Google put a new spin on the e-world of marketing and advertising and has survived. By way of its AdWords program, Google effectively developed a source of income for itself and developed an advertising system that delivers pre-interested third parties for business owners and individuals (the “Advertiser”). Recently a significant ruling by the European Court of Justice (the “ECJ”) was decided in Google’s favour, and it will be interesting to see whether similar complaints escalate to Canadian courtrooms.

On its AdWords website,1 Google explains that the AdWords program can help a business attract pre-interested customers. The AdWords program can be summarized as follows:

  1. the Advertiser creates advertisement and chooses keyword(s);
  2. the Google user conducts a Google search using keyword(s) and the Advertiser’s advertisement appears next to the Google search results; and
  3. if the Google user clicks on the Advertiser’s advertisement, then Google receives payment from the Advertiser.

In this arrangement, everyone is happy – Google has a source of revenue, the Advertiser receives targeted marketing, and the Google users are able to find relevant advertisements – unless the Advertiser selected a keyword that is a trade-mark belonging to a not-so-happy trade-mark owner.

In France, three unhappy trade-mark owners brought trade-mark infringement proceedings against Google for selling various keywords to Advertisers. The keywords at issue were registered trade-marks belonging to the plaintiffs, and it was alleged that the keywords were used by the Advertisers to sell or advertise competing wares/services. The lower courts ruled against Google finding it liable for trade-mark infringement.

In its ruling on March 23, 2010, the ECJ overturned the lower court decisions and decided that Google’s AdWords program did not violate the trade-mark rights of the trade-mark owners. The ECJ considered several issues and after analyzing applicable trade-mark law decided that:2

  1. In connection with an internet referencing service provider (i.e. Google), if an Advertiser selects a keyword identical to another’s trade-mark without consent, then the trade-mark owner is entitled to prohibit the Advertiser from advertising, on the basis of the keyword, goods or services identical to those for which the trade-mark is registered, but only in situations where the advertisement does not enable an average internet user to ascertain whether the goods or services referred to in the advertisement originate from the owner of the trade-mark.
  2. An internet referencing service provider (i.e. Google) that stores, as a keyword, a word identical to a trade-mark, and organizes the display of advertisements on the basis of that keyword, does not use that word within the meaning of the applicable trade-mark law.
  3. If an internet referencing service provider (i.e. Google) has not played an active role such of a kind as to give it knowledge or, or control over, the data stored, then that internet referencing service provider cannot be held liable for the data for which it has stored at the request of an Advertiser, unless, having obtained knowledge of the unlawful nature of the data or the Advertiser’s activities, the internet referencing service provider failed to act expeditiously to remove or disable access to the data at issue.

In its decision, the ECJ indicated that three criteria were necessary in order to find trade-mark infringement: a) there must be use of the trade-mark in the course of trade; b) the use must be in relation to goods and services; and c) the use is liable to have an adverse effect on the functions of the trade-mark. Google was not found liable because Google did not satisfy the first element and did not “use” the trade-mark in the course of trade.

Advertisers, on the other hand, were found a) to use the trade-marks of others in the course of trade and b) such use was in relation to goods and services. Whether the Advertiser’s use was c) liable to have an adverse effect on the functions of the trade-mark essentially required an analysis of the Advertiser’s advertisement. The “adverse effect on the function of the trade-mark” could be in relation to the “function of indicating origin” or in relation to the “function of advertising,” and the function of indicating origin was adversely affected if the advertisements did not enable an average internet user to ascertain whether the goods or services referred to therein originated from the owner of the trade-mark.3

The US law on this issue is unsettled and several cases are ongoing. However, the ECJ decision is similar to the recent decision in Rosetta Stone Ltd. v. Google Inc.4 Rosetta Stone Ltd. launched a trade-mark infringement and unfair competition lawsuit against Google seeking to prevent Google from selling its trade-marks as AdWords. The US District Court granted summary judgment in favour of Google and dismissed the case. Once released, it will be interesting to compare the District Court’s opinion to that of the ECJ.

In Canada, there is no decided case law with respect to whether the Google AdWords program violates the rights of trade-mark owners. Sections 19, 20 and 22 of the Trade-marks Act5 could conceivably be used as the basis for a lawsuit against Google. Sections 19 and 20 set out a cause of action for trade-mark infringement, and Section 22 defines a cause of action for depreciation of goodwill. Section 22 provides that no person shall use a trade-mark registered by another in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto, and it is interesting to note that the wording of Section 22 is similar to the “liable to have an adverse effect on the functions of the trade-mark” criterion for trade-mark infringement referred to by the ECJ. However, both Section 19 and Section 22 require “use” of a trade-mark within the meaning of Section 4 of the Trade-marks Act, so a Canadian court is likely to follow the lead of the ECJ and hold that Google did not “use” the trade-marks of others in its AdWords program. While Section 20 does not require “use,” and provides that an advertisement may constitute an infringement, Google is at most only an intermediary with respect to its AdWords program, and unlike in the US, trade-mark law in Canada does not appear to include a doctrine of contributory trade-mark infringement. Thus, for a Canadian court to find Google not liable for trade-mark infringement or depreciation of goodwill will not be surprising.

Moving forward, it will be important for trade-mark owners to federally register their trade-marks and to utilize Google’s complaint procedure.6 Google’s trade-mark complaint form requires the complainant to provide details of the trade-mark(s) at issue. While a complainant may rely on a common law trade-mark, the presence of a registered or pending application would bolster the position of the complainant and increase the likelihood of Google’s compliance with the complainant’s demands.

As it stands, Google has averted blame and it will be the Advertiser who may be subject to liability. Only time will tell which path Canada will follow. With the ever expanding nature of technology, and in light of the ECJ Google AdWords decision, it is apparent that trade-mark owners will need to become accustomed to policing their rights in new ways.