In a recent decision by the European Court of Justice, the Court ruled in favor of Google in a consolidated case spearheaded by Louis Vuitton relating to Google's Adwords program. The Court found that Google was not in breach of EU trademark law for its passive sale of third-party trademarks as keywords. However, Google's "safe harbor" is limited, as Google must act expeditiously to take down advertisements when trademark owners complain that the ads or websites linked from the keywords infringe their trademarks. Despite the finding of no infringement by Google, the decision may leave individual advertisers open to liability for use of a competitor's trademark as a keyword. The ECJ has left it to national courts to decide on a case-by-case basis whether trademark infringement has taken place.
In Google's AdWords program, advertisers bid on and purchase keywords, which may include trademarks of third parties. When an internet user types in a search term using Google's search engine, the resulting hits include regular or "natural" search results based on relevance, along with "Sponsored Links" results triggered by the keywords in the search query. These "Sponsored Links" is paid contextual advertising that is auctioned through Google's AdWords, with the highest bidder usually having its Sponsored Link listed first.
The ECJ found that Google's sale of trademarks as keywords, as a "referencing service provider," was not considered use of the marks under EU law. It further held that the keyword ads are not likely to have an adverse effect on the advertising function of the trademark. The court determined, however, that use of third-party trademarks as keywords or advertising links was considered "use in the course of trade" by the purchaser of the keyword, whether or not the trademark appeared in the ad text itself. Liability for the advertiser may arise if the ad does not enable the average internet user, or enables that user with difficulty, to ascertain whether the goods or services originate from the owner of the trademark (or an undertaking economically connected to it), or whether they originate from a third party.
National courts will have the power to adjudicate whether source confusion has actually occurred. The analysis will determine whether the online advertisement is considered trademark infringement, and whether Google's participation is active enough to remove its safe-harbor defense and provide liability based on Google's knowledge of and control over the infringing activity. Courts will have to consider whether Google's Keyword Suggestion Tool would be considered sufficient active participation to negate any exemptions that Google has garnered as a service provider.
While the current judgment refers to keywords that are "identical" to the trademark and to goods that are "identical" to the trademark owner's goods, it is anticipated that forthcoming decisions in the EU will address the liability of an advertiser for keywords that are similar to the trademark and are used for complimentary goods. Although Google appears to have averted blanket liability for keyword sales in the EU, its benefits may be limited due to potential advertiser liability.
Vol. 53, June 2010