Canada: The Surprising Impact Of The Terms Of The Google Adwords And Adsense Programs On A Claim Of Infringement

Last Updated: March 31 2017
Article by John McKeown

A recent U.K. case dealt with a claim for trademark infringement relating to the use of a domain name and the impact of the Google AdWords and AdSense programs on the claim as well jurisdictional issues.

The Facts

In Greek mythology, Argos was the short name of Argus Panoptes, an all-seeing giant, and a servant of Hera. When he was killed, as a constant reminder of his foul murder, or as some say of his loyalty to her, Hera placed Argos' eyes in the tail of the peacock.

In modern times, "Argos" has become a popular name for companies all over the world. The evidence in this case included a list of over 100 registered "Argos" domain names, and a list of about 100 registered trademarks comprising or including the word "Argos", which (a) related to a wide range of designated territories, (b) were not associated with either of the parties, and (c) appeared to belong to a substantial number of different companies, many of which have names which comprise or include the word "Argos".

Argos Limited, (the Plaintiff) is a very substantial UK based retailer of non-food consumer products, which began trading in 1973 through both catalogues and retail stores. The Plaintiff operates primarily in the UK and the Republic of Ireland under the mark ARGOS for which it has EU registrations. On January 8, 1996 it registered the domain name /argos.co.uk/ and launched an e-commerce website in 2004. The Plaintiff's sales in 2015 were in excess of £4bn. It was not in dispute that the ARGOS trademark is extremely well known to a substantial proportion of consumers in the UK and Ireland in relation to the provision of catalogue and store and internet based retail services.

Argos Systems Inc. (the Defendant) is a company incorporated under the laws of the state of Delaware, USA, in 1991.  The Defendant carries on business from its headquarters in Bedford, Massachusetts, providing computer aided design systems for the design and construction of residential and commercial buildings. The Defendant's sales were about US $25M between January 1995 and July 2014. The Defendant registered the domain name /argos.com/ on January 8, 1992, and uses it in conjunction with a commercial website and for email. The Defendant carries on business only in North and South America: It has no clients in the EU, and has made no attempt to enter the European market.

Google

Google operates two internet advertising programmes.  Under the Google AdWords program Google offers services to advertisers.  Under the Google AdSense program, Google offers website operators the opportunity to contract with it for the provision of space for advertising on their websites. Google refers to advertisers who sign up to Google AdWords as "Customers", to advertisements as "ads", and to the website operators as "Partners". Google explains how these programmes work as follows:

"The Google AdWords program enables you to create advertisements which will appear on relevant Google search results pages and our network of partner sites. ... The Google AdSense program differs in that it delivers Google AdWords ads to individuals' websites. Google then pays web publishers for the ads displayed on their site based on user clicks on ads or on ad impressions, depending on the type of ad."

The Plaintiff was a "Customer" and the Defendant was a "Partner" for purposes of these programs. At all material times under to the terms of the programs the Plaintiff granted not only to Google but also to the Defendant such rights as were necessary for Google and the Defendant to operate Google's programmes.

The Defendant's Website

At all material times the Defendant's website received substantial traffic from visitors from the U.K.  In fact close to 90% of all visitors were from the U.K. but the vast majority of them leave the website very promptly.

In January 2012 the Defendant introduced a version of its website which featured two different versions of the landing page.  The Defendant used geo-targeting source code to ensure that the version of the site which included the AdSense ads was not displayed to visitors from the Americas but the ads were displayed to all other visitors regardless of their location.

By participating in the Google AdSense programme between about December 2008 and September 2015, the Defendant was able to generate advertising revenue from visitors to its website, many of whom were visiting that website in the mistaken belief that /argos.com/ was the website address of the Plaintiff.  A number of the advertisements which were placed on the Defendant's website in this way were for the Plaintiff's business, and such advertisements were placed on the Defendant's website by Google as a result of the Plaintiff's participation in the Google AdWords programme. The Defendant contended that these mistaken visitors caused serious bandwidth and other problems and real expense for the Defendant. The ads generated about US $100,000 in revenue for the Defendant who contended that it used this sum, in part, to offset the costs of the bandwidth and infrastructure modifications needed to host its website.

The Claim

The Plaintiff alleged infringement of its EU trademark registrations in respect of the use by the Defendant of the sign ARGOS in the form of the domain name /argos.com/ and on Defendant's website. The Defendant filed a counterclaim which sought declarations of non-infringement in respect of both current and historic versions of Defendant's website.

As is the case in Canada if the plaintiff has consented to the defendant's use of its mark this will be a defence to a claim for infringement. The Defendant contended that the grant of rights given by the Plaintiff in the AdWords terms constituted consent to the display of the Plaintiff's advertisements by Partners, including the Defendant, on websites which are selected by Google to form part of the AdSense programme. This was subject to the Plaintiff exercising the right under the AdWords programme to opt out of having its advertisements placed on Partners' websites in general or on the Defendant's website(s) in particular.

The judge found that the Plaintiff expressly and unequivocally consented to the Defendant's use of the trademark ARGOS in the Defendant's domain name, together with the display of the Plaintiff's advertisements on the Defendant's website or on the AdWords terms.

The Defendant also asserted that it had not performed any act within the territory of the Plaintiff's rights, because the Defendant's website did not target consumers in the UK or the EU. Presumably by defending the action the Defendant waived the right to assert that the court had no jurisdiction but leaving that aside it is clear the rights associated with trademark are territorial and limited to the E.U.

The judge reviewed in great detail the cases in the U.K. and the E.U. dealing with targeting. He found that that there is no hard and fast rule that it was necessary to have regard to the entirety of the website, as opposed to, say, the landing or home page alone. It all depends on the circumstances. If the evidence shows that some part of the website is so configured as to attract a substantial number of UK users, it may be appropriate to have regard to that part of the website alone, even if, viewed globally the website is clearly not directed to UK users.

The judge disregarded the display of the Google ads because of his finding of consent. He concluded that it was clear that Defendant's website was visited by many internet users based in the UK not only when ads were displayed on it but also before any ads were displayed on it, and that this had continued after ads were removed from it. This was overwhelmingly a product of mistake, and, to a significant extent, was due to UK users guessing or assuming that the /argos.com/ domain name was owned by the Plaintiff. This traffic arises because the Defendant, entirely lawfully and properly, registered the /argos.com/ domain name in 1992 either before the Plaintiff thought of registering a domain name at all, which it first did in 1996 or at least before the Plaintiff thought of registering /argos.com/ as its domain name or one of its domain names. It did not arise because the Defendant had done anything to attract internet users based in the UK to its website.

As a result the action was dismissed and the counterclaim allowed.

Comment

The effect of a foreign trader's use of Google advertising in the context of determining whether the trader has targeted a specific country does not appear to have been previously considered by a court. Because of the wide spread use of the Google programs this is an important and potentially far-reaching issue.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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