Use of competitor's mark as keyword constitutes infringement

The Specialized Division of the Court of Milan has held that use by a third party of the trademark of a competitor as a keyword to trigger sponsored links on search results pages is equivalent to linking the third party's website to the competitor's trademark and, therefore, takes unfair advantage of the reputation of the competitor's mark (Case 3280, March 11 2009, only recently released).

The dispute involved:
 

Beaupassant, a French partner of Zanox, was authorized, by virtue of a franchising agreement with Sixt, to publicize on the Internet services offered under the trademark SIXT. Beaupassant, together with Rodea, purchased the term 'Avis' as a keyword in Google's AdWords system. Car rental services offered under the trademark AVIS are directly in competition with services offered under the trademark SIXT. As a consequence, many users who typed in the word 'Avis' in the search engine were directed to Sixt’s website and purchased services from Sixt to the detriment of Avis.

 

Sixt and Avis thus brought an action against the advertisers as defendants and Google as joint tortfeasor under:

The Court of Milan held that Google was not liable since the AdWords contract was entered into by Beaupassant and Google Ireland Ltd. Therefore, Google Ireland should have been summoned as defendant in this case.

 

The court also pointed out that while Avis had suffered damages due to the diversion of its customers, Sixt, the licensor of the trademark SIXT, could not claim that the parties with whom it had entered into franchising agreements were liable for the allegedly unlawful actions. Zanox was authorized to publicize the SIXT mark by virtue of the franchising agreement with Sixt. Sixt’s failure to exercise its duties of control, direction and supervision of the mark would imply, at least, that it was vicariously liable.   

 

The court concluded that Beaupassant and Rodea were liable for unfair competition and trademark infringement. The court also ordered that Beaupassant and Rodea, jointly and severally, compensate Avis for the damages suffered.

 

To date, there have been only a few cases involving keyword issues in Italy (eg, see "Use of keyword through AdWords program constitutes unfair trade practice"). This is the first significant decision to consider the practice of keyword marketing and the potential liability of search engines.