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An Opinion on AdWords

October 2009

Should Google and other search engine operators be free to sell brand names as keywords for Internet search advertising, or does it constitute trade mark infringement?

This contentious question has, for some time, perplexed the national courts of various European countries. However, a recent opinion of Advocate General Poiares Madura (“AG”) has provided some guidance on the issue.

Relevance

In 2008, despite a 3.5% reduction in the UK advertising industry as a whole, online advertising in the UK grew by 17% to over £3.3 billion. Of the total amount spent, paid-for search (i.e. the purchase of keywords and sponsored listings on search engine results) amounted to 59%, or just under £2 billion.

Due to the exponential growth of online advertising, companies such as Google and Yahoo! are able to generate substantial amounts of revenues from the sale of keywords to advertisers. However, this has offered third parties the opportunity to take advantage of the reputation of well known trade marks by using keywords, which correspond to those marks, to advertise their own goods/services. The resulting impact on brand owners is significant and has lead to them attempting to find ways to control the misuse of their brands by advertisers. However, there are two sides to this debate – not all use of a third party trade mark will be an infringement.

Background

The AG’s opinion related to three cases (Google France and Google Inc. v Louis Vuitton Malletier[i], Google France v Viaticum Luteciel[ii], and Google France v CNRRH and others[iii]) which were joined together following separate referrals to the ECJ from the French Courts. The cases were the first in a line of referrals to the ECJ from various national courts relating to the issue of whether Google and advertisers should be liable for trade mark infringement as a result of their respective sale/purchase and use of registered trade marks as keywords. Currently there are approximately seven other pending cases before the ECJ.

In the three joined cases, the respective Claimants had issued proceedings against Google in France for trade mark infringement on the basis that when their trade marks were entered into Google’s search engine, it triggered the display of adverts offering counterfeit products (in one case) and products of an identical or similar nature to those in respect of which the trade marks were registered (in the other cases).

Following first instance decisions and subsequent appeals, the French Court referred the following questions to the ECJ:

Should the proprietor of a registered trade mark be entitled to prevent a provider of a paid referencing service making available to advertisers keywords which reproduce or imitate registered trade marks?
Where a registered trade mark has a reputation, is the proprietor entitled to oppose such use of the mark where it takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the mark?
Is a registered trade mark infringed where a third party pays for a keyword that reproduces or imitates the registered mark and a search on the keyword triggers the display of a link to a website operated by the third party offering identical or similar goods/services to those in respect of which the mark is registered?
Under the E-Commerce Directive[iv] should the provider of a paid referencing service be regarded as providing an ‘information society service’[v] consisting of the storage of information provided by the recipient of the service, so that the provider is exempt from liability until it is notified of the unlawful use of the mark by the advertiser and has failed to take action to stop such unlawful use.

Advocate General’s Opinion

In relation to the above questions, the AG’s opinion was that:

A trade mark proprietor should not be entitled to prevent a provider of a paid referencing service making available to advertisers keywords which reproduce or imitate registered trade marks. In coming to this view the AG looked at how Google ‘uses’ the trade marks i.e. by (i) allowing advertisers to select the keywords so that adverts for their sites are presented as results following searches on those keywords and (ii) displaying adverts, alongside the natural results, in response to those keywords.

With regard to the selection of keywords, the AG said Google does not use the registered marks in a trade mark sense i.e. to offer goods/services to the public, as Google’s use of the marks is limited to the selection procedure which was carried out internally within the AdWords programme. Therefore, Google’s use of the marks is not in relation to goods and services that are identical or similar to those in respect of which the mark is registered and therefore cannot be prevented by EU trade mark law.

In relation to the display of adverts for third parties’ websites, the AG said that while this establishes a link between the keyword and websites potentially offering infringing goods/services, it is not sufficient to create a risk of confusion in consumers’ minds as to the origin of the goods/services. This is because internet users will know that various websites, in addition to that of the trade mark owner, will appear when they enter the trade mark into a search engine. Further, the internet user will not make an assessment as to the origin of the goods/services based on the fact that the adverts are displayed following a search on the trade mark. In fact the user will only make such an assessment having regard to the content of the adverts and by visiting the sites advertised. Importantly, the AG also recognised that, as many of the sites may be legitimate and lawful, a trade mark owner should not be allowed to limit Internet users’ access to information concerning a trade mark even if that mark has a substantial reputation.
Search engine providers should not liable for trade mark infringement as a result of their use of keywords even where such use takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the registered trade mark.
A registered trade mark is not infringed by a third party who pays for a keyword that reproduces or imitates the registered mark where the third party uses the keyword to promote a website offering identical or similar goods/services to those in respect of which the trade mark is registered.
A provider of a referencing service cannot be regarded as providing an ‘information society service’ and therefore would not benefit from the exemption from liability in the E-Commerce Directive.

Comment

The AG’s opinion that the acquisition and sale of trade marks as keywords does not constitute trade mark infringement is important for the business models of search engine providers. The decision may, however, be disappointing for brand owners looking for assistance in protecting their brand assets.

However, this is not the end of the story. The AG’s opinion is non-binding and it remains to be seen whether the ECJ will reach the same decision. More importantly, the AG’s comments only relate to the acquisition and sale of trade marks as keywords, rather than the use of trade marks in the adverts displayed or the sale of infringing products via the websites advertised. Therefore, brand owners need to focus their enforcement activities on third parties who use keywords to point to adverts which mislead consumers and infringe brand owners’ trade marks. In this regard, brand owners will have two options – firstly they may rely on Google’s complaints policy (in the UK complaints will only be investigated where the allegation of infringement extends to the use of a trade mark in the text of an advert, but not the purchase of the keyword itself) to prevent such infringements. Alternatively, brand owners could take action against infringers directly. Although this will obviously be more time consuming and expensive, it may be the most effective way for brand owners to protect their trade marks.

Perhaps the most important aspect of the opinion is that the AG believes Google is not an ‘information society service’ and therefore cannot avail itself of the protection from liability contained in the E-Commerce Directive. If the ECJ agrees with that view, Google and other search engine operators could still face liability in relation to the use of trade marks in the adverts triggered by keyword searches, where such adverts comprise or promote infringing acts.

In such circumstances, brand owners may still be able to take infringement action against the search engine providers.

Jeremy Harris

[i]C-236/08

[ii]C-237/08

[iii]C0-238/08

[iv]Directive 2000/31/EC of the European Parliament and of the Council of 8 June

[v]Defined in the E-Commerce Directive as any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service