Out-Law News | 10 Feb 2014 | 4:24 pm | 3 min. read
Amazon infringed the 'investment function' of Lush's trade mark when it suggested to users of its internal search engine, and in sponsored search results displayed in Google's search index, that Lush goods were for sale on its site when in fact they were not, Mr John Baldwin QC, who was acting as a deputy judge at the High Court of England and Wales, said.
It is the first time a UK court has ruled that the investment function of a trade mark has been infringed in a keyword advertising case, intellectual property law expert Iain Connor of Pinsent Masons, the law firm behind Out-Law.com, said.
"The case is incredibly helpful in allowing brand owners to understand what a trade mark protects and when the use of a trade mark in online advertising will be unlawful," Connor said. "It shows that if your brand is associated with characteristics above and beyond the goods or services themselves, there is an added layer of protection for the brand which means competitors cannot piggy-back the brand where to do so would damage the investment function."
Connor was commenting after the judge in the case considered the environmental and ethical stance Lush has taken to build reputation in its trade mark and whether the 'investment function' of Lush's mark had been infringed by Amazon's use of it.
The term 'investment function' of a trade mark had previously been accepted by the Court of Justice of the EU which ruled in 2011 that trade mark owners could stop companies using their brands as triggers for adverts for competing products if that use "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".
"Lush is a successful business which has built up an image of ethical trading," Mr John Baldwin QC said in the judgment, seen by Out-Law.com. "This is an image which it says it wishes to preserve and it has taken the decision not to allow its goods to be sold on Amazon because of the damage that it perceives there would be to that reputation."
"In my judgment there is no material which is sufficient to question the wisdom of Lush's decision not to permit its goods to be sold on the amazon.co.uk website, particularly bearing in mind they are rejecting an opportunity which Amazon would contend would lead to an increase in the sales of its goods," he added.
The judge had considered the opinion of a senior manager at Amazon when coming to his view on this point. That Amazon employee had given "common sense answers" when he admitted that Amazon's attitude to UK tax issues could be viewed as "repugnant" by some UK consumers and that brand owners were entitled to take their own view about whether to associate themselves with other businesses that some members of the public might believe act in an "unattractive" way, he said.
Mr John Baldwin QC had found that the 'origin function' of Lush's trade mark had been infringed by Amazon's use of the mark in the Google sponsored search results and in the suggestions the platform's own search engine had prompted users with.
Amazon had argued that competition rules and the "right of the public to access technological development" gave it the right to use Lush's mark to display others' goods for sale. However, the judge said that users searching for Lush goods would have expected to have been presented with the option of buying Lush-branded products and that it was not clear enough to users that Lush items were not available for sale on Amazon's site.
He said that Amazon could not "ride rough shod over intellectual property rights" and should not "treat trade marks such as ‘Lush’ as no more than a generic indication of a class of goods".
The judge also found that Amazon infringed the 'advertising function' of Lush's trade mark after first finding that Lush had built substantial reputation for health and beauty products. Amazon's use of the Lush mark to attract customers to buy non-Lush products was therefore infringing, he ruled.
"[Amazon] use the Lush trade mark to indicate to consumers that goods bearing the mark are their goods," Mr John Baldwin QC said. "The evidence establishes that they rely on the reputation of the mark to attract custom. That quality of attracting custom, in my judgment, is bound to damaged by the use of 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 at all to inform the consumer that the goods being offered are not in fact the goods of Lush."
Lush had also claimed that Amazon had infringed its trade mark rights by buying Google ads promoting the sale of non-Lush goods through its platform when users of Google's search engine had searched for Lush products. Because the ads displayed did make reference to Lush and did not therefore insinuate that Lush products would be available for sale on Amazon, however, Amazon's use of keyword advertising in this regard was legitimate and not an infringement of the cosmetic company's trade mark rights, the judge ruled.