The High Court, England and Wales, recently handed down its judgment in Cosmetic Warriors Limited and Lush Limited v Amazon.co.uk Limited and Amazon EU SARL [2014] 181 (Ch). This writer, a big fan of Lush's sugary lip scrub, eagerly awaited the judgment. Lush, widely known for its bath bomb products, claimed Amazon infringed its Community trade mark for the sign LUSH in respect of cosmetics and toiletries including, soap.

For laypersons, the basis of Lush’s lawsuit may appear confusing as it is not the typical trade mark infringement case involving the sale of counterfeit goods. In this case, Amazon had not been selling products branded “lush” on its website. So what arguments did Lush use to drop an unexpected bomb on Amazon by suing it for trade mark infringement?

Mr Baldwin QC, sitting as the Deputy Judge, helpfully separated Lush’s claims into three classes of infringement;

1. the sponsored link ad appearing on the Google search engine results page which contained the words “Lush Soap at Amazon.co.uk…Low prices on Lush soap” upon a user typing "lush" into the Google search engine (a direct result of Amazon’s successful bid for the keyword "lush");
2. the sponsored link ad appearing on the Google search engine results page  containing the words “Bomb Bath at Amazon.co.uk” upon a user typing “lush cosmetics bath bomb” (again the result of Amazon’s successful keyword bid); and
3. competing non-Lush branded products appearing on Amazon’s search results page upon a user typing "lush" into amazon.co.uk search engine and clicking one of the options automatically appearing in the drop down box such as “lush bath bombs” or “lush cosmetics”. Similarly, continuing to type the whole word “lush” into the amazon.co.uk search engine brought up a range of competing non Lush branded products, including bath bombs.

The issue for the High Court was whether the six conditions of Article 5(1)(a) of Trade Mark Directive 2008/95 were satisfied in order for Lush's infringement claim to succeed. Namely (1) there must be use of a sign by a third party within the relevant territory (2) the use must be in the course of trade (3) the use must be without the consent of the proprietor of the trade mark (4) the use must be of a sign which is identical to the trade mark (5) the use must be in relation to goods or services which are identical to those for which the trade mark is registered and (6) the use must be such as to affect or be liable to affect the functions of the trade mark.

In relation to the first two classes, the High Court followed the ruling in Google France (Case C-236/08). The purchase of keyword advertising identical to a third party’s trade mark (in this case Amazon’s purchase of Lush’s CTM for the word LUSH as a keyword)) to offer its own goods for sale constitutes a “use of the third party’s trade mark in the course of trade”. Amazon had not obtained consent from Lush to utilise its CTM on its UK site.  Lush had taken a deliberate commercial decision not to sell its products through Amazon due to building up a reputation as an ethically trading company. Additionally, the products offered by Amazon on its website related to the same type of goods as the products manufactured and sold by Lush (e.g. bath bombs). The most contentious issue related to condition 6 above: whether one of the functions of Lush’s CTM was affected. The first and second class fell on either side.

In respect of the first class, the High Court held that the average consumer was essentially outwitted by Amazon’s sponsored ad. The function of indicating origin of Lush's CTM was adversely affected because the sponsored ad did not enable a reasonably attentive user to easily ascertain whether the goods referred to by the ad originated from Lush. An average consumer seeing the sponsored ad would expect to find Lush soap on amazon.co.uk due to Amazon’s reputation as a reliable supplier of a wide range of goods.

Contrary to the decision in respect of the first class, the High Court held there was no trade mark infringement for the second class.  The sixth condition of Article 5(1)(a) of the Directive was not satisfied. Lush are brand-conscious enough so that an average consumer would expect to see a sponsored ad for Lush products to include the word LUSH.

In respect of the third class, Amazon raised an interesting defence. It is Amazon’s software that controls the options that appear on the drop-down box in the search engine on Amazon’s website and it is consumer behaviour patterns which dictate the drop down options. Mr Baldwin was clear that such a  right of the public to access technological development does not go so far as allowing traders such as Amazon to, “ride rough shod over intellectual property rights”.

The High Court discussed at length whether the second condition of Article 5(1)(a) of the Directive was satisfied. If a trade mark is to be “used in the course of trade” then following Google France what is required is at the very least commercial communication by a third party in relation to the relevant goods. Amazon's automatic drop down box options containing the word "lush"  were held to be part of Amazon’s commercial communication to consumers i.e. its usual course of trade. The average consumer would be unaware that Amazon’s drop down box options are generated by consumer behaviour and would simply view these drop down options as helpful in assisting to locate a Lush product.

In relation to the sixth condition in respect of the third class it was held consumers would, similarly to the first class, expect to see a Lush product. When the consumer clicked on the drop down box option containing, for example, "lush Bath Bombs" there was nothing to overtly indicate that Lush products were not available for purchase on Amazon's site. The High Court further held the investment function of Lush's CTM was damaged. Lush is renowned for its ethical trading and selling on amazon.co.uk whose position on tax some find "repugnant" (as admitted by a senior manager of the defendant) would damage this image.

Overall, this case provides a warning to companies that such use of a sign identical to a third party's trade mark to induce consumers into purchasing a competing product is potentially unlawful. Particularly if such use causes confusion as to whether or not the competing products originate from the trade mark owner. Online retailers using this "bait and switch" strategy would be well advised to add a statement, which is obvious to the consumer's eye, that the goods are not the product of the trade mark owner.

It is not yet known whether Amazon is appealing. Amazon viewed the third class relating to the search engine on its website as the heart of its business model and an appeal does not therefore look unlikely. Further, Lush's win has potentially opened the floodgates for other claimants.

For example, typing "the Cambridge" into Amazon's search engine produces a drop down option for "the Cambridge satchel company". Clicking on this option results in satchels produced by third parties. It is a similar case for "Longchamp" in relation to its famous "le pilage" handbags and "Mulberry" in relation to its famed handbags and purses. There may indeed be others.

This case was not however the last bomb to be dropped on Amazon by Lush.

While Mr Baldwin commented that Lush's decision to register the words CHRIS NORTH (the name of Amazon's managing director) as a trade mark was pretty bizarre (albeit irrelevant to the case), Lush's reasoning has recently become clear. Lush have released a new Chris North shower cream labelled "rich, thick and full of it". While this writer is amused, I would have preferred to see Lush release a new bath bomb: a legal explosion!

Class 46 thanks Natasza Slater for preparing this case note.