Trademark owners' costs have just shot through the roof, with the judgment of the Court of Justice of the European Union (ECJ) in the joined Google keywords cases placing a heavy strain on mark holders' budgets.

The ruling finds that Google's use of trademark terms as keywords does not constitute infringement but that the advertiser's use is likely to be an infringement. The court's findings will further complicate online brand protection and make it a great deal more expensive - a fact confirmed by a source close to the Google cases, who told WTR: "The decision places more of a burden on brand owners. We'll have to be better organized in order to start more actions against more parties." She confirmed that this would mean a rise in enforcement costs.

As trademark lawyers across the world digest the news, it is emerging that the court considers that the use, by an advertiser, of a sign which is identical with or similar to an earlier trademark implies that the advertiser uses the sign in its own commercial communication. Where the advertisement does not enable the average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to originate from the proprietor of the trademark or a third party (most likely the advertiser), it is likely to infringe on the earlier mark. So, while it sells trademark terms as keywords, Google is not liable for infringement - but its clients may be.

The ECJ has therefore clarified the issue of Google's involvement, but also pushed the problem further up the chain. Practically, this means that infringement still exists, but brand owners will have to spend more time and money finding it. "Trademark owners will have to continue to monitor use," notes Simon Bennett, partner at Fox Williams. "As the Internet grows as a tool of e-commerce the money spent by brand owners in combating infringements will increase. This judgment will push up costs."

Fortunately, the judgment means that brand owners still have recourse against what they consider to be infringing use. "Trademark owners are entitled to sue advertisers for using their trademarks as keywords in a paid referencing system to trigger the display of links to their own competitor or even counterfeit sites," notes Tobias Malte Müller, head of the trademark, design and domain name practice at Wirsing Hass Meinhold. Thus, as Richard Milchior, a partner at Granrut Avocats, told WTR: "This story is not finished!"

Milchior points out the court's categorical assertion that use of a trademark term as a keyword "by a third party advertiser is a 'use in relation to products or services' (paragraphs 60 to 74) which is 'liable to have an adverse effect on the function of the trademark' (paragraphs 75 to 98)". He notes positively that mark owners can take some comfort in the court's implication that the function of a trademark can be impaired when it is used as a keyword.

That said, it is unlikely that mark owners will be happy with this concession. After all, as alleged infringement will evidently continue after today's judgment, trademark managers and their marketing colleagues will be disappointed to hear their fears confirmed: that keyword advertising damages trademarks.

As this means more monitoring and more enforcement actions against keyword advertisers, trademark managers will likely have to stretch already tight budgets further. In fact, a shrewd head of trademarks may want to use this Google decision, plus the predicted online brand nightmare that is expected along with new generic top-level domains (see "Mark owners urged to comment in 'final' gTLD consultation"), to make a strong case for more money from the business.

Observers contacted WTR today to argue that Google will deliver a rise in infringement. "This decision will boost the infringement of trademarks in the European Union because, in reality, infringers are often based outside the Community and are, therefore, beyond the reach of the European authorities," said Mark Lubbock, IP partner at Ashurst. The growing breadth of the problem will inevitably be passed on to consumers, argue mark owners, as there will be greater scope for confusing sponsored links in Google search results. "In the end, it is the consumer who will suffer," Bennett predicts.

Google disagrees. In a statement published online, Harjinder Obhi, the search engine's senior litigation counsel for Europe, said: "We believe that user interest is best served by maximizing the choice of keywords, ensuring relevant and informative advertising for a wide variety of different contexts."

Google is not backing down. But neither are brand owners. One senior in-house IP counsel told WTR that she considered the judgment as an "invitation" to continue fighting.