Google's use of trademarks as keywords does not constitute infringement

In three joint cases, Louis Vuitton Malletier SA v Google France SARL (Case C-236/08), Viatecum SA v Google France SARL (Case C-237/08) and CNRRH v Google France SARL (Case C-238/08), the Court of Justice of the European Union (ECJ), in a highly anticipated decision, has held that Google's AdWords system did not breach trademark law.

The decision involved three cases originating from France:

The First Instance Court and the Court of Appeal of Paris held that Google's practice of selling certain terms as triggers for sponsored advertisements amounted to trademark infringement (in the third case, the courts also found that CNRRH's competitors were liable for trademark infringement). Google appealed to the Supreme Court.

 

In May 2008 the Supreme Court referred questions to the ECJ for a preliminary ruling. In a nutshell, the Supreme Court sought to know:  

In September 2009 the advocate general found in favour of Google (for further details please see "Advocate general favours Google in AdWords cases"). On March 23 2010 the ECJ agreed with the advocate general, holding that Google had not breached EU trademark law. According to the ECJ, the storage of signs identical to trademarks as keywords did not represent use of the marks in the course of trade. Although Google operated "in the course of trade" when it permitted advertisers to select signs identical to trademarks, stored those signs and displayed advertisements on the basis of those signs, it did not itself make use of the signs. The commercial activity and economic advantage derived by Google was irrelevant.

 

The ECJ held that Google could be regarded as a hosting services provider and, therefore, benefit from the liability exemption under the E-commerce Directive. However, this was left to the appreciation of the national courts, which will have to analyze, on a case-by-case basis, whether Google played an active role of such a kind as to give it knowledge of, or control over, the data stored.

 

Importantly, the ECJ also held that a trademark owner is entitled to prohibit an advertiser from advertising, based on a keyword identical to a registered trademark which the advertiser has selected without the consent of the trademark owner, goods or services identical to those for which the mark is registered. However, the trademark owner's ability to act is limited to situations where such advertising does not enable the average internet user, or enables that user only with difficulty, to ascertain whether the goods or services originate from the trademark owner or from an undertaking economically connected to it, or, on the contrary, from a third party.

 

This is only the beginning of a long-term dispute - trademark owners are unlikely to accept the proposition that Google is not liable for trademark infringement. Interestingly, the ECJ appears to have created the concept of the ‘average internet user’, and left room for interpretation with regard to the difficulties that this user may have in determining the origin of goods or services.

 

The term ‘identity’ (of the marks, as well as the goods or services) was key in the decision. However, the door was left open for a comparable outcome in cases based on ‘similarity’. In fact, two days later, in Case C-278/08, the ECJ held that a trademark owner is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical, or similar to, a registered trademark, goods or services identical to those for which that mark is registered.

 

Following these decisions, brand owners would be advised to update their trademark strategies.