The opinion is important because the analysis concerns the
Google AdWords policy and the broader acknowledgement of brand
rights online.
Three companies are suing Google because they object to the
current Google AdWords policy, which allows anyone to bid for their
brands as triggers for sponsored links on Google searches. The
companies argue 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. So, for example Pepsi
could pay to have their ads triggered when a user types "coke" or
"coca-cola" into a search.
The Advocate General's opinion is the forerunner to the full
judgment of the Court. The Court usually but does not always follow
the opinion. Opinions have been known to be wrong when it comes to
the eventual legal analysis. We hope this is the case for the
Google claim. The Advocate General has advised the Court that
Google's behaviour is legal and does not infringe trade mark
rights.
The opinion and the eventual judgment have to answer written
questions which have been referred to the court. In this case, the
questions put to the court were legalistic, but in essence they
were: if I have exclusive rights to a particular trade mark,
and Google 'sells' that term in the context of the Google AdWords
programme, is that trade mark infringement?
The Advocate General said no.
We disagree with the Advocate General because of our analysis of
trade mark law – a pretty basic disagreement. The starting point is
Article 5(1)(a) of the Trade Marks Directive (Directive
89/104):
"The registered trade mark shall confer on the
proprietor exclusive rights therein. The proprietor shall be
entitled to prevent all third parties not having his consent from
using in the course of trade:
(a) any sign which is identical with the
trade mark in relation to goods or services which are identical
with those for which the trade mark is registered…"
This is generally recognised as a property right. A registered
trade mark can be bought, sold, and licensed. It has a value,
although value tends to be described as the 'brand' value. It is an
exclusive right. The starting point is that only the owner of the
registered trade mark can use the mark for the goods and services
for which it is registered.
It would seem obvious, then, that if Google uses the mark to
generate adverts in relation to identical services, then it is
trade mark infringement.
The Advocate General was concerned that the scope of trade mark
protection was being expanded. He says:
"The Court is … 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. My examination of
the question whether there is trade mark infringement will reveal,
first, that the use in AdWords of keywords which correspond to
trade marks does not, in itself, constitute a trade mark
infringement, and, secondly, that the connection with other
(potentially infringing) uses is better addressed, as it has been
hitherto, through the rules on liability."
There seems to have been a general nervousness about how the
internet will develop. Enforcing the trade mark exclusivity against
a trader (Google) who is using and letting others use trade marks
without permission of the trade mark owner does not expand the
scope of trade mark protection at all. This case is the opportunity
for the Advocate General and the European Court to restate
established trade mark law but in the context of a new advertising
model.
The Advocate General has also added an extra condition for trade
mark infringement: He says:
"According to established case law, there are
four cumulative conditions which must be satisfied if trade mark
proprietors are to be able to prevent the use of their trade marks
under Article 5(1) of Directive 89/104 (or, in other words, for
there to be a trade mark infringement). One of those conditions is
clearly satisfied: the use by Google, in AdWords, of keywords which
correspond to trade marks is manifestly not consented to by the
trade mark proprietors. It therefore remains to be ascertained
whether the remaining three conditions are satisfied, that is to
say, whether: (i) that use takes place in the course of trade; (ii)
it relates to goods or services which are identical or similar to
those covered by the trade marks; and (iii) it affects or is liable
to affect the essential function of the trade mark – which is to
guarantee to consumers the origin of the goods or services – by
reason of a likelihood of confusion on the part of the public."
This is simply not the case. As can be seen Article 5(1)(a)
carries no requirement to prove confusion. Article 5(1)(a) says:
"The proprietor shall be entitled to prevent all third parties
..from using in the course of trade… any sign which is identical
with the trade mark in relation to goods or services which are
identical with those for which the trade mark is registered".
The Advocate General did offer some comfort to trade mark
owners. A question that has tested many judges is whether Google's
use of the trade mark is "use in the course of trade". The Advocate
General said that it was. "When Google offers advertisers, through
AdWords, the possibility of selecting keywords which correspond to
trade marks, it does so as a commercial activity: even though its
remuneration does not come about until later (when internet users
click on the ad’s link), Google’s service is provided ‘with a view
to a gain’," he wrote. "This condition should therefore be regarded
as satisfied."
The Advocate General has also left a muddle for the Court to
sort out on the question of whether the AdWords service amounts to
use of a trade mark on identical goods or services. This is
important because if the analysis is that AdWords links the trade
mark to identical goods of a competitor, confusion is not a
requirement and infringement is established.
At one point, he says:
"The essential factor is therefore the link
that is established between the trade mark and the good or service
being sold. In the traditional example of a use in advertising, the
link is established between the trade mark and the good or service
sold to the general public. This happens, for example, when the
advertiser sells a good under the trade mark. That is not the case
with the use by Google consisting in allowing advertisers to select
keywords so that their ads are presented as results. 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. 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.
"It seems evident that AdWords is not
identical or similar to any of the goods or services covered by the
trade marks. Accordingly, this condition is not satisfied and, in
consequence, 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."
In other words, AdWords is an advertising system, so it is not
the same as (say) holidays. That conclusion is difficult to
reconcile with his observations in another part of his opinion
where it is said, in the context of an analysis of the Google
search engine:
"…by displaying ads in response to the
keywords which correspond to trade marks, it establishes a link
between those keywords and the sites advertised, including the
goods or services sold via those sites. Even though the keywords do
not feature in the ads themselves, this use falls under the notion
of use ‘in advertising’ as referred to in Article 5(3)(d) of
Directive 89/104: the link established is between the trade mark
and the goods or services advertised. The sites concerned sell
goods which are identical or similar to those covered by the trade
mark (including counterfeit products). This condition should
therefore be regarded as satisfied."
Running though the opinion is the Advocate General's worry 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."
The notion of an absolute right of control is not correct. There
are many circumstances where it is right and proper that third
parties can use the registered trade mark of another, for example,
in comparative advertising. These circumstances are set out in the
Directive and elsewhere.
The answer is, I think, that the Advocate General has started
with a concern that brand owners were going too far in seeking
protection for their brands, and then he has worked backwards. He
has been forced to include in his analysis a requirement for
confusion. There is a lengthy and convoluted analysis of confusion
when there is no need for that analysis. Confusion is not a
requirement under the current law. Brand owners are entitled to
have their rights protected. Google has become the dominant search
service so brand rights on Google are incredibly important for
consumers and brand owners. Let's hope the Court takes a different
view.
By John
Mackenzie, a partner with Pinsent Masons, the law firm behind
OUT-LAW.COM. Pinsent Masons is acting for Interflora in a dispute with
Marks and Spencer over the use of AdWords – a case
that is on hold pending the full judgment of the European Court of
Justice in the French cases.
