Yesterday the German Federal Supreme Court (BGH) published its keenly anticipated decisions on three adword cases. The BGH found no trade mark infringement in two cases. It referred the main adword question to the European Court of Justice (ECJ) (as had the French Courts faced with similar issues).

Wragge & Co's Intellectual Property (IP) expert Janine Steinhardt says, "The long wait for certainty on adwords continues. Brand owners resent having to outbid competitors for their own advert to appear higher up in results lists generated by searches on their own trade mark. The ECJ referral's outcome will be critical to Google's future revenue."

In one case considered, the claimant and defendant were competitors in the field of printed circuit boards. The claimant owned the trade mark "PCB – POOL". The defendant's chosen adword was "pcb". The BGH decided that "pcb" was descriptive of the product and there was no trade mark infringement. Janine adds, "This decision may have been different had the defendant picked "PCB – POOL" as its adword, rather than "pcb"."

In the "Beta Layout" case, a company name had been used in its identical form as a keyword. Company names are protected under the German Trade Mark Act, although this protection is not based on harmonised European law. The BGH decided there was no infringement of the claimant's company name by adword use because there was no likelihood of confusion as to trade origin of the advert. It was thought that consumers can differentiate between advertisements and actual search results.

Alex Bayer, director in Wragge & Co's Munich-based IP team, says, "The outcome of the "Beta Layout" proceeding will concern many German companies. If the ECJ decides that third party trade mark use as an adword constitutes infringement, Germany may be left with two different levels of protection. This would be grossly incompatible with the German law principle that company name rights enjoy the same protection as trade marks."

The "Bananabay" case concerned competitors in the field of adult entertainment products. The proprietor of the "Bananabay" trade mark objected to its competitor's use of the trade mark as a keyword/adword. The BGH considered the critical question of whether such use was "use as a trade mark". The question referred to the ECJ is: "Does the use of a third party's trade mark as a keyword/adword on identical goods/services constitute trade mark infringement under the Directive?"

This judgment follows a string of contradictory decisions from different German Appeal Courts on whether Google's adwords service amounts to trade mark use for the purpose of the Trade Marks Directive. Its adwords service allows advertisers to choose particular key words within an automatically generated list featuring common search terms. In doing so, Google effectively auctions the right for a company to use a competitor's trade mark to trigger its own advert.