Off the mark
The ECJ's decision that Google does not infringe third party trademarks through its AdWords service has avoided other issues – not least whether the search engine could be liable for permitting infringement, says Paul Stanley NO
In October 2009, I commented on the opinion of advocate general Poiares Maduro in Joined Cases C-236/08 to C-238/08 Google France ('Room to breathe', Solicitors Journal 153/37, 6 October 2009). The Grand Chamber delivered its much-awaited judgment in the case on 23 March 2010.
When you perform a Google search, in addition to the search results, you may be presented with a number of 'sponsored links' on the right-hand side of the results page or above the main results. Those links appear because traders have agreed to pay Google, using a service called AdWords, so that when a user enters a particular search term the advertising link will be shown. Evidently Google's commercial success is derived from advertising revenue (advertising made up $22.8 of its $23.6bn revenue in 2009 '“ including, but not limited to, the AdWords advertisements).
Various companies '“ including the brand owners of the Louis Vuitton label, a French travel agency operator, and what the judgment describes as a 'matrimonial services agency' '“ alleged that in operating this service Google acted unlawfully. The complaint was that by using a trademarked term entered by a user (say 'Vuitton') to trigger the delivery of an advertisement produced by someone other than the trademark holder and without the trademark holder's consent, Google was infringing their trademarks.
This turned out to be a surprisingly tricky question, depending on a rather detailed analysis of the rights granted by directive 89/104 (which harmonises national trademarks) and regulation 40/94 (which governs Community trademarks).
No relevant use
The ECJ concentrated its attention, first, on the question whether Google was 'using in the course of trade any sign which is identical to the [trademark]'. It was not difficult to decide that '“ whatever Google and its advertisers were doing, they were doing it 'in the course of trade', as part of a commercial activity. But was Google using the trademark? In one sense, of course it was. But not, the ECJ thought, in any relevant sense. It seems that it was the ECJ's view (though this is only obliquely stated) that 'use' means 'use for the purposes of communication'. In the ECJ's view, the advertisers did use the trademark, and Google permitted that use, but Google did not itself use it.
What about the advertisers? Obviously if the trademark actually appears in the text of the advertisement (as it did in one of the cases before the ECJ) there is 'use'. But what if it is used only 'behind the scenes' to select the advertisement? The ECJ thought that this was also a use (indeed, it said it was 'clear').
Possibility of confusion
That was not, however, the end of the case, because under EU law the rights granted to trademark proprietors can be exercised to prevent use only if that use adversely affects the functions for which a trademark is granted, which include guaranteeing (for consumers) the origin and quality of goods, and protecting communication, investment and advertising. Does the use of a keyword merely to select an advertisement '“ if that advertisement does not itself contain the trademark '“ prejudice those aims?
The ECJ gave a qualified answer. It thought that the use of a trademark as a 'guarantee of origin' might be affected if a 'normally informed and reasonably attentive' user of the internet could not, without undue difficulty, work out that the advertisement that had been displayed in response to a search for a trademarked term did not originate from the trademark's proprietor. The thinking seems to be that if the consumer enters a trademark as a search term, and then sees a sponsored link for the same kind of goods, he or she might assume that the link is for the trademark proprietor's goods. Assessment of the possibility of confusion depended on a case-by-case analysis.
On the other hand, while it accepted that the use of keyword searches might have repercussions for the trademark proprietor's advertising strategy '“ for instance by causing the proprietor to pay a premium to have its own advertisements appear above those of competitors in response to a keyword search '“ the ECJ did not think that the repercussions were severe enough to lay the foundation for infringement.
A slippery character
In practical terms, this means that using the keyword to trigger the display of advertisements for competing products will be acceptable so long as a 'normally informed and reasonably attentive' consumer can quite easily see that they are competing products '“ and will not be misled into thinking that what is being advertised is the products of the proprietor of the trademark being searched. Since the 'normally informed and reasonably attentive' consumer is no doubt as slippery and artificial a character as the 'reasonable man' beloved of the common law, there is a wide field for disagreement and inconsistent conclusions, and one can expect the judgment to have a chilling effect on keyword-driven comparative advertising strategies.
But what about Google? It could not be directly liable '“ even, said the court, if it permitted advertisements to be triggered by such sinister search terms as 'Vuitton imitation', since it was not itself 'using' the trademark. But could Google be liable for its role in permitting infringement? Or could it avail itself of special protections offered to 'information society service providers' by directive 2000/13? The ECJ ducked that issue, regarding it as turning on a detailed analysis of the facts, in particular how actively involved Google was in preparing advertisements.