Last week, the German Federal Supreme Court (BGH) published the grounds of its third trade mark decision concerning Google AdWords. The decision itself was given on 13 January 2011.

The facts

The plaintiff is the owner of the registered trade mark "bananabay" used in connection with adult entertainment products. The defendant, which sells goods and services identical to those of the plaintiff, used the word "bananabay" as an AdWord to trigger its own advertisement on Google's Adwords sponsored links service.

The plaintiff, in the first two instances, successfully claimed that the defendant should refrain from using "bananabay" as a Google AdWord and claimed for damages. On the revision/appeal of the defendant, the German Federal Supreme Court (BGH) filed a petition for a preliminary ruling to the European Court of Justice (CJEU).

The BGH asked the CJEU whether this specific use of the AdWord should be considered a use of the trade mark according to Article 5 (1) of Directive 89/104/EEC if:

  • the advertisement of the third party refers to goods and services identical to the goods and services for which the trade mark of the right-holder is registered for; and
  • the advertisement of the third party is shown next to the search results list in a special area of the website marked "advertisements"; and
  • the advertisement of the third party does not allude to the keyword/trade mark itself, to the owner of the trade mark or to his offered products. 

On 26 March 2010 the CJEU decided that internet keyword use would be a use of the right-holder's trade mark if it:

"does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods concerned originate from the proprietor of the trade mark or from an undertaking economically linked to that proprietor or, on the contrary, originate from a third party."

Based on this answer from the CJEU, the BGH decided that in this case there is no trade mark infringement by the defendant.

Use of a trade mark

The BGH held that the defendant did use the trade mark of the plaintiff for identical goods and services. The intention of the defendant was that the internet user would click on the link in the advertisement, which leads to the defendant's website displaying its adult entertainment products.

Function of a trade mark

Even though the defendant did use an identical sign in relation to identical goods, the BGH decided that this use did not infringe any of the functions of the trade mark. Therefore, in the end the BGH came to the conclusion that the specific use of the plaintiff's trade mark as an AdWord did not constitute trade mark infringement.

Based on the finding of the CJEU cited above, the BGH decided that the origin function is not harmed in this case, because the ad appears in the "sponsored links" section of Google's website and because the term "bananabay" is not visible in the defendant's ad nor contained in the URL of the defendant's website. Therefore, the BGH held that the average internet user - whether or not they are aware of the function of AdWords on the Google website - would not mistakenly conclude that there was an economic connection between the two.

In making this finding the BGH overruled the lower instance court (Higher Regional Court (OLG) Braunschweig). This lower court had held that the internet user would not think deeply about the business practices of search engines. They would assume that advertisements for the trade marked products would appear in both the sponsored links section and the natural search results when entering the trade mark as a search term.

The BGH found that the OLG Braunschweig had not given sufficient weight to the positioning of the ad in the "sponsored links" section in this case as well as to the absence of the trade mark in the triggered ad and the URL.

The BGH also found that the advertising function of the trademark was not infringed. In the opinion of the BGH, the trade marked goods and services of the plaintiff are visible to the Internet user via the links in the so-called "natural" or "organic" search results. The BGH therefore did not consider that the advertising appeal of the trade mark was sufficiently weakened by the sponsored advertisements for third parties' products to amount to infringement of the advertising function of the trade mark.

Furthermore, according to the BGH there was no infringement of the other functions of the trade mark in this case.

Conclusion

This is the third decision of the BGH on the Google AdWords service (the others being PCB-Pool and Beta Layout GmbH). All three decisions confirm that the BGH generally considers the use of Google AdWords itself as lawful non-infringing uses of a third party's trade mark.

The BGH has now made clear in the Bananabay II decision that, in its view, the Internet user is able to ascertain the origin of the goods, and that therefore there is no trade mark infringement, when the ad which is triggered by the AdWord:

  1. appears in the "advertisements" or "sponsored links" sections of the Google website; and
  2. where the ad or the URL of the link to the website of the advertising party does not use the third party's trade mark in a visible manner.