The Supreme Court has reaffirmed that a company is allowed to use a competitor's trademark as a keyword in Google's paid referencing service AdWords.(1)

The case involved two competitors, Cobrason and Solutions, which both sell video and hi-fi products online. When an internet user typed 'Cobrason' into the website www.google.fr, a commercial link to Solutions was displayed, as well as a message stating, "Why should you pay more?". Cobrason sued Solutions, as well as Google France and Google, Inc, on the grounds of unfair competition and misleading advertising.

The Paris Court of Appeal(2) held Solutions and Google, Inc jointly liable on the grounds of unfair competition and misleading advertising and awarded €100,000 to compensate the loss sustained by Cobrason. It dismissed all claims against Google France on the grounds that Google, Inc was the only contracting party and hosting provider of the website www.google.fr, and that Google France was merely a subcontractor which assisted Google, Inc with respect to French users.

The French Supreme Court annulled this decision on three grounds.

First, with regard to the court's finding that Google, Inc had technically contributed to the acts of unfair competition committed by Solutions, the Supreme Court held that Google, Inc benefited from the limited liability regime for providers of hosting services according to Article 6-I-2 of the Law Relating to Confidence in the Digital Economy. This is consistent with the interpretation adopted by the European Court of Justice (ECJ) in the AdWords case.(3)

Second, with regard to the unfair competition claims, the Supreme Court found that the appeal court had established no risk of confusion between Cobrason's and Solutions' websites. By doing so, the court implicitly stated that the mere purchase of the word 'Cobrason' as a keyword in a referencing service was insufficient to hold Solutions liable for unfair competition. Unless there was a risk of confusion for the average internet user, unfair competition could not be established.(4) The Supreme Court further stated that soliciting a competitor's clients was not in itself unlawful, unless it constituted unfair behaviour.

Finally, the Supreme Court held that the appeal court had not established misleading advertising pursuant to one or several of the conditions in Article L121-1 of the Consumers Code. Neither the display of a link to Solutions' website nor the message "Why should you pay more?" was misleading and constituted a risk of confusion as to whether the companies were economically connected.

This decision of the Supreme Court is in line with the interpretation adopted by the ECJ, which is intended to promote competition. Although it is now clear that a company can use a competitor's trademark as a keyword in a paid referencing service, companies should nevertheless be extremely careful so as to avoid confusing the average internet user.

For further information on this topic please contact Christine Gateau or Pauline Faron at Hogan Lovells by telephone (+33 1 53 67 47 47), fax (+33 1 53 67 47 48) or email (christine.gateau@hoganlovells.com or pauline.faron@hoganlovells.com).

Endnotes

(1) French Supreme Court, decision of January 29 2013, 11-21011 and 11-24713, Cobrason v Solutions.

(2) Decision of May 11 2011.

(3) Decision of March 23 2010, C-236/08 to C-238/08, Google Inc v Louis Vuitton Malletier ao.

(4) French courts often consider that sponsored links from the AdWords service do not give rise to a risk of confusion as they are clearly separated from the normal search results and easily identifiable (eg, French Supreme Court, decision of September 25 2012, 11-18.110; Lyon Court of Appeal, decision of March 22 2012, 10/03392.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.