On March 23, 2010, the European Court of Justice (ECJ) issued three rulings on French cases concerning Google's AdWords program. Subject to certain restrictions, Google's AdWords system lets advertisers bid for placement of their ad messages as "sponsored links," which appear when certain words or phrases are entered into the search engine. Subject to certain restrictions, advertisers can purchase third-party trademarks for use as such triggers without the permission of the trademark holders. The French courts analyzing the legality of this program had referred a number of questions to the ECJ relating to this practice. The ECJ found that Google is a only a service provider and, as such, is not generally legally responsible for any trademark infringement resulting from third-party use of the system. The ECJ also held that Google can qualify for certain protections under the European E-commerce Directive's safe harbor provisions (similar to the DMCA in the United States).
Although this ruling is a victory for Google and other keyword advertising service providers, it raises significant concerns for the advertisers who actually purchase third-party trademarks. The ECJ held that trademark owners can prevent unauthorized third parties from using their trademarks as advertising keywords if that use infringes on the trademark owners' rights. Consequently, these decisions signal that advertisers who purchase third-party trademarks for use in keyword advertising without permission may face exposure for direct trademark infringement claims.
TIP: Trademark owners that wish to stop third parties from using their trademarks in keyword advertising in Europe will likely have to sue the individual advertisers directly, rather than pursuing an action again the provider of the keyword service. Advertisers should consult legal counsel before purchasing third-party trademarks for use in keyword advertising without the trademark owner's permission.