Marketing Control Act may be successfully invoked in trademark-related cases
The Committee for Unfair Competition has issued a decision stating that the purchase and use of a competitor’s trademark as a Google AdWord constituted a breach of Section 25 of the Norwegian Marketing Control Act. According to the committee, this practice is not in compliance with good business practice.
Complainant Teppeabo AS and defendant Teppeland AS are competitors in the home furniture market (mainly carpets and rugs).
Teppeland purchased and used the trademark TEPPEABO as an AdWord for its advertisements on Google. Teppeabo claimed that this practice constituted a breach of the Marketing Control Act and filed a complaint with the Committee for Unfair Competition. The complaint was based on three separate grounds:
- use of the TEPPEABO mark as an AdWord constituted a breach of Section 30 of the act, which prohibits the use of copies of famous marks in the course of the trade in a way that is likely to cause confusion;
- use of the mark was misleading under Section 26; and
- use of the mark constituted a breach of good business practice among traders under Section 25.
The jurisdiction of the Committee for Unfair Competition is limited to questions relating to the Marketing Control Act. It thus emphasised that it was not in a position to consider any trademark-related issues, such as whether the purchase and use of a trademark as an AdWord constitutes use of a trademark. Hence, the committee distinguished the present case from the various decisions of the Court of Justice of the European Union concerning these issues, such as Google (Joined Cases C-236/08, C-237/08 and 238/08) and Interflora (Case C-323/09).
It was also emphasised that the principles set out in the abovementioned decisions related to the interpretation of the Trademark Directive (89/104/EEC, now 2008/95/EC, and the corresponding regulations) and the E-commerce Directive (2000/31/EC), while the present case was based on the Marketing Control Act. In this respect, it was pointed out that the legislation on unfair competition and marketing - contrary to the trademark legislation - is not harmonised within the European Union/European Economic Area.
The committee assumed that the use of AdWords - including the use of a competitor’s trademark - was an established practice among traders. In this regard, the committee stated that the fact that a practice is established does not imply that it is a good business practice. Such evaluation was within the powers of the committee.
The committee further stated that Teppeland’s use of the complainant’s trademark as an AdWord was neither misleading nor likely to cause confusion under Sections 26 and 30 of the Marketing Control Act.
With respect to Section 25, the committee was of the opinion that the use of a competitor’s trademark as a “concealed door opener” to one’s own advertisement on the internet was an unreasonable exploitation of the efforts put in by the trademark owner. According to the committee, the goodwill of a trademark - and hence the value of the mark as a search term/AdWord - results from the marketing efforts carried out by the trademark owner. This goodwill may not be exploited without the consent of the trademark owner or without providing reasonable compensation. The unauthorised exploitation of Teppeabo’s goodwill was thus considered to be a breach of good business practice.
The fact that it was possible for Teppeabo to overbid the defendant was not considered to be decisive. In this respect, the committee argued that the defendant had paid only for the costs relating to the purchase of the AdWord, and not the costs relating to the marketing efforts. The committee found that the competitive advantage thus created was unlawful.
In light of the above, the committee concluded that Teppeland’s use of the complainant’s trademark as an AdWord was a breach of good business practice under Section 25.
Decisions from the committee are not legally binding. Hence, it remains to be seen whether this decision will have any impact inter partes and have a more general interest. The case raises legal issues that are significant and deserve to be tried in the ordinary courts.
The decision clearly illustrates the scope of the Marketing Control Act, and shows that the act may be successfully invoked as an independent basis for a trademark-related claim.
Siw Lysell Dølvik and Felix Reimers, Advokatfirmaet Grette DA, Oslo
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