IMPORTANT: This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice. Release Date: 26 April 2010

Briefings

The European Court of Justice (ECJ) has ruled that Google’s controversial practice of selling people’s trade marks as AdWords is legitimate. For advertisers using someone else’s trade mark as an AdWord, however, the situation is more precarious.

AdWords / Keywords

A Google search brings up two sets of results. On the left-hand side are the search results – those websites which Google has determined are the most relevant to your search term. In yellow boxes on either the right hand side or the top of the page, are the "Sponsored Links" – adverts.

The adverts appear because the advertiser is paying Google to bring up its advert when the search term is used – they have registered that term as a keyword, or "AdWord" in Google parlance. Any number of advertisers can register the same AdWord – the advertiser that pays the most per AdWord will have its advert listed first. The same system is used by other search engines, such as Yahoo!

The Problem

Keyword advertising becomes contentious when the advertiser uses someone else's trade mark as a keyword. This might be done to offer goods for sale in open competition with the trade mark owner. For example, Interflora is currently suing Marks & Spencer for using "Interflora" as an AdWord – if you Google "Interflora", an advert for "M&S Flowers Online" appears as a Sponsored Link besides Interflora’s own advert. The trade mark “Interflora” does not appear in the text of Marks & Spencer’s advert – its use is thus invisible. Such use is irritating enough to the trade mark owner. Worse still is when a trade mark is registered as an AdWord to trigger adverts for websites selling “knock offs” of the trade mark owner’s goods. One of the cases considered by the ECJ involved just such a use of “Louis Vuitton”.

To infringe a trade mark, the trade mark must be put to some unauthorised “use”. Prior to two judgments handed down by the ECJ in late March 2010, the following were unknown:

Was Google liable for infringement of the trade mark it had sold as an AdWord?
Could an advertiser infringe someone’s trade mark, through its mere use as an AdWord to trigger an advert? While the operator of a website selling counterfeit goods would clearly be liable for trade mark infringement, this liability arose from the website itself, rather than the use of the AdWord. In the Interflora / Marks & Spencer situation, where the website to which the advert links is clearly unconnected with the trade mark used as an AdWord, was Marks & Spencer doing anything wrong?
The Answer

The ECJ decided that Google is not infringing trade marks when it sells them as keywords. The reason for this was that Google was not itself “using” the trade mark – it was acting merely as an “internet referencing service” which enabled advertisers to use the trade marks. The fact that Google creates the technical conditions necessary for the AdWord to be used (i.e. the AdWords system) and received remuneration from its use did not make it a “user” of the trade mark.

The advertiser, however, can infringe a trade mark if it is using an identical or similar term as an AdWord. However, it will only infringe if the advert triggered is misleading – i.e. if it does not enable the average internet user (or enables him only with difficulty) to ascertain whether or not the goods or services offered in the advert originate from the trade mark owner.

What this Means

Trade mark owners cannot sue Google for selling their trade marks as AdWords. However, if your trade mark itself appears in the text of the advert triggered by the AdWord, then Google will, as a matter of policy, remove the advert upon being informed of this.

An advertiser is allowed to use someone else’s trade mark as a search engine keyword to trigger adverts for its own goods or services. So, Audi can register “Mercedes” as a keyword for an advert that will direct the user towards Audi’s website.

However, the advert must not mislead people into believing that the advertiser is connected to the trade mark proprietor – it must be clear that the advert is for Audi cars and not Mercedes cars. If there is any ambiguity (either by some confusing statement in the advert or by simply being vague about who the advertiser is), then the use by the advertiser of the trade mark as a keyword will potentially infringe. It is irrelevant whether or not it would become clear, upon clicking through the link to the advertiser’s website, that it was not connected with the trade mark proprietor.

While Google cannot be sued in its own right, it is not completely in the clear. The ECJ left open (just) the possibility that Google could have “accessory” liability – i.e. co-liability with the advertiser, where Google is aware of the infringement. So, while a trade mark owner cannot sue Google alone for use of its trade mark as a keyword, it may, in some circumstances, be possible to sue the advertiser and Google together.

If you come across a misleading advert which was triggered by use of your trade mark, it is still worth notifying Google of the advert and stating why you consider it infringes your trade mark. The risk of accessory liability may prompt Google to operate a “take down” policy for such adverts - similar to eBay’s policy of removing goods from its website upon being informed that they infringe intellectual property rights.

Mishcon’s View

The ECJ’s decision is in one sense welcome in that it clarifies that trade mark owners can exercise some control over how their trade marks are used by unauthorised advertisers. It is now clear that it is not necessary for the trade mark itself to appear in the text of the advert in order for there to be an infringement.

However, a trade mark owners’ right to control unauthorised use of their trade marks has been limited further than it should be. Why is it, for example, that someone who is not offering, say, Nike goods, should be able to attract internet users to his website by the use of Nike’s trade mark?

Further, under EU trade mark law, the normal position is that a trade mark is infringed if someone uses an identical sign to the trade mark for identical goods. When this happens, there is no need for consumers of the goods to be “confused” between whose goods are whose. In the case of search engine adverts, however, the ECJ has introduced a further requirement: the need to show that the advert is misleading. What justification is there for setting a higher threshold for trade mark infringement concerning search engine adverts than for any other type of commercial activity?

The rather unfair effect of the ECJ’s judgment is that trade mark proprietors will have to outbid competitors for their trade marks as keywords in order to appear above them in the Sponsored Links.

The ECJ judgments were given in Cases C-236/08 to C-238/08 and C-278/08.

If you would like to find out more about Mishcon's solution or anything else raised in this briefing, please contact Simon Tracey on +44 20 7440 4733 or by e-mail or Peter Nunn on +44 20 7440 4768 or by e-mail.