It is now accepted practice that paid search engine advertising (usually by the use of sponsored links) can be very effective in promoting a website. However, another useful way to attract traffic to a website is the use of metatags, which are text files that describe the contents of a website.  Metatags are searched by search engines to locate, rank and list sites of interest to users and so, in general terms, the more often a keyword appears on a site, particularly in hidden code, the higher a search engine will rank the site in its search results against that keyword. Maximising hits on a website is clearly good for sales of the website owner’s goods or services, but it can also increase advertising revenue since advertising space is often sold by reference to the number of hits on a  site.

Problems have arisen where website owners have succeeded in diverting traffic to their sites by the unauthorised use of a third party’s trademarks, logos or other materials in the metatags of those sites.


ECJ ruling in Google AdWords

The ECJ has given guidance on the liability of ISPs and advertisers for the use of others' trade marks as advertising keywords, following three sets of proceedings brought by trade mark owners against Google. The ECJ confirmed that a trade mark owner can prevent others from using its trade mark if the advert that is displayed fails to make it clear that the goods and/or services are from someone other than the trade mark owner.

However, in the same ruling the ECJ said that Google was only liable for infringement if it played an active role, was deemed to have knowledge of what the advertiser was doing and failed to act expeditiously once aware.  

More recently, the ECJ gave its judgment on four questions about the unpermitted use of the trademark of a competitor as a keyword in an internet referencing service, in the case of Interflora, Inc. v Marks and Spencer Plc.

In this case, Marks and Spencer bought the word "Interflora" – and some variation as a keyword for Google's AdWord service.  As a result, whenever one entered the query "Interflora", an advertisement of Marks & Spencer would appear on the top of the results in Google. Interflora started proceedings against Marks & Spencer claiming that the use of its well-known (Community) trademarks as an AdWord constituted trademark infringement.

In September 2011, the ECJ confirmed the trademark's function of indicating origin is not the only aspect that is eligible for protection. As indicated in the Google case, third-party use of a mark as a keyword can be prevented if this takes unfair advantage of the distinctive character or repute of the trade mark or causes detriment to its distinctive character.

It was considered that, provided that the reasonably well-informed and observant internet user could tell that the advertisement that appeared as the result of inputting "Interflora" as a keyword was not an Interflora advertisement, but was that of a competitor, there would be no reduction in the distinctiveness of the INTERFLORA mark. It was also said that, although use of third-party marks as keywords was almost by definition a form of "free-riding", this was lawful as long as it was not done "without due cause", thus the desire to engage in fair commercial competition, offering goods and services that represented an alternative would be legitimate.

Interestingly, the Court held that a trademark owner cannot object to the use by a competitor of a sign identical to its trademark as a keyword, if the only consequence of that use is that the owner has to increase its efforts to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.

Practical consequences

This is an unexpectedly broad interpretation by the ECJ regarding the legitimacy of the use of well-known trademarks as AdWords in internet referencing services. Based on this decision, competitors will be allowed to use trademarks embodying a competitors’ reputation as a keyword – and therefore benefit from the reputation – even if the competitor only offers an alternative product and no comparison whatsoever is made with the products or services sold under the well-known trademark.

On the other hand there is some good news for trademark owners. The ECJ has recognised that the use of a well-known trademark as an AdWord might lead to the dilution of that well-known trademark, although, typically, the use by only one competitor will not be sufficient to establish dilution. Finally, the ECJ provides a framework for the investment function of the trademark. A trademark owner should be able to safely invest in its trademark/image and reap the benefits of that investment. A competitor cannot interfere in the bond between trademark owner and customer created as a result of that investment.