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Cosmetic Warriors defeat Amazon over Lush Trade Mark Infringement

Cosmetic Warriors defeat Amazon over Lush Trade Mark Infringement

Friday 21st February 2014

Cosmetic Warriors Limited and Lush Limited (the registered proprietor and exclusive licensee of the European Community Trade Mark Lush in relation to cosmetics and toiletries, including soap) have won a trade mark infringement claim against Amazon.co.uk Limited and Amazon EU SARL.

On 10 February 2014, John Baldwin QC decided in favour of Cosmetic Warriors Limited and Lush Limited (together “Lush”) in their trade mark infringement claim against Amazon.co.uk Limited and Amazon EU SARL (together “Amazon”) http://www.bailii.org/ew/cases/EWHC/Ch/2014/181.html.

Amazon, the well-known online shopping retailer, sells both its own goods and goods of third parties on its website. Lush is also a well-known manufacturer and supplier of cosmetics under the Lush brand, particularly of colourful soaps and bath bombs.

For commercial reasons (including its “reputation of ethical and environmentally friendly trading”), Lush took the decision not to allow its goods to be sold on Amazon.co.uk because of the difference between its standards and those which it attributed to Amazon and because of the potential damage to Lush’s reputation. A senior manager of Amazon.co.uk accepted that some consumers would find Amazon’s attitude (or perceived attitude) to, say, UK taxation as repugnant and unattractive. Although some sales had been made by Lush on the US and French Amazon sites this was not held to be relevant in relation to the UK market.

Despite not selling Lush products, Amazon (via software that it had created) decided that it was commercially advantageous for it to bid on Google adwords including the mark LUSH. The consequence being that when LUSH is typed into Google, an Amazon sponsored ad would appear on the consumer’s screen (since the claim was brought, Amazon ceased bidding on Lush keywords but did not undertake not to recommence the practice). Two types of advertisement on Google would be created:

  1. Sponsored ads which referred to LUSH in the Ad Text e.g. “Lush Soap at Amazon.co.uk”
  2. Sponsored ads which had no reference to the LUSH mark in the Ad Text.

In addition, on Amazon’s own website, it has its own search facility. When a user begins typing the word “Lush”, after inputting the letters “LU” it would be offered suggestions including “lush bath bombs” and “lush cosmetics”. These suggestions are identified by software which recognises previous searches that have been undertaken on the website (whether by the same user or another user). Searches on Amazon for “Lush” also generated links to suggested “Related Searches” including “lush bath bombs” and “lush cosmetics”. The links generated by all such searches (on Google or Amazon) would then direct users to cosmetics and toiletries products including soaps available on Amazon (whether Amazon’s own products or third parties fulfilled by Amazon or directly by such third parties), which were not Lush products but which were more often than not sold under other brands or generic terms (although none were held to be sold under other well known brands that were obviously not Lush).

John Baldwin QC held that all of these uses constituted use by Amazon in the course of trade without the consent of Lush of an identical sign in relation to identical goods. The only question in order to determine whether there was trade mark infringement was whether the use was “such as to affect or be liable to affect the functions of the trade mark”. This final limb is now the established basis for finding trade mark infringement. In particular in this case Lush were claiming that the use affected the “origin”, “advertisement” and “investment” functions of their trade mark.

It has previously been held that ordinary keyword advertising is not liable to have an adverse effect on the “advertising function” of a trade mark.

The “investment function” would be affected if the use of the sign complained of jeopardised the trade mark’s reputation that was capable of attracting consumers and retaining their loyalty. If the image that the trade mark conveys (through the reputation it has built up) is damaged there is an adverse affect on the “investment function”.

However, usually the main argument will be in relation to the origin function. The established case law on keyword advertising has held that the origin function will be adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty to ascertain whether the goods or services referred to in the advertisement originate from or are connected with the proprietor of the mark or on the other hand from a third party. Previous case law (such as Interflora v Marks and Spencer - http://www.brabners.com/news/interflora-wins-trade-mark-infringement-case-against-marks-&-spencer) has shifted the burden of proof on this issue to the advertiser however in this case the court considered that this was not necessary (and indicated that burden of proof arguments were more suited to exceptional cases). In addition, the Court of Justice of the European Union has pointed out that infringement should be found where the average consumer may erroneously think that the goods advertised emanate from the trade mark proprietor.

Google’s adword policy to date has been that they will only investigate complaints into trade mark infringement where the trade mark has been bid on and appears in the ad text. That said, the Interflora case has given an example where infringement could be found even though the trade mark was not shown in the ad text.

In this case, Amazon argued that consumers were well aware of sponsored links and that even if users were interested by the ad, they would click though and would learn instantly that the goods had nothing to do with Lush. John Baldwin QC distinguished the two classes in that those where the trade mark appeared in the ad text did infringe, and those where the ad text did not show the trade mark did not infringe. The decision was based on the view that where the mark Lush was used in the ad text, the average consumer would expect to find Lush soap available on Amazon and would be lured to the site and not simply click away from the site if it did not find exactly what it was looking for straight away, but would persevere “somewhat” before giving up. The view was that given Amazon’s reputation as a reliable supplier, the consumer would not expect Amazon to be advertising Lush soap for purchase if it were not in fact available for purchase. Conversely it was held that, especially given that Lush are brand conscious, the average consumer would expect the advertisements to include some reference to the Lush mark and the absence of any reference would lead the user to realise that this was just an ad from another supplier offering similar products. Although this may be disappointing news to trade mark owners, it provides some clarity to the existing case law.

In relation to Amazon’s own search engine it was held that its design was carried out in order to maximise the sales of goods from the Amazon site. In the absence of a notice stating that their search matched no results (which other searches on Amazon might generate (including for example the misspelling “Lsuh”), the average consumer’s initial expectation would be that the products are Lush products and they would not be able to ascertain without difficulty that the goods did not originate from Lush. Accordingly this was held to damage the origin function and John Baldwin QC also held this damaged the advertising (their ability to attract custom being damaged by Amazon’s use) and investment (the damage to the investment in their image of ethical trading) functions.

This case provides a useful summary and update on the law following the Interflora v Marks & Spencer and other key word cases. It clarifies for trade mark owners, users and professionals alike what does and does not constitute trade mark infringement in relation to Google Adwords and search engines generally.

For further information on trade marks or other intellectual property advice please contact Hayley Hall or Colin Bell from the Commercial/IP team on 0151 600 3000 or email:   trademarks@brabners.com. Follow the Brabners Commercial/IP Team on Twitter @BrabnersIPCom

Side Note: It appears that had Amazon included a notice reading “Your search “Lush” did not match any products, what about these similar products:”, the decision may have been different as they would have been able to argue that the consumer could ascertain without difficulty that these were not Lush products. It is noted that as at the date of writing, although Amazon have ceased bidding on Google adwords for Lush (and has not recommenced even without reference to Lush in the ad text), it continues to use the same search mechanisms (which were found to infringe) on its own website and still does not include any notice that there are no results for Lush. It is expected that the decision will be appealed.

Side Note: John Baldwin QC commented on certain actions by Lush which he considered bizarre, namely successfully applying to register the name of Amazon’s managing director as a trade mark. Lush claim to be applying the "Christopher North" brand name to a shower smoothie, described as "rich, thick and full of it" – although it does not currently appear on sale on the website.

Side Note: Although Cosmetic Warriors Limited have an existing trade mark registration for “BATH BOMBS” in relation to cosmetic products and toiletries, John Baldwin QC noted that although BATH BOMB was once uniquely associated with Lush, it became generic about 20 years ago and Lush has no rights in relation thereto (given the registered trade mark, we presume that Cosmetic Warriors Limited might disagree).