Google was not using the LV trademark in its Ad Words system in a manner covered by European trademark law. The idea behind this is simple. Trademark law does not entitle a trademark owner to prevent all utilization of his trademark by a third party. In the view of the court, Google is merely operating a service that may enable advertisers to engage in trademark violations. Google does not decide which trademarks to use as keywords, but merely provides a keyword selection service. This is not sufficient, in the view of the court, to justify an action for direct trademark infringement.

However, Google might still be liable for what lawyers call secondary infringement. The argument would be that, if advertisers actually infringe trademark law because they create customer confusion in the AdWords system, Google is benefiting financially from these trademark violations. While this argument may sound convincing at first sight, the European E-Commerce Directive of 2000 restricts the liability of “information society service providers” (such as, potentially, Google) for infringing activities by third parties (the advertisers). Therefore, the European Court of Justice had to decide whether the safe harbor provisions of this directive shielded Google from secondary liability. The European Court of Justice held that the answer to this question depends on whether the Google Ad Words system is a mere automatic and passive system, as portrayed by Google, or whether Google plays an active role in selecting and ordering advertisements. As in the customer confusion question, the court refrained from giving any definite answer, but rather referred the case back to the French courts.

In the popular press, the European Court of Justice’s decision in the Google AdWords case has often been portrayed as a victory for Google. Does victory really look like this? Well, it depends. The European Court of Justice refrained from providing a final answer as to whether keyword advertising can lead to customer confusion. Nor did it provide a comprehensive answer as to whether Google could be held liable not because of customer confusion, but because other goals of trademark protection had been violated. Finally,

the danger is that
national courts will
continue to interpret
european trademark
law in different ways.

the court did not give a definite answer as to whether Google should be protected by safe harbors provisions. For most of these questions, the European Court of Justice provided some general guidelines, but left it to the national courts to rule on details which may be small, but decisive. Therefore, in Europe, it will ultimately be the national courts which will decide on the liability of Google for its AdWords system. We still lack a clear answer on how to design a keyword-backed advertisement system in a way that clearly does not violate European trademark law.

indecisive Decision

This does not mean that one should feel sorry for Google which still has to operate in an area of somewhat unsettled law. First, Google has some experience in this regard. Just think of the Google Books project. Second, Google has been running its Ad Words service in the U.S. for years, and in the U.S. the liability question is still not fully settled. In 2009, the Court of Appeals for the Second Circuit held that Google was using trademarks “in commerce” (as required by the Lan-ham Act) when operating its Ad Words system,c thereby taking a slightly different stance from that of the European Court of Justice. The impact of this decision on Google AdWords in the U.S. remains to be seen. At least, courts in the U.S. will now examine more closely whether unauthorized trademark-backed advertising links in c Rescuecom Corp. v. Google, Inc., 562 F.3d 123 (2009). This decision did not rule on the ultimate question of Google’s liability, as the Court of Appeals remanded the case back to the district court for further proceedings. In March 2010, the parties settled their dispute out of court.

Google Ad Words can really cause confusion among consumers. Up to now, most U.S. courts have denied Google’s liability on such grounds.

Third, as a result of the decisions by the European Court of Justice relating to the AdWords system, Google revised its European AdWords trademark policy in September 2010 and limited its support for trademark owners. Under the new policy, advertisers are free to select trademarks when registering advertising links. However, if a trademark owner discovers that an advertiser is using his trademark without proper authorization, Google will remove the advertising link if the trademark is being used in a confusing manner, for example if it falsely implies some affiliation between the advertiser and the trademark owner. By this policy change, Google has mollified at least some trademark owners and provided a mechanism outside the court system that may resolve a substantial proportion of AdWords trademark disputes in Europe. Nevertheless, it is almost certain that national courts in Europe will continue to rule on the details of how the AdWords trademark policy is implemented and enforced.

conclusion

In the end, the decision by the European Court of Justice may indeed turn out to be a victory for Google. Whether it is a victory for the European trademark system is less clear. While the European Court of Justice provided some general guidelines on Google AdWords, the task of working out the little details has been left to courts in Paris, Vienna, Karlsruhe, The Hague, London and other cities. The danger is that national courts will continue to interpret European trademark law in different ways. French courts, for example, may continue to be more critical of Google AdWords in their decisions than German or U.K. courts. This is not exactly the idea of a trademark system which is supposed to be harmonized across Europe by the institutions of the European Union.

 

Stefan Bechtold ( [e-mail]) is Associate Professor of Intellectual Property at ETH Zurich and a Communications Viewpoints section board member.