Google, AdWords, Internet Referencing and Trade Marks: Joined Cases C-236/08 to C-238/08 and Case C-278/08

The Court of Justice has handed down two important judgments on trade mark protection and internet keyword advertising.

The first is in Joined Cases C-236/08 to C-238/08 Google France and others v. Louis Vuitton and others and the second in is Case C-278/08 Die BergSpechte Outdoor Reisen v. Günter Guni. In both judgments, the Court held that EU law on trade marks allows the proprietor of a trade mark to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, if that advertisement does not enable an average internet user to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.

Well, you know who or what Google is, right ? But it is worth explaining what goes on when you do a Google search. When you do a search on the basis of one or more words, the search engine will display the sites which appear best to correspond to those words, in decreasing order of relevance. These are referred to as the ‘natural’ results of the search. Google also offers a paid referencing service called ‘AdWords’. That service enables anyone, by reserving of one or more keywords, to obtain the placing of an advertising link to its site. That advertising link appears under the heading ‘sponsored links’ above the natural results. That advertising link is accompanied by a short commercial message. The advertiser pays a fee for the referencing service for each click on the advertising link. That fee is calculated on the basis, in particular, of the ‘maximum price per click’ which the advertiser agreed to pay when concluding with Google the contract for the referencing service, and on the basis of the number of times that link is clicked on by internet users. A number of advertisers can reserve the same keyword. The order in which their advertising links are then displayed is determined according to, in particular, the maximum price per click, the number of previous clicks on those links and the quality of the ad as assessed by Google. The advertiser can at any time improve its ranking in the display by fixing a higher maximum price per click or by trying to improve the quality of its ad. Google has set up an automated process for the selection of keywords and the creation of ads. Advertisers select the keywords, draft the commercial message, and input the link to their site.

So what was the problem ?

Vuitton, the owners of trademarks protecting their posh bags and leather goods, discovered that the entry, by internet users, of terms constituting its trade marks into Google’s search engine triggered the display, under the heading ‘sponsored links’, of links to sites offering imitation versions of Vuitton’s products. It was also established that Google offered advertisers the possibility of selecting not only keywords which correspond to Vuitton’s trade marks, but also those keywords in combination with expressions indicating imitation, such as ‘imitation’ and ‘copy’. Vuitton brought proceedings in the French courts against Google to obtain, inter alia, to obtaining a declaration that Google had infringed its trade marks.

The other cases joined with Vuitton's case concerned, not links to imitations of the trade mark holder's goods but to competitors of the trade mark proprietors.

The French court referred a series of questions to the Court of Justice on whether Google's practices were compatible with Directive 89/104/EEC on trade marks and Regulation 40/94/EC on the Community trade mark which entitle proprietors of trade marks, subject to certain conditions, to prohibit third parties from using signs which are identical with, or similar to, their trade marks for goods or services equivalent to those for which those trade marks are registered. In particular it asked whether:
Article 5(1)(a) and (b) of Directive 89/104 and Article 9(1)(a) and (b) of Regulation No 40/94 mean that a provider of a paid referencing service who makes available to advertisers keywords reproducing or imitating registered trade marks and arranges by the referencing agreement to create and favorably display, on the basis of those keywords, advertising links to sites offering infringing goods is using those trade marks in a manner which their proprietor can prevent;
in the event that the trade marks have a reputation, the proprietor oppose such use under Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94,
and interestingly, whether Google is liable: In the event that such use does not constitute a use which may be prevented by the trade mark proprietor under Directive 89/104 or Regulation No 40/94, is Google to be regarded as providing an information society service consisting of the storage of information provided by the recipient of the service, within the meaning of Article 14 of Directive 2000/31 on electronic commerce, so that that provider cannot incur liability until it has been notified by the trade mark proprietor of the unlawful use of the sign by the advertiser?

In answering the first question, the Court recalled that by application of Article 5(1)(a) of Directive 89/104 or, in the case of Community trade marks, of Article 9(1)(a) of Regulation No 40/94, the proprietor of a trade mark is entitled to prohibit a third party from using, without consent, a sign identical with that trade mark when that use is in the course of trade, is in relation to goods or services which are identical with, or similar to, those for which that trade mark is registered, and affects, or is liable to affect, the functions of the trade mark (Case C‑17/06 Céline [2007] ECR I‑7041, paragraph 16; order in Case C‑62/08 UDV North America [2009] ECR I‑0000, paragraph 42; and Case C‑487/07 L’Oréal and Others [2009] ECR I‑0000, paragraph 58). Also, the use of a sign identical with a trade mark constitutes use in the course of trade where it occurs in the context of commercial activity with a view to economic advantage and not as a private matter (Case C‑206/01 Arsenal Football Club [2002] ECR I‑10273, paragraph 40; Céline, paragraph 17; and UDV North America, paragraph 44).

Consequently, the Court finds that, by purchasing the referencing service and selecting, as a keyword, a sign corresponding to another person’s trade mark, with the purpose of offering internet users an alternative to the goods or services of that proprietor, an advertiser uses that sign in relation to its goods or services. But that is not the case where Google permits advertisers to select, as keywords, signs identical with trade marks, stores those signs and displays its clients’ ads on the basis of those keywords. The use, by a third party, of a sign which is identical with, or similar to, the proprietor’s trade mark implies, at the very least, that that third party uses the sign in its own commercial communication. A referencing service provider such as Google, however, allows its clients, namely the advertisers, to use signs which are identical with, or similar to, trade marks, but does not itself use those signs. If a trade mark has been used as a keyword, the proprietor of that trade mark cannot, therefore, rely, as against Google, on the exclusive right which it derives from its mark.

By contrast, the trade mark owner can invoke that right against those advertisers which, by means of a keyword corresponding to its mark, arrange for Google to display ads which make it impossible, or possible only with difficulty, for average internet users to establish from what undertaking the goods or services covered by the ad originate. In such a situation – when the ad in question appears immediately after the trade mark has been entered as a search term by the internet user concerned and is displayed at a point when the trade mark, in its capacity as a search term, is also displayed on the screen – the internet user may err as to the origin of the goods or services in question. The function of the trade mark is thus adversely affected.

The Court held that it is for the national court to assess, on a case-by-case basis, whether the facts of the dispute before it point to an adverse effect, or a risk thereof, on the function of indicating origin.

As to the second issue concerning the use by internet advertisers of a sign corresponding to another person’s trade mark as a keyword for purposes of the display of advertising messages, the Court takes the view that that use is liable to have certain repercussions on the advertising use of that mark by its proprietor and on the latter’s commercial strategy. Those repercussions of third parties’ use of a sign identical with the trade mark do not of themselves, however, constitute an adverse effect on the of the trade mark.

Finally, on the question of the liability of Google in respect of the data of its clients which it stores on its server, the Court recalls that Directive 2000/31 lays down restrictions on liability which favor information society intermediary service providers.

As to whether an internet referencing service, such as ‘AdWords’, is an information society service consisting in the storage of information supplied by advertisers and whether, on that ground, the liability of the referencing service provider may be limited, the Court finds that it is for the national court to examine whether the role played by that service provider is neutral, in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge of, or control over, the data which it stores. If Google's role is passive, it cannot be held liable for the data which it has stored at the request of an advertiser, unless it had obtained knowledge of the unlawful nature of those data or of that advertiser’s activities and failed to act expeditiously to remove or to disable access to the data concerned.

The judgment of the Court in Case C-278/08 Die BergSpechte Outdoor Reisen v. Günter Guni is materially similar to that in Joined Cases C-236/08 to C-238/08 Google France and others v. Louis Vuitton and others. So no need to go into that case separately.

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