A landmark decision from the European Court of Justice will have brand owners checking whether, and how, third parties use their brands as internet search terms.
When a point of law is so significant that judgment on it hits the national press, you can be sure that lost in the excitement will be that most fundamental of questions for practitioners: what does this mean for my clients? Such is the case in the much-anticipated Google AdWords decision of the ECJ (Google France SARL, Google Inc. (C-236/08 to C-238/08), 23 March 2010).
When an internet user types words (a ‘search term’) into a search engine such as Google, the search engine displays the sites which appear best to correspond to the search term, in decreasing order of relevance. These displays are known as the ‘natural’ results of the search.
Alongside the natural results, search engines also display sponsored links that are relevant to the search term. Type ‘holiday’ into Google and a number of sponsored links appear above and to the right of the natural results, the lead one being ThomasCook.com. Next to each link will appear a couple of sentences of advertising, designed to encourage you to click on the link. Sponsors pay Google a ‘maximum price per click’ for a sponsored link. Sponsored links appear ranked in order, depending on which sponsor has agreed the highest maximum price per click, the number of previous clicks on the link, and the quality of the sponsor’s advertisement.
But what happens if your search term is also a trademark? Type in the trademark Interflora, and a sponsored link for Marks & Spencer Flowers Online will appear. The problem with this from Interflora’s point of view is that users might then click through to the M&S website, and not to the Interflora website, to buy their flowers. A worse threat to brand owners is sponsored links that might tempt away users with copycat products.
All over Europe, brand owners have been trying to stop third parties from using their brands as sponsored search terms, by bringing claims for trademark infringement against Google and against the sponsors that used their brands in this way. A number of these cases were referred by the national courts to the ECJ to determine certain key points, and the ECJ has answered four of these – from France and Austria – together.
The first question before the ECJ was whether Google itself was primarily liable for trademark infringement, on the grounds that it was storing the trademark names as search terms, and profiting from that storage. The answer from the court was a clear ‘no’. The relevant provision (article 5 of Trade Marks Directive, 89/104) states that for a party to be said to have infringed a trademark, they must themselves have ‘used’ that trademark. The ECJ held that for Google to have created the technical conditions for third parties to use a trademark did not mean that it was itself using the trademark. That was the case, even if it profited from those conditions.
The next question for the ECJ was whether the third party advertisers were liable for trademark infringement, on the grounds that they select the trademark as a key word, and use it to generate sponsored links to websites offering identical goods and services. The ECJ’s answer draws up the battlelines for future litigation and so stands to be quoted in full. The ECJ said that third party advertisers could be liable, ‘in the case where the ad does not enable the average internet user, or enables that user only with difficulty, to ascertain whether the goods and services referred to therein originate from the proprietor of the trademark or an undertaking economically connected with it or, on the contrary, originate from a third party’.
So, the question of whether an advertiser will be liable for trademark infringement will hinge on whether the average internet user can tell that the goods advertised in a sponsored link do not come from the trademark holder or anyone ‘economically connected’ to them (for example, trademark licensees). As to where the line should be drawn on this point – that is, how in practice an advertiser might phrase its sponsored link and accompanying advertisement so that it will not confuse the user – the ECJ did not say. The view at M&S seems to be that labelling its sponsored link Marks & Spencer Flowers Online/Blooming Flowers and Plants at M&S is enough to avoid confusion with Interflora, since that is the wording that still appears when you type Interflora as a search term. On the other hand, if you type M&S into Google, then the M&S website will appear, but not a single third party sponsored link. M&S’s competitors seem to be nervous of using the M&S trademark as a search term at all.
Although the ECJ held that Google could not be held primarily liable for trademark infringement, Google can only half exhale. In some European jurisdictions it may incur a secondary liability, should it be regarded as an accessory to trademark infringement by an advertiser. With this in mind, the ECJ considered a third question, on whether Google could rely on a defence under article 14 of the E-Commerce Directive (2000/31). Article 14 provides that the provider of an ‘information society service’ cannot be held liable for data which is stored at the request of a user. So, for example, internet service providers have a defence under the directive to claims in defamation for comments that users might publish through their services. The question for the ECJ was whether sponsored links constitute an ‘information society service’ and so fall into this protected category. The ECJ held that they do, so long as the service provider has not played an active role of such a kind as to give it knowledge of or control over the data stored.
That is not the end of the story for Google, because the article 14 defence falls away if the provider becomes aware of the unlawful activities, for example because of information supplied by an injured party, and then fails to expeditiously remove or disable access to the data. In other words, it seems that if a search engine is given notice of an advertisement that infringes a trademark, and fails to act expeditiously to remove it, then it could still find itself liable.
So what happens now? Although these decisions were major successes for Google and brand owners, they weren’t quite the full marks that they might have scored. There is scope for further litigation between brand owners and competitors that continue to use their brands as search terms, as to whether or not the sponsored link and accompanying advertisement sufficiently distinguishes the competitor from the brand owner. There is also scope for litigation between brand owners and Google, should brand owners notify Google of a perceived infringement and Google disagrees with them.
The judgment also leaves open some important questions: is the legal position different for natural search results? Is the position stronger for well-known trademarks, which enjoy a special protection against a third party taking unfair advantage of their reputation or distinctive character (article 5(2))?
Some guidance on the practical application of the principles set out by the ECJ may come from national courts. In the UK, for example, the litigation between Interflora and M&S is still live. But, on the internet, custom and practice often come to count for as much as hard law. For all that the world wide web is hard to govern, it is a surprisingly consensual place. A pattern of dos and don’ts for sponsored links may well start to emerge.
Richard Taylor, DLA Piper, Yorkshire