Having run into some legal problems recently with clients regarding advertising against competitor trademarks on Google, I wanted to put together a post on this issue, and the current state of play. It seems pretty clear to me that globally speaking, no case has really got to the bottom of the particular problems associated with advertising against a trademarked keyword, or using a trademark in ad text on a search engine.
In terms of context, AdWords is Google’s flagship advertising product and main source of revenue, offering pay per click advertising, and site targeted advertising for both text and banner ads. Advertisers create ads and choose keywords, which are words or phrases related to their business so that when people search on Google using one of those keywords, the advertiser’s ad may appear next to the search results.
A company can choose a trademark protected term as keyword. For example, if you enter “nike” in the Google search box, you will get listings from advertisers who paid for placement with this keyword. Google puts those listings off to the right side of the screen, clearly marked as ads.
Google started allowing advertisers to bid on a wide variety of search terms in 2004 in the US and Canada, including the trademarks of their competitors and in May 2008 expanded this policy to the UK and Ireland.
Certain trademark owners have become concerned about their brand awareness and claimed that this behaviour violates their trademarks. Google came consequently under fire both in the media and from a legal perspective for allowing advertisers to bid on trademarked keywords.
In its 2008 Annual Report, Google commented on the lawsuits as follows:
Companies have filed trademark infringement and related claims against us over the display of ads in response to user queries that include trademark terms. The outcomes of these lawsuits have differed from jurisdiction to jurisdiction. We currently have three cases pending at the European Court of Justice, which will address questions regarding whether advertisers and search engines can be held liable for use of trademarked terms in keyword advertising. We are litigating, or have recently litigated similar issues in other cases, in the U.S., Australia, Austria, Brazil, China, France, Germany, Israel, and Italy.
Courts in all these countries ahve differed in their verdicts and reasoning oncerning the potential liability of search engines, and there is still no certainty as to whether Google will be viewed as an active trademark infringer when third parties make an improper use of trademarked terms on AdWords or whether the liability passes to the third party advertiser.
Certain recent decisions by the Court of Appeal in Paris were favourable to trademark owners such as Louis Vuitton, although this is based on a history of interpretation of trademark laws in France. According to the Court of Nanterre Google is an active trademark infringer. The mere fact of suggesting the infringement by using the mark as proposed keyword is enough. On the contrary, the court of Paris took the view that Google does not use the trademark for identical or similar products or services in a commercial manner. So there is no trademark infringement. But nevertheless Google’s conduct was not deemed legal. Google’s liability was based on the common civil principle of fault due to the lack of preliminary control to check whether chosen keywords do infringe third party rights. The Court of Strasbourg, took into account technical measures implemented by Google (a filter and links to check third parties’ rights) and excluded Google’s liability on all grounds. This decision appears however to be isolated.
More recently, Google was held liable by several courts like the Cour d’Appel of Paris in the Louis Vuitton case but Google decided to appeal the case in front of the Cour de Cassation and the proceeding is pending. Google has now lodged an appeal before the French Supreme Court and the court has in turn referred the case to the European level by sending a reference for preliminary ruling to the European Court of Justice. Courts in other jurisdictions have also asked substantially similar question to the European Court of Justice, including the Dutch courts in December 2008 and the German courts in January 2009.
Such reference for preliminary ruling, as referred to in Googles statement, has not yet been answered by the European court and it is difficult to know when the judgment will take place and whether it will help to clarify the debate. Based on several industry sources, it seems there is some heavy lobbying on the Court of Justice including from the European Commission to confirm that there is no trademark infringement from Google and that it should be free to continue its paid search activity going forward as conducted so far.
In addition to the ECJ response, it is worth looking at other decisions pending in certain jurisdictions. By way of example, a US appeals court ruled in April 2009 that a trademark infringement lawsuit against Google by Rescuecom be sent back to a lower court for trial. The Court of Appeals for the Second Circuit in New York ruled that Google should answer to the claim that it infringed upon Rescuecom’s trademarks by selling AdWords ads to Rescuecom’s competitors which appear when Google users search for phrases containing “rescuecom”. Prior to this ruling, it was believed that this issue had basically been resolved by the courts in the US in Google’s favour; there are other cases which provided some precedent for the notion that third parties like Google weren’t liable in cases like this. But that is no longer a given, and Google will have to defend itself against this trademark owner’s claim.
Another interesting case is currently pending in the UK involving Interflora vs. Marks & Spencer. The world’s largest flower delivery firm has sued Marks and Spencer at the High Court in London for sponsoring the word ‘Interflora’ as a search engine keyword. The case could be an important test of how UK trade mark laws apply to keyword advertising. Interflora’s contention is that when a user searches for the word “interfl0ra” a specific request is being made for that trademark only.
There is some UK precedent for this position. The main UK authority on keyword advertising is the Mr Spicy case in which the trade marks owner sued Yahoo! for allowing Sainsbury’s to bid on the keyword “spicy”. The court summarily dismissed the claim and found that the only use of the trade mark itself was by the search engine user. The ruling went further and opined that even if there had been use by the search engine, the use would not affect the essential function of the trade mark as an indication of origin. However the significance of this ruling should not be overstated, because “spicy”is a purely descriptive term and Sainsbury’s therefore had a legitimate right to bid on that word.
The case of Reed v Reed concerned the comparable issue of the use of a trade mark as a metatag within a website (metatags are embedded keywords within a website that are picked up by search engines during the searching process). It was found that such use was not use for the purposes of trade mark infringement, and further was commented that the web-using public are well aware that search results contain irrelevant hits and sponsored links. He thought they would not be confused and infer a trading connection simply because their search returned such a sponsored link.
Although Interflora does not need to establish that the public is likely to be confused by Marks & Spencer’s actions in order to succeed, it has brought the issue of confusion into play by arguing that, although the Marks & Spencer sponsored link itself does not visibly display the Interflora mark, Google users will infer a trading connection that is detrimental to the distinctiveness of its trade marks.
Below are listed some links to relevant articles concerning use of trademarks in search advertising online, and legal cases pertaining to this issue.