AdWords continued
In previous newsflashes we have reported on the ongoing litigation between, on the one hand, Portakabin Limited and Portakabin BV ("Portakabin") and, on the other hand, Primakabin BV ("Primakabin"), all of which are traders in modular portable buildings. In this litigation (pending before multiple courts in the Netherlands), the main issue is Primakabin's use of keywords, such as Google's AdWords, consisting of the trade mark "Portakabin", together with variants such as "portacabin" and "portokabin". The case raised questions as to the permissibility of using such keywords where the advertiser is offering for sale genuine, albeit second-hand, products manufactured by the trade mark proprietor. The Dutch Supreme Court requested a preliminary ruling on these questions from the European Court of Justice (ECJ) on 12 December 2008 (Case C-558/08), as described in our newsflash of 29 December 2008.
On 8 July 2010, the ECJ issued a preliminary ruling on the questions referred. A summary of the ECJ's answers is given below.
The ECJ's answers
Use of the keywords: "use" under Article 5(1) of Directive 89/104/EEC?
The ECJ held that the purpose and effect of Primakabin's use of Portakabin's trade mark as a keyword is to trigger a display of advertisements for goods identical to those in respect of which that trade mark is registered, namely mobile buildings. This constitutes a use in relation to the goods and services offered by Primakabin, regardless of whether the keyword is used only in relation to goods manufactured by Portakabin or also for goods from other manufacturers or manufactured by Primakabin itself. This means that such use falls within the scope of Article 5(1) of Directive 89/104/EEC ("the Directive").
Based on Article 5(1), Portakabin is entitled to prohibit Primakabin from advertising – using Portakabin's trade mark as a keyword without Portakabin's consent – goods or services identical to those in respect of which the trade mark is registered, except if such use is not liable to cause detriment to any of the trade mark's functions, particularly the function of indicating origin and the function of advertising. According to the ECJ, keywords are not liable to have an adverse effect on the advertising function of the relevant trade mark. As regards the function of indicating origin, the ECJ held that this function will be adversely affected if the advertisement does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services advertised originate from the trade mark's proprietor or an undertaking economically linked to it or, on the contrary, originate from a third party. It is up to the national court to assess whether the facts of the dispute in the main proceedings point to such an adverse effect or the risk thereof. The presence or absence, in the advertisement, of actual offers for the sale of the goods or services in question is not, in general, a decisive factor for the purposes of that assessment.
Keywords with spelling errors: allowed under Article 5(1)(a) or (b) of the Directive?
As regards the keywords that reproduce the trade mark but contain spelling errors (question 4 of the Dutch Supreme Court), the national court must assess whether: a) the relevant signs (i.e. the keywords) are identical with the trade mark because they contain differences which are so insignificant that they may go unnoticed by an average consumer (making them fall within the scope of Article 5(1)(a) of the Directive), or whether b) the relevant signs are not identical to that trade mark, but are similar to it within the meaning of Article 5(1)(b) of the Directive.
In the latter case, it will be for the national court to determine whether there is a likelihood of confusion. This should be assessed in the same way as the assessment of whether there is an adverse effect on the trade mark's function of indicating origin.
Use of the keywords: allowed under Article 6 of the Directive? - Exceptions
According to the ECJ, it is not likely that Primakabin's use of the keywords comes within the exceptions to Article 5 envisaged in Article 6(1)(b) or (c) of the Directive, although the opposite conclusion is possible. This is for the national court to determine, in the light of the particular circumstances of the case. If it is decided that the use of the keywords falls within the abovementioned exceptions, it must still be determined whether the use can be regarded as having been made in accordance with honest practices in industrial or commercial matters, i.e. fair use in relation to Portakabin's legitimate interests. If the relevant keyword is used in such a way that the function of indicating origin will be adversely affected (see above), this may easily correspond to a situation in which Primakabin cannot claim that it is acting in accordance with honest practices in industrial or commercial matters. Thus, where use by advertisers of a keyword is liable to be prohibited pursuant to Article 5 of the Directive, those advertisers cannot, in general, rely on the exception provided for in Article 6(1) in order to avoid such a prohibition.
Use of the keywords: allowed under Article 7 of the Directive? - Exhaustion
The ECJ found it to be apparent (from the request for a preliminary ruling) that Primakabin’s advertising, carried out with the assistance of keywords, concerns to a large degree the resale of used mobile buildings originally manufactured by Portakabin. According to the ECJ, it is also common grounds that those goods have been placed on the market in the EEA by Portakabin, under the trade mark Portakabin. Therefore, under Article 7 of the Directive, Portakabin is not entitled to prohibit Primakabin from advertising – using the keyword – the resale of those goods unless there is a legitimate reason, within the meaning of Article 7(2), which justifies Portakabin opposing that advertising. A legitimate reason could be that the use of the keyword (i) gives the impression that the reseller and the trade mark proprietor are economically linked or (ii) is seriously detrimental to the trade mark's reputation. The national court, which must assess whether or not there is such a legitimate reason in the case before it:
- cannot find that such a legitimate reason exists merely on the basis that Primakabin uses Portakabin’s trade mark with additional wording indicating that the goods in question are being resold, such as ‘used’ or ‘second-hand’;
- must find that there is such a legitimate reason where the reseller, without the consent of the trade mark proprietor, has removed the reference to the trade mark from the goods manufactured and placed on the market by the trade mark proprietor and replaced it with a label bearing the reseller’s name, thereby concealing the trade mark; and
- is obliged to find that a specialist reseller of second-hand goods (such as Primakabin) under Portakabin's trade mark cannot be prohibited from using that trade mark to advertise to the public its resale activities which also include other second-hand goods, unless the sale of those other goods, in the light of their volume, their presentation or their poor quality, risks seriously damaging the image which Portakabin has succeeded in creating for its trade mark.
Conclusion
Several courts in EU countries have requested preliminary rulings from the ECJ regarding this type of advertising. Examples of cases where the ECJ has already answered these questions are the French joined cases Google/Louis Vuitton (C-236/06), Google/Viaticum (C-237/07) and Google/CNRRH (C-238/08) on which we reported in our newsflash of 23 March 2010, and the Austrian case Bergspechte Outdoor Reisen/Gunter Guni (C-278/08). These cases are frequently cited by the ECJ in the decision at hand. However, they differ from Portakabin/Primakabin in that the French cases concerned the liability of Google itself, and not that of the advertiser, and the Austrian case involved the use by an advertiser of another party's trade mark to advertise his own goods and services, not the resale of genuine (second-hand) goods of the trade mark proprietor.
With its answers to the questions referred in Portakabin/Primakabin, the ECJ has provided additional guidelines on the permitted use of other parties' trade marks as keywords by resellers.
Please click here for the English version of the preliminary ruling.
