Google Adwords case

Google’s Sale of Ad Words Does Not Infringe Trade Marks – Opinion Of Advocate General Poiares Maduro 22 September 2009

In three cases brought against Google by a number of different claimants, including Louis Vuitton, an important advisory Opinion was handed down yesterday, 22 September 2009, in relation to the sale by Google of keywords containing trade marks.

The case is before the European Court of Justice (ECJ) and the Opinion is by the Advocate General. (Advocate Generals’ Opinions are taken into account by the ECJ in reaching its judgment, expected early next year, but are not determinative. They often provide useful insights into the likely thinking of the Court.)

On virtually all points, the Advocate General preferred Google’s arguments. However, he left the way open for trade mark owners to sue advertisers for their use of the Adwords.

Background

Google sells Adwords to advertisers. Those Adwords sometimes correspond to or contain trade marks owned by other parties. By selling and then permitting the use of those Adwords for sponsored listings on the Google search engine, is Google itself liable for infringement of those trade marks?

Summary of Findings

Trade Mark Infringement
The Advocate General said:

1. In offering Adwords to advertisers Google was not using a sign identical or similar to any of the goods or services covered by the trade mark registrations. The use was limited to a selection procedure concerning only Google and the advertisers. There was thus no link between the Adwords service and the goods or services covered by the registrations. Accordingly, there was no trade mark infringement. The Opinion does not deal with what the position would have been had the trade mark registrations in fact covered the sale of advertising keywords. This is something trade mark owners may wish to consider for new trade mark applications.
2. Displaying adverts for goods and services covered by the trade mark registrations in response to keywords corresponding to registered trade marks did not amount to infringement by Google either. Such use did not cause confusion and hence could not affect the essential function of a trade mark. This was the case even though there was a link between the trade marks and the goods or services advertised.
3. Trade marks enjoying a reputation enjoy a special protection, such that their use can be prevented not only in relation to identical or similar goods or services, but also in relation to any goods or services that take unfair advantage of or are detrimental to the distinctive character or repute of the trade mark. This special protection derives from the innovation and investment made by the proprietor and relates to the the functions of a trade mark other than as a guarantee of origin – namely as a guarantee of quality and as a means of communication, investment and advertising. However, the protection must be balanced against freedom of expression and freedom of commerce. Trade mark proprietors should not be given absolute control over the use of their trade marks in circumstances that do not intrude on their interests.
4. There are permissible uses under trade mark law even without the authorisation of the trade mark owner - for example for reviews and comparative advertising. Use in relation to keywords was even less intrusive on a trade mark proprietor’s rights than use in reviews and comparative adverts. (This argument is somewhat similar to ones run in online copyright cases where file-sharing software sites have argued that there are legitimate possible uses for the software and that therefore it should not be restricted. However, it is a novel interpretation of trade mark law.)
5. The Internet operates without any central control which may be why it has been so successful. Keywords are possibly the main instrument by means of which information is organised and made accessible. They are content neutral as they simply enable users to reach sites associated with the words. They do not affect the functions of trade marks with a special reputation. As a result, they cannot be prevented.
6. Google was also not contributorily liable for infringements committed by advertisers. However, there is an interesting caveat to this which is that additional information which Google provides to people bidding on keywords could be such as to take Google outside the protection of the law. This may arise for example if the information contributes to Internet users being directed to counterfeit sites. However, whether Google is so liable is a matter for the national Courts.
7. Trade mark proprietors can still take action in respect of the content of adverts displayed to Internet users. In other words, the door is still open for them to sue advertisers who purchase Adwords from Google.

E-Commerce Directive
There is an interesting discussion of the role of the “hosting” defence under Article 14 of the E-commerce Directive. This defence is of fundamental importance to the way the web currently operates and in particular to the protection which UGC file-sharing and other sites enjoy.

An important related provision in the E-commerce Directive is that sites should not be forced to monitor the content that goes through them. The Advocate General provides an interesting new spin on this which is that service providers who seek to benefit from a liability exemption should remain neutral with regard to the information they carry or host. This is an entirely new view and is in keeping with the idea that there should be net neutrality, currently a hot political potato.

Comment

If the Advocate General’s Opinion is adopted in full by the ECJ, this will be an extremely important case not only concerning the liability for the use of trade marks on the Internet, but also in respect of liability of service providers generally.

The Opinion is very much in favour of a “free” web environment, where freedom of commerce and expression are important and are to be balanced with intellectual property rights. It would seem that if service providers can say that they are acting entirely neutrally then they stand a much better chance of escaping liability for what their service is used for.

The reasoning of the Advocate General is in many places difficult to follow. In addition, many will consider his Opinion is too much in favour of “freedom” on the web and the primacy of technology. However, by his having looked so exhaustively at the issues, the ECJ will have no excuse for now not bringing some long overdue clarity to this important area.