Google has been fined 350,000 euros by a French court for trade mark infringement resulting from its "adwords" policy.

Kate Swaine, director in Wragge & Co's Brands team, says "This issue is not going anyway for Google. Trade mark owners need clarity as to what the position is on adwords under the Trade Mark Directive."

Louis Vuitton Moët & Hennessy (LVMH) and Le Méridien Hotels brought the action against Google claiming that its sale of keywords, which were also trade marks belonging to the two companies, constituted infringement of those marks.

In finding in favour of the claimants, the court acknowledged that the actual harm to LVMH and Le Méridien was limited. However, it also found that potential customers had been directed to other competing sites through advertisements triggered by the adwords. Therefore, infringement had taken place.

Google's adwords policy has come under particular scrutiny since it changed its policy in the UK last year to allow sale of trademarked words to someone other than the trade mark holder.

This French Courts' decision comes hot on the heels of a referral by the German Federal Supreme Court to the European Court of Justice (ECJ), asking whether the use of a third party's trade mark as a keyword or adword constitutes trade mark infringement.

Kate Swaine adds, "At the moment we have contradictory decisions in some jurisdictions and no guidance at all in others. A decision from the ECJ is critical."

Google claims its policy is in line with French and European law and has stated it will appeal the decision.