Supreme Court confirms case law on keyword advertising

In MOST-Pralinen (Case I ZR 217/10, December 13 2012, published in February 2013), the German Supreme Court has overruled a decision of the Braunschweig Court of Appeals and denied that there had been trademark infringement in a keyword advertising case, thereby confirming its case law in this issue.

The claimant is the exclusive licensee of the German word-and-device mark MOST covering, among other things, candies and chocolate in Class 30 of the Nice Classification. It offers high-end chocolate products at 'most-shop.com'. The defendant runs an online shop selling presents, candies and chocolate at 'feinkost-geschenke.de' and 'selection-exquisit.de'. In January 2007 the defendant purchased the generic term 'Pralinen' (candies) as a Google AdWord, with a 'broad match' option also covering the term 'MOST-Pralinen'. As a consequence, when an internet user entered the search term 'MOST-Pralinen', the following advertisement of the defendant appeared on the right-hand side of the screen, next to the results:

“Pralinen

Wines, candies, delicatessen, gifts

Enjoy and make a gift!

www.feinkost-geschenke.de” (English translation)

Moreover, if the user clicked on the link contained in the advertisement, he/she was led to the defendant’s online shop, where no products under the mark MOST were offered.

The Braunschweig District Court granted the claimant's claim for cease and desist, considering that the defendant's advertisement constituted an infringement of the claimant’s trademark MOST. The Braunschweig Court of Appeals confirmed this finding. However, on further appeal the German Supreme Court annulled the Court of Appeals’ decision and dismissed the action, finding that the defendant’s advertisement did not infringe the claimant’s trademark.

The following lines of argumentation are worth noting:

• The Supreme Court agreed with the findings of the second instance court that the defendant, as a keyword buyer (ie, not as a search engine operator), had used the sign MOST-Pralinen in the course of trade and without approval of the trademark owner. The court relied on established case law of the Court of Justice of the European Union (ECJ) (eg, Interflora/M&S (Case C-323/09)).


• The Supreme Court also confirmed the Court of Appeal’s finding that the defendant used the sign MOST-Pralinen to sell goods and services. It was irrelevant whether the keyword and the goods/services at issue did not appear in the advertisement itself, as the selection of a specific keyword has the objective of leading internet users to the goods and services offered at the advertiser’s website (the court again referred to the ECJ’s case law, eg Interflora).


• Further, the court confirmed the finding that the word-and-device mark MOST and the keyword 'MOST-Pralinen' were not identical, but similar. Therefore, the question of whether there was a likelihood of confusion was relevant, and only an adverse effect on the essential function of the trademark (ie, indicating the origin of the goods), rather than the other functions of a mark, would constitute an infringement.


• In contrast to the Braunschweig Court of Appeals, the Supreme Court found that the defendant's advertisement did not affect the essential function of the claimant’s trademark. The court, referring to Interflora, stated that, in general, the trademark’s function of indicating origin might be adversely affected where the advertisement suggests the existence of an economic link between the advertiser and the proprietor of the trademark, or is so vague that reasonably well-informed and reasonably observant internet users are unable to determine, on the basis of the link and the commercial message attached to it, whether the advertiser is a third party not connected to the proprietor of the trademark or whether, on the contrary, the advertiser is economically connected to the proprietor. Such assessment must be carried out on a case-by-case basis by the national courts.


• Based on these parameters, the Supreme Court referred to its recent case law (Bananabay II, Case I ZR 125/07, January 13 2011) according to which a trademark’s function of indicating origin is generally not adversely affected if the advertisement is clearly separated from the search results and does not include the mark itself or a reference to the trademark owner or the products offered under the mark. In the present case, the defendant’s advertisement appears in a separate part of the screen under the headline 'advertisements', and neither the advertisement nor the defendant’s website contained the trademark MOST.

The decision clearly puts an end to the approach followed by certain German appeal courts whereby keyword advertising was held to constitute use as a trademark which might give rise to a likelihood of confusion. The court’s opinion was well-founded and anchored in the real world, as internet users should be able to distinguish search results from sponsored links, but the court’s approach also allows search engines to continue generating revenue by selling keywords.

Florian Schwab, Boehmert & Boehmert, Munich