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Author: Luke Portnow
7 May, 2013

Recently there has been some clarification on AdWords and keyword bidding following rulings handed down by the Court of Justice of the European Union (CJEU).

The CJEU is Europe’s highest court and its decisions are binding throughout the European Union (of which the United Kingdom is a member). In fact, many of the CJEU’s rulings originate from national courts referring questions on points of European law to it, especially in relation to the Community Trade Mark Regulation (which provides for Community Trade Mark applications and the relative harmonization of trade mark law throughout the European Union).

In this Bulletin we examine the significance of these recent rulings

General position
The most important and far-reaching CJEU rulings hold that Google’s AdWords system does not violate the trade mark rights of a brand owner when its trade marks are used by a third party to trigger adverts.

However, third parties using a proprietor’s trade mark as an AdWord can be liable to trade mark infringement if their ad suggests that there is an economic link between the parties and/or if the ad has an adverse effect on the essential function of the trade mark: its indication of origin or its reputation.

Google France
The first important case was Google France SARL and Google Inc. v Louis Vuitton Malletier SA (C-236/08) and the CJEU’s full decision can be found here.

In this case Louis Vuitton Moet Hennessy (LVMH) had argued that Google was infringing its trade marks when it allowed anyone other than LVMH to bid on its registered trade marks using Google’s AdWords system.

The CJEU ruled that Google is only an information service provider and so does not infringe any trade marks – it only creates the environment in which trade mark owners and advertisers do business. As explained by the CJEU in the ruling: “A referencing service provider is not involved in use in the course of trade within the meaning of the provisions of the [Community Trade Mark] Directive and Regulation”.

The CJEU did, however, go on to state that: “In the case where a third party’s ad suggests that there is an economic link between that third party and the proprietor of the trade mark, the conclusion must be that there is an adverse effect on the function of indicating origin”.

The CJEU stated in the case where an ad (while not suggesting the existence of an economic link) is so vague: “on the origin of the goods or services at issue that normally informed and reasonably attentive internet users are unable to determine, on the basis of the advertising link and the commercial message attached thereto, whether the advertiser is a third party vis-à-vis the proprietor of the trade mark or, on the contrary, economically linked to that proprietor, the conclusion must also be that there is an adverse effect on that function of the trade mark.”

Interflora
Shortly after Google France the CJEU was asked to provide guidance on an further keyword bidding dispute – this time in the case of Interflora Inc. and Interflora British Unit v Marks & Spencer plc et Flowers Direct Online Ltd (C-323/09) here.

It is this case that provides the best clarification on the position concerning trade mark infringement and keyword bidding on third party trade marks.

In Interflora the CJEU held that the proprietor of a trade mark is entitled to prevent a third party competitor from advertising – on the basis of a keyword which is identical with the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor’s consent – goods or services identical with those for which that mark is registered where that use is liable to have an adverse effect on one of the functions of the proprietor’s trade mark. This case is discussed in more detail below.

Essential function
In its ruling in Interflora the CJEU gave a clear list and exemplar of what may constitute trade mark infringement when a third party uses the registered trade mark of a third party as an AdWord.

In essence, the complaint in this case was that Marks & Spencer purchased ‘interflora’ as a keyword for Google’s AdWord service so that when people who were looking for the well known Interflora flower delivery service, they would find an advertisement for Marks & Spencer’s rival service at the top of the non-organic search results (“sponsored links”).

The CJEU ruling in Google France could not help Interflora at first because Marks & Spencer was not using the word “interflora” in its sponsored link advertisement. What Interflora was able to argue, based on the Google France decision, was that Marks & Spencer’s use of the AdWord was damaging the Interflora mark’s reputation and distinctive character without due cause.

The trial judge in this United Kingdom case analysed all relevant law and then referred a number of questions to the CJEU for clarification and/or preliminary rulings. The CJEU answered these questions, and clarified the position in relation to trade mark infringement and AdWords, ruling as follows:

1. The proprietor of a trade mark is entitled to prevent a competitor from advertising – on the basis of a keyword which is identical with the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor’s consent – goods or services identical with those for which that mark is registered, where that use is liable to have an adverse effect on one of the trade mark’s functions, such as:

  • adversely affecting the trade mark’s function of indicating origin where the advertising displayed on the basis of that keyword does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services concerned by the advertisement originate from the proprietor of the trade mark or an undertaking economically linked to that proprietor or, on the contrary, originate from a third party;
  • does not adversely affect, in the context of an internet referencing service having the characteristics of the service at issue in the main proceedings, the trade mark’s advertising function; and
  • adversely affects the trade mark’s investment function if it substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.

2. the proprietor of a trade mark with a reputation is entitled to prevent a competitor from advertising on the basis of a keyword corresponding to that trade mark where the competitor thereby takes unfair advantage of the distinctive character or repute of the trade mark (free-riding) or where the advertising is detrimental to that distinctive character (dilution) or to that repute (tarnishment).

As an example, the CJEU explained that a keyword would be detrimental to the distinctive character of a trade mark with a reputation (dilution) if, for example, it contributes to turning that trade mark into a generic term.

Going forward
National courts such as the German Federal Supreme Court are already applying the CJEU’s rulings in Google France and Interflora.

Author

Luke Portnow Trade Mark Attorney

Luke Portnow
Trade Mark Attorney

Phone this number (0)+44 20 7430 7500

Email this address lportnow@boult.com

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London
WC1X 8BT