The liability of service providers in the information society. Reflections about the Judgment of the European Court of Justice delivered on 23 March 2010 in joined cases C-236 to 238 /08 Google v Louis Vuitton and others before the CJ (formerly ECJ)

21 June 2010

Fidel Porcuna

The liability of the company Google France as provider of data storage services online is analysed in the recent Judgment of the CJ in cases C-236/08, C-237/08 and C-238/08. These matters deal with the requests for a preliminary ruling submitted by the French Cour de Cassation in three proceedings between the company Google Inc. (or its French subsidiary Google France SARL), against the purse manufacturer Louis Vuitton Malletier SA, against the company Viaticum SA and Luteciel SA and against the Centre National de Recherche en Relations Humaines SARL (CNRRH) and its trade mark licensee. These companies complained about the advertising system called Google AdwordsTM on which the links sponsored by Google were based. Google AdWordsTM is the method used by Google to provide sponsored link advertising services. Yahoo!, Microsoft and other search engines provide similar sponsored link advertising systems.

The Plaintiffs argued that, given that third party advertisers could choose their marks, or words similar to them, as keywords, this implied trade mark infringement. At the same time, the Plaintiffs alleged that the service provider (search engine, financed through advertising), at the very least, contributed to the infringement of trade mark rights and unfair competition acts and unlawful advertising. They also asserted that Google could not seek protection under the exemption from liability of intermediary service providers because they considered that their intervention was not mechanical or passive, but amounted to contributory infringement.

Their claim was initially admitted and a judgment for trade mark infringement, unfair competition and unlawful advertisement was entered against the search service provider for failing to prevent the advertiser from choosing registered trade marks as keywords. The French Cour de Cassation raised some requests for preliminary rulings concerning whether trade mark owners are authorised, under trade mark law (Article 5.1.(a) and (b) of Directive 89/104 (replaced by Directive 2008/95) and Article  9.1(a) and (b) of Regulation 40/94 (replaced by Regulation 207/2009), to prohibit a search service provider from establishing a system that allows advertisers to choose terms that are identical or similar to registered trade marks as keywords. It also questioned whether or not, in the event that the trade mark use made by the company does not infringe the storage or disclosure by Google of the contents of the sponsored links, is an activity exempt from liability and is included in Article 14 of Directive 2000/31/EC on electronic commerce.

These issues needed consideration by the CJ given the different legal solutions previously adopted by national courts and self-regulatory activities in the Member States.

In his opinion, the Advocate General Maduro Poiares concluded that Google did not commit trade mark infringement by making available to advertisers, by means of an Google AdwordsTM system, the prominent appearance of their advertisements containing a certain keyword which may or may not be the same as a third party mark. However, he found that Google (and, by extension, other operators that establish a similar system) could not benefit from the exemption from liability envisaged in Article 14 of Directive 2000/31/EC for hosting services. His understanding was that the Google AdwordsTM system –unlike “natural searches” – is not a neutral information service, but one based on Google’s relationship with its advertisers and coupled with Google’s economic interest in having the users click on the sponsored links. The latter interest – argued the Advocate General – conflicts with the aim of the Directive, which is “to create a free and open public domain on the internet”.

On 23 March 2010, the judgment of the CJ ruled that an internet referencing provider such as Google, which stores as a keyword, a sign identical with a trade mark and organises the display of advertisements on the basis of that keyword does not use that sign with the legal meaning of a trade mark according to Directive 2008/95 or Regulation 207/2009. This is irrespective of the trade mark infringement that the advertiser may be committing by using the trade mark in a way that does not enable an average internet user, or enables that user only with difficulty, to ascertain whether he is confronted with a genuine product originating from the trade mark owner or not.

The CJ also considered the question of Google’s (and other internet referencing providers) exemption from liability in relation to the advertisements stored. The Court states that the mere fact that the referencing service is subject to payment, as set by Google’s terms, cannot deprive Google of the exemption of liability, nor does the concordance between the keyword selected by the advertiser and the search term entered by an internet user that may lead to confusion. It is, in the Court’s view, the role that the internet service provider may have played in the drafting of the commercial message or in the establishment or selection of keywords, is relevant to establish “knowledge of or control over” the advertisement stored and therefore the application of the rule laid down in Article 14 of Directive 2000/31. The Court goes on to declare that the national Court is the one best placed to assess whether Google could have played an active role of such a kind as to give it knowledge of, or control over, the data stored.

The ruling, in short, seems to swing the main focus of attention on the test for infringement by internet advertisers, namely how the advertisement would be perceived by normally informed and reasonably attentive internet users.