A UK Court has for the first time, in granting an application for summary judgment, ruled in favour of the use by search engines and their advertisers of trade marks of third parties as keywords to trigger the display of sponsored search results. The judgment of Mr Justice Morgan in Wilson v Yahoo [2008] EWHC 361 (Ch) was reported last week.

Summary and Business Impacts 

  • Morgan J held that when a member of the public types a trade mark into a search engine and the search engine responds by displaying a sponsored link, it is the member of the public that uses the trade mark – not the search engine.
  • Even if this is wrong, and there is use by the search engine, such use is not, in the Court's opinion, 'trade mark' use, that is, use as a badge of origin, and it does not interfere with the interests of the trade mark proprietor. No claim is made by the use that, for example, the products of the sponsored search advertiser originate from the trade mark proprietor.
  • The case brings UK law into line with that in the US, but reaches a different conclusion to that in France, despite the trade mark laws of the Member States of the European Community having the same legislative basis. Some search engines' policies have differed in Europe from the US due to French case law. The decision might therefore encourage search engines to change those policies to make them less favourable to trade mark owners.
  • The decision is only a summary judgment, however, and the Claimant had far from the strongest case – his trade mark was highly descriptive, and the Court found that the offending sponsored search results had not even used his whole trade mark as a keyword – but only its descriptive element. It may not therefore turn out to be the licence to use trade marks in sponsored links that some might have hoped for.

Proprietor of Community Trade Mark sued search engine

In the Judgment reported last week, the UK High Court has ruled for the first time on the use of trade marked terms as keywords to trigger the display of search engine sponsored search results. Such use has only previously been considered obiter and has been treated differently in other jurisdictions.

In Wilson v Yahoo, the Claimant, Mr Wilson, who appeared as a litigant in person, sought damages from the search engine Yahoo, and its fellow group company and sponsored search technology provider, Overture.

Mr Wilson, a sole trader, operated as a mobile caterer at carnivals, festivals and the likes, selling Afro-Caribbean and Halal South Asian snacks from a trailer under the brand name MR SPICY. He owned a Community Trade Mark ("CTM") for the brand name in respect of certain food products and services (note that with very similar law in place for UK trade marks, the same decision is likely to have been reached by the Judge had the mark been registered in the UK only).

Having carried out some searches on the Yahoo search engine using his brand name, Mr Wilson was aggrieved to discover the display of sponsored search results for third parties, namely supermarket Sainsbury's and price comparison website Pricegrabber.com. He sued Yahoo and Overture for infringement of his CTM, claiming they had sold his trade mark as a sponsored search keyword. The Defendants, Yahoo and Overture, brought an application for summary judgment and strike out, and won.

Judge finds use falls well short of that required for infringement

Morgan J found that there was no evidence that any advertiser had ever purchased MR SPICY as a keyword. Both Sainsbury's and Pricegrabber.com had purchased the word SPICY only, and Sainsbury's did not even use SPICY in the wording of its advertisement. The sponsored searches were triggered and displayed when typing in MR SPICY only because the search phrase contained the word SPICY.

In considering what had been used by the search engine and how it had been used, the Court referred to the 2003 European Court of Justice decision in Arsenal v Reed, a case which extolled the function of a trade mark as a badge or guarantee of origin, which allowed the consumer to distinguish the trade marked goods or services from others, without confusion. The Judge went on to quote the following consequential limitation imposed by the ECJ upon a trade mark owner:

"The proprietor may not prohibit the use of a sign identical to the trade mark for goods identical to those for which the mark is registered if that use cannot affect his own interests as proprietor of the mark having regard to its functions".

In light of this passage and agreeing with Yahoo, the Judge concluded that (the second and third bullets being obiter):

  • There had been no use of the trade mark MR SPICY by the Defendants at all – the search engine user is the only person who uses the term MR SPICY, when he or she types it in. The defendants' search engine merely responds to this. This by itself meant that there was no infringement.
  • If, alternatively, there was use by the defendants, no use is made of MR SPICY, only SPICY. SPICY is not identical or confusingly similar to MR SPICY.
  • Even if the search engine response amounted to use by the defendants of MR SPICY, it was not 'trade mark' use, and was not a use which affected Mr Wilson's interests as proprietor of the mark having regard to its function as a badge or origin, as required by Arsenal v Reed. The sponsored search results did not, for example, claim that all food sold in Sainsbury's originates from Mr Wilson, or even that Mr Wilson's products are stocked at Sainsbury's.

Varying results in similar cases in the US and Europe

This is the first ruling on the use of trade marks as keywords triggering sponsored links on search engines, although the point was considered obiter by the Court of Appeal in 2004 in Reed v Reed. Lord Justice Jacob noted in that case that use as a keyword is invisible use, with no meaning (denoting origin or source) conveyed to anyone, indicating that there was no trade mark infringement. Morgan J did not refer to Jacob LJ's comments, and did not consider the invisible nature of the use, but reached the same result. The latter is perhaps a gap in the decision – for technically it is not just a user who 'uses' (in some way) the keyword, but also the search engine, which has that keyword stored in its sponsored search systems against which it compares whatever the user types in. Morgan J may have this covered however with the third bullet above; as he holds that the response by the search engine is not 'trade mark' use as required by Arsenal v Reed. It is not clear, however, that the response (displaying the sponsored link) is quite the same as the sale, recording and cross-checking of the keyword in the search engine's database which causes the response in the first place.

There have been more cases on sponsored links in the US, Google having been sued by the likes of American Airlines and Rescuecom Corporation. The latter lost its case on similar reasoning as deployed in the UK – that internal use in a search engine was not visible to the public and so the trade mark was not being used in any way to indicate source or origin. One case likened the practice to that of supermarkets placing their own brand goods next to identical goods of well known brands, a quite legitimate marketing technique. The American Airlines case, which concerns the sale of American Airlines' trade marks as keywords to rivals such as United Airlines, has yet to be resolved.

A different view is taken in France, where Google have lost several cases including those brought by Louis Vuitton and hotel chain Le Meridien, the latter case inspiring Mr Wilson to bring his claim.

Claimant's case always a weak one – so probably not the end of the story

This may not be the last litigation we encounter on this subject, as the decision is far from definitive. There was no full trial, only a summary judgment hearing, and despite his best efforts and the judge's patience, Mr Wilson's pleading lacked the finesse that it might have had had he been legally represented. The Claimant always had a weak case – his highly descriptive mark was not even being used in its entirety by advertisers, as they were only using the purely descriptive SPICY part, which was always unlikely to be enough to infringe his mark. One can imagine this decision would not entirely discourage other battles where one player purchases a competitor's brand as a keyword to trigger an advert of their own.

Most search engines have a clearly stated policy on the use of trade marks as keywords, and some, in reaction to the position in France, have previously been more generous to trade mark owners in Europe than in the US. This decision may encourage an end to such generosity, although search engines and advertisers should not forget its limitations.