Google “AdWords” system and registered trade marks

21 June 2010

Fulvio V Mellucci

The use of keywords in online advertising systems is prevalent in our culture and can cause conflicts among competitors, especially when the keywords consist of registered trade marks. As a consequence many trade mark owners started legal actions aimed at protecting their distinctive signs against unlawful uses on the web. As far as Italy is concerned, an interesting decision was issued by the Court of Milan on 11 March 2009 concerning “AdWords”, the well known Google advertising system.

Two companies active in the field of car hire [Avis][1] established that entering the “Avis” keyword (their registered trade mark) into Google’s search engine triggered the display of a link to the website of some competitors[2] under the heading “sponsored links”. In other words, these companies had activated the “AdWords” service, “purchasing” the word “Avis” as a keyword.  Avis therefore sued these competitors for inter alia acts of unfair competition and trade mark infringement.[3]

The Court of Milan concluded that the use of keywords without permission which reproduce a distinctive sign of a third party, constitutes:

  • unfair competition under Article 2598, paragraph 3, of the Italian Civil Code, being an activity aimed at “linking the website with the trade mark of a third party and exploiting the undoubted notoriety of the latter sign. This is clearly a confusing activity, which misappropriates the merits of a third-party and, overall, is professionally unfair and able to confuse and poach customers and to damage the competitor”;

  • trade mark infringement under Article 21 of the Italian IP Code: “such a use of the keyword constitutes a trade mark infringement since it is used with a distinctive function... as a matter of fact, it is undisputed that if one clicks on the Avis sign of the sponsored link he is readdressed to the website [of Avis’ competitors] thereby making the risk of confusion between the signs real, at least due to the risk of association”.

The principles set forth by the Milan Court have been recently confirmed by the CJ in the decision issued on 23 March 2010: “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”[4].

However, such conclusion in the Avis case was not obvious in the light of earlier case law.

In a very similar case[5], the Court of Milan, in a prior decision issued on 15 October 2007, had granted a preliminary injunction grounding it on unfair competition, but refused to find trade mark infringement stating that the use of a sign as a keyword is not “the distinctive use provided by the Italian Legislator in the IP Code: as a matter of fact, the defendant clearly does not distinguish – neither for economical nor promotional purposes – its services with the mark at issue and the keyword does not appear in its company name and in its domain name”.

Therefore, in the later Avis case the Court of Milan anticipated, to a certain extent, the recent decision of the CJ, clarifying that the use of a keyword identical to a registered trade mark owned by a third-party may constitute trade mark infringement.

The Court of Milan also indicated (for the first time) some criteria according to which the damages could be calculated in similar cases, stating that: “the damages suffered by the legitimate owner as a result of infringement and unfair competition acts, caused by using a keyword identical to its trade mark has to be calculated by considering the number of visitors during the period at issue, the ratio between the number of visitors and the number of actual customers, the average profit, the damages caused by the unlawful link to the competitor’s activity and the duration of  poaching of customers.”





[1]  Win Rent S.p.a. and Avis Autonoleggio S.p.a.
[2]  Zanox AG, Zanox S.r.l., Rodea Multimedia sarl and Mr. Beaussant Roland.
[3]  Although Avis also sued Google Italy S.r.l., Google Inc. and Google UK Ltd, the Court declared that they were not the correct defendants since the AdWords service was provided by Google Ireland Ltd, which was not sued in the proceedings. The Court therefore did not consider whether Google could be contributorily liable.
[4]  In joined cases C-236/08 to C-238/08 - Google France SARL and others/Luis Vuitton Malletier SA and others.
[5]  In the case Multiutility S.p.A./Key 21 Italia Trading Company S.p.A. – Judge Rosa (unpublished decision).