The Advocate General delivered his widely anticipated opinion today in three references to the European Court of Justice involving whether the AdWords system operated by Google amounted to trade mark infringement. The references 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 Advocate General found that the offering of keywords for purchase and subsequently displaying sponsored links alongside natural search results does not constitute trade mark infringement.
Google AdWords System
Alongside its search engine service, Google operates its AdWords system which allows advertisers to bid on keywords, with the affect that their advertisements (referred to on the site as Sponsored links) are displayed to internet users searching for those keywords.
The Advocate General's View
The Advocate General addressed each of the three questions raised by the references:
- Whether trade mark proprietors can prevent the use by Google, in AdWords, of keywords which correspond to their trade marks;
- Whether the liability exemption for hosting applies to the content featured by Google in AdWords; and
- Whether trade mark proprietors can prevent the use by advertisers, in AdWords, of keywords corresponding to their trade marks.
Whether trade mark proprietors can prevent the use by Google, in AdWords, of keywords which correspond to their trade marks
Four conditions need to be satisfied if trade mark proprietors are able to prevent the use of their trade marks under Art. 5(1) of Directive 89/104 (the "Trade Marks Directive"):
(a) use is without the proprietors consent;
(b) the use takes place in the course of trade;
(c) it relates to goods or services which are identical or similar to those covered by the trade marks; and
(d) it affects or is liable to affect the essential function of the trade mark – which is to guarantee to consumers the origin of the goods and services – by reason of a likelihood of confusion on the part of the public.
Two different uses by Google had to be considered. The first use occurs when Google allows advertisers to select keywords which correspond to trade marks and the second use occurs when Google displays ads alongside the natural results in response to a search for the keyword. It was accepted that neither use was consented to by the trade mark proprietors. As both uses take place with a view to a financial gain, they both occur in the course of trade and thus the first and second criteria were satisfied.
The first use of the trade mark occurs in relation to the AdWords service, which was not identical or similar to any of the goods or services for which the trade marks were registered and therefore the third condition was not satisfied. However, the second use establishes a link between the keywords which correspond to the trade marks and the goods or services available from the advertised site. This same link is established in relation to both the AdWords ads and the natural search results. The third criterion was therefore satisfied in relation to the second category of use.
The fourth condition required the Advocate General to consider whether the use by Google affects or is liable to affect the essential function of the trade mark by reason of a likelihood of confusion on the part of the public. In relation to the first use, it was not necessary to consider this point as Google's use was not in relation to goods or services identical or similar to those covered by the trade marks. For this reason, there could in principle be no risk of confusion and this condition was not satisfied. In relation to the second use, there was also no risk of confusion because, as with natural results, internet users would not reach conclusions as to the origin of goods and services offered without reading the description of the sites contained in the sponsored links and ultimately leaving Google and entering those sites.
Next the Advocate General had to consider whether Google's use of keywords corresponding to trade marks took unfair advantage of or was detrimental to the distinctive character or repute of the mark contrary to Art 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94. This called for a balancing of freedom of expression and freedom of commerce with the trade mark proprietor's interests. The Advocate General found that Google's use of the trade marks does not create a risk of confusion and such use intrudes less on the trade mark proprietor's interests than other permitted uses such as comparative advertising and descriptive use. The Advocate General concluded that the uses made by Google of trade marks do not affect the functions of the trade mark and therefore such use could not be prevented even where the marks involved have a reputation entitling them to special protection.
The trade mark proprietors who brought the three actions were seeking to extend the scope of trade mark protection in line with the US doctrine of "contributory infringement" by seeking a ruling that Google was liable for trade mark infringement by contributing to infringements committed by a third party (the purchaser of the keyword). The trade mark owners were asking the Court to rule that the possibility that AdWords could be used to infringe a trade mark means that the system is itself an infringement. In the Advocate General's opinion, the scope of trade mark protection should not be expanded in this significant way. If the trade mark proprietors were successful on this point it "would create serious obstacles to any system for the delivery of information" and "the nature of the internet and search engines as we know it would change." The Advocate General found that the trade mark proprietors' concerns in this regard should not be addressed within the scope of trade mark protection but rather should fall for consideration under national liability rules.
Whether the liability exemption for hosting applies to the content featured by Google in AdWords
The Advocate General found that Google was not entitled to protection under Article 14 of Directive 2000/31 ("the E-Commerce Directive") for content featured in AdWords. Although the services provided by Google meant that it qualified as an "information society service", its activities in relation to AdWords (as opposed to natural search results) went further than hosting (it was not "a neutral information vehicle") and the liability exemption offered under Art 14 did not apply.
Whether trade mark proprietors can prevent the use, in AdWords, of keywords corresponding to their trade marks
The selection of keywords by advertisers is the flipside to the first use by Google and constitutes a private, and not commercial, activity. To find otherwise "would be tantamount to saying that Google should be permitted to allow the selection of keywords that no one is permitted to select."
However, trade mark proprietors are not left totally defenceless and can intervene at the appropriate time (when the ads are displayed to internet users) if such use involves a risk of confusion or otherwise affects the other functions of the trade mark.
The Advocate General observed that "it is important not to allow the legitimate purpose of preventing certain trademark infringements to lead all trade mark uses to be prohibited in the context of cyberspace."
The Advocate General's conclusion was that the Court should answer the questions referred by finding that:
- The selection of keywords does not constitute an infringement of the exclusive rights of the trade mark proprietor;
- A trade mark proprietor may not prevent the provider of a paid referencing service, such as Google, from making keywords available to advertisers or displaying advertising links on the basis of those keywords;
- In the event that a trade mark has a reputation, the proprietor may not oppose Google's use under Art 5(2); and
- The provider of a paid referencing service cannot benefit from the exception provided under the E-Commerce Directive.