The European Court of Justice (ECJ) has been asked to judge
whether a part of the system which offers advertising buyers
alternative choices of keywords breaches trade mark laws.
A court in France has referred crucial questions about the
operation of the system and one intellectual property expert has
said that any answers the ECJ gives will guide how search engines
operate all over Europe.
Most of Google's income comes from keyword advertising, the
practice of placing sponsored links beside the 'natural' search
results for a given term. Advertisers bid on the search terms in a
live auction which means that sponsored links for, say, 'car
insurance', are likely to attract a higher fee than something more
obscure such as 'string sculptures'.
Luxury goods producer Louis Vuitton sued Google over its keyword
generation engine, which suggests terms to advertisers.
It took action when the AdWords keyword engine offered terms
such as 'Louis Vuitton fakes' and 'Louis Vuitton replicas' as
suggestions when an advertiser searched for its brand as a possible
keyword to use as a trigger for its adverts.
It won the case, but Google appealed. The Cour de
cassation has paused in its deliberations to ask the ECJ to
rule on whether Google's actions infringe trade mark law. The ECJ
can choose whether or not to rule on the questions posed.
"The court has asked whether or not that use by Google in its
keyword generator amounts to trade mark use," said Iain Connor, an
intellectual property partner with Pinsent Masons, the law firm
behind OUT-LAW.COM.
"When considering whether or not this amounts to trade mark use
the ECJ will use a relatively low threshold," he said. "It will
concentrate on whether it affects the essential function of the
trade mark, which is to designate the origin of the goods."
Connor said that he believes that Google certainly has a case to
answer. "Every time someone clicks on one of those ads for a fake,
Google makes money," he said. "The keyword generator changes Google
from being passive to being active because when someone wants to
bid on 'Vuitton' Google suggests that the advertiser should also
bid on 'fake Louis Vuitton'."
Louis Vuitton, according to French court documents, is suing for
trade mark counterfeiting, unfair competition, damage to its trade
marks and domain names and false advertising.
The ECJ has been asked to rule on whether the suggesting of
keywords advertising fake goods using real trade marks is the kind
of trade mark infringement the owner is entitled to prohibit; does
a brand holder have the right to object to that usage; and whether
or not Google is indemnified against the practice until notified of
illegal use by virtue of being a service provider.
Connor said that because trade mark law is harmonised across the
EU any judgment on this issue from the ECJ would influence search
engine practices in all member states.
Google's trade mark policy has recently caused controversy.
Until recently, in all countries outside North America, companies
could ask Google to prevent any other party from sponsoring their
trade marks as keywords. On 5th May, rights holders in the UK and
Ireland were added to the policy for the US and Canada, meaning
that rivals could bid on their trade marks. However, rights holders
in France can still object to the sale of their marks as
keywords.
Connor said the referral should offer some guidance if a case is
brought in the UK over the new policy but will not answer all
questions.
"The ECJ will answer one question on the use of a brand by
Google and whether that amounts to trade mark infringement. But
this will not answer all the questions. It is likely that there
will be a need for further references on different facts to deal
with questions where one company bids on a competitor's trade mark
term and Google's liability (if any) in facilitating that process
and displaying the results of searches in the form of sponsored
links."
Connor said the French case was focused on a particular element
of Google's system and does not look at the more general issue of
displaying an advert as a sponsored link in response to a user's
query.
"This case shows that there is an appetite for litigation by
claimants to have a definitive answer as to whether the operation
of search engines involves lawful use of trade marks," said Connor.
"At the moment, that question is unresolved."
Editor's note, 04/06/2008: This article was
updated to clarify some points.
