The Court of Justice (ECJ) held that search engines are not liable for trade mark infringement for registering trade marks as AdWords. It delivered judgment on 23 March 2010 in the three joined cases C-236-238/08 in which Google France was pursued by Louis Vuitton, Viaticum/Luteciel and the Centre national de recherche en relations humaines (CNRRH).
In all three cases the first instance courts (Tribunal de Grande Instance de Paris; Tribunal de Grande Instance de Nanterre) and the appeal courts (Cour d’Appel de Paris; Cour d’Appel de Versailles) found Google guilty of trade mark infringement. On further appeal, the French Cour de Cassation referred questions for a preliminary ruling to the ECJ.
All three cases concerned Google’s AdWords system. This allows advertisers to register a keyword. If a search engine user then types this keyword into the search box of his or her browser, Google will display an advertisement consisting of text and a link to the advertiser’s web site in the list of ‘sponsored’ search results. The list of sponsored search results is displayed on top of or to the right of the ‘natural’ search results. Payment for the AdWords service is made for each ‘click’ on the advertisement by a user. The rate depends on the position of the advertisement in the list of sponsored results (the higher up in the list, the more expensive) and on the text of the advertisement.
In the first case, Vuitton complained of providers of imitation goods registering its famous trade marks as keywords. The second and third cases concerned less well known marks – those of an online travel agency and a ‘matrimonial’ agency, whose registered trade marks were used as keywords by competitors.
In all three cases the signs complained of were identical to the trade marks and the goods/services were also identical. The case was decided under the ‘old’ law: Trade Mark Directive 89/104/EC and Regulation 40/94 (which have now been replaced by Directive 2008/95/EC and Regulation 207/2009). Before setting out the decision of the Court it may be useful to set out the legal issues raised in the following table:
|
Different Actions |
Registration of Keyword as AdWord · Invisible · Automatic · Advertiser selects keyword and text of advertisement · But: Google’s adword system guides the process and suggests keywords to register |
Hosting & Display of Advertisement & Link · Automatic · May or may not contain trade mark in text |
Linking through to the Advertiser’s Web site · Immediate result of keyword registration · User must click on link/advertisement · Confusion? |
|
Advertiser |
TM infringement? |
TM infringement? |
TM infringement? |
|
Search Engine |
TM infringement? |
TM infringement? |
TM infringement? |
As this table illustrates, liability for primary infringement must be considered separately for each activity and separately for the advertiser and the search engine.
First of all, the ECJ considered the search engine’s liability under Article 5(1)(a) and (2) of the Directive and Article 9(1) of the Regulation. It held that, even though the search engine was carrying out a commercial activity and was therefore acting in the course of trade, it did not use the sign in its own commercial communication. The Court concluded that the search engine enabled the advertiser to use the sign, but did not use the sign itself. Hence the Court clearly held that Google did not use the sign as a trade mark and therefore is not liable for trade mark infringement under the Directive or the Regulation.[1]
Secondly the ECJ considered the position of the search engine under the hosting exemption in Article 14 of the E-commerce Directive 2000/31/EC. This provision applies where the information society service provided consists of the storage of information provided by the recipient of the service. Here the Court found that the search engine stores the keywords selected by the advertiser, the advertising link and the text of the advertisement.[2] However the Court referred to Recital 42 to the Directive and held that the exemption from liability applies only where the information society service was of a merely technical, automatic and passive nature. This was a question for the referring court to decide on the facts.[3]
Nevertheless, the ECJ gave some guidance to the French court. First, it pointed out that the software developed by Google controls the conditions under which the data is processed and the resulting advertisements are displayed. Secondly the ECJ pointed out that the mere fact that the AdWords service is subject to payment and Google sets the payment terms is not sufficient for a loss of the benefit of the exceptions.[4]
Finally the Court considered the position of the advertisers. Only in the first case did the text of the advertisement contain the trade mark. Therefore the Court had to answer the question whether the mere registration of a trade mark as an AdWord, without its use in the text of the advertisement displayed, is also a trade mark use of the sign. The ECJ answered this question positively, on the basis that the advertisement and link are the result of the AdWord registration and on the basis that most Internet users are either confused by the advertisement or may regard it as a welcome alternative to the goods or services of the trade mark owner. Hence the use was in relation to goods and services as defined by Article 5(1)(a) of Directive 89/104.[5]
Furthermore it must be shown that the use has adverse effects on the functions of the trade mark. Here the ECJ referred to two possible functions – the indication of origin and the advertising function. As to the former, the Court found that this is adversely affected if normally informed and reasonably attentive Internet users are not without difficulty able to ascertain the origin of the goods or services from the advertisement in the sponsored research results.[6] The Court emphasized the importance of transparency in e-commerce, but left it to the national court to decide whether there are any adverse effects in the cases under consideration.[7]
However the ECJ held that there are no adverse effects on the advertising function of a trade mark, for the reason that the trade mark owner is able to register an AdWord with Google as well. The mere fact that the registration by other advertisers of the same word increases the price is not sufficient for the argument that the advertising function is impaired. Furthermore, the Court pointed out that the natural search results redress the balance.[8]
Comment
This decision does indeed leave some free rein to search engines. The Court has held that their keyword activities are not trade mark use. On the other hand it is important to remember that the position of secondary liability has not been harmonised in the EU and that therefore the ECJ did not directly answer the question whether Google could be liable as an accessory to the advertisers’ primary infringement. It is therefore noteworthy, but perhaps unsurprising, that the ECJ held that the advertisers’ use of the sign may amount to trade mark infringement if the function of indicating origin would be adversely affected. This means that Google may be liable as a secondary infringer to the extent that national law allows for this.
It may come as a greater surprise that the ECJ held that the AdWord service falls under the hosting exception. While it is true that the search engine stores the keywords, text of the advertisements and links, its service is more than mere data storage, but also includes search functionality and linking. However, although search engines benefit from this exception, under Article 14 they are liable once they receive notification (actual knowledge), or even before notification if the illegal activity or information is apparent from all the facts and circumstances.
Thus, if national (French) law provides for secondary liability, Google may not be off the hook and may be subject to an injunction in any case under Article 14(3).
Dr Julia Hörnle is Senior Lecturer in Internet Law at the School of Law, Queen Mary University of London
[1] Paragraphs 55-58
[2] Paragraph 111
[3] Paragraphs 113-114, 119
[4] Paragraphs 115-116
[5] Paragraphs 68-73
[6] Paragraph 84
[7] Paragraph 88
[8] Paragraphs 95-98
