The Court of Justice decides the question of whether a keyword service infringes trade mark rights

24 March 2010

Peter Brownlow, Emily Forsyth

The CJ (formerly the European Court of Justice) has delivered its widely anticipated judgment today as to whether the AdWords system operated by Google amounted to trade mark infringement.  The references to the CJ were from the Cour de cassation (France) in the following cases: Google France and Google Inc v Louis Vuitton Malletier SA (C-236/08), Google France v Viaticum SA & Luteciel SARL (C-237/08) and Google France v CNRRH, Pierre-Alexis Thonet, Bruno Raboin & Tiger SARL (C-238/08).

The CJ's judgment departed from the Opinion of the Advocate-General in a number of significant ways. The background to the matter, and a summary of the Opinion of the Advocate-General can be found here.

Summary of the CJ's decision

The CJ found that:

  • the use of keywords by advertisers may constitute trade mark infringement where the advertisement does not make it clear to the average internet user whether the goods or services on offer originate from the trade mark owner or from an unrelated party;

  • the provider of an internet referencing service such as the Google AdWords System is not liable for trade mark infringement because it does not "use" the trade marks within the meaning required to constitute infringement; and

  • the hosting defence under Article 14 of the E-Commerce Directive could apply to Google in respect of its AdWords System so long as it had not played an active role giving it knowledge of or control over the data stored which it has stored at the request of the advertiser.

Google AdWords System

Alongside its search engine service, Google operates its AdWords system which allows advertisers to bid on keywords, with the effect that their advertisements (referred to on the site as Sponsored links) are displayed to internet users searching for those keywords.

Use, in an internet referencing service, of keywords corresponding to trade marks of other persons

The CJ had to consider the liability of two parties:

  • the referencing service provider (ie Google), in relation to its liability for storage of a keyword and its organisation of the display of its client's advertisements on the basis of that keyword; and

  • the advertisers, in relation to their liability for the selection of the signs as keywords and the display, by means of the referencing mechanism, of the advertisements (i.e. sponsored links) which result from that selection.

The CJ examined the questions referred primarily from the angle of infringement of


  1. identical marks in relation to identical or similar goods or services; and

  2. marks with a reputation.

Identical marks / identical or similar goods or services (Article 5(1) and (2) of Directive 89/104 and Article 9(1) of Regulation No 40/94)

For there to be infringement it was necessary for the following conditions to be met:

  • use in the course of trade;

  • use in relation to goods and services; and

  • use liable to have adverse effect on the function of the trade mark.

Use in the course of trade

Google

In contrast to the opinion of the Advocate-General, the CJ found that Google, in allowing its clients to use signs which are identical with, or similar to, trade marks, does not itself use those signs in its own commercial communications.

The CJ noted just because the referencing service provider created the technical conditions necessary for the use of a sign and was paid for that service did not mean that it actually used the sign.

Advertiser

Again in contrast with the opinion of the Advocate-General, the CJ held that an advertiser using the referencing service and choosing as a keyword a sign identical with another's trade mark is using that sign in the context of commercial activity with a view to economic advantage (following established CJ case-law in Arsenal, Celine and UDV North America); the use of the sign selected as the keyword triggers an advertisement displaying a link to the site where the advertiser offers his goods or services for sale.

Given the above findings, the CJ only needed to consider the other conditions as they related to use by the Advertiser.

Use 'in relation to goods and services'

The CJ held that use by an advertiser of a sign identical with a trade mark as a keyword in the context of an internet referencing service falls within the concept of use 'in relation to goods or services'. Specifically, the CJ found that:


  1. where the advertiser selects as a keyword the trade mark of its competitor with the aim of offering internet users an alternative to the goods or services of the trade mark owner, there is a use of that sign in relation to the goods or services of that competitor; and

  2. even in cases in which the advertiser does not seek to present its goods or services to internet users as an alternative to the goods or services of the owner of the trade mark but seeks to mislead internet users as to the origin of its goods or services by making them believe that they originate from the owner of the trade mark or from an undertaking economically connected to it, there is use 'in relation to goods or services'.

Use liable to have an adverse effect on the functions of the trade mark

For the purposes of considering whether the advertiser's use of the sign has an adverse effect on the functions of the trade mark the CJ considered that the relevant functions to be examined were the functions of 1) indicating origin; and 2) advertising.

Origin

The CJ noted that the effect on this function depends on the manner in which the advertisement is presented. It found that the function of the mark will be adversely affected where the advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to originate from the owner of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.

The CJ indicated that the following facts would give rise to a conclusion that there was an adverse effect:


  1. where the advertiser's ad suggests there is an economic link between it and the owner of the trade mark; or

  2. where the ad is so vague as to the origin of the goods or services that normally informed and reasonably attentive internet users are unable to determine whether the advertiser is economically linked to the trade mark owner.

The advertising function

The CJ found that a trade mark owner is entitled to prohibit a third party from using an identical sign for where that use adversely affects the proprietor's use of its mark in sales promotion or as an instrument of commercial strategy.

The CJ concluded that because the use of the mark in the natural search results was not affected the use of the sign by the advertisers was not liable to have an adverse effect on the advertising function of the trade mark.

Marks with a reputation (Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94)

The CJ found that as Google did not use the mark it was not liable to infringement under the broader trade mark infringement right granted by Article 5(2) to marks with a reputation.

Liability of the referencing service provider

The CJ found that the liability exemption for hosts in Article 14 of the E-Commerce Directive (2003/31/EC) applies to an internet referencing service provider in the case where it has not played an active role which gave it knowledge of, or control over, the data stored. If it had not played such a role, the service provider could not be held liable for the data which it had stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of or that advertiser's activities, it failed to act expeditiously to remove or to disable access to the data concerned.

In contrast to the position of the Advocate-General, the CJ considered that the hosting defence may apply to Google, but referred the question back to the national courts. It noted that a relevant factor was the role played by Google in the drafting of the commercial message which accompanied the advertising link, or in the establishment or selection of keywords.

The CJ's ruling

The text of the CJ's answers to the questions referred is:


  1. Article 5(1)(a) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks and Article 9(1)(a) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark must be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, in the case where that advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.

  2. An internet referencing service provider 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 within the meaning of Article 5(1) and (2) of Directive 89/104 or of Article 9(1) of Regulation No 40/94.

  3. Article 14 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce') must be interpreted as meaning that the rule laid down therein applies to an internet referencing service provider in the case where that service provider has not played an active role of such a kind as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser's activities, it failed to act expeditiously to remove or to disable access to the data concerned.

    Click here for the CJ's judgment

For more information on the subject matter contained in this newsflash please contact Bird & Bird Partner, Peter Brownlow or Associate, Emily Forsyth, in London  +44 (0) 20 7415 6000 or by email.

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