Supreme Court refers questions to ECJ on jurisdiction in keyword cases

The issue of AdWords consisting of the trademark or name of a competitor seems to be of increasing concern to trademark owners. The Supreme Court of Austria has recently submitted a reference for a preliminary ruling to the Court of Justice of the European Union (ECJ) with clearly formulated questions which will hopefully clarify the issue (Case 17 Ob 8/10s, October 5 2010).
Austrian company Wintersteiger AG manufactured and sold ski and snowboard service machines, as well as machines for repairing and maintaining skis. In addition, the company owned the Austrian trademark WINTERSTEIGER. The defendant was a German competitor which produced the same kind of machines and products, labelled on its webpage as 'Wintersteiger accessories'. The subject matter of the proceedings was the Austrian mark only, so the court had to assume that no trademark protection existed in Germany and that use of WINTERSTEIGER was perfectly legal in that country.
The defendant used the word 'Wintersteiger' as a Google AdWord on '', but not on ''. Consumers looking for Wintersteiger on '' would get the webpage of the plaintiff as a search result. Moreover, on the right-hand side, there would be an advertisement for the defendant that did not refer to Wintersteiger on its face; however, if consumers accessed the defendant's site, they would find a subpage entitled 'Wintersteiger accessories'.
The plaintiff argued that, because Germany and Austria share the same language, the defendant infringed the plaintiff's trademark by using it as an AdWord. The first instance court considered that it did not have jurisdiction and rejected the plaintiff's motion for a preliminary injunction, finding that '' targeted only internet users in Germany, but not Austria. The Court of Appeals took the contrary position, holding that '' could also be accessed by Austrian consumers and was also in the German language, so that it automatically targeted Austrian users. However, it held that the defendant's advertisement on '' did not show the trademark WINTERSTEIGER and, therefore, consumers could not be led to believe that the two businesses were economically linked.
On appeal, the Supreme Court first sought to establish whether it had jurisdiction to hear the case. It relied on Article 5(3) of Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which provides that a person domiciled in a member state may be sued in another member state in matters relating to tort, delict or quasi-delict, provided that the court has jurisdiction over the place where the harmful event occurred or may occur. Therefore, the question to be solved under EU law was whether, under the given circumstances, the harmful event had taken place in Austria or in Germany.
The Supreme Court suggested three possible answers:
  • One could take the position that use of trademarks as AdWords could be considered to be infringing only if the top-level domain of the search engine was that of the state where the suit had been filed. However, this did not solve the problem in the case of generic top-level domains.
  • One may be of the opinion that, due to the international character of the internet, the website at issue could be accessed in any country. However, in this case, the party using AdWords would have to conduct a worldwide search in order to avoid a trademark conflict.
  • The third position - which the court clearly preferred - was that jurisdiction should depend on the language of the website combined with whether the litigants are competitors in the state in which the trademark is registered. This method could be refined by establishing a minimum number of hits on the search engine, and weighing the pros and cons of a worldwide prohibition against the use of a trademark.
With regard to the third solution, the Supreme Court requested that the ECJ define these criteria, should the latter share the opinion of the court.
The Supreme Court also discussed previous decisions, including a judgment of the German Bundesgerichtshof in a case involving the domain name '' (I ZR 163/02, BB 2005, 573, October 13 2004). The Bundesgerichtshof considered that a foreign company offering services on the internet could infringe German trademarks, but only where the consequences of the foreign company's actions had a real impact on the complainant’s economic activities.
The Supreme Court also referred to its own judgment in Northland (4 Ob 122/03z, July 8 2003), which also dealt with Article 5(3) of Regulation 44/2001. The court considered the definition of 'the place where the harmful event occurred'. It is well established that such place may be the place where the damage occurred or the place where the harmful event took place. In Northland, an Italian manufacturer sold products bearing an infringing mark - which was infringing only in Austria - to Austrian companies, which then imported the products into Austria. There was no doubt that the importers committed trademark infringement, but it was unclear, until that decision, that the manufacturer could also be held liable under Article 5(3).
The decision of the ECJ, which should lay down the criteria for assessing jurisdiction in cases involving AdWords, is thus awaited with great interest.
Hans Georg Zeiner, Zeiner & Zeiner, Vienna

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