ECJ: Google’s AdWords has not infringed trademark law

On 23 March 2010, the European Court of Justice handed down its long awaited preliminary ruling in response to the questions referred to it by the French Cour de Cassation (French Court of Cassation) on the dispute between Google and French luxury brand owners.  The ruling provides guidance as to how national courts should assess trademark disputes arising in the context of internet advertising, notably in relation to so-called referencing services, like Google’sAdWords.

The AdWords referencing service enables any economic operator, by means of the reservation of one or more keywords, to obtain the placing, in the event of a correspondence between one or more of those words and that/those entered as a request in the search engine by an internet user, of an advertising link to its site.  That advertising link appears under the heading “sponsored links”, which is displayed either on the right-hand side of the screen, to the right of the natural results, or on the upper part of the screen, above the natural results.

While the ECJ ultimately leaves national courts to decide each dispute on a case-by-case basis, the principles it established appear to hint that Google has not infringed trademark law by allowing advertisers to purchase keywords corresponding to their competitors’ trademarks.   The ruling, which provides useful guidance to trademarks owners as to how they may restrict online use of their brands, comes just shortly before the publication of the Commission’s revised Block Exemption Regulation and Guidelines on vertical agreements, which will include specific provisions on online sales.

As to the first of the two questions raised by the French Court of Cassation, the ECJ pointed out that, under the EU trademark rules, by purchasing the Google’s AdWords referencing service and selecting, as a keyword, a sign corresponding to an existing trademark, it is the advertiser, and not Google, that actually uses the “sign”.  Conversely, the activity of an internet referencing service provider which consists in storing, as a keyword, a sign identical with a trade mark and organizing the display of ads on the basis of that keyword does not amount to “use” of that sign.

Accordingly, if a trademark has been used as a keyword, the trademark owner cannot, therefore, rely, against Google, on the exclusive right which it derives from its mark.  On the other hand, advertisers themselves cannot, by using such keywords, arrange for Google to display ads which do not allow average internet users easily to establish from which undertaking the goods or services covered by the ad in question originate.

As to the second issue, the ECJ did not directly rule on the liability of Google as referencing service provider with respect to the data of its clients which it stores on its server.  In fact, questions of liability are governed by national law.

Yet, the ECJ provided general guidance to the national court, saying that the liability of the referencing service provider may be limited if the role played by the service provider is neutral, in the sense that its conduct is merely technical, automatic, and passive, pointing to a lack of knowledge of, or control over, the data which it stores.  In such a case, the service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained  knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned.

In this respect, the ECJ considers that certain factors, like the mere facts that the referencing service is subject to payment, that Google sets the payment terms or that it provides general information to its clients cannot have the effect of depriving Google of the exemptions from liability under EU law, while the role played by Google in the drafting of the commercial message which accompanies the advertising link or in the establishment or selection of keywords is relevant. [Gabriele Accardo]

Advertisements