case law developed by the CJEU in relation to keyword advertising and trade mark use, in particular the leading authorities Google France v Louis Vuitton (Case C-236/08) and Interflora v Marks & Spencer (Case C‑323/09).

Turning to the facts before him, he first noted that internet users expect to be presented with a website of the trade mark proprietor after searching for their trade mark. In addition, the trade mark features on the pages displaying the search results, along with the sponsored ad which contains the competitor's mark. In light of this, Justice Carr considered that there is a particular propensity for confusion in this context, particularly if the ad is vague as to the origin of the goods and services offered by the competitor.

The Judge naturally found that the Defendant had made use of an identical mark to that of the Claimant by purchasing it as a keyword, in relation to identical goods and services.

By searching for VICTORIA PLUM, consumers were specifically looking for the Claimant's products. In addition, the click-through rate to the Defendant's website was found to be unusually high. In view of this, along with the high degree of similarity between the parties' names, Justice Carr held that confusion was not only likely but also occurring on a significant scale.

This finding led him to conclude that the Defendant's ads did not "enable normally informed and reasonably attentive internet users, or enable them only with difficulty, to ascertain whether the goods or services referred to by the advertisements originate from Victoria Plum(b) or an undertaking economically connected to it, or on the contrary, originate from a third party", applying the test set out in Google France. The infringement claim was therefore made out.

The Defence of Honest Concurrent Use:

In response to the infringement claim, the Defendant attempted to rely on the defence of honest concurrent use, as the parties had been coexisting on the market since 2001.

The Court reviewed the relevant authorities in relation to this common law defence, which was considered in particular in the case of Phones4U Ltd v Phone4u.co.uk Internet Ltd [2006] EWCA Civ 244 and recognised by the CJEU in the Budweiser case (Case C-245/02), where the Court held that in particular circumstances, the origin function of the trade mark is not affected by the honest concurrent use of the same mark (or two confusingly similar marks) by two entities, as the guarantee of origin attaches to both companies.

Turning to the current proceedings, Justice Carr found that the Defendant could not rely on this defence, as it only entitled a party to use their own name. The Defendant could therefore not claim honest concurrent use of the Claimant's mark as they had only used the mark through keyword advertising. In addition, the Claimant's mark did not become a guarantee of origin of both undertakings, as it was agreed that the mark VICTORIA PLUMB was exclusively owned by the Claimant.

Nonetheless, the Judge went on to consider whether the Defendant's use could be considered honest. He noted that the Defendant had dramatically increased its bidding on the Claimant's name as a keyword. In addition, the click-through rate had also increased substantially and was unusually high for keyword bidding on a competitor's brand, which led the Judge to conclude that it was inevitably caused by confusion. Given the particular propensity for confusion associated with keyword advertising, the Defendant had exacerbated the otherwise inevitable confusion. The acts of the Defendant were therefore not consistent with their duty to act fairly in relation to the legitimate interests of the Claimant and the use could not be deemed honest.

Counterclaim for Passing Off:

As the Defendant started trading a few months before the Claimant, they brought a counterclaim for passing off on the basis that the Claimant had been purchasing the Defendant's name as a keyword to return sponsored links for their website.

Justice Carr found that the Defendant had acquired sufficient goodwill by the time the Claimant started purchasing the Defendant's name as a keyword. Nothing in the ads indicated that the parties were unconnected, and so there was a propensity for confusion. Furthermore, a substantial proportion of consumers were likely to have been misled into believing that the Claimant was (or was connected to) the Defendant, which amounted to misrepresentation. On this basis, the Judge also found that there was a likelihood of damage.

Comment:

Although few trade mark cases have addressed keyword advertising, it is clear that businesses should tread very carefully when bidding on trade marks to advertise their products and services. As the courts have shown, it can be difficult to find the balance between acceptable keyword advertising, which has been recognised by the courts as fair competition, and trade mark infringement.

Although keyword advertising has become an indispensable tool for businesses in the digital economy, companies should be cautious where trade marks are involved and ensure their ads do not mislead or confuse consumers as to the origin of their goods or services.

Following this latest decision, it is hard to imagine a situation in which keyword advertising involving parties with confusingly similar names would not lead to infringement, given the particular propensity for confusion associated with keyword advertising.

This case also provides useful guidance in relation to the defence of honest concurrent use and the criterion of honesty. Although both parties had been making honest concurrent use of their respective names for more than a decade, the Defendant's bidding and use of the Claimant's mark naturally fell outside the scope of this acceptable coexistence.