Lush obtains a judicial victory against Amazon in keyword advertising matter

by Béatrice Martinet Farano

On 10 February 2014, the English and Wales High Court (EWHC) issued an important decision in favor of Lush Ltd (Lush), the famous cosmetics manufacturer which apparently invented the “bath ball”, in relation with the use by the UK division of Amazon (hereinafter Amazon) of its “Lush” brand in keyword advertising and other instances.

In this case, Lush, which had made clear to Amazon that it did not want them to sell their products for “ethical reasons”, launched a trademark infringement action against Amazon, after noticing that Amazon was arguably using its brand without its consent.

Specifically, Lush argued that Amazon was using its brand, without its authorization, in the two following ways:

1. By bidding, or purchasing, on Google AdWords service, keywords including the brand “Lush” so as to trigger a sponsored link advertisement on the Google search engine results page (typically on the right hand side of – or above – what are known as the “natural” or “organic” results) whenever a consumer types “lush” into the search box; and

2. By featuring the “Lush” brand in a number of places on their own website, in response to consumer requests, while knowing that Lush had not authorized them to sell any products of its brand.

1. Use of the “Lush” brand in keyword advertising

With respect to the first type of use, i.e. use in keyword advertising, the Court first noted that, in keeping with established ECJ case law (see e.g. Case C-323-09 Interflora v. Marks & Spencer; Newsletter 6/2011 p.9), to establish infringement under Article 5(1) (a) of the Trademark Directive, Lush had to show (i) a use by a third party of a sign, (ii) identical to its mark, (iii) in relation to goods or services identical to those for which it is registered (iv) in the course of trade, (v) without the consent of the owner of the mark and (vi) that this use affect or is liable to affect one the functions of its trademarks.

As for factors (i)-(v), the Court first observed that, pursuant to the ECJ decision in Google France (see ECJ Joined cases C-236/08 and C-238/08, see Newsletter 6/2011 p.7), the purchase by an advertiser of a keyword identical to a third party trademark in order to display a link to a site on which he offers his goods or services for sales had to be considered a “use” of this third party’s trademark, and this use has to be considered “in the course of trade” since this use was related to the sale of products and services. Since Amazon used a sign identical to the “Lush” brand to offer its own goods or services as an alternative to those of Lush, the Court also held that this use was “in relation with identical products”. As to factor (v) the Court simply observed that this use was not authorized.

The Court then went on to focus on whether such use affected the functions of the mark (factor vi). On this last point, the Court drew a clear distinction between two types of keyword advertising:

(i) Where the brand was only selected by the Advertiser as a sponsored keyword (the link neither features brands by the advertiser, nor does the ad link to, or includes any reference to the advertiser’s brand), the Court stated that none of the functions (indication of origin, advertisement or investment) of the Trademark were affected. The Court reasoned that since consumers would now be familiar with sponsored ads, they would likely not be deceived into believing that a Lush-equivalent product (e.g. bath ball from another brand) sold by Amazon on its website should emanate from Lush for the mere reason that an ad for Amazon appears in the result when they type in the term “Lush” on a third party search engine.

(ii) Where, on the other hand, the Advertiser’s brand was reproduced either on the link featured by the Advertiser, or in the advertisement linked to, the Court considered that this use affected the indication of origin function of the trademark. This was the case even if the ad itself did not include any reference to the brand. The Court reasoned that an average consumer, seeing a link such as “Lush soap available on” would expect to find Lush soap available on Amazon and, even where not finding any of these products on the site, would at least “persevere somewhat before giving up”.

2. Presence of the Lush Trademark on Amazon’s own website in response to user’s request

The Court subsequently went through the second category of use criticized by Lush, specifically the use by Amazon of its brand, in several places of its website in response to users’ request.

With regard to the use of the brand “Lush” in its search box, the Court held that while Amazon could not be held liable when this use was the result of a user entering this term on Amazon search box (no use by Amazon), Amazon was on the other hand liable when it programmed its software so that they could autocomplete the brand “Lush” whenever a user entered the first letters (e.g. lu) or a misspelled version of this brand (e.g. sluch). Here again, the Court observed, for the same reasons stated above that this was an unauthorized use, in the course of trade, of an identical sign, to designate identical products. It went on to assess whether any of the functions of the brand had been affected. On this last point, the Court held that  such use by Amazon of Lush Trademark not only affected the indication of origin function of their brand (since it made it difficult for the average consumer to ascertain whether the goods originates from Lush or an entity linked to it), but also the advertising and investment functions of the Lush trademark since Lush had shown that (i) they relied on the reputation of their mark to attract consumer and (ii) it had built an image of ethical trading, incompatible in their mind with the sale of their products on Amazon.

Similarly, the Court observed that Amazon was making an unauthorized use of the Lush trademark when displaying, in response to user’s request, products unrelated to Lush under categories such as “Beauty-Lush” or “Related search: Lush Bath bomb, lush cosmetic”. The fact that these categories were automatically created by software based on the user request and/or on prior consumer behavior was deemed immaterial by the English Court. Moreover, the Court rejected Amazon’s argument that its search facility would be of benefit to consumers by helping them to navigate its website, holding that “the right of the public to access technological development did not go as far as to allow a trader such as Amazon to ride rough-shod over intellectual property rights, by treating trademarks such as Lush as no more than a generic indication of a class of goods in which the consumer might have an interest.

This decision therefore provides important guidance on online advertising practices and could impact the way retailers use keywords for brands that they are actually not selling.