AdWords and trade marks: the current position

Submitted by
Alasdair Taylor
23rd October 2009

When you search the internet using Google, you get two types of results: “organic” results determined by the Google algorithm to be relevant to your query, and paid advertisements. The paid advertisements appear where an advertiser has bid on keywords relating to the search terms – i.e. has agreed to pay Google in respect of user clicks resulting from the appearance of the advertisement in search engine results pages relating to those keywords.  This is a form of “pay-per-click” advertising.  Where an advertiser uses keywords that are identical or similar to another company’s trade marks, there is an obvious risk of conflict. 

The question is: can a trade mark owner use its trade marks to prevent this (arguably unfair) form of competition?

European national courts

There have been a number of cases in Europe dealing with the issue of trade marks being used as keywords without authorisation, but the national courts have not yet arrived at a clear  position. In the words of Mr Justice Arnold, “given that both European trade mark law, and European law with regard to the liability of internet service providers are substantially harmonised … there ought to be a common set of European answers to the issues that arise in such cases.” (Interflora Inc. Interflora British Unit v Marks and Spencer Plc Flowers Direct Online Limited ([2009] EWHC 1095 (Ch)). Several cases have resulted in references to the ECJ.

In the German Bananabay case (I ZR 125/07), both the claimant and defendant were sellers of adult entertainment products. The claimant was the owner of the registered trade mark BANANABAY, and wanted to stop the defendant from using the mark as an AdWords keyword. The German Federal Supreme Court (the Bundesgerichtshof) decided that it needed to be clarified whether “use as a trade mark” includes the use by a Google (not a party to the proceedings) of the trade mark as an Adwords keyword. Accordingly, the question was referred to the ECJ.

In the UK, Interflora is attempting to stop Marks and Spencer using “Interflora” as a keyword. M&S argues that its use of the keyword is not “use in trade”, and that there is no confusion between the two flower services.  As part of his decision to refer this case to the ECJ, Justice Arnold noted that Google’s policy (and presumably its legal advice) in the UK and Ireland is different to its policy elsewhere in Europe.

In France, three companies are seeking to prevent Google from selling their trade marks as AdWords (C-236/08 Google France, Google Inc. v Louis Vuitton Malletier,  C237/08 Viaticum Luteciel, and C-238/08 CNRRH Pierre Alexis Thonet, Bruno Raboin, Tiger, a franchisee of Unicis). These cases are different from Bananabay and Interflora, in that the defendant is Google, not the advertiser.  In the reference to the ECJ, the three French cases have been combined.

European Court of Justice: the Advocate General’s Opinion

Where questions are referred to the ECJ, the Advocate General provides an opinion on those questions, which the ECJ will consider before its ruling.

The Advocate General’s opinion on the questions referred by the French court is the first to become available. The three references from the French court before the ECJ all pose, in the Advocate General’s words, the same question: “does the use by Google, in its AdWords advertising system, of keywords corresponding to trade marks constitute an infringement of those trade marks?  Although the references are formulated somewhat differently, they all ask for an interpretation of Article 5(1) of Directive 89/104 and therefore concern that basic question of whether Google has committed a trade mark infringement”.

The Advocate General states that Google should not be held liable for infringement when allowing advertisers to use another party’s trade mark as an AdWord, because no product is actually being sold to the general public at the time when the keyword is selected.  He argues that “the use is limited to a selection procedure which is internal to AdWords and concerns only Google and the advertisers.” Accordingly, the Advocate General suggests that trade mark owners should not be allowed to prevent the use by Google of their trade marks as keywords.

In answering the question whether the use of a trade mark as a key word affects the essential function of the mark, because of a likelihood of confusion on the part of the public, the Advocate General finds that Google is a tool that establishes a link between keywords corresponding to trade marks and natural results, but this link alone is not sufficient to establish confusion, because “internet users only decide on the origin of the goods or services offered on the sites by reading their description and, ultimately, by leaving Google and entering those sites”. He states that “neither the display of ads nor the display of natural results in response to keywords which correspond to trade marks leads to a risk of confusion as to the origin of goods and services”, and that “neither AdWords nor Google’s search engine affects or is in danger of affecting the essential function of the trade mark”.

The Advocate General also does not think that Google’s use of keywords takes an unfair advantage of, or is detrimental to the distinctive character of a trade mark; because, while trade marks enjoy various types of protection, which are “linked to the promotion and innovation of investment”, this protection is never absolute, and must be balanced against other interests, such as freedom of expression and freedom of commerce. He continues by stating that Google’s uses of key words which correspond to trade marks are “independent of the use of the trade mark in the ads displayed and on the sites advertised in AdWords; they are limited to conveying that information to the consumer”. He concludes by saying that “if trade mark proprietors were to be allowed to prevent those uses on the basis of trade mark protection, they would establish an absolute right of control over the use of their trade marks as keywords. Such an absolute right of control would cover, de facto, whatever could be shown and said in cyberspace with respect to the good or service associated with the trade mark”.

The Advocate General’s opinion is followed in approximately 80% of cases.

This article was researched and written by Harriet Zimmermann.

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