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Monday, 28 November 2016

Mr Justice Carr's decision in Victoria Plumb is about Adwords (honest)


Would a reasonably attentive internet user be able
to identify the difference between the two?
Adwords.   Remember them?  About five years ago, we seemed to be height of the adwords battles.  Since then, matters have quieted down.  Then about a week ago, Mr Justice Carr handed down his decision in Victoria Plum Limited v Victorian Plumbing Ltd [2016] EWHC 2911 all about the defence of honest concurrent use in the context of keyword advertising.  Jeremy Blum (Bristows) and Andrew Butcher (Bristows) explain:  
"Given that we can count on one hand the number of judgments on the topic of trade mark infringement in the context of key word advertising (by our count they are L’Oréal, M&S, Lush, Mr Spicy) we were unsurprisingly eager to receive last Friday’s decision of Mr Justice Carr in Victoria Plum Limited v Victorian Plumbing Ltd [2016] EWHC 2911 (Ch). However, that anticipation was marginally dampened , but only temporarily, as the main issue in dispute focused on the defence of honest concurrent use, albeit in the context of keyword advertising. The defence is one of those curiosities of trade mark law (like the multiple functions of a trade mark) that you will not find in the Trade Mark Directive or the Trade Mark Regulation. So, read on if you do not want to miss out. 
The claimant and first defendant, both bathroom retailers that operate exclusively or primarily online, have been co-existing under their highly similar names since 2001. The claimant traded under the name “Victoria Plumb” until July 2015, when it changed its name to “Victoria Plum”. However, both sides accepted that for the purposes of this case the omission of the “b” from the claimant’s name is not significant. The first defendant trades under the name “Victorian Plumbing”. 
Infringement

The two sides’ relatively agreeable co-existence became acrimonious when the first defendant began to spend significant sums bidding on the claimant’s Victoria Plum(b) trade marks (the most important of which being a UK registration for VICTORIA PLUMB) in the context of pay per click (PPC) advertising online, including variations such as “Victorian Plum(b)”. The search engine advertisements displayed in response to the first defendant’s PPC bidding activity fell into two categories:
  1. Ads that include the “Victoria Plumb” trade mark as a result of Google’s “dynamic keyword insertion” service – this service automatically includes the internet user’s search term in the resulting ad text if the search term matches one of the keywords purchased by the advertiser; and 
  2. Ads that include the terms “Victoria Plumbing” and/or “VictorianPlumb” and/or “Victorian Plumbing”. The claimant did not seek to restrain the use of the name ‘Victorian Plumbing’.
In respect of the first set of ads, the first defendant accepted that the PPC bidding that results in the display of these ads constituted trade mark infringement and submitted to judgment and an injunction against further infringement. Disappointingly, Mr Justice Carr refrained from suggesting that had they not submitted to judgment on this point the defendants would have been ‘plumb’ (for the non-cricketer see here).  However, infringement was not admitted in respect of the PPC bidding that results in the display of the second set of ads, with the first defendant relying on the defence of honest concurrent use. 
Victorian plumbing - descriptive of most London plumbing
After identifying the signs complained of ('Victoria Plumb’ and trivial variations of the sign, but not use of the First Defendant’s name ‘Victorian Plumbing’) the judge considered the test set down in the CJEU’s judgment in Google France.   The judge had to decide whether the second set of ads enable normally informed and reasonably attentive internet users to ascertain without difficulty whether the goods or services referenced in the ads originate from Victoria Plum or an undertaking economically connected to it, or from a third party. It was found that the ads do not allow the average internet user to make this determination without difficulty and, therefore, the first defendant’s PPC bidding activity that led to the display of the second set of ads constituted trade mark infringement.
This conclusion is really not surprising given the very close similarity of the Victoria Plum(b) trade marks with the terms used in the second set of ads. It is only if one looks very closely (i.e not the normally informed and reasonably attentive internet user) that one notices the ads do not display the exact words which the user searched for (e.g Victoria Plum(b)) but rather the ad refers to goods from ‘Victorian Plumbing’. There is little context in the advert to provide any clarity either.

The honest current use defence

The central plank of the first defendant’s case was that it had a defence of honest concurrent use.  In the context of validity, the CJEU in Budvar confirmed that where there has been a long period of concurrent use of two trade marks, and that use neither has or is liable to have an adverse effect on the essential function of the earlier trade mark, then the earlier mark’s proprietor cannot cancel the later trade mark.  Summarising the Court of Appeal’s guidance when it applied Budvar, Mr Justice Carr said that honest co-existence for a long period of the same or closely similar names may have to be tolerated. The judge then set out at paragraph 79 the factors to be considered as to whether ‘concurrent use’ is honest.

The judge found that the defence did not apply because the use complained of was that of the claimant’s Victoria Plum(b) marks, by bidding on them as key words. The defence might entitle a defendant to continue to use its own name or mark but it does not give a right to use the claimant’s mark. Further, other than use as keywords, the first defendant has never actually used those trade marks; this leads to a further consideration that the first defendant did not claim the trade marks guaranteed the origin of both entities but instead accepted that the trade marks indicate exclusively the Claimant.

The judge went on, in case he was wrong, to assess if the use was ‘honest’.  He held that
the defence could not apply in this case because the first defendant’s PPC bidding activity was inconsistent with its duty to act fairly in relation to the legitimate interests of the claimant. This finding was influenced by a number of factors, including the first defendant’s decision to substantially increase the amount it spent on bidding on Victoria Plum(b) keywords in late 2012 and the confusion among consumers shown by unusually high click through rates on the defendant’s ads displayed in response to searches including Victoria Plum(b) keywords.  Mr. Justice Carr came to the view that it should have been obvious to the first defendant that its increased spend on bidding on Victoria Plum(b) keywords would exacerbate the inevitable level of consumer confusion, and that the first defendant had encroached upon the claimant’s goodwill such that the honest concurrent use defence could not apply.

The judge then considered whether statutory acquiescence under section 48 Trade Marks Act 1994 applied. Section 48(1) provides that where there has been acquiescence in the use of a registered trade mark for five years or more, the proprietor of an earlier registered or unregistered trade mark loses his right to challenge or oppose the use of the later registration. Section 48(2) goes on to provide that, in that situation, the owner of the later registration cannot enforce it against the party that has acquiesced - this is the provision on which the defendant sought to rely. This statutory acquiescence defence failed for two reasons:
  1. Victorian Plumbing does not own an “earlier right” for the purposes of section 48 of the Act because it only began trading, on a small scale, a few months prior to Victoria Plum; and 
  2. Section 48(2) cannot apply in any event because Victoria Plum is not opposing the use of any earlier right that Victorian Plumbing might own – it is opposing the use of Victoria Plum’s trade marks by Victorian Plumbing. An estoppel defence also failed.
Plum
Passing off

Finally, the judge considered the counterclaim for passing off. The first defendant argued that the the claimant’s PPC bidding on “Victorian Plumbing” which resulted in the display of ads containing the term “Victoria Plum(b)” must constitute passing off.

The counterclaim succeeded. The judge found that by the time the claimant began bidding on “Victorian Plumbing”, the first defendant owned sufficient goodwill in the name to enable it to bring a passing off action against use of the name by the claimant. Furthermore, although it was accepted that the claimant’s relevant PPC bidding activity was on a smaller scale to the corresponding activity by the first defendant, and that the likelihood of consumer confusion at the point of click-through may have been somewhat lower in the case of the claimant’s activity than in the case of the first defendant’s activity, the judge found that there is a propensity for confusion when internet users who search for “Victorian Plumbing”(and are therefore likely to be looking for the defendant’s website) are presented with Victoria Plum(b) advertisements for a business unconnected with that of the first defendant.

Applying the test for an actionable misrepresentation, the judge concluded that a substantial proportion of the relevant public are likely to have been misled into believing that the claimant is, or is connected with, the first defendant, and that there is a likelihood of damage to the first defendant’s goodwill. Therefore, the claimant’s PPC bidding on “Victorian Plumbing” in combination with the resulting ads displayed constituted passing off. There is minimal detail on this finding, but Mr Justice Carr confirms that the point to consider when looking at a misrepresentation for passing off is the advertisements and whether they indicate a connection between the parties.

To our knowledge, this is the first UK case where passing off has been found in the context of PPC bidding. Although passing off has been raised in previous keyword trade mark infringement cases, passing off arguments have not previously been pursued to a finding of liability.   It is unlikely to herald a new age of passing off allegations in the Adwords context given the close similarity of the two sides' marks that is likely to be required for an actionable misrepresentation in the context of search engine advertising.

Remarks
The first defendant is entitled to advertise and promote its business. It has a confusingly similar name which was tolerated for many years. It is easy to see how the first defendant might have thought it could extend its marketing activities by purchasing “Victoria Plum(b)” as keywords given it had existing rights, co-existed for over a decade and had an established brand in the very similar words “Victorian Plumbing”. Since Interflora it has been clear that keyword advertising itself is not an inherently objectionable practice. Moreover, third party competitors are happily bidding on the claimant’s trade marks as key words, so why can’t the first defendant?

In circumstances where two entities co-exist with the same or similar names, they both have to be careful not to overstep the delicate balance. It is noteworthy that the first defendant recognised the parties names are so similar that there was a likelihood of confusion but in spite of actual confusion they co-existed. A claimant’s mark is not impaired by a defendant’s honest concurrent use as the mark does not denote the claimant alone. That is why the honest concurrent use defence exists.

Plumb
But, the status quo of co-existence needs to be maintained and confusion can not be exacerbated. Of course, the bidding on the keywords is not in itself an infringing act. In these types of circumstances, to avoid the average internet user from having difficulties ascertaining from which entity the goods in the advert originate, the party will need to ensure the advert is clear, if it is possible to do that when the brands are so similar. Consistent with maintaining the co-existence balance, neither party can overstep the mark as the court found that the claimant committed passing off due to its pay per click advertisements being unclear.

The plain similarity between Victoria Plum(b) and Victorian Plumbing means this case is likely to be an outlier from the ‘typical’ AdWords cases and the signs at issue clearly made the question of infringement less arguable (hence the reliance on the honest concurrent use defence). If the defendants had a different trading name e.g Roman Plumbing, but still performed the identical acts complained of, it is highly likely the approach and evidence required to satisfy the Google France test would have been different - if the case would have been pursued at all."

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