Internet Marketing and Keywords In Search Engine Advertising
May 7, 2009
Keyword advertising earns search engines an essential stream of revenue.
Google, which allows use of competitors' brands as keywords in pay per click advertising, has had to defend its position in the courts across Europe. The issue turns on whether use of competitors’ brands as keywords constitutes ‘use’ for trade mark purposes. If it does then advertisers expose themselves to an action for trade mark infringement.
Understanding of Search Engines
Many people are still unaware that the search results appearing at the top of Google and along the right hand side are paid for advertisements. So, whether out of ignorance or otherwise, or because searchers know they can expect more relevant websites when they click on the sponsored advertisements, advertising with search engines is increasingly popular and effective. It allows advertisers to immediately appear in the search results on page one of google whenever their desired search terms are searched on by potential customers.
The fact that Google changed its policy on Google Ads in order to allow companies to choose keywords that are their competitors' trade marks has given rise to misunderstanding. It is important for companies to be aware that just because Google allows them to use competitors’ keywords does not mean it is desirable or risk free to do so. Indeed it would be prudent to only use competitors’ trade marks as keywords once fully appraised of the potential risk of trade mark infringement litigation.
Recently Marks and Spencer was threatened with litigation by Interflora. Interflora objected to the fact that whenever a search was made for the term INTERFLORA a sponsored ad belonging to Marks and Spencer promoting flowers would appear among the search results.
Last year, the English High Court decided that Yahoo had not infringed the trade marks of the trade mark owner of “Mr. Spicy” when users searched for the term “spicy”. As Laurence Kaye points out the case only concerned the position of the search engine. It didn’t look at the position of the advertiser who bought the search term (although this would have been a weak case given the generic nature of the trade mark itself).
The case establishes, for now, that a search engine does not “use” a trade mark as a trade mark merely by displaying an ad with keywords featuring all or part of such a trade mark in sponsored search results. However, the case does not answer the question whether the advertiser (that is, Marks and Spencer in the above example) using Interflora’s mark as a trade mark when it bids on a competitor’s mark as a keyword.
The cases in Europe on whether use of Google Ads keywords can constitute trademark infringement are briefly outlined below. These cases have since been decided, with the ECJ issuing landmark rulings that shaped how keyword advertising and trademark law interact across Europe.
France
The French courts have joined three cases to be referred for preliminary rulings. These cases are part of the ongoing dispute between Google France and Louis Vuitton Malletier over the use of keyword advertising and internet searches that display sponsored links referring users to sites selling rival products and even counterfeits. The Court heard arguments in the dispute recently. Lawyers for Louis Vuitton contend that Google advertising gives companies which sell counterfeit goods the unprecedented ability to promote their products in ways beyond their wildest dreams. Google argues that the decision to click or buy ultimately rests with the internet user and not with them. In 2010, the ECJ ruled in Google France v Louis Vuitton that Google was not directly liable for trademark infringement by providing the AdWords service, but that advertisers could be liable if their ads did not allow users to determine the origin of the goods or services advertised.
Germany
Recently, the German Federal Supreme Court ruled on two other ad word cases and has referred a third to the ECJ. All three cases were based on instances when the defendants had purchased the claimant’s trade mark as an ad word. This was shown as a sponsored link. None of the actual internet advertisements included a reference to the trade mark or the trade mark owner.
The first case concerns the ad word “Beta Layout.” This case is slightly different from the others because the word in question was registered as a company name which is protected as a trade mark under German law. Therefore this case did not involve a point of EU law but simply German law. The Court found that internet users would not assume that the sponsored link, which was visually separated from the search results, originated from the claimant. Therefore this was not an infringement. It also decided, given that the legal protection of company names was not based on harmonized European law, that this matter did not have to be referred to the ECJ for a decision. A problem with this decision is that Germany may be left with two different levels of protection for trade marks and company names which is incompatible with the German law principle that company name rights enjoy the same protection as trade marks.
The next case concerns “PCB” and both parties are active in the field of printed circuit boards. The claimant had a registered mark for “pcb-pool.” The defendant purchased the ad word for “pcb” only. However when typing “pcb-pool” into a search engine the defendants sponsored search results were retrieved. The court ruled that the trade mark owner could prohibit use of the descriptive term “pcb” which is an acronym of “printed circuit board.”
The last case is on the purchase of the ad word “bananabay.” Both the defendant and the claimant are in the field of selling adult entertainment products. The claimant owned the trade mark “bananabay” and the defendant had purchase an adword for that term. The ECJ subsequently ruled that bidding on a competitor's trademark as a keyword constitutes trademark use where the resulting ad does not enable a reasonably well-informed user to determine the origin of the goods or services.
The Netherlands
A recent case has recently been referred to the ECJ. The dispute is between two companies Primakabin / Portakabin who both offer cabins for sale via online advertisements. Primakabin had purchased the ad words of “portakabin” as well as other similar words. The Dutch court has referred the question of whether this constitutes trade mark use to the ECJ. The ECJ ruled that a trademark owner could prevent a competitor from using its mark as a keyword where the ad did not make it obvious that the advertiser was independent from the trademark owner.
Conclusion
These decisions were important but did not end the disputes — questions around keyword advertising and trademark infringement continue to arise as advertising platforms evolve. Google's own liability remains limited, but advertisers remain exposed where their ads create confusion about the origin of goods or services.
If you're concerned about competitors using your trademark in their online advertising, get in touch with Azrights.
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