Vertex Law

The ruling has been the subject of considerable controversy, largely due to the fact that one of its key considerations placed one of Google’s most important revenue streams, Google AdWords', under the spotlight. This article looks primarily at the following questions:
 

 

1 Google AdWords is a service available from Google which allows advertisers to purchase or 'sponsor' keywords and/or phrases so that when the keywords or phrases are used as search terms in Google’s search engine, the advertiser’s advertisement is displayed alongside the natural search results. Google AdWords (as well as other similar services offered by other search engine providers, such as the Yahoo SM service) have proved to be very popular and such advertisements are common to see and usually appear either at the top, or at the right-hand side of the page alongside the search engine’s natural search results.
 

There are limited restrictions on the keywords and or phrases that an advertiser may sponsor and many, as in the case of Google v Louis Vuitton, have chosen to sponsor keywords and/or phrases that are a trade mark of another (such as a competitor’s name), for obvious benefits.
 

2 The ECJ has ruled in the case of Google v Louis Vuitton on whether Google is liable for infringing a brand owner’s trade mark rights by allowing others to sponsor its trade mark (e.g. their company name or product name) as an AdWord.
 

The ECJ has found in favour of Google and held that Google were not infringing Louis Vuitton’s trade mark by allowing others to purchase 'Louis Vuitton' as an AdWord. The ECJ considered that in selling an AdWord which was identical to a brand owner’s registered trade mark, Google was not 'using' the trademark in the sense necessary for the purposes of trade mark infringement; it was merely creating the technical conditions necessary for advertisers to use the trade mark. 
 

However, one important point to note is that the ECJ also considered the E-Commerce Directive (2000/31/EC) under which the ECJ held that, although Google would not be infringing a brand owner’s rights by selling an AdWord identical to the brand owner’s trade mark, if Google or any other search engine provider becomes aware that an advertiser (i.e. the purchaser of an AdWord) were infringing a party’s trade mark they are required to act expeditiously to stop the infringement.
 

3 The ECJ has also importantly considered the question as to whether advertisers may be liable for trade mark infringement by sponsoring an AdWord which is another’s trade mark.
 

The ECJ has considered that a trade mark owner can prevent another business from selecting an AdWord which is identical to its trade mark if the sponsored link and the words advertised underneath the link ('the advertisement') “do not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services originate from the proprietor of the trade mark or an undertaking economically connected to it…or from a third party.”
 

The key function of a trade mark is that it identifies where the goods and or services originate from – it is a badge of origin. If an internet user may be confused as to a commercial affiliation between the advertiser and the trade mark owner then the brand owner’s trade mark rights are likely to be infringed and the brand owner will be able to prevent the use of the AdWord.
 

By reaching this decision, the ECJ has attempted to balance the importance of protecting the rights of trade mark owners against a desire not to over regulate the internet and to ensure diversity of consumer choice. The ECJ recognised that there are instances when others may use a trade mark belonging to another (for example, within this article a number of brand owners’ names have been referred to without infringing their trade marks and the case is also true when businesses use another’s trade mark in the course of lawful comparative advertising).
 

Whilst it is up to the national courts to decide on the facts of each case whether there will be a likelihood of confusion on the part of the internet user (and the ECJ’s ruling allows national courts considerable leeway in determining infringement in keyword cases), the decision of the ECJ does suggest that from the perspective of advertisers bidding for AdWords, as long as the use of an AdWord is unlikely to confuse the average internet user of a connection or an affiliation between the advertiser and the trade mark owner in the way set out above, then trade mark rights should not be infringed. However, the approach that the UK courts will adopt in deciding these cases has yet to be seen and therefore there is still some uncertainty.
 

Therefore, subject to receiving the necessary legal advice relating to its specific circumstances and taking certain precautions, if a business considers that there is a real benefit in sponsoring keywords which happen to be a trade mark of a another and they are confident that they can avoid confusion on the part of internet users as detailed above, then they should consider taking advantage of the ruling. 
 

Perhaps a more compelling reason to reconsider use of your competitor’s AdWords is that they may, as a result of the ECJ’s findings, now be seriously considering using yours!
 

The use of the internet by businesses has from the outset caused real difficulties in relation to the interpretation of trade mark law and other concepts which were created prior to the internet era. Whilst many believe that use of a competitor’s trade mark as an AdWord is somehow instinctively wrong, it has, in limited circumstances been declared by the ECJ to be lawful and therefore businesses need to think carefully about how they can benefit from this use of search engines and the use of sponsored keywords within their own advertising and marketing programme.