Avni S. Chari
In a case of French luxury goods manufacturers, led by LVMH Moet Hennessy Louis Vuitton SA, against Google Inc., the European Court of Justice has ruled in favour of the world’s most popular search engine. LVMH alleged an ongoing trademark violation by Google AdWords service, which prompts ads to appear alongside the search results when a user searches for a particular term. The French company was anxious to limit counterfeiters from purchasing links in Google AdWords to sell fake goods. In this pursuit, the company argued that Google was serving the medium for trademark infringement and its AdWords system promoted counterfeit goods.
The case was brought before the European Court of Justice when the Cour de cassation (French Court of Cassation) decided to refer the matter to it for further guidance and direction. Google was initially found guilty of infringing Vuitton’s trade marks by the Tribunal de grande instance de Paris (Regional Court, Paris), and subsequently, on appeal, by the Cour d’appel de Paris (Court of Appeal, Paris). When Google brought an appeal on a point of law (cassation) against that latter judgment, the Cour de cassation (French Court of Cassation) decided to stay the proceedings and to refer the following question to the European Court of Justice for a preliminary ruling: “whether… the proprietor of a trade mark is entitled to prohibit a third party from displaying, or arranging for the display of, on the basis of a keyword identical with, or similar to, that trademark which that third party has, without the consent of that proprietor, selected or stored in connection with an internet referencing service, an ad for goods or services identical with, or similar to, those for which that mark is registered?”
On Tuesday, 23.3.2010, the European Union’s highest Court passed a judgment in favor of Google Inc. The judgment reads, “Google has not infringed trade mark law by allowing advertisers to purchase keywords corresponding to their competitors’ trademarks.” Reaching this conclusion required an exhaustive scrutiny of Article 5(1)(a) of Directive 89/104 or, in the case of Community trademarks, of Article 9(1)(a) of Regulation No 40/94 of the Council. The law provides that the proprietor of a trade mark is entitled to prohibit a third party from using, without the proprietor’s consent, a sign identical with that trade mark when that use is in the course of trade, is in relation to goods or services which are identical with, or similar to, those for which that trademark is registered, and affects, or is liable to affect, the functions of the trademark. Although it is clear that the referencing service provider, Google, operates “in the course of trade” when it permits advertisers to select, as keywords, signs identical with trademarks, the Court observed that it does not follow from those factors that that service provider itself “uses” those signs within the terms of Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94. Google AdWords allows its clients to use signs which are identical with or similar to trademarks without actually using those signs itself.
Google is a host for advertisements and cannot be responsible on account of merely displaying sponsored links corresponding to trademarks. It is the responsibility of the advertisers to make their product distinct and preclude confusion among consumers. However, Google can be held responsible in cases where having obtained knowledge of the unlawful nature of an advertisement it fails “to act expeditiously to remove or to disable access to the advertising.”
The implications of the European Court’s judgment are extensive. By sanctioning Google’s lucrative practice of accepting money for displaying advertisements, it has secured to it a certain efflux of heavy revenue. However, the judgment has instilled an element of accountability by allowing Google to be pursued for inaction if it is aware of fraudulent and illegal activity.
For the companies and trademark holders, the judgment has come as a slight inconvenience. By instituting legal proceedings against Google, the companies were hoping to avoid having to pursue rogue online traders at every instance of trademark infringement. The judgment precludes any company from blindly attempting to hold Google responsible. Each act of infringement will have to be individually pursued. The European Court of Justice has ruled that from now on, subsequent disputes are for national courts to assess on a case-by-case basis.
This was the first time a court as high as the European Court of Justice has ruled on the legality of Google AdWords. Many countries were eagerly awaiting the ruling to clarify the state of the law. The law, as has been clarified, does not confer on Google the right to advertise counterfeit goods. However, the ruling has confirmed that Google’s activities through the AdWords service do not constitute trademark infringements.
