Will AI dethrone trademarks in E-shopping?

By Mariya Nikolova Trademarks | Designs Attorney IP Hills | Ipsilon Group

Artificial Intelligence (AI) is reshaping the world around us and, among other things, is transforming how we shop, interact, and make purchasing decisions. The prevalence of AI applications such as chatbots, recommender systems, and voice assistants prompts critical questions about their implications. This article explores whether these AI applications enhance convenience at the expense of consumer autonomy and examines their impact on trademark rights in the digital economy.

The role of trademarks in making purchasing decisions

Our purchasing decisions have long been influenced by trademarks. Think about how you choose a new smartphone or a pair of running shoes. You likely rely on well-known or trusted brands to help you decide what to choose.

The law preserves the distinctiveness of marks as a way for consumers to identify a product or service and the EU Court of Justice has recognized that, in addition to indicating origin, trademarks can perform quality, advertising, investment, and communication functions as well.

Traditionally, trademarks have always relied on the notion of the “average consumer”, a recipient with human characteristics (e.g. human perception, feelings, subconscious etc.) to be able to fulfil their functions. Direct communication with a human recipient is essential for trademarks to be able to signal origin, guarantee quality, to help consumers make informed choices, to build trust and provide assurance about a product’s or service’s attributes​​.

The changing landscape with AI

AI is establishing its presence in e-commerce and is undoubtedly changing the way consumers make purchasing decisions. According to the Financial Times, more than 50% of Amazon’s Alexa customers are now using it for shopping, while the European Data Protection Board highlights that there are currently more than 3 billion smartphones and all of them have integrated virtual voice assistants, most of them switched on by default.

But why are these AI applications so popular? Imagine you are grocery shopping for breakfast cereal, instead of feeling overwhelmed with all the different options available, you could rely on a recommender system that suggests cereal based on your dietary preferences and past purchases, or you might ask ChatGPT to suggest the “best” cereal for your breakfast.​​ Voice assistants like Amazon’s Alexa take convenience even further, as its algorithm can suggest products based on a buyers personal shopping history and execute the purchase. You can simply say, “Alexa, order my favourite cereal,” and it’s done without ever seeing a brand name. Without a doubt, these AI applications make your shopping trip more time efficient and enhance your overall shopping experience.

How do AI applications impact trademarks?

These developments have significant implications for trademarks, as it seems that AI applications can act as a filter between the consumer, the product/service and the brand, while also affecting the information available to the consumer and the extent of consumer autonomy in executing the purchase.

In practice, AI applications usually recommend a limited number of products to the consumer when prompted to search for a product. Therefore, the consumer is not aware of the full range of products available on the market and is thus met with a relatively limited set of choices, even if ultimately, he or she makes the purchasing decision. On the other hand, AI tools like Amazon’s Alexa can even take the role of the “primary purchaser” with very little human input. In this case, not much prominence would be afforded to a brand name, as from the outset, AI-driven purchasing decisions are based on data rather than emotional factors.

Furthermore, AI applications might prioritize products from companies that pay for better placement in search results, rather than those that best meet consumers’ needs and quality standards. However, this is no different from a conventional in-store shopping experience, where specific products are displayed on higher or lower shelves, and human shopping assistants often recommend specific products or services over others, depending on the seller’s interests. The acceptability of this practice is supported by the Google France v. Louis Vuitton (Google AdWords) case, which, when adapted to the AI environment, confirms that paid placement does not constitute trademark infringement if it does not mislead consumers about the origin of the goods or services.

A potential liability issue could arise when AI applications recommend counterfeit or trademark infringing products. Decisions such as L’Oréal v eBay confirm that companies can be, indeed, held liable for trademark infringements that resulted from their user’s postings, if they were actively aware of the infringing activity. Similarly, the Cosmetic Warriors Ltd and Lush Ltd v Amazon.co.uk Ltd and Amazon EU Sarl case, when adapted to the AI environment, suggests that an AI provider could be held liable in case an AI application recommended a counterfeit or trademark infringing product. However, the determination of liability would depend on the specifics of each case.

The author’s opinion

While virtual assistants are unlikely to fully replace humans in purchasing decisions in the immediate future, we can already see the ease with which purchasing power can be delegated to them. This shift marks the beginning of less direct brand interaction between consumers and businesses. Therefore, it is crucial to ensure that the framework underpinning trademark law keeps the pace with these developments, while also ensuring transparency in how AI systems operate and ultimately preserving consumer autonomy in the digital marketplace.

Sources: 

Dave Lee (2023), Amazons Big Dreams for Alexa Fall Short, The Financial Times

Dessers, Vilté K. (2019), Alexa, are you confused? Unravelling the interplay between AI and (European) trademark law, CiTiP KU Leuven, available at https://www.law.kuleuven.be/citip/blog/alexa-are-you-confused-unravelling-the-interplay-between-ai-and-european-trademark-law/

EDPB, Guidelines 02/2021 on Virtual Voice Assistants (7 July 2021), available at: https://edpb.europa.eu/our-work-tools/documents/public-consultations/2021/guidelines-022021-virtual-voice-assistants_en 

Lee Curtis and Rachel Platts (2020), Trademark law playing catch-up with Artificial Intelligence?, WIPO Magazine, avalable at: https://www.wipo.int/wipo_magazine_digital/en/2020/article_0001.html

Marie White, Alexandara Mogyoros, Dev Gangjee (2020), IPO Artificial Intelligence and Intellectual Property: call for views Trade Marks, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3740271

The United Kingdom Government Consultation Outcome, Artificial intelligence call for views: trade marks (2021), available at: https://www.gov.uk/government/consultations/artificial-intelligence-and-intellectual-property-call-for-views/artificial-intelligence-call-for-views-trade-marks

C-487/07, L’Oréal SA v Bellure NV, EU:C:2009:378

C–236/08, Google France SARL and Google Inc. v Louis Vuitton Malletier SA, ECLI:EU:C:2010:159

C-324/09, L’Oréal SA and Others v eBay International AG and Others, judgment ECLI:EU:C:2011:474

Cosmetic Warriors Ltd and Lush Ltd v Amazon.co.uk Ltd and Amazon EU Sarl, [2014] EWHC 181 (Ch)