Mills & Reeve: Technology Law Update

Interflora v Marks and Spencer- take care when using keywords!

The High Court has recently ruled in Interflora’s favour in its long-running dispute with Marks and Spencer (Interflora, inc and Interflora British Unit v Marks and Spencer plc and Flowers Direct Online Limited [2013] EWHC 1291 (Ch)).

What is keyword advertising?

Keyword advertising is where a search engine (e.g. Google) is paid by an advertiser to display advertisements on its search engine results page when an internet user types in a search term.

The use of other companies trademarks are often used as keywords as they allow the advertiser to attract the attention of consumers who are familiar with their competitor’s brand and provides them with the opportunity to attract these consumers to their website and offer them an alternative product or service. This practice has been recognised by the courts as promoting competition.

Facts of the case

Marks and Spencer (M&S) had purchased the key word “INTERFLORA” in Google Adwords when advertising its own flower delivery service. “INTERFLORA” is a registered UK trademark and Community trademark owned by Interflora who operate a flower delivery network in the UK.

This meant that adverts for M&S’s flower delivery service were displayed when consumers typed “Interflora” into Google. The INTERFLORA mark was not visible in the M&S advertisements and was not used on the M&S website. The court found that a significant proportion of consumers then clicked on the M&S adverts apparently believing that the M&S flower delivery service was part of the Interflora network.

The High Court judgment

The High Court ruled that M&S had infringed Interflora’s trademark when it used the “INTERFLORA” mark as a keyword in its advertisements.

Mr Justice Arnold came to his conclusion essentially because the M&S advertisements did not enable a reasonably well informed and reasonably attentive internet user, or enabled them only with difficulty, to ascertain whether the service referred to in the advertisements originated from Interflora, a company in its network, or from a third party unconnected with Interflora’s network.

The ruling highlights that the onus is on the advertiser to ensure its adverts are clear as to the origin of the goods or services which it is advertising. Mr Justice Arnold found that M&S had failed to discharge their responsibility as it was not made clear that the M&S flower delivery service was not part of the Interflora network and was instead competing with it. There was nothing in M&S’s advertisements which would have allowed the consumer to distinguish the true relationship between M&S and the Interflora network.

While the ruling is to an extent particular to the facts of the case, businesses should review their existing, and carefully consider proposed new, Adwords, for potential trademark infringements.

The dangers of copy and paste

You wouldn't expect a judge to commit plagiarism, but it seems that is what happened in the case of Crinion v IG Markets [2013] EWCA (Civ) 587.  Rather than drafting his own judgment from scratch, it seems that the judge took the Word version of counsel's submissions and largely copied it with only a few modifications made.

Plagiarism is something often discussed in the educational context, however, as this case reminds us, it has a far wider reach.  Businesses, large and small, need to be alive to the possibility of intentional or accidental plagiarism (or copyright infringement) by its employees.  In the digital age, this is of even greater risk where text, graphics or photos can easily be copied and pasted from a website and permission to use the material is not obtained. 

With copyright infringement comes the risk of court proceedings, legal fees and possible damage to brand reputation. So what should businesses do? Without computer programmes to check if content has been copied, it can be difficult for companies to identify whether something is original or copied from elsewhere.  Businesses might want to consider creating guidelines and providing training to employees, explaining what constitutes plagiarism and/or copyright infringement, how to avoid it and the possible consequences of copying another's work. 

Personalised Pricing in the Online Marketplace

We thought it worth flagging that the Office of Fair Trading published a report in May to help consumers understand how the use of their personal information and internet conduct is affecting the price they pay for goods and services online. The report also offers valuable guidance to online retailers, explaining how to avoid unfair, misleading or aggressive practices when personalising prices.

In summary, the report found no evidence of online businesses using cookies or repeat searches to increase prices. In fact, the OFT discovered that personalised pricing is commonly used to benefit consumers, for example by targeting people with certain online behavioural patterns in order to offer them a discount.

However, the message coming out of the report is that online retailers should, in general, be more transparent about the information they are collecting from consumers and how it is being, and will be, used. The OFT has reiterated that it will consider enforcement action if it finds evidence of any misleading or unfair practices online.

Maasai™? How the Maasai are seeking intellectual property rights

The semi-nomadic people of Kenya and north Tanzania, the Maasai, have had their iconic cultural brand exploited by companies across the world, for products ranging from cars, to shoes and even wine.  They are now working to protect and take control of their brand and in doing so aim to generate a valuable source of income all Maasai people, 80% of whom currently live below poverty levels.

A new organisation, the Maasai Intellectual Property Initiative was founded and is supported by Light Years IP, an NGO which specialises in assisting developing countries to gain ownership of their IP.  Ron Layton, founder and head of Light Years IP has argued that "the Maasai brand is one of the most used cultural brands in the world" and estimated that it could be worth tens of millions of dollars each year. 

To quote the Maasai Intellectual Property Initiative,  they "are working to obtain licenses from companies who currently use our Intellectual Property.  We are also working on Trademark rights, and building Authenticity for the Maasai Mamas to return more income through Direct trade."

It is not yet certain if the Maasai will pursue IP protection and elders are currently travelling around Maasai areas to ensure that the whole community is in support of the initiative.  If the Maasai do decide to seek IP rights, they plan to create a General Assembly of Maasai elders who would be trained in IP and would act as a legal body to negotiate with companies on licensing and use of the Maasai's IP.  It is proposed that this would be underpinned by a constitution setting out how income generated would be distributed and used.

The question should be asked, however: just how could intellectual property rights be used to protect the Maasai's image?  There are currently no intellectual property rights which specifically protect the cultural identity of an ethnic or national group equivalent to protected designations of origin, which protect the names of agricultural products and foodstuffs originating from a specific region (such as Melton Mowbray pies). 

This leaves the Maasai with the option only of registering their name as a trade mark, but this faces the following difficulties, at least in the UK and the EU:

• Who would apply on behalf of the Maasai people to register their name as a trade mark?  They do not collectively constitute a legal entity capable of owning a trade mark, and this would need to be addressed.

• Other traders have already registered UK and Community trade marks consisting of, or incorporating the words "Maasai" and "Masai".  Any application on behalf of the Maasai people to register their name as a trade mark may be opposed by one or more of the owners of these trade marks.

• An application to register the Maasai name (which is geographically distinct) may be refused (at least in the UK and EU) as being deceptive as to the geographical origin of the goods or services, however, this does not seem to have prevented the existing registrations referred to above.

• For the Maasai people to ensure they have an absolute worldwide monopoly in their name, they would have to register it in every jurisdiction all 45 classes for all goods and services.  Even if this were achievable, it would be prohibitively expensive.

• Trade marks are (or should be) registered for the goods and services for which they are or will be used.  Some countries (such as the USA) have very stringent use requirements and most provide for revocation of trade mark registrations where no genuine use is made of these for a period after registration (typically 3 or 5 years).  This could make it difficult for the Maasai to maintain their registrations for all goods and services to the extent they have not been used by, or with the license of, the Maasai entity owning the marks.

Absent an international treaty allowing indigenous or ethnic groups to secure a monopoly in the use of their name (something which is likely to be difficult to negotiate and agree), the Maasai are left with no practical option but to apply pressure (including by "naming and shaming" ) to commercial users of their name, with a view to persuading them to sign up to a voluntary code and to pay royalties for their use, hoping that this  creates an industry norm.

So far the Maasai Intellectual Property Initiative engages in lobbying and letter writing where they have found use of their images offensive.  Just how far they decide to go in trying to protect their cultural brand from exploitation, and what success they achieve, remains to be seen.

Bye bye England: what will happen to Community Trade Marks and Community Registered Designs if the UK or another Member State says “Good-bye”?

With the recent debates about an in-out EU referendum rumbling on, the relationship between the UK and the EU is under continuing scrutiny. The political and economic issues of a withdrawal may take newspaper headlines, but the impact on Community trade marks and registered designs should not be forgotten either.

It has become increasingly common for businesses, instead of registering trade marks or designs on a national basis within the EU, instead to register a Community trade mark or design – this is a single registration which covers all EU member states  and which has been praised for administrative ease and cost effectiveness.  

Whilst Community trade mark and design legislation provides for the extension of Community trade mark and design protection to new countries joining the EU, the possibility of any country leaving the EU appears to have been regarded as inconceivable. The legislation is silent to what would happen if, for example, the UK were to leave the European Union.  

After Ireland left the United Kingdom in 1921, owners of existing UK trade marks and registered design were entitled, on payment of a fee and within 6 months of the commencement of the relevant legislation, to register their UK trade mark or design as an Irish trade mark or design (without any change in the priority date).

If a similar procedure were to apply in respect of CTMs and CRDs on the UK leaving the EU, this would place the onus on owners to apply to have their trade marks and designs separately registered in the UK, failing which they would lose protection in the UK (unless there was already a corresponding UK registration).  Apart from placing a considerable administrative burden on the UK IP Office, this could also result in significant costs to owners of large portfolios, who would have to pay additional registration and renewal fees.

Other alternatives include (i) allowing existing CTMs and CRDs to continue to apply to the UK until they are up for renewal; or (ii) automatically converting existing CTMs and CRDs into UK registered trade marks and designs administered by the UK IP Office.

But that bit is actually the easy bit when you consider the other issues that will need to be resolved:

1. Exhaustion of rights

Community trade marks and design legislation provides that owners of CTMs and CRDs will not be entitled to prohibit their use in relation to products which have been put on the market in the EU by them or with their consent.  This is known as the “exhaustion of rights”.

• If the UK were to leave the EU, would owners of the “descendant” UK trade marks be entitled to prohibit the importation into and sale in the UK of products, which they first placed on the market elsewhere in the EU Member States? 

• If so, would it be relevant whether these products had first been placed on the market before or after the UK left the EU?

• What would happen if ownership of the “descendant” UK trade mark were to be transferred to an entity different from the owner of the corresponding CTM?  Would a trade mark owner be entitled to oppose the importation of products lawfully bearing an identical UK trade mark into EU Member States, even though that trade mark originally belonged to a subsidiary or affiliated company?

2. Licences

• What would happen to EU-wide licences of CTMs and CRDs? Would the licence also continue to apply  to the “descendant” rights in the withdrawing state and would the licensor be prohibited from transferring its ownership to another party? 

• How would a licence expressed to be granted in respect of a CTM or CRD even be read after a split?

And a final, more economic point for brand owners to note - if the UK does end up outside the EU, however CTMs and CRDs are dealt with, it is more than likely that businesses wishing to protect their trade marks and designs in Europe will be faced with additional registration costs. 

Written by Richard Plaistowe

Have you got designs for the future?

Last week the Queen told us that "A further Bill will make it easier for businesses to protect their intellectual property". The day after this announcement, a new Intellectual Property Bill had its first reading in the House of Lords. It primarily relates to design rights (both registered and unregistered) and notably changes the rules on first ownership of rights in designs - under the current drafting, commissioning the creation of a design will no longer automatically entitle you to ownership of the resulting design. 

This change will make the ownership rules applicable to designs more consistent with the ownership rules applicable to copyright. So, if the Bill is passed in its current form and you subsequently pay a designer to create a design, then in order to own all rights in the resulting design, you will need to obtain an assignment of these rights from the designer (unless the designer is one of your employees).

A general debate on all aspects of the Bill is scheduled to take place in the House of Lords on 22 May.  We will follow this with interest.

Does browsing the web make you a copyright infringer?

The UK Supreme Court recently considered an interesting appeal in Public Relations Consultants Association Limited v The Newspaper Licensing Agency Limited and others, concerning the status in copyright law of temporary copies of web pages held in an internet browser cache or on the screen of end users reading those pages. Although on the face of it this is a fairly esoteric topic, it has made it this far through the judicial system because the outcome has significant commercial implications for interested parties (primarily web publishers) and significant public policy implications.

At first instance, and then by the Court of Appeal, it was held that without a licence, the end-user was breaching copyright by storing temporary copies of web pages, if they received headlines and extracts from those web pages via the third party aggregator involved - Meltwater.

Meltwater provided PR professionals (members of the Public Relations Consultants Association Limited – referred to collectively as PRCA members) with a web monitoring service, monitoring news articles on PRCA members’ clients. Meltwater created monitoring reports with the opening words of the article, the keyword (and several words on either side) and a hyperlink. Meltwater is licensed by the NLA to create and distribute the reports, and it had previously been agreed that the PRCA members would need an end-user licence to view articles on monitoring reports sent from Meltwater by email (essentially because an email is not a temporary copy so could not fall within the scope of Article 5(1) Copyright Directive – more below).

The other method of viewing the reports was on Meltwater’s website – in practical terms this technically involves creating further copies of the article extracts, in the PRCA member’s browser cache. Is that unlawful copying for copyright purposes?   

The answer lies in the scope of the exception provided under Article 5(1) of the Copyright Directive (Directive 2001/29/EC), which allows temporary copying (which would otherwise be infringing copies) provided certain criteria are met. The copy must:

• be transient or incidental; 
• be an integral and essential part of a technological process;
• have no independent economic value; and
• its sole purpose must have been to enable a lawful use or transmission in a network between third parties.

The Supreme Court analysed the various elements of this test, and came to the conclusion that cached browser copies of web pages are copies that should fall within the Article 5(1) exception. Above all, the Court accepted that, as a statement of the current state of the art, temporary copying is essentially how web browsing works – it is an essential part of current browser technology (although this may not always be the case). The same is true of web search – Google (with some exceptions) caches web pages on its servers, and searches against that cache. 

The exception does not extend to downloading or printing web pages (and retaining or distributing the resulting digital or paper copy). As the Court recognised, “if it is [copyright] infringement merely to view copyright material, without downloading or printing out, then those who browse the internet are likely unintentionally to incur civil liability […] by merely coming upon a web-page containing copyright material in the course of browsing […] which would make infringers of millions of [internet users] across the EU…”

In an interesting aside, which really gets to the nub, the Court noted that the licence fee which should be payable by Meltwater to the NLA may well reasonably be higher than it currently is, if the PRCA members do not need (and so have not paid for) their own licences to view the article extracts where the reports are accessed via Meltwater’s website. So although this decision may not go the NLA’s way, it might ultimately get the commercial outcome it is after.

Going back to those millions of internet users like you and me, the Supreme Court decided that the European Court of Justice ought to clear this up once and for all and has accordingly made a reference for a decision on the scope of Article 5(1) in relation to cached copies of web pages.

Does the UK need more investment in R&D?

I've just had an article (written by the BBC's tech correspondent Rory Cellan-Jones) pointed out to me, which questions why the UK, and Cambridge in particular, doesn't have more 'world-class technology companies', given its big role in the history of the computer.

The article does go on to mention some big Cambridge success stories (ARM, CSR and Autonomy) and how the introduction of the Raspberry Pi may be the first step to ensuring a new generation of computer science enthusiasts, but the basic suggestion seems to be that there is not enough investment in the UK in:

1. R&D generally (1.7% of GDP in the UK, as compared to 2.8% in Germany and 2.9% in the United States); and

2. Tech companies - once they want to move on from small start up to the next stage, they are often 'selling up to big American firms' (this from Dr Mike Lynch, Autonomy's founder who sold on to HP of course).

So, is there anything that can be done to improve this situation? One suggestion was for the UK government to 'think more about using its own procurement budgets to help UK firms in the way the US did'. This may however be difficult - you'll probably be aware that the European Commission recently failed to approve a planned tax break for the video games industry (for games where more than 80% of production was in the UK) on the grounds that 'no obvious market failure' in competition needed to be addressed (see article here). On that basis, would an attempt by the government to ensure more business for UK tech companies be seen by the EU as an attempt to unfairly distort competition?

We'd like to hear your thoughts on this...

Court of Appeal raids the Patents Court for intellectual expertise

Yesterday saw the formal appointment of another patents judge to the Court of Appeal.  The Lord Chief Justice's Court was packed with other judges, members of the Bar, Solicitors and Patent and Trade Mark Attorneys welcoming Sir Christopher Floyd's elevation to the Court.  The Lord Chief Justice and Henry Carr QC (11 South Square, Sir Christopher's former chambers) gave strong speeches of support; the LCJ recording his past service amongst other things no Bar Committees and the Copyright Tribunal; Henry Carr added congratulations on Sir Christopher escaping having to handle "on his own" rafts of Smart Phone litigation (eg here and a selection here), where he was facing multiple large teams of practitioners putting forward their complex arguments, also adding just a careful and restrained sprinkling of anecdotes -- no doubt mindful of future appearances.  Sir Christopher will be a sad loss from the Patents Court; he will be a valuable addition to the Court of Appeal following the retirement (or part retirement) of Sir Robin Jacob.  His appointment is a reminder of the calibre and strength of UK judges in the intellectual property field, keeping the UK Courts as an attractive forum for both UK and international litigation -- a point alluded to by the LCJ, perhaps a basis on which the UK judiciary should be awarded the Queens Award for services to export.  Congratulations.

Younger UK IPO Mediation Service

Lord Younger, the Intellectual Property Minister, announced today that the UK IPO Mediation Service, which was established in 2006, is to be modernised.  The aim if to make resolving intellectual property disputes outside of the Courts cheaper and quicker for small businesses.

Some of the changes include a reduction in mediation fees, options for mediation which include short telephone sessions and access to mediators who specialise in a wider range.

The UK IPO’s Mediation Service resources can be accessed here.