With the official name of the case, Cosmetic Warriors v Amazon.co.uk Limited [2014] EWHC 181 (Ch), sounding like a teenage boy’s fantasy wresting match and subject matter that covered bath bombs, the High Court judgment in this dispute between the retailer and the online megastore had a lot to live up to. It was clearly not possible for Deputy High Court Judge John Baldwin QC to provide IT lawyers with all the titillation that the title and subject-matter might have led them to hope for, but they will find lots of very perceptive analysis in this latest twist in the ongoing battle between high-profile trade mark holders and online sellers of similar goods.
This a quick account of a complex case. Comments on the case are are especially welcome.
The claim was that Amazon breached the Lush trade mark in a number of ways and that Amazon’s UK and EU arms were joint tortfeasors in that each was a ‘party to a common design to infringe the Lush trade marks’.
One head of claim concerned Internet advertising. Amazon had bid on the keyword ‘lush’, within the Google AdWords service so as to trigger a sponsored link advertisement appearing on the Google search engine results page whenever a consumer typed ‘lush’ into the search box. It is not in fact possible to buy any Lush products on Amazon but the sponsored search result suggests otherwise.
A second head of claim concerned the result of searches for ‘bath bomb’, a product which Lush claimed to have invented.
The third head concerned the search facility on Amazon’s own web site. Typing in ‘lu’ for example led to a suggestions for completion which included ‘lush cosmetics’ and then threw up results for products similar to those for which Lush is famous.
After a thorough review of the cases, from Reed to Interflora and venturing a little abroad, John Baldwin QC addressed each of the heads of claim. As to the first head, he said (at[42]):
‘In my judgment, Lush establishes infringement with respect to this class of case. I consider that the average consumer seeing the ad [referred to earlier in his judgment] would expect to find Lush soap available on the Amazon site and would expect to find it at a competitive price. Moreover, I consider that it is likely that if he were looking for Lush soap and did not find it immediately on the Amazon site, then he would persevere somewhat before giving up. My reason is that the consumer is likely to think that Amazon is a reliable supplier of a very wide range of goods and he would not expect Amazon to be advertising Lush soap for purchase if it were not in fact available for purchase. Thus, on the facts of this case, I reject [counsel for Amazon]’s argument to the effect that the average consumer would, without difficulty, ascertain that the goods referred to by the ad were not the goods of or connected with Lush, the Claimants.’
In the second class of claim, Lush failed with its ‘bath bomb’ arguments. The judge did not consider that the average consumer would be in any way misled by the type of links that were revealed on searches for bath bombs.
The third head of claim was the most interesting, especially as Amazon contended that it went to the root of its business model. A lengthy extract is pasted below but the essence of the successful Lush claim is that Amazon could not distance itself from the operation of its search engine – the suggestion that it was the creature of consumer preferences because it converted past consumer behaviour into suggestions was not sustainable. The judge did not think that ‘Amazon can escape from the conclusion that it has used the Lush sign in the course of trade in relation to the relevant goods based on the principles to be found in Google France and L’Oreal v eBay. It has used the sign as part of a commercial communication that it is selling the goods on its website.’ Moreover, on the confusion point, Amazon could not rely on the wit of the consumer to get himself out of the trap that has been set’.
Mr John Baldwin QC said (at [56]-[85]:
‘The question for me is whether Amazon’s use, as typified by paragraphs 11 and 12 above, constitutes such use and, if so, whether it affects the function of the trade mark.
The facts of the present case are quite different from those in either Google France or in L’Oreal v eBay. In brief, in this case Amazon is both the designer and operator of the search engine and the operations on its site include the three categories referred to in paragraph 15 above. Although it may be wearing different hats when it designs its search engines and sells its goods, I have no doubt that the design of the search engine is carried out in order to maximize the sale of goods from the site. It is this philosophy which has made Amazon the UK’s biggest online retailer. Nor do I consider it necessary to distinguish for the purposes of determining liability the three separate categories of sales via the website. In relation to the third category, Amazon may just be an online market place but the items in this category are mixed up with those in the other two categories, and Amazon’s involvement in the transactions of these other two categories is more than sufficient for it to be commercially involved in the offering for sale and selling; the display on the website is part of its own commercial communication within paragraph [102] of L’Oreal v eBay. In my judgment this use is much more than merely use in a service consisting of enabling its customers to display on its website signs corresponding to trade marks.
The first use complained of is the consumer typing Lush into the Amazon search engine. I do not understand how this can be use by Amazon and I reject it as an infringement.
However, the matter does not stop there in relation to this entry by the consumer. As described in paragraph 11 above, when the consumer types in the first two letters of lush, ie lu, a drop down menu appears which includes, for example, ‘lush bath bombs’. This is the result of Amazon’s sophisticated software and its analysis of prior consumers’ behaviour on the amazon.co.uk site.
In my judgment, the average consumer is unlikely to know how the drop down menu has the content which it displays, but is likely to believe that it is intended to be helpful to him and is some consequence of other searches that have been carried out. In my judgment it would inform the average consumer that if he were looking for Lush Bath Bombs on Amazon, he would find them by clicking on that menu item. I reject the contention that the average consumer who was typing Lush into the search box would think that the drop down menu reference to Lush Bath Bombs was a reference merely to products which were similar to or competitive with the Lush product. Moreover, my conclusion is supported by the evidence of Dr Fliedner of Amazon who accepted without hesitation that a consumer would expect the brand he was searching for to be shown as the first result, and probably as the first few results, if it were available.
On the facts of this case, I do not think Amazon can escape from the conclusion that it has used the Lush sign in the course of trade in relation to the relevant goods based on the principles to be found in Google France and L’Oreal v eBay. It has used the sign as part of a commercial communication that it is selling the goods on its website.
So I must go on to consider whether this use affects the function of the trade mark. Mr Bloch contended that the average consumer would be likely to think that the goods were indeed from Lush not only because he has been directed to them by the drop down menu but also because they have a very similar appearance to Lush goods and there is little to disabuse him of the fact that these are not Lush goods (such as a well known third party brand name) unless he pays more than average attention or drills down into the detail to find out exactly what it is he is being presented with (something an average consumer of these type of goods would not usually do if he thought he had found what he wanted).
Mr Carr contended that consumers are used to being presented with goods of third parties in response to search terms and that the average consumer would attach no particular significance to the content of the drop down menu other than that it might lead him to products in which he may be interested. Further he pointed out that none of the goods are branded Lush and that in and of itself would tell the consumer that the goods were not from Lush. He also stressed that this type of response from the search engine was highly advantageous to the consumer as it enabled him more easily to navigate the website and was conducive to proper and fair competition, that it was very important in terms of consumer choice. He submitted that these were matters which I should bear well in mind in striking the balance between the rights of a trade mark proprietor and the rights of the consumer to enjoy the benefits of technology and what it can offer in terms of purchasing opportunities and access to alternative products.
Mr Carr submitted that any such a conclusion as contended for by Mr Bloch and based on the similarity of appearance of the goods was unfair in that it discriminated against the smaller or less well known brands. In my judgment, however, the appearance and branding of the goods returned pursuant to a search is just one of the many factors I must take into account in assessing whether the average consumer would ascertain without difficulty that the goods were not connected with Lush.
Furthermore and in this connection, I have taken into account the evidence of Mr Bolter, of Amazon’s solicitors, who reported the results of searches for Lush on the retail sites of third parties, such as John Lewis, Debenhams, House of Fraser, Boots, Selfridges and others. In cross examination Mr Bolter accepted that the search engines of these third party retailers appeared to operate rather differently from that of Amazon, and that consumers, on the whole, probably did not understand how the different search engines decided on the results which were returned. Observations about third party retailer search engines are, in my judgment, also part of the general background of internet shopping which I have to bear in mind in considering the consequences of the interaction between the average consumer and the amazon.co.uk website.
In my view there is some similarity between this type of use and the use in the first class of infringements, ie the sponsored ad on Google which says Lush Bath Bombs at Amazon (for example). In circumstances where there is no overt indication whatsoever that Lush products are not available for purchase on the Amazon site and where the consumer has been informed (from the drop down menu) that Lush Bath Bombs are available, I do not consider that the average consumer would ascertain without difficulty that the goods to which he was directed did not originate from Lush (the Google France test).
Moreover I do not think the absence of any reference to Lush on the display of the goods themselves carries the day for Mr Carr. The situation is different from the sponsored ad claim where I noted that a consumer seeing an advertisement for Lush products would expect to see a reference to Lush. Here the consumer’s initial expectation is that the products are Lush products (because of the uses made of Lush on the web page and the context), a scenario that is quite different from a case where a sponsored ad making no reference to Lush appears pursuant to a search for Lush on Google.
Another example of this type of case was illustrated by the instance of a consumer misspelling lush on the search entry, and typing ‘lsuh’ in the search box for the “Health & Personal Care” department. This search inquiry elicits the response “Your search ‘lsuh’ did not match any products. Did you mean: lush”. The next line of the response states ‘Showing Top Results for “lush” in Health and Personal Care’ and below that is shown a number of products similar in appearance to Lush Bath products but supplied by a different manufacturer. This example shows Amazon’s appreciation of what the consumer might expect if there are no lsuh products for sale. It also goes on to illustrate that Amazon assumes the consumer is looking for Lush products, or, at least, intended to search for Lush products and thereafter, without a further indication that such products are not available, offers competing products to the consumer. In these circumstances I do not consider the average consumer would ascertain without difficulty that the products he is shown are not the Lush products of the Claimants. Indeed, in my judgment it illustrates that Amazon is using the Lush trade mark as a generic indicator of a class of goods, conduct which attacks head on the ability of the mark to act as a guarantee of origin in the Claimants and nobody else.
I have concluded that this use by Amazon damages the origin function of the Lush trade mark. In my judgment this use also damages both the advertising function and the investment function of the Lush trade mark. In relation to the former, the Claimants use the Lush trade mark to indicate to consumers that goods bearing the mark are their goods. 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 be damaged by the use by 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.
In relation to the investment function, Lush is a successful business which has built up an image of ethical trading. 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. Moreover, Mr Shipley, a senior manager of the First Defendant, accepted that some consumers would regard Amazon’s attitude to, for example, UK taxation as repugnant and he also accepted that a brand owner was entitled to his own view as to whether his brand should be associated with companies which are believed by some members of the public to act in ways which they find unattractive. Mr Carr objected to reliance on the answers of Mr Shipley based on the fact that he was not part of the business team at Amazon and there was no evidence whatsoever from Lush on this point. It seems to me, however, that Mr Shipley was doing no more than giving common sense answers to not particularly difficult questions.
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. Although it is the case that Lush goods were sold in the US and France on the respective local Amazon sites, I do not think that sufficiently undermines Lush’s contentions with respect to the UK market. Neither do I consider it relevant that Lush itself has done some pretty bizarre things, such as applying to register as a trade mark the name of Amazon’s managing director. I accept the argument that this use by Amazon damages the investment function of the Lush trade mark.
The next use complained of is the repeat of the word Lush just below the search box and above the Related Searches line. Mr Carr submitted that the average consumer would appreciate that this use of Lush was no more than a repeat of what the consumer had typed in to the search box. He also submitted that this was not use by Amazon using its commercial hat but use using its search engine hat and therefore was not use in relation to the relevant goods. I accept the former submission, but not the latter for the same reasons as expressed earlier in relation to the same point.
There are two aspects of this use which are, in my judgment, important. First there is no notice to the effect that the search returned no results for Lush, the Claimants, (although Lush Hair Extensions does appear on page 3 or 4). Secondly, the Related Searches line refers to lush bath bombs, lush cosmetics and lush products. I consider that the average consumer would think that these Related Search items were being presented by Amazon in order to be helpful and that if the consumer clicked on one of them he would indeed find either Lush Bath Bombs or Lush Cosmetics or Lush Products.
Mr Carr’s response to this is that the consumer would quickly appreciate that, despite the indication that he was going to get what he wanted (by the presentation of the search term ‘lush bath bombs’ in the Related Search line for example), he was in fact being offered competing products. Thus he is relying on the wit of the consumer to get himself out of the trap that has been set. He also relies on the other submissions I have referred to including the submission that the consumers ought to be allowed fair access to technological development. Mr Bloch’s position is that this is a classic case of trade mark infringement. He submits that not only do we have the double identity paradigm, but it was unrealistic and unfair to conclude that the average consumer would appreciate without difficulty that he was being offered goods which were different from what he was looking for and, in the case of related searches, thought he had been directed to and found.
In my judgment in relation to the facts of this case, and following the guidance given in Google France, I think Mr Bloch is right in his submission. The use complained of by Lush clearly damages the origin function and the advertisement and investment function of the Lush trade mark for the same reasons as given earlier.
There remains the question of whether the use of Lush in the related searches line is a use of the trade mark in relation to the relevant goods. Again, and for the same reasons as with the other uses, I think there is such use. It is a commercial communication by Amazon to aid the sales by Amazon of non-Lush cosmetics.
Finally there is the use of Lush under the heading ‘Brands’ in the left hand side of the page. Clicking on the item reveals Lush Hair Extensions and other Lush branded products, all being properly (so far as this case is concerned) so branded and none of them having anything to do with the Claimants. Any claim in relation to this use fails.
I have reached the above conclusions without referring to the evidence of confusion to which Lush drew attention. This evidence was of communications from customers and plainly there has been some actual confusion. However, it is very difficult to evaluate this evidence since I know nothing about the particular consumers concerned or their circumstances. Nor do I think I am in any real position to determine how common are these instances of confusion. The examples I have seen support and are consistent with the conclusions I have reached, but I have not relied upon them in coming to these conclusions.
I now turn to the issue of joint tortfeasance, all my previous remarks referring to Amazon without distinguishing between the separate activities of the two Defendants. This is a factual matter of importance to the Defendants, although it was not explained why since it was accepted that any order of the court, including any injunction, would be satisfied jointly by the two Defendants.
The pleaded case is that each of the Defendants has acted in concert with the other in furtherance of a common design and has infringed trade mark. There is no dispute between the parties as to the relevant law, as usual the dispute is in relation to whether, on the facts, the allegation is made out.
The principal modern authorities were cited by Arnold J in L’Oreal v eBay International [2009] RPC 21 at [346] to 352 and there is nothing to be gained from a repeat. The underlying concept is that each alleged joint tortfeasor has been so involved in the commission of the tort as to make himself liable for it. If there is a common design or concerted action or otherwise a combination to secure the doing of infringing acts, or if there is an action in concert pursuant to a common design, then each of the combiners will be liable. On the facts of that case, Arnold J held that joint tortfeasance was not made out.
The facts here are that the second Defendant, a Luxembourg company, operates the website at amazon.co.uk whereas the first Defendant, a UK company, operates fulfilment centres in various parts of the UK, through which goods sold by the website are dispatched to customers, and provides logistic services to the second Defendant. The first Defendant also leases offices in Berkshire and provides marketing, legal, accounting and other services which support the operation of the second Defendant’s web business.
I heard evidence from a number of witnesses who described various parts of Amazon’s business. Dr Fliedner, an employee of Amazon.de GmbH, an affiliate of the Defendants, described how he was responsible for a team of software developers working on the Amazon product search engine and that, although his focus was on the www.amazon.de website, since there was significant functionality cross over between the second Defendant’s websites, much of his work relates to the operation of the amazon.co.uk site. His evidence, elicited in cross examination was entirely consistent with, if not positively supportive of, the conclusion that the first Defendant is intimately involved with the Second Defendant’s website. Mr Shipley, a senior manager and employee of the first Defendant said he and his team provided a number of services which supported the operation of the second Defendant’s web business. In particular he said he carries out a number of tasks although his principal role focused on supporting the operation of free and paid search marketing for the amazon.co.uk website. It is plain that the first Defendant is intimately involved with optimizing the website so that it appears organically in response to search items and also with the adwords aspect of the second Defendant’s business in the UK.
Mr Stokes, legal counsel for the first Defendant, gave evidence about the marketing, legal accounting and other services which he said supported the operation of the second Defendant’s web businesses. Furthermore documents disclosed show contractual arrangements between the Defendants whereby the first Defendant provides pre-sale marketing services as well as post-sale services. Other documents, for example from the legal department, show that the first Defendant holds itself out as responsible for the operation of the amazon.co.uk site. In addition there is the pleaded admission that the first Defendant carries out fulfillment services for the second Defendant, that is to say, is responsible for getting the goods to the customer and dealing with customer service and returns handling.
Having heard the evidence I have no doubt that the first and second Defendants have joined together and agreed to work together in the furtherance of a common plan which includes doing the acts which are complained of by the Claimants in these proceedings. I regard the protestations that the first Defendant is not involved at all or is merely facilitating the doing of the infringing acts as distinct from sufficiently participating in them as being wholly unreal and divorced from the commercial reality of the situation. In my judgment the allegation of joint tortfeasance succeeds.
