In brief

On 23 March 2010, the European Court of Justice (ECJ) issued its preliminary ruling in relation to the Google AdWords system. This ruling was highly awaited in Europe, where several cases between trade marks owners and internet referencing service providers, and in particular Google, are pending before national jurisdictions.

The ECJ found that:

  • an internet referencing service provider (such as Google) which stores, as a keyword, a sign identical to a trade mark and organises the display of advertisements on the basis of the keyword does not infringe trade mark rights  
  • an advertiser that uses a keyword which is identical to a trade mark may infringe trade mark rights if the advertisement does not enable an average internet user—or enables that user only with difficulty—to determine whether the goods or services on offer originate from the trade mark owner or from the advertiser, and  
  • the hosting defence under the E-Commerce Directive could apply to Google in relation to its AdWords system, provided that it has not played an active role of such a kind as to give Google knowledge of, or control over, the data stored.  

Google AdWords system

When an internet user performs a search on the Google search engine, the search engine displays links selected and ranked through automatic algorithms. The links triggered by this search are the ‘natural’ links. In addition, Google offers a paid service through which third parties can reserve one or more keywords which trigger an advertising link which is displayed either above the natural results or at the right of the natural results. These are the ‘sponsored’ links.

Background

The French Cour de Cassation referred several questions to the ECJ for a preliminary ruling in three decisions.

In Google France, Google Inc v Louis Vuitton, Google stored keywords which were identical to several of Louis Vuitton’s trade marks and the entry of these keywords into Google’s search engine triggered the display of sponsored links to sites offering counterfeit goods. Louis Vuitton also established that Google offered advertisers the possibility of selecting not only keywords which correspond to Louis Vuitton’s trade marks but also those keywords in combination with expressions such as ‘limitations’ and ‘copy’. The Court of First Instance and the Court of Appeal found that Google was infringing Louis Vuitton’s trade mark rights.

In Google France v Viaticum Luteciel and Google France v CNRRH, Pierre-Alexis Thoner, Bruno Raboin and Tiger, keywords which were identical to the plaintiffs’ trade marks triggered the display of sponsored links to sites of the plaintiffs’ competitors. The facts differ from the Louis Vuitton case, in that entering the keywords into Google’s search engine triggered the display of ads for sites offering identical or similar products, but not infringing products. The French Court of First Instance and Court of Appeal found that Google was liable for trade mark infringement.

Decision

Google’s liability under trade mark law

The ECJ ruled that when Google permits advertisers to select, as keywords, signs identical to trade marks, stores the signs and displays sponsored links on the basis of these keywords, Google is not using the signs in a trade mark sense and is not liable for trade mark infringement. The ECJ found that Google, while creating technical conditions necessary for the use of a sign and being paid for that service, was not itself using the sign. The ECJ acknowledged that Google was operating in the course of trade but it was not itself using the signs.

Advertisers’ liability

The ECJ found that the advertisers were using the signs in the course of trade and in relation to goods or services identical to those for which the trade marks were registered. The ECJ also found that the use, by the advertisers, of a keyword identical to a trade mark could have an adverse effect on the trade mark function of indicating origin where the advertiser’s ad suggests that there is an economic link between the advertiser and the proprietor or the trade mark, or where the ad, while not suggesting the existence of an economic link, is vague to such an extent that it does not enable an average internet user, or it enables that user only with difficulty, to ascertain whether the goods or services originate from the advertiser or the proprietor of the trade mark.

Can Google benefit from the ‘hosting provider’ exemption?

Article 14 of Directive 2000/31/EC (E-Commerce Directive) provides that a hosting provider is not liable for the information stored, as long as the hosting provider does not have actual knowledge of illegal activity or information or, upon obtaining such knowledge, acts expeditiously to remove or to disable access to the information. Louis Vuitton, Viaticum and CNRRH submitted that a referencing service such as AdWords, was not an information society service within the terms of the E-Commerce Directive. Google was of the opposite view.

The ECJ found that the hosting provider exemption could apply to an internet referencing service provider where that service provider had not played an active role of such a kind as to give it knowledge of, or control over, the data stored. The ECJ referred to the preamble of the E-Commerce Directive and stated that the exemptions from liability cover only cases in which the activities of the information society provider are ‘of a mere technical automatic and passive nature’. The ECJ held that it is up to the national courts to assess whether Google can benefit from the hosting provider exemption.

Conclusion

Both Google and Louis Vuitton claimed victory after the ECJ’s preliminary ruling.

This ruling clarifies the position on trade mark infringement by internet referencing service providers, including Google, in the European Community. Google is not liable for trade mark infringement, but advertisers may be liable.

However, it is now up to the national courts to rule as to whether Google’s role is of a mere ‘technical, mechanical and passive nature’, or whether it extends beyond this nature and whether Google can benefit from the hosting provider exemptions.