Advocate General’s ruling on Google AdWords

The long awaited opinion of the Advocate General (AG) of the European Court of Justice (ECJ) has arrived. The AG has examined a number of references from France in relation to the legality of Google’s AdWords advertisement service, which allows advertisers to pay for and reserve key words, which when entered by users of the search engine trigger the display of their advertisements and/ or websites as sponsored links next to the natural search results. These sites often advertise identical or similar (or even counterfeit) goods to those of the trade mark owner.

Background

In addition to being a leading search engine provider, Google operates an AdWords system. Businesses are able to bid for and use the registered trade marks or brand names of their competitors as key words in online advertising. Not surprisingly, the Adwords system has been met by criticism and outrage from brandowners who claim that their trade mark rights are infringed when other businesses use their brands. In essence, the question put to the AG was: If you have an exclusive trade mark, and Google then sells that mark as an Adword through the AdWords service, does that amount to trade mark infringement?

The AG opinion

The AG has found that the Google’s AdWords system is legal and does not infringe the trade mark rights of others. A brandowner cannot prevent its rivals from using its trade marks as key words in advertising. The key elements of the AG’s decision were:

there is no trade mark infringement where a business enters into a paid search referencing agreement, pays for a key word which reproduces or imitates an existing registered trade mark and the use of that key word triggers a link to a site or advertisement operated by that business;
a trade mark owner cannot stop the provider of a paid reference service (such as Goggle) from selling key words (identical or similar to the owner’s registered mark) to advertisers, or from arranging for advertising links to sites to be created and favourably displayed, in relation to the key words;
where the trade marks has a reputation, the owner cannot oppose use of the mark, as there is no damage to that trade mark if a similar term is used as key word to activate links to competitors’ sites or goods;
providers (such as Google) which offer paid referencing services made up of key words cannot benefit from the liability exemption under the E-Commerce Directive as they have a direct financial interest in internet users clicking on the advertisements’ links;
the advertisers’ selection of key words was not a commercial activity, it was not used to sell goods or services but was for private use. The choice could be made for a legitimate reason, such as descriptive uses and product reviews.

Commentary

Trade mark owners will be unhappy with this opinion. However, the AG opinion is that only an opinion and the ECJ are not obliged to follow it, although it usually does. Nevertheless, opinions have been known to be wrong and it is clear that trade mark owners will be hoping that this is the case here. It is important to note that these reference are only concerned with the use of key words which correspond to trade marks, it says nothing about the use of the trade marks in advertisements which are displayed or in the products sold via these advertisements.

If you have any questions relating to this article or any other trade mark or brand related issue, please contact any member of our Brand Guardianship team at brandguardianship@boyesturner.com or on +44 (0)118 952 7247.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the
accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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