(Case c-323/09)

Google's policy of offering trade marks to the highest bidders within its AdWords program has proved controversial and led to significant litigation in US, the EU and elsewhere.

For the most part, these cases have been decided in favour of Google and advertisers. In March 2010, the Court of Justice of the European Union ("CJEU") decided that Google was not "using" trade marks when it offers them within its AdWords program. The CJEU also decided that the advertiser would not generally infringe the trade mark that it had bid for unless the sponsored advert suggested that the advertiser's goods/services are connected with those of the trade mark owner.

Until the CJEU's decision of 22 September 2011 in Interflora v Marks & Spencer, none of the European cases has considered whether bidding for a trade mark within the AdWords program could amount to dilution, or free riding.

The CJEU's decision of 22 September 2011 provides some additional guidance but, for the most part, leaves it for the national courts to determine these issues on the facts of each case. More litigation will no doubt follow.

SUMMARY

The CJEU restates the underlying position that a sponsored advert triggered by a third party's trade mark will be infringing if the sponsored advert does not enable Internet users to ascertain that the goods/services referred to do not come from the trade mark owner.

The CJEU extends this to the issue of dilution: if the Internet user understands that the goods/services referred to in the sponsored advert do not come from the owner of the trade mark that triggered the ad, then there can be no dilution.

The CJEU accepts that in many cases bidding for a third party's trade mark within the AdWords program is intended to take unfair advantage of the trade mark. However, the CJEU states that this "free riding" will only be actionable if the sponsored advert triggered by the trade mark links to a site offering "imitations" of the trade mark owner's goods/services. If the advertiser's site offers "alternatives" to the trade mark owner's goods/services, this will not be actionable. It is for national courts to decide on the facts of each case whether the advertiser offers "imitations" or "alternatives".

Background

Marks & Spencer ("M&S"), the well known British retailer, bid for the term INTERFLORA within Google's AdWords program.

A search on the Google search engine for the term INTERFLORA returned a sponsored advert for M&S's flower delivery service.

Click here to see diagram

The term INTERFLORA does not appear within M&S's sponsored advert.

Interflora objected to M&S's use of the INTERFLORA trade mark within Google's AdWords program. Interflora sued M&S for trade mark infringement before the English High Court.

The High Court referred a number of questions to the Court of Justice of the European Union ("CJEU"). The CJEU gave its decision on 22 September 2011. This decision will now be considered by the English High Court who will then give its judgment in the trade mark infringement proceedings.

Google AdWords – The Legal Position

Decisions from the CJEU over the past 18 months have confirmed its decision of 23 March 2010 in Google France and others v Louis Vuitton Malletier SA (Case C-236/08).

In this decision, the CJEU confirmed that an advertiser can bid for a third party trade mark within Google's AdWords program provided the sponsored advert triggered by the trade mark enables "an average internet user" to ascertain that the goods or services referred to in the sponsored advert do not originate from the trade mark owner.

Subsequent cases – and commentators – suggest that a sponsored advert that does not include the trade mark within the heading / text / URL is sufficient to enable the "average Internet user" to ascertain that advertiser's good/services do not come from the owner of the trade mark that triggered the sponsored advert.

In the M&S example above, the sponsored advert does not refer to INTERFLORA and would therefore meet the criteria of the Google France decision as it does not suggest that the flower delivery services come from Interflora.

AdWords cases – a new approach?

Until the AdWords cases, almost all the trade mark infringement arguments in the EU have been straightforward:

Identical mark + Identical good/services = Infringement

The Google France decision changed this – moving the EU towards the US position: even if the mark and the goods/services are identical, only if the consumer is confused will there be detriment to the function of the trade mark and therefore infringement.

The CJEU has held that use of a trade mark within Google's AdWords program will not generally be detrimental to a trade mark's function and, if there is no detriment to the function of the trade mark, there is no infringement.

What about free riding / dilution?

Interflora argued that INTERFLORA is a mark with reputation and that, by bidding for INTERFLORA within Google's AdWords program, M&S sought to take unfair advantage of the distinctive character and reputation of the INTERFLORA mark (free riding). In addition, Interflora argued that M&S's use of the INTERFLORA mark risked diluting the INTERFLORA mark.

THE DECISION

The decision does not provide significant further clarity for trade mark owners or advertisers.

For the most part, the CJEU states that it is for the English High Court to determine whether the M&S sponsored advert enables Internet users to ascertain that the services referred to come from M&S and not from Interflora.

With regard to dilution, the CJEU states that a sponsored advert that enables the Internet user to ascertain that the goods/services do not come from the trade mark owner cannot cause dilution as the Internet user does not associate the trade mark search term with the advertiser's goods/services: the Internet user understands that he/she is being offered an alternative to the trade mark owner's goods/services.

The position regarding free-riding is a little more complex. The CJEU states that an otherwise lawful sponsored advert which takes the Internet user to a site offering "imitations" of the trade mark owners goods/services takes unfair advantage of the trade mark (free riding). However, an otherwise lawful sponsored advert that takes the Internet user to a site offering "alternatives" to the trade mark owner's goods/services would be "fair competition" and the trade mark would not therefore be used "without due cause" (one of the criteria for free-riding).

The CJEU states that it is for the national court to establish, on the facts of the case, whether the advertisers goods/services are "imitations of" or "alternatives for" the trade mark owner's goods/services.

Conclusion

Those on both sides of the debate had hoped that the Interflora decision would give further guidance on the application of trade mark law to Google's AdWords program: all will be disappointed. We await with interest a final decision from the English High Court in this case.

It appears inevitable that further litigation will follow, in particular, as trade mark owners and advertisers seek further clarity on the meaning of and difference between "imitation" and "alternative".