Recently the European Court has ruled that the sale by Google of a third party trade mark as an AdWord did not constitute “trade mark use”. Instead the limit of Google’s obligation is restricted to it removing an AdWord if it is infringing and it is notified of the use.
The issue is whether it is lawful for Google to sell trade marks as key words that generate sponsored links to goods or services that are not linked to the trade mark owner. Trade mark owners dispute the sale by Google of registered trade marks for AdWords by anyone willing to pay the asking price which is based on the number of users that go to the site through the link. Search engines retort that they are a mere conduit and have no general obligation to monitor illegal activity by internet users. Indeed, it is suggested to impose such an obligation would be practically unworkable due to the volume of traffic handled by Google.
So how does it work? An example is if you buy the search term “Gucci” and then when, say, a potential customer, enters "Gucci" into a Google search engine your website selling knock-off Gucci copies appears at the top or side of the results page as a sponsored link. Unsurprisingly fashion companies are particularly concerned about this – Louis Vuitton was one of the claimants in this action trying to stop Google selling the terms "fake Louis Vuitton" or "Louis Vuitton copies."
Aside from the counterfeiting scenario, Adwords can be used by one business to try to direct traffic from its competitor where it is argued that the consumer knows exactly what product or service he is purchasing and therefore is not confused. Popular trade marks can command high sums, one example being the use of ‘Interflora’ by Marks and Spencer plc (M&S) to link to its own mail order flower service. In the week just before Valentine’s Day 2009 the price for per-click advertising rose to between 23 and 29 pence as M&S, Flowers Direct and Interflora all entered the bidding war. This was in contrast to an average of 2p per click in 2008. M&S paid the greater amount for use of the keyword; Interflora estimated that the value of its lost business was $750,000. Interflora sued M&S (as opposed to Google) for the use of its trade mark “Interflora” as a key word and their case is still pending at the European Court. It is expected that the Court will rule in M&S’s favour based upon its reasoning in the Louis Vuitton case.
The sums at stake in the M&S case are the tip of the iceberg compared to the sums lost by luxury goods manufacturers who argue against a more pernicious feature of keyword advertising – the use of words such as ‘imitation’, ‘copies’ and ‘knock-offs’ in association with trade marks. In the French case against Google, Louis Vuitton claimed that it was unsurprising that many of the sponsored links that used such words in conjunction with Louis Vuitton trade marks directed users to websites that offered counterfeit Louis Vuitton products.
Summary of the judgment
Notwithstanding the above, the European Court held that Google's business of selling trade marks as AdWords is not use in the course of trade within the terms of EU law. Google is simply allowing its clients to use signs which may be identical or similar to trade marks, without itself using the signs. The fact that clients pay for the use of such signs and the fact that Google creates the technical conditions necessary for this does not alter this fact.
Some would argue that simply because Google have reduced the system of purchasing such signs to an automated process does not mean that it can totally wash its hands of its customers’ activities. This is especially as Google could easily put in a filter to prevent third parties from purchasing a trade mark as an AdWord if it does not own the mark. Indeed, Google’s policy in the United Kingdom and Northern Ireland reflected this prior to May 2008.
In practical terms there is little change with this judgment – trade mark owners will have to continue to monitor use, and as the internet grows as a tool of ecommerce the money spent by brand owners in combating infringements will increase. However, they will not be able to abridge the process by cutting off the method by which the majority of internet users are directed to these sites. This will increase costs which the brandowner will pass on in the price of its goods and services. Also, sites that are misleading and are not picked up by the brand owner will not be pulled; causing confusion and potentially misleading the consumer. Ultimately, it is the consumer who will suffer.