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29 Apr 2010

European Google AdWords case - a win both for trade mark owners and for Google

by Nicholas Tyacke

In a victory for owners of trade marks in the European Union, the EU's highest court, the European Court of Justice (ECJ), has recently found that the purchase, from a search engine, of a keyword associated with someone else's trade mark could amount to trade mark infringement by the purchaser.

Search engines such as Google sell keywords or phrases to advertisers. When a particular purchased keyword or phrase is entered as the search query on that search engine, advertisements, or "sponsored links", are triggered, and appear at the top of and/or on the right hand side of the organic or natural results (ie. search results that have not been paid for). This is a very common practice, but the legal status of it has rarely been considered by the courts. The ECJ is the highest court anywhere in the world to deal with this question, and its decision is of great interest to trade mark owners and advertisers alike.

The trade marks and the claims of infringement

Three trade mark owners – Louis Vuitton Malletier SA, Viaticum SA and Luteciel SARL, and Centre National de Recherche en Relations Humaines SARL – claimed that:

  • Google, as part of its AdWords program, sold keywords corresponding to their respective trade marks to unrelated third party advertisers;
  • that those keywords returned sponsored links to advertisements for those advertisers on Google's search results page; and
  • that this conduct infringed their respective trade marks.

In Louis Vuitton's case, the keywords were bought by advertisers of imitations of its products. The keywords relating to the other parties' trade marks were used for sponsored links that led to competitors' websites.

A win for trade mark owners

The ECJ held that the use by an advertiser of a keyword identical to a third party's trade mark constitutes use by that advertiser of the trade mark in relation to goods and services, a key prerequisite to a finding of trade mark infringement under EU law.

Following from this conclusion, and even more significantly for EU trade mark owners, the ECJ held that a trade mark owner could prohibit an advertiser from advertising if:

  • a keyword is identical to the trade mark;
  • the advertiser has, without the consent of the proprietor, selected the trade mark in connection with an internet search engine provider;
  • the advertisement is for goods or services identical to those for which that mark is registered; and
  • the advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether those goods or services originate from the owner of the trade mark, from an undertaking economically connected to it, or from a third party.

The ECJ held that it is for the national courts of the European Union member states to decide on a case-by-case basis whether the advertiser's conduct is to be prohibited on the basis of this analysis.

Use of trade mark by a search engine provider

As for Google, the ECJ found that its conduct did not infringe EU trade mark law. The ECJ found that through its sponsored links facility Google was carrying out a commercial activity with a view to economic advantage, and supplied keywords to unrelated advertisers without the consent of the owners of those trade marks. It did not follow, however, that Google itself "used" those keywords in relation to goods or services, which as noted above is a prerequisite to trade mark infringement under EU trade mark law.

What if Google could be held liable for trade mark infringement? Could it use the safe harbour provisions under the European Union's E-Commerce Directive? The ECJ held that the information provided by Google to users on its search engine meant that it was considered as a hosting service and accordingly Google could not be held liable for trade mark infringement before it was informed of the unlawful conduct of that advertiser.

The trade mark owners argued that the AdWords facility was not an information service as Google determined the order of the displayed results and the fees paid by the advertisers. To this, the ECJ held that the concordance between the keyword selected and the search terms entered by a user was not sufficient of itself to justify the view that Google had knowledge of, or control over, the data entered into its system by advertisers and stored in the memory of its servers.

Effect in Australia

The ECJ's decision benefits trade mark owners in the European Union. It is not binding on Australian courts. However, an Australian judgment in relation to the issue of keyword advertising is expected later this year. Currently, the Federal Court of Australia is presiding over a matter between the Australian Competition and Consumer Commission and Google Inc and Google Australia considering whether Google's conduct in similar circumstances breaches the consumer protection provisions of the Trade Practices Act.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.