Has Your Trademark Been Googled?

Google is one of the biggest brands on the Internet. If you are looking for information on the Internet, it is a superb tool. However, if you are a business jockeying for a high position in the search results, the competition is intense. It’s big business – there has been wide speculation that Google is planning an IPO with analysts estimating that it could achieve a market capitalization of up to $20 billion.

Adwords

The Google service is free to use and its entry page is iconic, uncluttered and free of advertising. One of the ways in which Google earns revenues is through its AdWords service. In essence, an advertiser can purchase certain keywords specific to its site or product. If someone then enters one of these words into the search engine, a link to the advertiser’s site appears at the top of the page adjacent to the search results. For example, if you search for “cheap air fares”, several sponsored links will appear offering bargain flights. Google charges the advertiser a fee every time someone clicks on a sponsored link.

However, some advertisers try to manipulate search results by using their competitor’s brand names as keywords. When a potential customer enters the competitor’s brand name into the search engine, the advertiser’s site will appear as a sponsored link. The potential custumer may then be diverted from the competitor’s site. While consumers benefit from having rapid access to competitive product and pricing information, brand owners may take the view that their intellectual property rights are being abused. This is beginning to attract litigation on an international scale and the search engines are in the front line.

Google is not the only search engine operator to be sued for keyword infringement. Playboy brought a claim in the US against AOL’s Netscape search engine for copyright infringement for using the words “playboy” and “playmate” to promote Web sites with adult content in competition with Playboy’s own site. The case was originally filed in Los Angeles in 1999 and in January 2004 an appeals panel allowed the case to proceed. The panel’s ruling that the “evidence suggests, at a minimum, that defendants do nothing to alleviate confusion, even when asked to do so by their advertisers, and that they profit from confusion”. That case has now settled. In another keyword auction case, this time in Germany, the Court in Hamburg held that Excite’s sale to i.Beauty of the keywords “Estee Lauder”, “Clinique” and “Origins” had improperly exploited the Estee Lauder brands and constituted unfair competition under German law.

Trademark infringement

In October 2003, Google France was successfully sued for trademark infringement and ordered by The Lower Court of Nanterre to pay €70,000 to two French travel agencies, Luteciel and Viaticum, who claimed rights in keywords “bourse des vols” and “bourse des voyages”. The Court found that Google France had violated their trademark rights by displaying a competitor’s sponsored links when these terms were used in the search engine. Google’s policy is not to monitor trademark abuse by advertisers and much of the AdWords service is set up mechanically online. The French Court expressed the view that Google should have a process to ensure that trademark abuse does not occur. Google are said to be appealing the decision.

Louis Vuitton SA is also suing Google on similar grounds and there are a number of such cases in the pipeline against Google and other search engine operators.

Is it legal?

As a result of these claims, and under threat of another action from American Blind and Wallpaper Factory, in December 2003 Google applied to the court in the Northern District of California for a declaratory judgment on whether its AdWord policy is legal.

The sale of generic terms (such as travel, computer, camera) as keywords does not raise any legal issues. The problem arises where trademarks are sold as keywords. The English courts have already held that a trademark may be infringed where it is included in the meta content of a third party’s Web site (see Reed Executive plc v Reed Business Information Ltd [2002] EWHC 2772 and Road Tech Computer Systems v. Mandata [2000] ETMR 970). The sale of keywords by search engines raises similar issues.

Trademarks Act 1994

The legal question is not whether selling keywords is dubious or reprehensible, but whether the practice could constitute trademark infringement under the Trademarks Act 1994 or passing off.

But does the purchase of keywords constitute trademark use for the purpose of s 10 of the Act, ie use as an indication of trade origin? Following R v Johnstone [2003] UKHL 28, the test is how the use of the sign would be perceived by the average consumer. It will be hard for an advertiser to escape allegations that he was trying to manipulate or deceive consumers or suggest a connection that did not exist.

Where the mark is used in relation to similar goods or services, infringement under s 10(2) of the Act involves an assessment of the “likelihood of confusion on the part of the public”. Evidence will be required to show whether or not such confusion has arisen. Would a consumer entering a brand name into a search engine believe that there is an association between the brand owner and the sites listed in the sponsored links? This may or may not be the case depending on the circumstances.

Section 10(3) of the Act applies in relation to well known trademarks and provides that there is an infringement where an identical or similar mark is used in relation to dissimilar goods or services and the use “takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark”. In such cases, it may be arguable that the purchase of a well known brand as a keyword to divert Internet users away from the brand-owner’s site was in some way taking unfair advantage of the brand. Similarly, the owner of an unregistered trademark may be able to take common-law action to prevent passing off where there is a likelihood of deception.

There may be cases where legitimate use of third-party brands as keywords may be justified. For example, where the advertiser is a reseller of the goods or services concerned (such as use of the mark “Kodak” by a Web site selling digital cameras). In the absence of such legitimate use, the courts will be applying old remedies to new situations.

Action points for brand owners

Brand owners must be ever watchful to maintain the value in their brands and to ensure that this is not being diluted by improper use by competitors or others. If a competitor’s sponsored link appears when you search using your brand, the competitor may have purchased your mark as a keyword, causing lost sales and goodwill.

Nigel Miller is a Commerce and Technology partner at City law firm Fox Williams. He is also joint-Chair of the Society for Computers & Law. Nigel can be contacted at nmiller@foxwilliams.com.

© Fox Williams 2004