Search engines and trademarks

IP/IT law update: A battle is currently raging between brand owners and Google.

At issue is a recent change in policy by Google to allow third parties to use a brand owner’s trademark as a keyword to throw up sponsored links to the third party’s site.

When you type a word or ­combination of words into a search engine, the engine identifies and displays websites that contain the words in the search query.

The engine will also display sponsored results, usually identified in a separate box. These sponsored results are thrown up by keywords chosen by the advertiser (or more usually by intermediaries known as affiliates) ­relevant to the advertiser’s products or services. The sponsored results ­generate revenue to the search engine because the advertiser pays the engine each time a user clicks through to the advertiser’s website via the hyperlink in the sponsored result.

The amount that advertisers are willing to pay per click determines the order in which the sponsored results are displayed, with the highest-paying advertiser at the top of the list.

How do trademarks fit into this ­picture? For example, if you enter Sainsbury’s into a search engine, you will find that a price comparison site is displayed as a sponsored link. The price comparison site will have bid on Sainsbury’s as a keyword. Has either the price comparison site or the search engine infringed Sainsbury’s trademark? Until recently, the position under UK law was unclear.

Lord Justice Jacob in the Court of Appeal had hinted that there might not be an infringement, even where a ­keyword identical to a third-party trademark was adopted by an advertiser in relation to identical goods or services, but he expressly reserved his opinion on the point (Reed Executive plc and others v Reed Business Information [2004] EWCA Civ 159). This uncertainty meant that Google, for example, would not allow ­advertisers to use third-party trademarks to produce sponsored links.

The position has now changed with the case of Victor Andrew Wilson v Yahoo! UK Ltd, Overture Services Ltd [2008] EWHC 361 (Ch). Wilson ­carried on a mobile catering business selling snacks from a trailer at festivals throughout London under the name Mr Spicy, a name that he registered as a Community Trademark in relation to food, sauces and spices and ­providing food and drink.

Wilson complained that typing Mr Spicy into the Yahoo! search engine triggered sponsored links to Sainsbury’s website and a price comparison site, PriceGrabber.co.uk. He claimed infringement of his trademark rights by the search engines Yahoo! UK and its sister company Overture Services.

On the facts, Wilson was on a hiding to nothing. Evidence showed that no one, including Sainsbury’s and PriceGrabber, had ever purchased Mr Spicy as a keyword. Rather, ­advertisers had bid on the word ‘spicy’, which was why the search engine’s word-matching technology was responding to the input of Mr Spicy with sponsored links to those ­advertisers.

The court found of course that merely using the word ‘spicy’ in this context could not constitute a trademark infringement.

What is more interesting about the judgment is its statement of what the situation would have been if the defendants had made Wilson’s trademark available as a keyword. The question was whether this would ­constitute an infringing ‘use’ of the trademark.

The court relied on the decision in Arsenal Football Club plc v Reed [2003] ETMR 19. In that case, Arsenal Football Club sued a street vendor called Matthew Reed for trademark infringement over Reed’s sale of Arsenal-branded, but unofficial, merchandise. The case made it all the way to the European Court of Justice, which held that a trademark proprietor may not prohibit the use of a sign identical to the trademark, even for goods identical to those for which the mark is registered, if that use cannot affect his own interests as proprietor of the mark, having regard to the ­function of the trademark. The ­function of a trademark was said to be as a guarantee of the identity of origin of marked goods.

Applying this formula to Mr Spicy, Mr Justice Morgan found that using Wilson’s trademark as a keyword would not have affected Wilson’s ­interests in the mark, or caused it to fail as a guarantee of origin, because no one seeing the sponsored results would think that Sainsbury’s had any connection with Wilson. The text of the adverts complained of made no ­reference to Wilson’s business. The reference to Sainsbury’s did not ­suggest that food sold at Sainsbury’s had Wilson’s trade or business as an origin. The same was true of the ­reference to Pricegrabber.

The point is much in line with the opinion of the Court of Appeal in Reed. Here, a banner advert for TotalJobs.com appeared when the word ‘reed’, part of the claimant's trademark, was entered. The court took a robust view: ‘The web-using member of the public knows that all sorts of banners appear when he or she does a search and they are or may be triggered by something in the search. He or she also knows that searches produce fuzzy results – results with much rubbish thrown in. The idea that a search under the name reed would make anyone think there was a trade connection between a Totaljobs banner making no reference to the word reed and Reed Employment is ­fanciful.’

The judgment in Mr Spicy has caused Google to change its policy. Previously, trademark holders could complain to Google about adverts triggered by their trademark and have them taken down. Since 5 May 2008, the new policy has let advertisers bid on other companies’ brands and trademarks to trigger their own advert, although they are still not allowed to use the trademarks in the body of their advert.

The policy change applies only to the UK and Ireland, which have been brought in line with Google's policy in the US and Canada.

Many brand owners are horrified by the policy change. There are recent press reports of ‘crisis meetings’ at ­traditionally on- and offline companies. There have been dark hints from brand owners about taking action against Google, and behind-the-scenes pressure on Google to reverse its policy.

There may be no resolution, though, until the European Court of Justice (ECJ) has had its say. Three cases on the point were referred to the court last month by the French Cour de Cassation: Google v Viaticum Luteciel, Google France v Louis Vuiton Malletier, and Google v Cnrrh et autres. The ­central question referred is whether a service provider is making a prohibited use of a trademark by suggesting it as a key word.

If the ECJ agrees with the UK courts that the answer is ‘no’, it may go on to consider some important ­supplemental questions. First, is the ­position any different for well-known trademarks (which enjoy additional protection against use which ‘takes unfair advantage of, or is detrimental to, the distinctive character or repute of the mark’, article 5(2) of Council Directive 89/104, section 10(3) of the Trade Marks Act 1994 )?

Second, is the position any different if the business using the keyword is actively harming the trademark, for example by selling counterfeit goods? The conclusions that the ECJ reaches could change forever what appears on your screen when you search the ­internet.