12 March 2004
Key Points:
There is no simple answer to the question of whether keyword-based advertising infringes trade marks. Cases will most likely hinge on whether the advertiser uses the term as a trade mark, or simply in a descriptive manner.
Internet search engines sell advertising linked to certain keywords, but some of these keywords are also trade marks. Owners of those trade marks are now mobilising to protect their intellectual property, with Google already involved in several cases in the US and France. We’ll look at how trade marks are used without their owners’ permission by search engines, and whether Australian law can prevent it.
Keyword-based advertising works through the sale of search terms. The advertiser pays the search engine a fee, nominating certain keywords, so that whenever a search engine user searches using any of those keywords, the advertiser’s advertisement will appear high among the search results and/or as a banner advertisement on the search results page. Trade mark issues arise when the keyword is a trade mark owned by someone other than the advertiser.
How the trade mark issue with keyword advertising arose
Google’s problems with trade mark infringement by keyword advertising first arose in the United States in 2002. In July of that year, American Blind and Wallpaper Factory Inc.’s lawyer sent a letter to Google accusing it of trade mark infringement by keyword-based advertising. American Blind demanded that Google stop selling keywords similar to American Blind’s marks to competitors. American Blind cited 35 different keywords Google had sold, including “american wallpaper discount” and “decoratetoday.com”. Google did not comply with this demand.
In November 2003, after another company successfully sued Google in France (see below), American Blind again wrote to Google. This time, American Blind threatened legal action. Google responded by filing its own case with the United States District Court for the Northern District of California. It sought a court ruling that its actions did not constitute infringement of American Blind’s trade marks.
American Blind then filed its own suit in the United States District Court for the Southern District of New York against Google and its partners AOL and Netscape. American Blind has asked the court to consider its claims and dismiss Google’s suit. These trials are yet to begin.
Companies succeeding in removing keywords
While Google did not stop selling advertising in accordance with American Blind’s demand, it has acceded, at least in part, to other requests. In June 2003, eBay wrote to Google asking it not to sell advertising based on a 13 page list of keywords. Google agreed not to sell advertising based on some, although not all, of these keywords.
Google has also ceased selling other keyword advertising because of legal action in France. In October 2003, French travel companies Viaticum and Lutecel sued Google’s French subsidiary alleging trade mark infringement by the sale of advertising based on keyword searches including the terms “bourse des vols” and “bourse des voyages”, trade marks of those two companies, to rival companies including Easyjet. The French court found that, in doing so, Google had infringed Viaticum and Lutecel’s trade marks under French law. Other cases have also been brought against Google in France. In August, before the Viaticum/Lutecel decision had been handed down, Louis Vuitton SA filed a similar suit. French telephone payments firm Rentabiliweb has also sued Google for allegedly selling to rival company Tel 4 Money advertising based upon keyword searches including Rentabiliweb’s trade mark.
Problems for other search engines
Google is not the only company to have legal troubles over the sale of keyword-based advertising.
Mark Nutritionals, which produces and markets the Body Solutions weight-loss program, has filed separate suits against search engine companies AltaVista, FindWhat, Kanoodle and Overture for selling keyword-based advertising tied to the term “body solutions”, a trade mark of Mark Nutritionals.
Netscape and Excite have also been sued; in 1999 Playboy sued both of them for keyword-based advertising using the term “playboy”. However, the United States District Court threw out the case, awarding summary judgment to Netscape and Excite. Recently, on January 14 2004, the United States Court of Appeals reversed the decision to award summary judgment, saying that the claim should be allowed to proceed and be tried on its merits. While the Court of Appeals was not called upon to decide whether there has been a trade mark infringement in this case, it did find that genuine issues existed, and sent the case back to the District Court to be reconsidered. Soon after this decision, the case was settled on undisclosed terms.
Estée Lauder brought a smilar suit against online perfume seller Fragrance Counter and search engine Excite in 1999 over Fragrance Counter banner ads being triggered by searches for Estée Lauder’s brands. The suit was settled in August 2000; one term was that Fragrance Counter agreed not to use Estée Lauder‘s brands in this manner. Estée Lauder later settled with Excite in the United States, and won an injunction in similar suits filed in France and Germany.
What does this mean for Australia?
These events in Europe and the United States do not necessarily mean that the sale or use of keyword advertising based upon a trade mark is capable of infringing the rights of the trade mark’s owner.
Under Australian law, a trade mark owner may have rights in relation to the unauthorised use of its brands in this way. These can arise in different ways:
1. an unregistered trade mark which is well-known in the relevant market: the use could amount to “passing off”, such as “switch-and-sell” marketing (a famous example is the offering of another white rum when someone asks for Bacardi);
2. a registered trade mark: the advertising could be the use of the registered trade mark (or a mark which is substantially identical with, or deceptively similar to, the registered trade mark) for goods or services for which the mark is registered in Australia - or if it is a very famous brand, even in respect of different goods or services - if such use is harmful to the trade mark owner (section 120 of the Trade Marks Act 1995 (Cth);
3. if such use is otherwise misleading, deceptive or false, as prohibited by sections 52 and 53 of the Trade Practices Act 1974 (Cth).
In essence, however, a trade mark will be infringed in these circumstances only if the user of the search engine is deceived in some way. The search engine provider, or keyword based advertiser, which uses a competitor’s brand in this way may justifiably argue that, once consumers have been drawn to the advertisement, it is perfectly clear that they are not being offered the branded product searched for, and can take it or leave it.
Often, in such cases, the central issue is whether the keyword advertising set-up is using the trade mark in the relevant sense, or whether it is simply the same as saying “we offer the same sort of products as [the named brand]”. Both Australian and United States courts have held in many different contexts that the mere use of a descriptive term like this does not infringe the trade mark. A good example of this in the context of internet search engines can be found in a United States case concerning metatags. A metatag is a list of key terms used to describe sites for search engines. In the late ‘90s, there was a large amount of litigation concerning whether a metatag which contained trade marks infringed those trade marks. The issues underlying these cases were very similar to the issues that now underlie keyword-based advertising.
In 2002, the United States Court of Appeals for the Ninth Circuit upheld the right of former Playboy Playmate Terri Welles to use the terms “Playboy” and “Playmate” in a metatag for her web site. The court found that these words were descriptive of Ms Wells rather than being used as a trade mark by her. There was therefore no trade mark infringement.
Australian courts are yet to see litigation over trade marks and search engines. However, the principles underlying any such litigation are likely to be similar to those applied in the US. There is no global answer to the question of whether keyword-based advertising infringes trade marks. Each case must be decided on its own facts, with most likely to hinge on the question of whether the advertiser uses the term as a trade mark, or simply in a descriptive manner.
