Preliminary injunction overturned in keyword case

Denmark

In HE-House A/S v Skandinavisk Motor Co A/S (Case 173/2008, October 13 2009), the Danish Supreme Court has quashed a ruling of the Eastern High Court in a case involving the use of registered trademarks as keywords in search engines.

The plaintiff, Danish car dealer Skandinavisk Motor Co A/S (SMC), holds a licence to use the trademark SKODA and other SKODA marks in Denmark. The defendant, HE-House A/S, was for many years an authorized Skoda dealer. After the termination of HE’s distributorship, HE continued to sell and repair Skoda cars on an unauthorized basis. In addition, HE continued to use the trademark SKODA on the Internet, and registered various SKODA marks as keywords with different search engines. Therefore, an advertisement for HE appeared when an internet user entered the SKODA marks in a search engine.

SMC sought a preliminary injunction against HE, alleging that use of its marks as keywords constituted infringement of its trademark rights under Section 4 of the Danish Trademarks Act, which implements Article 5 of the First Trademarks Directive (89/104/EEC).

The Bailiff’s Court rejected SMC’s request for a preliminary injunction. SMC appealed to the Eastern High Court, which overturned the decision of the Bailiff’s Court and issued a preliminary injunction against HE in February 2008. The Eastern High Court found that HE’s use of SMC’s marks as keywords constituted commercial use within the meaning of Section 4 of the act, as it improved HE’s ranking in the search engine results. HE appealed to the Supreme Court.

Before the Supreme Court, HE submitted the following arguments:

  • Use of SMC’s marks as keywords did not constitute commercial use under Section 4 of the act.
  • The function and purpose of the keywords are not to be part of the advertisement, but to generate the advertisement.
  • The keywords are not shown to the end users and are used only for the purpose of triggering the advertisement.
  • Even assuming that HE’s use of SMC’s marks as keywords constitutes commercial use within the meaning of Section 4 of the act, such use is necessary and not detrimental to SMC. Therefore, such use is in accordance with Section 5 of the act (implementing Article 6 of the First Trademarks Directive).

In contrast, SMC maintained that HE’s use of its marks as keywords constituted commercial use under Section 4 of the act. In addition, it argued as follows:

  • With regard to establishing commercial use, it is irrelevant whether the trademarks are used directly in an advertisement or as keywords in search engines.
  • Since the advertisement is triggered by a search for the trademarks, use of the marks as keywords does not constitute merely a 'quiet' dialogue between the search engine and the server hosting the advertisement.
  • Use of SMC’s marks as keywords is not necessary and thus violate the act.

The Supreme Court held that the issue of whether use of the SKODA marks as keywords constituted infringement of SMC’s trademark rights was to be determined by interpreting Sections 4 and 5 of the act. As the act implements the First Trademarks Directive, the provisions had to be interpreted in light of the directive. A number of cases have recently been referred to the European Court of Justice (ECJ) for a preliminary ruling on the interpretation of the directive - including the term 'commercial use' (eg, see Google France v Louis Vuitton Malletier SA (Case C-236/08)). It remains to be seen whether the ECJ will determine that use of third-party trademarks as keywords constitutes infringement.

In the present case, the Supreme Court found that the proceedings could not be delayed until the decision of the ECJ due to the very nature of a preliminary injunction. The court concluded that the act and the directive could not be interpreted with a sufficient degree of certainty to establish whether SMC’s trademark rights had been infringed. Further, the court found that HE’s use of SMC’s marks as keywords did not violate the Marketing Practices Act. However, the court did not state the grounds for its decision in this regard.

Against this background, the court concluded that the requirements for a preliminary injunction had not been met. As the use of third-party trademarks as keywords is becoming increasingly common, the decision of the ECJ is awaited with great interest.

Lasse A Søndergaard Christensen and Christian Fleischer Christiansen, Gorrissen Federspiel, Aarhus

Unlock unlimited access to all WTR content