Resolutions: Spare a thought for trade mark owners this Christmas, and in 2021 …

December 17, 2020

Earlier this year Giuseppe Colangelo published an authoritative account of Competing through Keyword Advertising (Journal of Competition Law & Economics, Volume 16, Issue 3, September 2020), aptly describing this developing field as “the new frontier of the IP-antitrust interface”. In line with the landmark judgments of the CJEU in Google France v Louis Vuitton and Interflora v M&S and the EC in Guess, the paper concludes inter alia that confusion as to the origin of goods and services should be held as the primary infringement ground available to trade mark owners in so-called ‘brand bidding’ cases. Yet, in the shadow of the Coronavirus pandemic this conclusion seems, for reasons set out below, anachronistic. Trade mark and competition law must respond to the modern commercial realities facing brands and consumers and, in the UK at least, it may just be possible to make rapid progress starting 1st January 2021. A worthy New Year’s resolution!

Following Google and Interflora, trade mark owners are not entitled to flex their proverbial muscles if competitors engage in keyword advertising in relation to alternative goods and services, which is a practice “inherent to competition” and thereby not without ‘due cause’. In Guess, it was held that a prohibition on keyword advertising within selective distribution agreements amounts to a hardcore by object restriction under Article 101 (1) TFEU. Comprehensive lockdowns and restrictions to the physical movement of people necessarily impact upon the reach and relevance of many forms of traditional advertising, not to mention bricks-and-mortar retail, and are narrowing the sphere of interaction towards the digital world. Although it is possible that changes in consumer behaviour resulting from the pandemic will be short-lived, this author is rather persuaded that the present health crisis will have a long legacy. Whereas the judgments in Google and Interflora may have been defensible in the context of a dynamic, hybridised physical and digital marketplace, in a predominantly digital one it seems entirely reasonable that trade mark owners should not be legally bound to endure exponential increases in investment in keyword advertising in order to exercise their registered rights and to safeguard the enduring distinctiveness of their brands. Reflecting upon Guess, despite short term benefits to consumers resulting from increased choice and price competition, it is arguable that the status quo imposes costs on trade mark owners that stand to undermine the innovation incentive and hence harm consumer welfare in the long term (Elias Deutscher, CCP Blog (May 2020)).

The premise upon which prevailing legal reasoning is broadly based, namely that “search engines have reduced the cost for companies of reaching consumers” (Colangelo), demands deeper scrutiny. This author contends that it is in fact the Internet that has reduced the cost for companies of reaching consumers, and that the advertising revenue models underpinning search engines has led to the erection of new cost barriers for companies with a genuine intention to reach consumers through use of their trade mark. By recognising this distinction, it is possible to appreciate how the much maligned ‘coat-tails’ formula advanced by the CJEU in L’Oreal v Bellure may have broader application to ‘brand bidding’ trade mark infringement cases. In much the same way, a more nuanced analysis of the Guess case reveals how restrictive agreements can in fact allow trade mark owners to guard against the damage caused by parties that free-ride on the kind of “marketing effort expended” in order to “create and maintain the mark’s image” that was recognised in L’Oreal. One question is whether “initial interest confusion” should be incorporated into trade mark law as a companion to free-riding (Alice Blythe, ‘Initial interest confusion: attempting to define its current status within European trade mark law’ (2016) European Intellectual Property Review 38 (4)). The more controversial question is whether the CJEU’s interpretation of the E-Commerce Directive in Google should be adjusted to accurately reflect the deeper understanding that competition authorities are developing of ‘digital gatekeepers’, upon which brands are increasingly reliant in order to convey both information and advertising to consumers.

Ben Evans holds an LLM in IT & IP Law, and his current academic research focusses on ‘data advantage’. He is a consultant at Aorta Law and can be reached at: / +44 (0) 1603 542 054.