The European Union’s Court of Justice has ruled in the long-running Interflora case against Marks & Spencer, which involves bidding on trademarked terms, and the decision is no clear victory for either party. Instead, it OKs trademark bidding so long as the resulting ad offers an alternative to the mark holder’s service and doesn’t cause dilution, tarnishment or adversely affect the functions of the trademark.

The case involved a situation in which retailer Marks & Spencer bid on the florist network’s trademarked keywords and phrases, including variants, in Google AdWords in the United Kingdom. Interflora accused M&S of unfairly trading on its trademarks.

Interflora, for its part, says it is “delighted” with the ruling. It does limit advertising including trademarked keyword bidding in certain cases:

• Where a reasonable internet user might be confused about the origin of the goods or services offered in the advertisement.
• Where it damages the trademark holder’s ability to maintain a good reputation or advertise itself successfully.
• Where the ad takes unfair advantage of the “distinctive character or repute” of the trademark or where the advertising harms the distinctive character or repute. An example would be if the advertising would contribute to turning the trademark into a generic term.

The final decision as to whether Marks & Spencer is liable in the case will come when the High Court of the UK applies the ruling of the European court. That’s expected to occur next year.

Previously, the European Advocate General had recommended against allowing trademark bidding.

In the European Union, Google permits the use of trademarks as keywords, except in cases where they would be “confusing as to the origin of the advertised goods and service.” It allows other uses such as competitive keyword bidding and bidding by resellers of the goods being advertised.

Related Topics: Channel: SEM | Google: AdWords | Legal: Trademarks

About The Author: Pamela Parker is a contributing editor for Search Engine Land and Executive Features Editor at Marketing Land. She’s a well-respected authority on digital marketing, having reported and written on the subject since 1998, including a stint as managing editor of ClickZ. She’s also worked to help monetize independent publishers’ sites at Federated Media Publishing. She blogs about media and marketing at The River and about cooking, gardening and parenthood at Free Range. She can be found on Twitter as @pamelaparker. See more articles by Pamela Parker

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