Trademark Infringement by Use of AdWords? Legal Risks by Using AdWords Despite European Court of Justice (ECJ) Rulings

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The internet is one of the most important marketing tools today. The use of trademarks as keywords for becoming prominently placed in the results of a search via the Google search machine is nowadays a common and important marketing strategy.

1. What are Google AdWords?
When a user of the Google search machine performs a search on the basis of one or more terms, the search engine displays the internet sites which appear best to correspond to those terms in a decreasing order of relevance. These hits are referred to as the 'natural' results of a search. In addition, Google offers a paid referencing service called 'AdWords'. This service enables an advertiser by means of reservation of one or more keywords to have its advertising link prominently placed on the search results in case of a correspondence between one or more of the reserved search terms and those that the user entered as search query. The advertising link then appears under the heading 'sponsored links' which is usually displayed either on the right-hand side of the screen, to the right of the natural results, or on the upper part of the screen above the natural results.

Google allows trademarks to be "purchased" as keywords by advertisers that are not the owners of the trademarks. Trademark owners often do not agree with the advertisers' use of its trademark as 'AdWord' and claim trademark infringement against the advertisers.

2. Trademark infringement by the advertisers?
The core question is: If the advertiser selects a word as an 'AdWord' that is identical or similar to a third party's trademark, does the advertiser infringe the third party's trademark rights?[1]

During the last years this question was key to a number of court decisions throughout Europe and was finally brought to the European Court of Justice (ECJ) which rendered first decisions. The analysis of the ECJ[2] culminated in the following consideration:

For constituting a trademark infringement, the use of a trademark as 'AdWord' must have an adverse effect on the protected functions of the trademark.

The ECJ held that the main function of a trademark is the so called origin function[3]. Advertiser's use of a trademark as an 'AdWord' adversely affects the origin function of the trademark if an advertiser's ad shown as search result pretends an economic link between the advertiser and the trademark owner. The same applies in the cases where the ad and its content, although not pretending the existence of such an economic link, is vague regarding the origin of the goods or services so that 'normally informed and reasonably attentive internet user' is not able to determine on whether the advertiser is a third party or the trademark owner.

At least, the ECJ set some guidelines. However, it remains unclear how the 'normally informed and reasonably attentive internet user' understands the ad in each particular case. The ECJ refers this question to the national courts of the Member States that recently have, unfortunately, rendered decisions deviating from each other.

3. Deviating decisions of member state courts
The German Federal Court of Justice has been so far friendly to advertisers[4] arguing that the 'normally informed and reasonably attentive internet user' is able to distinguish between the trademarks owner and ads of third parties in particular when the ad appears on the parts of the search result screen which are reserved for advertisement. By contrast, the Austrian Highest Court of Justice[5] has been friendly to trademark owners and affirmed trademark infringement assuming that the 'normally informed and reasonably attentive internet user' is fairly unskilled and is not able to distinguish among natural results and AdWord based results. The French Cour de Cassation is in line with the Austrian approach.[6] The Dutch decisions are sometimes favourable to trademark owner[7] and sometimes to advertiser.[8] The English High Court of Justice in London rendered a decision involving Interflora, a flower delivery service, and Marks & Spencer, user of the AdWord "Interflora".[9] The court held a decision in favour of Interflora.

The conclusion is the following:

  • Even until now there is no consistent legal definition of 'normally informed and reasonably attentive internet user' and its skills by the national courts. This leads to legal uncertainty whether, according to the national courts' belief, the internet users are able to distinguish between AdWord based ads and natural hits and, therefore, whether the use of a trademark as 'AdWord" constitutes trademark infringement.
  • There is a risk of forum shopping. Even though the use of trademarks as 'AdWords' takes places only at a specific top level domain such as google.de or google.fr, the trademark owner may chose a place of jurisdiction in another member state if it is arguable that the specific ad reaches out to users in other states.
  • Advertisers who are interested in a pan-European marketing strategy by reservation of trademarks as 'AdWords' throughout Europe must be aware that the decisions of the ECJ do not lead to a unified European legal practice. A one-fits-it-all approach is, there4fore, very risky. Rather, advertiser must carefully screen the current legal positions of the national courts prior to using AdWords throughout Europe.  

[1] - The key legal provisions are Art.5 (1) (a)-(b) and 5 (2) of the European Trademark Directive (89/104/EC). Art. 5(1)(a) of the Trademark Directive governs use of signs identical to the protected mark in connection with goods or services identical or similar to the goods or services for which the mark is registered, whereas Art. 5(1) (b) covers use of identical or similar signs in a manner that causes likelihood of confusion.
[2] - ECJ, Judgment of 23 March 2010, C-236/08 to C-238/08, Google France.
[3] - The ECJ also highlighted the advertising function and the investment function.
[4] - BGH, Judgment of 13 January 2011, I ZR 125/07, Banabay II; BGH, Judgment of 22 January 2009 – I ZR 139/07, pcb. The BGH assumed that, given the specific design of the ad, an internet user does not have a reason to assume a connection between the advertiser and the trademark owner. One major factor in the assessment was that the trademark was displayed neither in the text of the ad nor in the relevant domain name line. In addition, the BGH based its reasoning on the fact that the internet user does not establish any commercial connection between the trademark owner and the goods advertised in ad even though he entered the other party's trademark in the search engine.
[5] - OGH, Judgment of 5 Oktober 2010, 17 Ob 8/10s, Wintersteiger; OGH, Judgment of 20 March 2007, 17 Ob 1/07g, Wein & Co; OGH, Judgment of 21 June 2010, 17 Ob 3/10f, Bergspechte III.
[6] - Cour de Cassation, Judgment of 13 July 2010, 06-15136, Google v. CNRRH.
[7] - District Court of The Hague, Judgment of 20 December 2010, Tempur v Energy+.
[8] - Court of Appeal of The Hague, Judgment of 22 November 2011, Tempur v Medicomfort and SEB v Philips.
[9] - High Court of Justice London, Judgement of 21 May 2013, HC08C03340, Interflora.

Topics:  Advertising, AdWords, ECJ, EU, Infringement, Internet, Trademarks

Published In: Communications & Media Updates, Intellectual Property Updates, International Trade Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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