An ECJ Advocate General has advised the Court that Google does not infringe companies' trade mark rights when AdWords allows other firms to pay for their adverts to be shown when a trade marked term is searched for.
Three French companies have taken Google to court arguing that their trade mark rights are infringed when other companies use their names as triggers for ads.
Google's AdWords system displays adverts next to the natural search results generated by a search term. Advertisers pay to have their ads appear beside chosen search terms.
The Google case will determine whether or not it is allowed to let companies bid to have their ads appear when terms trade marked by others are searched for.
ECJ Advocate General Poiares Maduro has advised the Court that Google's behaviour is legal and does not infringe the trade mark rights of companies.
He said that the situation is not like one company selling goods under another's trade mark because the trade mark is hidden in a transaction between an ad space buyer and Google.
"There is no good or service sold to the general public. The use is limited to a selection procedure which is internal to AdWords and concerns only Google and the advertisers," he wrote. "The service being sold, and to which the use of the keywords corresponding to the trade marks is linked, is therefore Google’s own service, AdWords. The use consisting in allowing advertisers to select in AdWords keywords which correspond to trade marks, so that ads for their sites are presented as results for searches involving those keywords, does not constitute a trade mark infringement."
Advocates General produce advice which judges at the ECJ can follow or not. The advice is reportedly followed in around 80% of cases.
Maduro said that there was a link between a trade marked keyword and the ads that it triggered, but that the existence of that link was not enough to establish trade mark infringement.
"Neither the display of ads nor the display of natural results in response to keywords which correspond to trade marks leads to a risk of confusion as to the origin of goods and services," he wrote. "Accordingly, neither AdWords nor Google’s search engine affects or is in danger of affecting the essential function of the trade mark."
Brand owners have taken court cases against Google over the issue in the UK, France, Germany and the US, and an ECJ ruling will be influential in settling other disputes.
The Attorney General said that, contrary to Google's claim, permitting people to bid on others' trade marks was a 'use' of trade marks. The question it had to answer, it said, was whether that use relates to goods and services and infringes holders' rights.
"The trade mark proprietors are urging the Court to … rule, in effect, that the mere possibility that a system – in the present cases, AdWords – may be used by a third party to infringe a trade mark means that such a system is, itself, in infringement," said Maduro. "Indeed, the trade mark proprietors do not wish to limit their claims to cases where AdWords is actually used by sites offering counterfeit goods; they want to nip that possibility in the bud by preventing Google from being able to make keywords corresponding to their trade marks available for selection."
"From the existence of a risk that AdWords may be used to promote those counterfeit sites, they deduce a general right to prevent the use of their trade marks as keywords. If the infringement lies in the use of those keywords in AdWords, as the trade mark proprietors claim, that is so whether or not the sites displayed in response actually infringe the trade mark," he wrote. "The Court is thus being asked to expand significantly the scope of trade mark protection. I shall make clear why I believe that it ought not to do so."
Maduro also said that he was worried about the power that ruling in favour of the trade mark holders would give them.
"I am concerned that, if trade mark proprietors were to be allowed to prevent those uses on the basis of trade mark protection, they would establish an absolute right of control over the use of their trade marks as keywords. Such an absolute right of control would cover, de facto, whatever could be shown and said in cyberspace with respect to the good or service associated with the trade mark," he said.
Intellectual property law expert Iain Connor of Pinsent Masons, the law firm behind OUT-LAW.COM, said that ruling in favour of the trade mark holders may not have that effect on natural results because trade mark law only applies to use in the course of trade. "By equating natural results with sponsored links the advocate general appears to be discounting the significance of the payment made by the advertiser to Google," he said.
The Advocate General did say, though, that because Google profits from the ads shown in its AdWords system it cannot qualify for the exemption from liability that the E-Commerce Directive gives to companies that are simply hosts of electronic information.
Connor said that he believed that Maduro had made a mistake.
"The Advocate General's opinion is self contradictory. EU law provides a defence to people who are not really involved in trade mark infringement and he says Google cannot rely on this defence," he said. "However, at the same time he does not think Google is liable for trade mark infringement because the AdWords scheme is something private between the advertiser and Google."
"This does not make sense as is evident from a simple Google search which displays sponsored links for competitor products and fake goods. As is often the case, we will have to wait for the European Court of Justice to make sense of it," he said.