Google's AdWords system sells the right to have an ad displayed when a specific term is searched for in the Google search engine. The adverts are displayed beside the natural search results, ranked by which advertiser bid most and by the ad's relevance.
Many of the keywords sponsored by companies will be general words, such as 'car', or their own brand names. But some advertisers use competitors' brands as triggers for their own ads.
Some companies claim that this practice is an infringement of the competitor company's trade mark rights, and courts in France have ruled that the practice infringes trade mark rights.
The European Court of Justice (ECJ), though, ruled earlier this month that a trade mark right is only infringed if the advert creates confusion about what company is behind the advert.
Ruling in a dispute between temporary building sellers Portakabin and Primakabin, the ECJ said that the ad will breach the trade mark owner's rights if it "does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it".
At present, in the US, the UK, Ireland and nearly 200 other countries, Google will not act on a complaint that the use of a trade mark as a keyword is an infringement of trade mark law. In all other EU countries they will act on that complaint.
In six weeks time that will change, the company has said. It will extend its practice in the US, UK and Ireland to all 25 other EU countries, and to almost every other country in the world.
"Today, we are announcing an important change to our advertising trademark policy," said Google product manager Dan Stokeley in a blog post. "A company advertising on Google in Europe will now be able to select trademarked terms as keywords. If, for example, a user types in a trademark of a television manufacturer, he could now find relevant and helpful advertisements from resellers, review sites and second hand dealers as well as ads from other manufacturers."
The change will take effect on 14th September, the company said. "Advertisers will be able to complain about the selection of their trademark by a third party if they feel that it leads to a specific ad text which confuses users about the origin of the advertised goods and services. Google will then conduct a limited investigation and if we find that the ad text does confuse users as to the origin of the advertised goods and services, we will remove the ad. However, we will not prevent use of trademarks as keywords in the affected regions," said the updated AdWords trademark policy.
The only countries in which Google will still act on a keyword trade mark complaint will be Australia, Brazil, China, Hong Kong, Macau, New Zealand, North Korea, South Korea, and Taiwan.
Google said that its move was in line with the ECJ ruling in the Portakabin case and that in another case involving LVMH.
"We defended our position in a series of court cases that eventually made their way up to the European Court of Justice, which earlier this year largely upheld our position," said Stokeley. "The ECJ ruled that Google has not infringed trade mark law by allowing advertisers to bid for keywords corresponding to third party trade marks. Additionally, the court ruled that advertisers can legitimately use a third party trademark as a keyword to trigger their ads."
"Our policy aims to balance the interests of users, advertisers, and trademark owners," said the updated policy. "Furthermore, Google's position is in line with the principles set out in the European Court of Justice (ECJ) judgment in joined cases C-236/08 to C-238/08, which was published in March 2010 [the LVMH case]," it said.
In the case involving LVMH, the ECJ said that while some adverts might infringe a competitor's trade marks, the Google AdWords system itself did not. The Court has said that Google is only an information service provider and does not infringe any trade marks, it only creates the environment in which trade mark owners and advertisers do business.
Google is introducing another change to its policies, though this change will only apply in the UK, Ireland and Canada. In the US the company currently allows resellers of other companies' goods or services to use that company's trade marks in the text of adverts.
Courts in the US have previously ruled that while the use of another company's trade mark as a keyword is unlikely to infringe trade mark laws, use in the actual text of an advert is likely to in many cases.
Last year Google changed its policy in the US, allowing resellers of goods or components to use the trade marks of companies whose goods they sell in the text of their adverts, with or without those companies' permission.
That policy will now be extended to Canada, the UK and Ireland, Google said.
"We believe that this change has helped both our users and advertisers by improving the usefulness of text ads on Google.com and across partner sites in the US," Stokeley said. "For example, resellers of jeans have been able to highlight the actual brands they sell in their ad text making their ads even more specific and relevant for users. Today, we're announcing that starting September 14 we'll be extending this policy to Canada, the UK and Ireland."