Marks & Spencer and other companies which buy competitors’ trade marks as search engine keywords have suffered a blow in the Court of Justice of the European Union (CJEU).

In its long-awaited ruling in the case between Marks & Spencer and Interflora, the CJEU ruled that purchasing another party’s trade mark as a keyword could infringe the trade mark proprietor’s rights.

The Court ruled that infringement occurs if the keyword’s use affects the original trade mark in two of its key functions: its ability to identify the origin of goods or services and its ability to preserve the proprietor’s reputation, which attracts consumers.

The decision also confirmed that proprietors of a trade mark with a reputation can prevent a competitor from such advertising where the competitor’s use of the keyword is free riding on or is detrimental to the trade mark’s reputation, or where it results in a dilution of the trade mark’s distinctive character.

The judgment could reduce the widespread online marketing tactic, used across many industries. The ruling is one of several which have helped to determine European law around online brand protection.

A previous ruling by the CJEU on a case between Google and Louis Vuitton had established that the sale of a trade mark as a keyword is not a trade mark infringement per se, effectively absolving search engines of any wrongdoing.

The ruling answers questions referred to the CJEU by the High Court of Justice of England and Wales during the 2009 case Interflora vs Marks & Spencer. Interflora launched the law suit against Marks & Spencer after the British retailer bought ‘Interflora’ as a Google AdWord, ensuring a link to the Marks & Spencer’s online flower shop appeared every time an internet user searched for ‘Interflora’ in Google.

Brand owners will be encouraged that their competitors no longer have a completely free rein over use of their trade mark as a keyword. But, the practice of purchasing rivals’ trade marks as keywords is widespread, and marketers may now have to think of other creative ways to advertise their brands on the web.

Google is likely to be disappointed with the ruling. The revenue Google generates from its AdWord service is significant. Companies will now be a lot more cautious with their choice of AdWord.

Trade mark law has at times struggled to keep up with the challenges of the internet age. The opportunities presented by online advertising were unforeseeable when our system of law was conceived. Google innovations like AdWords have presented unique questions that trade mark law is only now providing answers for.

Unless a settlement between Marks & Spencer and Interflora is reached first, the High Court of Justice will now return to the original case and make a decision in the light of the EU Court’s ruling, once evidence has been presented by both sides.