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Friday, 22 October 2010

Sudden outbreak of common sense? "Initial interest confusion" part of EU trade mark law, says judge

Just to show that he can do it if he wants to, specialist IP judge Mr Justice Arnold (Chancery Division, England and Wales) decided a case on Wednesday without referring so much as a single question to the Court of Justice of the European Union for a preliminary ruling.  The IPKat was a little disappointed, since it does spoil the fun of a trip to Luxembourg and back (remember: most felines sleep for 20 hours a day, so the pace of life in the tiny Duchy is just about right for them).  Apparently it was all the fault of counsel for the disputing parties, who dropped various interesting European points that their clients were pleading.  Anyway, the case in question was Och-Ziff Management Europe Ltd & Anor v Och Capital LLP & Anor [2010] EWHC 2599 (Ch).

Essentially Och-Ziff, who owned the OCH and OCH-ZIFF Community trade marks, sued Och Capital for using OCH themselves for the same financial services.  Arnold J found the marks were infringed and that there had been some passing off too. A counterclaim for a declaration of invalidity and a defence of "we're only using our own name" both failed.  The exciting bit of this very long judgment comes at paragraphs 79 to 101, where the learned judge considers something that the IPKat gets very excited about -- the doctrine of initial interest confusion, which Och-Ziff pleaded:
".... "Initial interest confusion" is an expression that derives from US trade mark law. It was succinctly defined in a resolution adopted by the International Trade Mark Association on 18 September 2006 as follows: 
"initial interest confusion is a doctrine which has been developing in U.S. trademarks cases since the 1970s, which allows for a finding of liability where a plaintiff can demonstrate that a consumer was confused by a defendant's conduct at the time of interest in a product or service, even if that initial confusion is corrected by the time of purchase." 
[After a masterly and pleasurably intelligible explanation of the doctrine, illustrated by examples and precedents drawn from US case law, the judge continued] What then is the status of initial interest confusion in European trade mark law? For this purpose, I shall define "initial interest confusion" as confusion on the part of the public as to the trade origin of the goods or services in relation to which the impugned sign has been used arising from use of the sign prior to purchase of those goods or services, and in particular confusion arising from use of the sign in advertising or promotional materials. Both counsel addressed this question from first principles as well as on authority. 
[After a masterly and pleasurably intelligible explanation of the doctrine, illustrated by cases decided under European trade mark, paying particular attention to Court of Justice rulings, the judge continued]  It again seems clear from this that there can be a likelihood of confusion within the meaning of Article 9(1)(b) [of the Community Trade Mark Regulation] at the point when a consumer views an advertisement, whether or not the advertisement leads to a sale and whether or not the consumer remains confused at the time of any such sale.
This interpretation is supported by the most recent decision in this line of cases, namely Portakabin. At [51]-[52] the Court reiterated what it had said in Die BergSpechte at [38]-[39]. It then said at [53] that the guidance it had set out at [35] was applicable by analogy. That guidance was as follows: 
"On that point the Court has also stated that, in the case where a third party's ad suggests that there is an economic link between that third party and the proprietor of the trade mark, the conclusion must be that there is an adverse effect on the function of indicating origin. Similarly, in the case where the ad, while not suggesting the existence of an economic link, is vague to such an extent on the origin of the goods or services at issue that normally informed and reasonably attentive internet users are unable to determine, on the basis of the advertising link and the commercial message attached thereto, whether the advertiser is a third party vis-à-vis the proprietor of the trade mark or, on the contrary, economically linked to that proprietor, the conclusion must also be that there is an adverse effect on that function of the trade mark (Google France and Google, paragraphs 89 and 90, and BergSpechte, paragraph 36)."
Again, it follows that there may be a likelihood of confusion as result of the advertisement.
Counsel for the Defendants was unable to cite any authority to support the proposition that initial interest confusion is not actionable under Article 9(1)(b). 
... I find the arguments of principle in favour of this conclusion advanced by counsel for Och-Ziff more compelling than those against it advanced by counsel for the Defendants. Counsel for the Defendants had no convincing answer to the point that Article 9(2) shows that there may be an infringing use of a sign even if there is no sale, in particular in an advertisement. As discussed above, this analysis is supported by the decisions in O2, Die BergSpechte and Portakabin.
Nor did he have a convincing answer to the point that confusion arising from an advertisement is capable of causing damage to the trade mark proprietor even if such confusion would be dispelled prior to any purchase. Although there will be no diversion of sales in such circumstances, there are at least two other ways in which the trade mark proprietor may be damaged. The first is that a confusing advertisement may affect the reputation of the trade marked goods or services. It is irrelevant for this purpose whether the defendant's goods or services are objectively inferior to those of the trade mark proprietor. The second is that such confusion may erode the distinctiveness of the trade mark. Both of these points were explained with characteristic lucidity and verve by Laddie J in the context of passing off by false endorsement in Irvine v Talksport Ltd [2002] EWHC 367 (Ch), [2002] 1 WLR 2355, in particular in the passages quoted below. ...".
The IPKat wholeheartedly agrees with the court's analysis which he has reproduced in outline here and he hopes that the issue is never put in doubt again.  Merpel says, why can't we have a system for referring cases to the US Supreme Court for a preliminary ruling if they involve our interpretation of US cases? Now, that would be fun.


Och aye the noo here

6 comments:

Gareth said...

Ironically, perhaps, the European position on Initial Interest Confusion is now more consistent than the US position, where there is still debate on the applicability of Initial Interest Confusion. Completely agree, though, that the issue is clear as far as the ECJ is concerned.

austrotrabant said...

I think I disagree..

Weren't we happy that the US courts had finally dumped the IIC? In my opinion (which I think I've adopted from Goldman) it is ill defined as it is very difficult to apply correctly as it is almost impossible to predict whether the average consumers will be confused or not?


Summing up the ECJ's recent Keyword Advertising decisions with my own words I come to three conclusions:

A: If the third party has done anything to suggest an economic link etc. -> infringement

B: If the third party drafted the ad is such a way that the ad itself was (on purpose) so vague that an average consumer could only determine with great difficulty if an economic connection exists or not [let's call it 'dolus eventualis'] -> infringement.

C: If the third party hasn't done anything to kind of "provoke" the assumption an any kind of economic connection: -> no infringement.


But what the UK court in this case does was to actually invent a fourth criteria:

D: the third party has not undertaken every possible steps to effectively rule out any possibility that any user might be assume a connection.

If the ECJ had wanted such a solution he'd have said so. But fact is, he didn't. The ECJ went for A and B which logically results in C.

I guess D. in this case was the outcome of an 'unfortunate' lawyer. But to be fair, and I think Gareth you be delighted to hear that, the Austrian OGH in BergSpechte II didn't even need the IIC to reach conclusion D.

I am confident that the ECJ's strong arm will bring the national courts onto the right track. I think we've see that already seen that in the past a couple of times.. ;)

Birgit Clark said...

@austrotrabant - interesting post, as usual. :-) I would have thought though, and please do correct me if I get it wrong, that group "D" is a sub-group of "B" or a logical extension of "B".

I am not sure you need "dolus eventualis" at all, at least not the way I read Portakabin and Die BergSpechte and even Google France but then again, what is "vague"...?!

austrotrabant said...

@Birgit Clark

Well, good point! I think we both agree but just see the issue from different perspectives. So...

I think we all agree that the ECJ ruled that AdWords are per se not infringing but only under certain circumstances, right?

So we are left with three scenarios:
infringing -> maybe infringing -> not infringing.

And I guess the 'vague' issue is all about the dividing line between 'maybe' and 'not' section, right?

If we try to image this dividing line as a scale on the one side we have got 'duty for the advertiser to rule out any possible wrong assumptions' (TM-owner friendly) and on the other side 'duty for the advertiser not do to anything that could cause a wrong assumption (advertiser-friendly).

And how national courts interpret this remaining discretionary space appears to be the question, right?

And... I think we both agree that the ECJ hasn't provided any valuable hints of how to interpret this discretionary space.

Anyone disagreeing or able to good offer counter-argument?

Sorry for all the rhetorical questions. Any chances the Kats are going hold a meeting in Vienna? I'd love to discuss this issue again in an off-line environment.

Nicole van der Laan said...

Thanks for the intriguing discussion above. I too have great interest in this topic.
Mr Justice Arnold is right to state that the ECJ has adopted at least some sort of initial interest confusion doctrine, whether that is a good development or not.
I agree with the commentators above that the Court has not given any direct clues about the definition of “vagueness”. However, from a policy perspective, the Court seems to allow the use of TMs as keywords provided the advertiser is identifiable. (It denies an adverse effect on the advertising function, refuses to discuss the other TM functions, and relieves Google from primary liability.)
But if - what austrotrabant calls - option “D” is true, it becomes nearly impossible to use a TM-keyword in a non-infringing way. An AdWords-ad may consist only of a heading (max. 25 signs), two short lines (max. 35 signs each) and an URL (max. 35 signs). How is the advertiser supposed to enable the internet user to determine without difficulty that the advertiser is a third party if it only has such limited space to its disposal?
In my opinion, it should be enough to mention the advertiser’s name in the ad text or in the URL beneath. Unfortunately, the Austrian Supreme Court (OGH) is much stricter. It finds the use of the TMs in dispute infringing, although those TMs do not occur in the ad and the name of the advertising company, “trekking.at”, is indicated in the URL. Apparently, the Austrian court finds it relevant that the company name of the advertiser contains a generic term, whereas the TMs/search terms/keywords are highly original.
The OGH requires the advertiser to counteract the risk of confusion by a clarifying indication. But how?! I can only think of examples like this one I found last May when searching for the brand “Armani” on Google.de: “Edle Designer Mode – 70 %. Kein Armani, aber viele andere edle Designer-Marken. Bis -70% Rabatt! www.dress-for-less.de”. In English: “No Armani but many other designer-labels”. This is definitely a clarifying indication, but then again: isn’t this blurring or taking unfair advantage of the reputable TM?
Furthermore, the Austrian court points out that the use of a TM-keyword is only then not infringing, if the internet user can “easily” recognize that there is no economic connection. The ECJ speaks of enabling the user “only with difficulty” to ascertain whether there is an economic connection. Is “not difficult” exactly the same as “easy”?
I think it’s time to find out what consumers really think when viewing the ads. Are they truly initially confused when they type in a TM and are confronted with ads of third companies? Can they possibly assume an ad to originate from (a company economically connected with) the TM-owner when the TM is not even mentioned in the ad? Is the fact that the ad appears after a search for the TM sufficient to conclude that there could be an economic connection, unless such connection is explicitly denied (which, as described above, is an extremely hard task)? Remember that the ECJ wants us to take “the normally informed and reasonably attentive internet user” as a yardstick. I did not perform any official consumer survey (yet) but from some random testing in my family circle, I can reveal that even less than normally informed and reasonably attentive internet users are at least aware of the difference between the search results and the advertisements and are rather skeptical towards the latter.
Here I will stop writing since this comment is already much too long. Austrobant, I love your idea about a meeting in Vienna. I’d be willing to help with the organization.

Nicole van der Laan said...

Thanks for the intriguing discussion above. I too have great interest in this topic.
Mr Justice Arnold is right to state that the ECJ has adopted at least some sort of initial interest confusion doctrine, whether that is a good development or not.
I agree with the commentators above that the Court has not given any direct clues about the definition of “vagueness”. However, from a policy perspective, the Court seems to allow the use of TMs as keywords provided the advertiser is identifiable. (It denies an adverse effect on the advertising function, refuses to discuss the other TM functions, and relieves Google from primary liability.)
But if - what austrotrabant calls - option “D” is true, it becomes nearly impossible to use a TM-keyword in a non-infringing way. An AdWords-ad may consist only of a heading (max. 25 signs), two short lines (max. 35 signs each) and an URL (max. 35 signs). How is the advertiser supposed to enable the internet user to determine without difficulty that the advertiser is a third party if it only has such limited space to its disposal?
In my opinion, it should be enough to mention the advertiser’s name in the ad text or in the URL beneath. Unfortunately, the Austrian Supreme Court (OGH) is much stricter. It finds the use of the TMs in dispute infringing, although those TMs do not occur in the ad and the name of the advertising company, “trekking.at”, is indicated in the URL. Apparently, the Austrian court finds it relevant that the company name of the advertiser contains a generic term, whereas the TMs/search terms/keywords are highly original.
The OGH requires the advertiser to counteract the risk of confusion by a clarifying indication. But how?! I can only think of examples like this one I found last May when searching for the brand “Armani” on Google.de: “Edle Designer Mode – 70 %. Kein Armani, aber viele andere edle Designer-Marken. Bis -70% Rabatt! www.dress-for-less.de”. In English: “No Armani but many other designer-labels”. This is definitely a clarifying indication, but then again: isn’t this blurring or taking unfair advantage of the reputable TM?
Furthermore, the Austrian court points out that the use of a TM-keyword is only then not infringing, if the internet user can “easily” recognize that there is no economic connection. The ECJ speaks of enabling the user “only with difficulty” to ascertain whether there is an economic connection. Is “not difficult” exactly the same as “easy”?
I think it’s time to find out what consumers really think when viewing the ads. Are they truly initially confused when they type in a TM and are confronted with ads of third companies? Can they possibly assume an ad to originate from (a company economically connected with) the TM-owner when the TM is not even mentioned in the ad? Is the fact that the ad appears after a search for the TM sufficient to conclude that there could be an economic connection, unless such connection is explicitly denied (which, as described above, is an extremely hard task)? Remember that the ECJ wants us to take “the normally informed and reasonably attentive internet user” as a yardstick. I did not perform any official consumer survey (yet) but from some random testing in my family circle, I can reveal that even less than normally informed and reasonably attentive internet users are at least aware of the difference between the search results and the advertisements and are rather skeptical towards the latter.
Here I will stop writing since this comment is already much too long. Austrobant, I love your idea about a meeting in Vienna. I’d be willing to help with the organization.

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