In a much anticipated judgement the European Court of Justice has today ruled in a series of linked cases involving objections by trademark holders including Louis Vuitton (LV) against the use of adwords on Google by competitors and alleged counterfeiters. The decision will have major impact on how the adwords system can be used in particular, and on wider Internet advertising practices in general.
Luxury goods manufacturer LV and others sued Google in France in separate cases for allowing third parties to register “Louis Vuitton” and other registered trademarks as adwords with the effect that, when those trademarks were typed into the search engine by users, the advertisements of the third parties would be displayed as sponsored links alongside the “normal” search results. LV claimed that the third parties were using its registered trademarks unlawfully, and further that Google, by running the adwords registration system and taking money for it from the third party advertisers, was knowingly assisting this and itself was using the trademarks unlawfully. In some cases the third parties were offering “imitation” goods, and in others goods that simply competed with those of LV. In many cases these third-party ads did not themselves contain any of LV’s trademarks; the trademarks had simply been used as adwords to drive the Google search mechanism to pull up the third party’s sponsored ad.
Google claimed that it did not use the trademarks in any relevant way (it merely provided the search engine and adwords registration systems), and further that it was protected from liability under European law which restricts the situations in which internet service providers can be held liable for what is transmitted through their systems. The French courts referred questions relating to trademark infringement and the liability of ISPs to the European Court of Justice.
The European Court of Justice decided a number of key points:
The liability of advertisers:
- Relevant European trademark law requires a trademark to be “used” by a third party before the owner of the trademark can sue for infringement . The court held that a third party advertiser purchasing an adword identical with another’s trademark was “using” that trademark, and could therefore be liable for infringement.
- Whether the sponsored advertisement to which an adword leads itself contains the trademark in dispute is irrelevant. The trademark has been “used” within the adword.
- “Use” arises not only where the third-party advertiser wishes to make Internet users aware of its competing goods or services, but also where the advertiser seeks to mislead Internet users (for example in relation to counterfeit goods).
- There will be a trademark infringement “if the ad produced by the adword does not enable normally informed and reasonably attentive Internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trademark or a business economically connected to it or, on the contrary, originate from a third party”.
- The court went further and expressed the view that where the ad appears immediately after entry of the trademark as a search term by the Internet user and is displayed at the point when the trademark typed in by the user is still displayed on the screen, the Internet user may be confused as to the origin of the goods or services in question, thus making infringement in such circumstances highly likely.
- There will be a trademark infringement in circumstances where a third-party ad suggests that there is some economic link between that third party and the trademark owner.
- Even where the search outcome does not suggest the existence of an economic link, “if the ad is vague to such an extent on the origin of the goods or services that normally informed and reasonably attentive Internet users are unable to determine, on the basis of the advertising link and a commercial message attached thereto, whether the advertiser is a third-party vis-a-vis the proprietor of the trademark or, on the contrary, economically linked to that proprietor”, there will be an infringement of the trademark.
The liability of Google:
- A search engine provider (here, Google) does not “use” the trademark that is contained in an adword simply by permitting advertisers to register it, and accordingly in these circumstances Google could not be liable for direct trademark infringement. The fact that Google makes money from offering this service to advertisers is irrelevant.
- Google could seek protection from the law which restricts the situations in which internet service providers can be held liable for what is transmitted through their systems.
- However, the Court made clear that these exemptions from liability cover only cases in which the activity of the service provider is “of a mere technical, automatic and passive nature”, which implies that the service provider “has neither knowledge of nor control over the information which is transmitted or stored”. The court expressed the view that the role played by Google in the drafting of the commercial message which accompanies the advertising link or in the establishment or selection of keywords is relevant here. However, it would be up to the national court (in this case, in France) to determine whether Google had in fact any knowledge or control over the information transmitted or stored.
Conclusions
It is now clear that in many circumstances the use of someone else’s trademark as an adword will amount to trademark infringement, with the result that the value of those adwords must now be questionable. Google can seek protection from liability in relation to such matters, but only if it takes a relatively passive role and has no knowledge or control over the misuse of trademarks in this manner. Whether it actually enjoys that protected status will be determined by a French court (and to date Google has not fared well in front of the French judiciary). In any event, it is clear that Google will have to maintain an effective takedown mechanism whenever allegations regarding trademark infringements by the adwords system are made.
© Taveners March 2010