The High Court ruled against Amazon, which does not sell Lush products, saying that the typical consumer would be confused into thinking that products listed on Amazon in a search for "Lush" were genuine Lush products.
The court said that Amazon can still use "lush" as a paid-for search term to produce ads for similar products, but that the ads must not contain the word "Lush" or imply that Amazon sells Lush products.
The ruling could set a legal precedent affecting how online retailers use brand-specific search terms to promote rival brands’ products.
Lush, which trades on its ethical positioning and has actively decided not to trade on Amazon, was represented by law firm Lewis Silkin.
Simon Chapman, the partner at Lewis Silkin who led the case, said: "We are pleased to have worked with the team at Lush to secure today’s judgement, bringing to bear both technically excellent legal arguments, as well as a diligence that showcased our own deep commitment to guiding our clients on how the law dovetails with the responsibilities of those using the internet in today’s digital economy.
"Today’s judgement provides much-needed clarity with regards to exactly how far third parties can go in their use of trademarks to generate sponsored advertisements or direct web-traffic for commercial gain, unrelated to the trademark owner.
"There is no doubt that many online retailers will need to reconsider their approach with regards to the promotion of and marketing activity in support of alternative products, to ensure they do not fall foul of today’s important precedent."
Despite the ruling, Amazon’s website still throws up a list of non-Lush branded products when a user enters "Lush" as a search term.
Amazon is likely to appeal against the High Court’s decision.