Cyprus: Trade Mark Infringement On The Internet: Current Issues And Concerns In Europe (Keywords, Keyword Advertising And The GOOGLE AdWords Case) - Part 2


III. 1. The keywords issue

The use of keywords and sponsored links in internet advertising is currently considered to be one of the biggest trade mark law issues. The legal problems encountered regarding keyword advertising, relate mainly to the function of the relevant paid referencing service systems itself.

More specifically the AdWords system – as it was explained with more detail in the previous chapter - permits unauthorized advertisers to purchase the protected brand names of other companies or businesses as internet search engine terms and therefore to be displayed within the sponsored link results. In any case the trade marks are being used as keywords without a relevant consent having been given by the respective trade mark owners. Therefore a first problem that can be identified here is that a third party is utilizing the trade mark without the proprietor's consent.

According to Article 5 (1) (a) of Directive 89/104, as it has now been replaced by Article 5 (1) (a) of Directive 2008/95, or in the case of a community trade mark, to Article 9 (1) (a) of Regulation No. 40/94, the proprietor of a trade mark is entitled to prohibit a third party from using, without the proprietors consent, a sign identical with that trade mark when that use is in the course of trade, is in relation to goods or services which are identical with, or similar to, those for which that trade mark is registered, and affects, or is liable to affect, the functions of the trade mark.

Namely in the case of L'Oreal SA v Bellure NV30 the ECJ stated that:

The first sentence of Article 5 (1) of Directive 89/104 provides that the registered trade mark is to confer on the proprietor exclusive rights therein. By virtue of Article 5 (1) (a) of that directive, those exclusive rights entitle the proprietor to prevent all third parties not having his consent from using, in the course of trade, any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered. The Court has already held that the exclusive right under Article 5 (1) (a) of Directive 89/104 was conferred in order to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfill its functions and that, therefore, the exercise of that right must be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark ... These functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services, but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising.

Therefore one problem that should be tackled, regarding the use of trade marks as keywords, is the lack of the consent by the trade mark proprietor. Nevertheless this should be addressed under the light of what exactly constitutes 'use of the trade mark in the course of business'. This is to be analyzed further below.

Moreover another problem lies in that there was up until recently nothing in the infrastructure of the sponsored links services that search engines offer, to stop advertisers selecting trade marks and brand names of other traders. Consequently an advertiser may purchase and utilize a famous brand name or a reputable trade mark belonging to a competitor in order to divert consumers to their own web page. As a result someone could pose the question here if Google (or any other search engine for that matter) should filter the requests of the advertisers and allow only non-registered names to be purchased as keywords. In any case the selection of keywords is currently completely free and unconditional. But is the creation of a control system something feasible? Or even, is it desirable?

It could be argued that recommending measures of control being taken by the operators of search engines could potentially damage the whole internet construction; namely that the internet constitutes a completely free marketplace in which consumers can trade freely. Nevertheless measures taken by search engines should be reasonable and proportionate since otherwise search engines would incur a 'duty' to police or scrutinize their websites, something which would affect their entire operation and functioning. Let us not forget that Google gains the majority of its advertising income from the AdWords system. It doesn't seem likely that Google (or any search engine) would be willing to limit or reduce this particular revenue stream.

A positive development in this area is the fact that trade mark owners have now available to them a 'method for wagging a preemptive strike'.31 That means that Google now enables trade mark proprietors to limit the purchase of their protected marks to some authorized entities. It seems that this is a way forward, since up until recently their only defence measure against their competitors obvious piggy-backing of their registered signs, was the submission of a complaint form to Google.

Furthermore, issues may arise in case where advertisers purchase keywords corresponding to famous brand names in order to trigger sites offering counterfeit goods of those brands, to be displayed as sponsored links.

It is established case law that the affixing of a trade mark onto counterfeit or unofficial products constitutes violation of trade mark rights. The offering for sale of non-genuine goods infringes the specific object of a trade mark, which is the indication of origin and the offer of a guarantee that all the goods or services which bear it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality. For that guarantee of origin, which constitutes the essential function of a trade mark, to be ensured, the proprietor must be protected against competitors wishing to take unfair advantage of the status and reputation of the trade mark by selling products illegally bearing it.32

Under the light of the above it would seem logical and reasonable that when counterfeit or unofficial products are offered for sale or advertised through the internet, the vendor of the said products would most probably be liable for trade mark infringement. However the situation it is not so straightforward as regards search engines. Could Google – for example - be held responsible for allowing advertisers to promote their counterfeit goods through the purchase of a trade mark as a key word? Or should Google be responsible to take measures to stop such infringements once it realizes that they are occurring?

All issues identified here above shall be thoroughly addressed further down under the light of the much anticipated ruling of the ECJ in the case widely known as the Google AdWords case.

III. 2. Keyword Advertising in the European Union

As a corollary of the sponsored links issue that was discussed here above, someone could logically pose the question of whether a sponsored link triggered by a keyword which comprises of a trade mark belonging to a third party, constitutes trade mark infringement on behalf of the search engine company.

This question should be answered under the light of what constitutes "use on the course of trade" in relation to goods or services, according to the respective legislation of the European Union.

The aforementioned question becomes of outmost importance, especially in the case of potential infringement under the double identity provision, since no further requirements need to be satisfied other than the said double identity one.33

The said double identity provisions are Article 5 (1) (a) of the European Trade Mark Directive (of both Directives 89/104 as well as 2008/95) and Article 9 (1) (a) of the European Trade Mark Regulation No 40/94. Directive 89/104 although repealed and replaced by Directive 2008/95 is still of essence and relevance since most of the cases referred either to national courts or to the ECJ are still assessed under its provisions, since they concern infringements occurring in the time period prior to its repeal.

According to these provisions a trade mark proprietor shall be entitled to prevent all third parties not having his or her consent from using in the course of trade any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered.

Likewise Article 5 (1) (b) of the Directive together with the likelihood of confusion provision of Article 9 (1) (b) of the Regulation state that the owner of a trade mark may prohibit the unapproved use by any third party in the course of trade of any sign where, because of this identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark.

The protection provided in Article 5 (1) (a) relating to identical trade marks and products or services is 'absolute' in the meaning that the owner of the trade mark does not need to show likelihood of confusion. In contrast 'likelihood of confusion' must be shown in situations under Article 5 (1) (b) where the 'double identity' between signs and products or services is not present but the signs, products or services are similar.

In any case in order for a trade mark proprietor to be successful under article 5 (1) (a) of the Trade Mark Directive there must be use of a sign by a third party, this use must be in the course of trade and without the consent of the trade mark proprietor, the sign must be identical to the trade mark, it must be in relation to goods or services which are identical to those for which the trade mark is registered and it must affect some of the functions of the trade mark. These were established in a number of cases reviewed by the European Court including the Arsenal case.34

Nevertheless up until recently a clear judicial approach to the above matter did not exist. As national courts in the European Union have tried to apply the relevant trademark provisions to keyword advertising cases they have produced different results.

Many identify as the reason behind this judicial uncertainty the fact that intellectual property is considered to be the least stable of all business assets:

Far more than any other business assets, intangible assets are constructed of legal rules that are subject to constant change; intellectual property's boundary lines are inherently uncertain and can shift from one judicial decision to the next and from one country to another. This stems from the desire of judges, legislators and lawyers to try and find an adequate balance between legitimate concerns of rightholders to be protected and those of the public to access and use the information contained in these assets.35

It is hereby also supported that intellectual property rights and especially trade mark protection are continuously evolving. One reason for this is the development of internet advertising models, since advertising is closely linked to the commercial development of the internet. The emergence of new online business models, systems and services has caused the simultaneous expansion of trade mark infringement claims.

As already mentioned the judicial treatment of these claims, has not been uniform, at least, throughout Europe. In Germany, several lower and higher regional courts have issued decisions without establishing any legal certainty.36

Namely in Germany the vast majority of the court rulings held that the usage of a third party's trade mark as a keyword amounts to trade mark infringement. However a 2008 decision from the OLG Frankfurt37 denied any trade mark infringement as the AdWord advertisements clearly were separated from the natural search results.

Similarly in France according to the vast majority of the court decisions users of keyword advertising should refrain from utilizing as keywords trade marks belonging to third parties. More specifically the French national courts, in cases such as Crrnh, Pierre Alexis T. v. Google France and others,38 as well as Amen v. Espace 2001 and Google,39 have never denied the violating nature of the use as a keyword of a protected trade mark.

Nevertheless the Strasbourg District Court identifying that the initial function of a trade mark is to distinguish a product or a service and to associate it to a specific origin has ruled that there exists no confusion since a sponsored link clearly mentions another trade mark proprietor.

The said Court based its rational upon a traditional concept of the likelihood of confusion and held that:

Considering the fact that sponsored links resulting from a search under the terms "Tryba" or "Triba" do not reproduce in any way the trade mark "Tryba", but clearly mention the corporate names K by K or Techni Windows which, as such, are not counter fating, as neither their title nor their description or URL address to which they point reproduce the trade mark "Tryba", the mere usage of this protected brand in keywords, which cannot be perceived by users, does not create any confusion in the latter's mind, who cannot be deceived as to the source of the products.40

Moreover, courts in the United Kingdom, had until recently, considered a relatively small number of keyword cases41. Nevertheless two English decisions, namely Reed v. Reed42 and Wilson v Yahoo! UK Ltd43 have determined the scenery in the UK and have caused the policy of Google regarding the UK and Ireland to change; more specifically on April 3, 2008, Google informed the United Kingdom and Irish users of its AdWords system that the rules governing its use were about to change in that the ban on companies to buy the right to use another's trade mark as a keyword to trigger their own advert, was going to be lifted.44

In the case of Reed v Reed, the defendant had purchased the keyword REED, a trade mark owned by the plaintiff, which triggered a pop-up advertisement for the defendant's webpage when entered into the search engine of Yahoo!. The court when addressing the issue of infringement under Article 5 (1) (b) of the Directive 89/104 held that:

The idea that a search under the name Reed would make anyone think there was a trade mark connection between a total jobs banner making no reference to the word ''Reed'' and Reed Employment is fanciful. No likelihood of confusion was established.45

Furthermore the court pointed out in dicta that "an invisible use of this sort is not use at all for the purposes of this trade mark legislation" 46, something which was later confirmed in Wilson v Yahoo. In this case the claimant brought proceedings against Yahoo! because when an internet user entered its registered trade mark MR. SPICY in the Yahoo! UK search engine it triggered the appearance of a sponsored advert for different websites. The court stressed out that a proprietor of a trade mark is not able to prohibit the use of its mark as keyword if the said use cannot affect his own interest as proprietor of the mark having regard to its functions.47

Although it seems to be somehow clear from the above mentioned decisions that English Courts have shared the view that using a trade mark as a keyword for the display of sponsored links does not infringe trade mark rights, nevertheless these two decisions do not provide significant guidance in deciding similar cases. The main reason for this is that both UK rulings expressed the above view in obiter dicta.

Therefore in the UK as well the need for more case law on the use of keyword advertising was, up until the recent past, great.

In addition in many European countries, such as the Scandinavian countries, although there exists a lively discussion on the subject, no significant court decision has been rendered.

In the midst of the above described uncertainty the decision of the ECJ in the so called Google AdWords Case shed some light in the previous unclear situation.

III. 3. Google AdWords Case: The ECJ's ruling

The Google AdWords case was in fact a hearing of three joined cases against Google by various trade mark owners who complained that their protected trade marks were being made available through the AdWords service.

More specifically, the first of the three cases concerned, Louis Vuitton Malletier SA (hereinafter referred to as "Vuitton") a manufacturer of luxury bags and other leather goods, the owner of the community trade mark "Vuitton" and of the French national trade marks "Louis Vuitton" and "LV'. Vuitton brought proceedings against Google on the grounds that Google offered advertisers the possibility of selecting not only keywords which corresponded to its trade marks, but also those keywords in combination with expressions indicating imitation, such as "imitation" and "copy".

In the second case C-237/08 Viaticum SA (hereinafter referred to as 'Viaticum'), the owner of specific French trade marks registered for travel-arrangement services and Luteciel SARL (hereinafter referred to as 'Lucetiel'), a provider of information – technology services to travel agencies who published and maintained Viaticum's web page, brought proceedings against Google due to the fact that the entry by internet users of their trade marks triggered the appearance of links to sites of their competitors as sponsored links.

Moreover the third French case concerned Mr. Thonet, the owner of the "Eurochallenges" trade mark, which was registered for matrimonial agency services and Centre national de recherché en relations humaines (CNRRH) SARL, (hereinafter referred to as "CNRRH"), a matrimonial agency which held a license, granted by Mr. Thonet, under the said trade mark. Mr. Thonet and CNRRH became aware that their trade mark when entered as a keyword into Google's search engine triggered the display of web pages of their competitors under the heading "sponsored links". Therefore they initiated court procedures against Google.

In all three cases mentioned above the French High Court, Cour de Cassation, referred questions to the ECJ for a preliminary ruling. Most of the questions referred to the ECJ are common in all three cases. One of the question asks in essence, whether Article 5 (1) (a) and (b) of Directive 89/104 (Directive 2008/95 was inapplicable to the proceedings) and Article 9 (1) (a) and (b) of Regulation No 40/94 are to be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit a third party from displaying of, on the basis of a keyword identical with, or similar to, that trade mark which that third party has, without the consent of the relevant proprietor, selected or stored in connection with an internet referencing service an advertisement for goods or services identical with, or similar to, those for which that trade mark is registered.

However, can the storage of a keyword by Google and the organization of the display of the advertiser's ad on the basis of the specific keyword be considered as a use in the course of trade?

The European Court had no problem whatsoever to state that the advertiser purchasing as a keyword a sign identical with a trade mark of a third party is using that sign in the course of trade and in the context of commercial activity with a view to economic advantage.

With regards to Google the ECJ commented that it is common ground that it is carrying out a commercial activity with a view to economic advantage when it stores as keywords, for certain of its clients, signs which are identical with trade marks and arranges for the display of ads on the basis of those keywords.48

...a referencing service provider operates 'in the course of trade when it permits advertisers to select, as keywords, signs identical with trade marks, stores those signs and displays its clients' ads on the basis thereof, it does not follow, however, from those factors that that service provider itself 'uses' those signs within the terms of Art.5 of Directive 89/104 and Art.9 of Regulation No 40/94.49

It becomes evident that the ECJ has drawn a distinctive line between Google and the advertisers, ruling that Google does not use keywords in the course of trade for the reason that it does not use the sign in its own commercial communication. Namely the keywords are used to trigger advertisements promoting the business activities of third parties (i.e. the advertisers) and not the economic undertaking of the Google search engine.

Moreover the ECJ ruled that use by advertisers of trade marks as keywords constitutes use 'in relation to goods or services', even if the advertiser does not make any reference whatsoever to the mark while attempting to promote its own products or services; use of the trade mark occurs merely by purchasing it as a keyword from the search engine. This is the so called 'invisible' use of the mark. The European Court has identified that there is a use of the protected sign in relation to the goods or services simply when a sign identical with a trade mark is selected as a keyword by a competitor of the proprietor of the mark with the aim of offering internet users an alternative to that proprietor's goods or services.50 Someone could argue at this point that this position of the European Court has post a quite unrestrained standard regarding the use of the protected sign in relation to goods or services. The above 'invisible use' seems risky due to the fact that it is not accompanied by a clear test and a solid or straightforward test.

According to ECJ's ruling whether the function of a trade mark is adversely affected when internet users are shown on the basis of a keyword identical with a protected mark, an advertisement belonging to a third party (a competitor), is something for the national courts to assess.

In the case where a third party's ad suggests that there is an economic link between that third party and the proprietor of the trade mark, the conclusion must be that there is an adverse effect on the function of indicating origin. In the case where the ad, while not suggesting the existence of an economic link, is vague to such an extent on the origin of the goods or services at issue that normally informed and reasonably attentive internet users are unable to determine, on the basis of the advertising link and the commercial message attached thereto, whether the advertiser is a third party vis – á – vis the proprietor of the trade mark or, on the contrary, economically linked to that proprietor, the conclusion must also be that there is an adverse effect on that function of the trade mark.51

I am of the view that the above position of the European Court is the starting point of all problems and insecurities caused by the said Google AdWords judgement. Not only ECJ throws the ball back to national courts, burdening them with the task of deciding of where there is adverse effect, but also fails to provide them with sufficient guidance. On the contrary someone could argue that it is a question of fact after all and hence something for the national courts to decide on the merit of each case. Nonetheless it is hereby suggested that clearer guidelines from the ECJ could render the courts of the member states with more assistance to reach their decisions.

The ECJ has utilized in its ruling words such as 'vague' which in my opinion fail to enlighten national judges for their exact concept and interpretation.

The situation remains the same with the advertising function of the protected trade mark as well. That means that the proprietors of trade marks, despite that they cannot forbid search engines to sell their protected signs as keywords, they may start proceedings against advertisers themselves in cases where likelihood of association can be demonstrated between the trade mark proprietor's webpage and the webpage of its competitor. Confusion usually will exist in cases where the common internet user is not able to understand whether the products displayed in the webpage of the advertiser originate from the actual owner of the protected sign or from a third party having an unconnected business. Again it is up to national courts to determine whether such a likelihood of confusion exists.

On the one hand this outcome is positive since the ECJ did not rule out the possibility of trade mark infringement. On the other hand it is now up to the national courts of each country to decide whether such an infringement has occurred.

The European Court however did not provide any further guidance on how national court should reach such conclusion, but this is something that shall be further analyzed below.

In addition the European Court considered the safe harbor provisions of the E-Commerce Directive,52 namely article 14 of the said Directive and examined whether a search engine can enjoy the immunity concerned when storing infringing information.

According to the said article 14(1) where an information society service is provided that consists of the storage of information provided by a recipient of the service, the service provider is not liable for the information stored at the request of a recipient of the service unless that service provider, after having become aware, because of information supplied by an injured party or otherwise, of the unlawful nature of those data or of activities of that recipient, fails to act expeditiously to remove or to disable access to those data.

Therefore the European Court had to answer the questions of whether a referencing service – such as Google AdWords – constitutes an information society service, weather such a referencing service actually 'stores' information supplied by the advertisers with the result that the said information is the subject of 'hosting' and finally whether such a referencing service provider cannot be held liable prior to its being informed of the unlawful conduct of its users.

Although the ECJ held that a referencing service provider has all the features of an information society service, for once more it left it to the national courts to decide on a case by case basis whether the role of Google or another search engine is neutral, in that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores.53 Only this way it can benefit from the above-mentioned exemption from liability.

The European Court in paragraph 119 of its decision justified its position by stating that the national court is best placed to be aware of the actual terms on which the service is supplied. It might be that national courts have greater proximity with the events of each case, hence they can better understand the circumstances and characteristics of each case, however a more straightforward and cleaner line should have been provided by the ECJ.

The European Court's judgment in the famous (or rather infamous) Google AdWords case, although it clarified that Google does not have any direct liability for trade mark infringement occurring from the use of its AdWords system, nevertheless it left the door open to much debate because it threw it back to the national courts to decide the issue of confusion, with respect to advertisers' liability, on a case by case basis. This together with other effects shall be discussed here below.

III. 4. The Impact of the Google AdWords Decision

The majority of the legal as well the business world support that the ECJ's ruling in the so called Google AdWords case did in fact shed some light on the issue of whether keyword advertising constitutes infringement of trade mark rights.54

While the said ruling did not answer all of the questions related to applying the Trade Mark Directive 89/104 as well as Regulation 40/94, to the issue of utilizing trade marks as keywords, it is an important start both in harmonizing the respective law among the various member states and in providing more certainty to search engines, trademark proprietors and advertises in the European Union.55

I am of the same opinion. As the analysis in paragraph III.2 here above has indicated the different national courts within the European Union have taken varying and different approaches in order to decide about keyword advertising and trade infringment issues. Therefore the said ruling in the Google AdWords case is able to provide national courts with some guidance as to how to handle and treat keyword cases.

It is a reality that the Google AdWords decision does not resolve all related issues. Yet it draws a clear line that the operator of an online search engine does not use the trade mark in the course of trade within the meaning of Article 5 of Trade Mark Directive 89/104 and Article 9 of Regulation No. 40/94, by either offering the mark for sale as a keyword or by arranging for and displaying advertisements based on the said keyword. Consequently this alone suffices to provide guidance to national courts regarding the primary liability of the operator of such search engines.

It is a fact that the ECJ has left it to the national courts to rule on a case by case basis and according to the facts of each case whether there will be a likelihood of confusion on the part of the internet user.

However it is clear that the ECJ's ruling indicates that as long as the use of a trade mark as a keyword does not confuse the average internet user of a connection between the trade mark proprietor and the advertiser, then trade marks rights are unlikely to be violated.

Furthermore many have commented that:

By reaching this decision the ECJ has attempted to balance the importance of protecting the rights of trademark owners against a desire not to over regulate the internet and to ensure diversity of consumer choice. 56

It is argued that it would be inappropriate or even impossible to over regulate the internet. Especially when in many instances trade marks are utilized without the occurrence of any infringement. Namely when someone writes an article or a review regarding a branded product it doesn't necessarily mean that he or she violates any trade mark right. In addition internet is a marketplace where products and services move freely, traders and consumers are able to easily sell or purchase merchandise and choice in the internet is extremely wide; thus a possible over regulation of the internet would be something against the whole purpose of it.

On the contrary for many the ECJ through its Google AdWords ruling managed to avoid some of the critical questions in a decision that, in fact, projects little new light on the multibillion dollars question: Is AdWording that involves marks as keywords legal in Europe?.57

The above view emerges from the fact that the ECJ held that the issue of confusion will be decided by national courts on a case by case basis:

The court practically throws back to national courts the most controversial and difficult question, precisely the issue in which they have been desperate for some more guidance. This is the place where the ECJ should have come up with some concrete instructions, but came up with a vague test of vagueness instead. 58

It is hereby submitted that the danger that entails this position of the European Court is that decisions of national courts are likely to remain largely unharmonious from jurisdiction to jurisdiction. Especially since the ECJ did not establish a firm test to help national courts decide when possible confusion exists.

It follows form the ECJ's that search engines which provide keyword advertising services, such as Google AdWords can now feel relieved since direct liability for trade mark violations will not arise out of the use of the AdWords system.

Overall this is good news for Google, which will continue to see rival companies trying to outbid each other for popular AdWords.59 This might be the case that Google shall continue profit form its AdWord service, since the ECJ held that it is not infringement a trade mark by simply allowing third parties to buy it as a keyword.

Nevertheless it is important to state here that the European court has also stated that, under the provisions of the E–Commerce Directive 2000/31/EC, in case that an internet referencing service provided becomes aware that an advertiser which has purchased a keyword is violating a trade mark belonging to a third party, is in fact required to act expeditiously to stop the infringement.

This alone suffices to comment that Google's victory is not so clear after all and does not constitute a blow for major brands.

On the other hand brand owners should not be feeling quite happy and satisfied with the ECJ's Google AdWords ruling. The reason for this is that trade mark owners shall be now required to start legal proceedings against their competitors themselves on a case by case basis. As a corollary these trade mark owners shall be burdened with increased litigation costs.

On the contrary, the Vice President of Louis Vuitton, Pierre Godé welcomed the decision by stating that 'it represents a critical step towards the clarification of the rules governing online advertising, of which Louis Vuitton Malletier is one of the foremost clients'.60 He continued commenting that as the world's leading luxury group, with more brands actively engaged with the internet than any other luxury company, Louis Vuitton is committed to eradicate illicit online practices and to promote a framework that fosters the continued growth of the digital economy.

In any case the line that was established in the said Google AdWords case, was supported by the subsequent decision of the ECJ in the Portakabin case.61

In this case the ECJ has again ruled that a trade mark proprietor is entitled to prohibit an advertiser from advertising on the basis of a keyword, identical or similar, to the predicted mark:

... use by an advertiser of a sign identical with, or similar to, a trade mark for an internet referencing service comes within Articles (1) of Directive 89/104 where that use does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the trade mark proprietor or from an undertaking economically linked to it or, on the contrary, originate from a third party. 62

Therefore the Court did not rule out the possibility of confusion; something that will depend on the manner in which the advertisement in question is presented and that is up to the national courts to assess. The ECJ in its Portakabin ruling repeated its Google AdWord case's reasoning, hence failing to determine which specific circumstances would possibly amount to "confusion". In paragraphs 34 and 35 of the said judgement it repeated the wording of its previous Google AdWord ruling and stated that it is up to national courts to decide whether the advertiser violates any trade mark rights.

I am of the view that the court by simply confirming its previous judgement did not succeed in providing any clear guidelines to national courts.

The opinion of Advocate General Niilo Jääskinen in the case of Interflora v Marks & Spencer63 attempted to shed more light into the whole matter since it offered a quite satisfactory analysis and examination of the whole matter.

First of all the Advocate General in the said opinion, provided a more clear interpretation of article 5 (1) (a) of Directive 89/104. It stated that a sign identical with a trade mark is used 'in relation to goods or services' within the meaning of the said Article 5 (1) (a), as well as of Article 9 (1) (a) of Regulation No 40/94 when it has been selected as a keyword in connection with an internet referencing service without the consent of the trade mark proprietor, and the display of ads is organised on the basis of the keyword.

It continued stating that the proprietor of a trade mark is entitled to prohibit such conduct under the abovementioned circumstances, in the case where the ad does not enable an average internet user, or enables the said user only with difficulty, to ascertain whether the goods or services referred to in the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or from a third party. It concluded by commenting that an error concerning the origin of goods or services arises when the competitor's sponsored link is liable to lead some members of the public to believe that the competitor is a member of the trade mark proprietor's commercial network when it is not.

As a result of this the trade mark proprietor has the right to prohibit the use of the keyword in advertising by the competitor in question.64

Furthermore Advocate General Jääskinen commented that he does not thing that the Court has meant that the role of all trade mark functions would be restricted to the application of Article 5 (1) (a) of Directive 89/104. In case of double identity of signs and goods or services all or some of the functions are relevant for the application of Article 5 (2).65 Article 5 (2) concerns primarily signs with repudiation and protects trade mark functions other than the origin function. For example, Article 5 (2) is able to protect the advertising and investment function of a trade mark.

It is also important that he identified a number of circumstances that confusion would be likely to occur. Namely: the case of a trade mark such as INERFLORA which identifies a well-known commercial network of independent enterprises providing a special uniform service, i.e. delivery of flowers according to a standard procedure, the display of the name of another enterprise in a sponsored link is in my opinion likely to create the impression that the enterprise mentioned in the ad belongs to the network of undertakings identified by that trade mark.66

This essay supports the above view. Especially when famous trade marks are involved, which are highly distinctive, the use of an identical sign as a keyword by a third person could be considered as indicating a link between them.

I am of the view that the said opinion was of quite significance as it attempts to clarify the whole situation.

However the decision of the European Court in the relevant Interflora case67 of the 22nd of September 2011 did not quite followed the Advocate General's opinion which was focused on the special circumstances of the case.

It held that the proprietor of a trademark is entitled to prevent a competitor from advertising – on the basis of a keyword which is identical with the relevant trade mark and which has been selected in an internet referencing service by the competitor without the consent of the proprietor – goods or services identical with those for which the said mark is registered, where that use is liable to have an adverse effect on one of the functions of the trade mark. Thereafter the ECJ went further than its previous decisions and elaborated on the principle of the trade mark functions and especially on the investment function of a trade mark. Namely it stated that

When the use by a third party, such as a competitor of the trade mark proprietor, of a sign identical with the trade mark in relation to goods or services identical with those for which the mark is registered substantially interferes with the proprietor's use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty, the third party's use must be regarded as adversely affecting the trade mark's investment function. 68

Besides, the ECJ highlighted a great number of factors that the national court should consider when applying the relevant provisions and provided specific defences. The Court held that the fact that some internet users may have had difficulty grasping that the service provided by M & S is independent from that of Interflora is not a sufficient basis for a finding that the function of indicating origin has been adversely affected69 and continued by stating that the knowledge of the internet user of the relevant market will be considered.

Therefore the use of a competitor's trade name could only be prevented if reasonably informed consumers were likely to be confused. Hence it seems that the said Interflora ruling is a setback for brand owners.

It can be argued that the ECJ's Interflora decision left both sides scratching their heads. This case as well, failed to establish clear and easy rules as to the admissibility of keyword advertising relating to protected trade names. Yet it is clear that keyword advertising, even when using a trade mark with a repudiation is generally admissible, while the use of trade marks as keywords by competitors does not automatically give rise to infringement.

Nevertheless we have to wait and see how the High Court of England and Wales will interpret the ruling of the ECJ and which party will emerge victorious when the case is finally decided by the English Court.

It follows from the above analysis that perhaps the Google AdWords decision is not in reality the panacea that was expected by some to be. It is true that it provides some clarification, namely in regards Google's liability (or any other search engine's liability) when selling keywords and when operating its keyword advertising system, nonetheless in my opinion the said judgment does not offer satisfactory guidance. Many issues have remained unsettled. More specifically the issues concerning secondary liability for trade mark infringement and violations regarding unfair competition are still unresolved.

Therefore someone could pose the question here of what would be the ECJ's position if the cause of action was not trade mark law but rather something completely different, such as unfair competition. In case that an advertiser purchases as keywords the registered trade marks of a direct competitor, couldn't Google for example be held secondary liable for its contribution to unfair competition?

Consequently one has to wait and see how national courts shall start to treat the said matters, before having a completed view.


30 Case C-487/07 L' Oreal SA v Bellure NV [2009] E.C.R. I-0000, [2010] R.P.C. 1, par. 57, 58.

31 M Hammings Kent, 'Google Allows Trademark Owners to Block Purchase of their Marks as Adwords', August 8, 2011 available at (accessed 05 September 2011).

32 Case C-206/01, Arsenal Football Club v Mathew Reed, no.18 above, paragraph 50.

33 N Shemtov, ''Searching for the Right Balance: Google, Keywords, Advertising and Trade Mark Use'' [2008] EurIntellProprev 470, p. 471.

34 Case C-206/01, Arsenal Football Club v Mathew Reed, no.18 above

35 P Gillieron, 'Online advertising Business models and Distinctive Signs – Should one rethink the concept of confusion?' [2008] IIC 39(6), 688 – 706.

36 N Lehmann, 'Clear Guidelines Needed for Keyword Advertising', ManagingIntellProp Apr. [2008] at p.4, available at (accessed on the 13th of August 2011).

37 February 26, 2008, Az 6 W 17/08.

38 Crrnh, Pierre Alexis T. v. Google France and others (Nanterre District Court, December 12, 2004, confirmed by Versailles Court of Appeal, March 23, 2006).

39 Amen v. Espace 2001 and Google (June 24, 2005).

40 Atrya v. Google France and K par K/Techni Feneres, Strasbourg District Court, July 20, 2007.

41 D Meale, 'The Online Advertising Free-riding Free-for-all' [2008] 3 J IntellProp L & Prac 779.

42 Reed Executive Plc v Reed Business Information Ltd [2004] EWCA Civ 159; [2004] E.T.M.R. 56 CA [Civ Div].

43Wilson v Yahoo! UK Ltd, [2008] EWHC 361 (Ch); [2008] E.T.M.R. 33 (Ch D).

44 N Shemtov, no. 32 above.

45 Reed Executive Plc v Reed Business Information Ltd, no 41 above at paragraph 140.

46 Ibid at paragraph 142.

47 Wilson v Yahoo! UK Ltd, no.42 above at paragraph 65.

48 Joined cases C-236/08, C-237/08 and C-238/08, no 22 above at paragraph 53.

49 Ibid, at paragraph 55.

50 Ibid, at paragraph 69.

51 Ibid paragraphs 89 and 90.

52 Directive 2000/31 of the European Parliament and the Council of 8 June 2000 on certain aspects of information society, in particular electronic commerce, in the Internal Market (Directive on electronic commerce), OJ L 178/1, 17.02.2000.

53 Joined cases C-236/08, C-237/08 and C-238/08, no 22 above at paragraph 114.

54 See foe example M Colchester, 'AdWord Victory Means Pain for Brand Owners' March 23, 2010, available at

55 T Smith 'Googling a Trademark: A comparative look at keyword use in internet advertising' [2010] TILR 46:231, at p. 233.

56 P Kenyon, 'Are Google AdWords Fairgame?' available at (accessed on 16th August 2011).

57 Z Efroni, 'The ECJ's Ruling on Google AdWords' available at (accessed on 16th August 2011).

58 Ibid.

59 M Colchester, No. 54 above.

60 See

61 Case C-558/08, Portakabin Ltd, Portakabin BV v Primakabin BV, 8 July 2010.

62 Ibid, paragraph 68.

63 Case C-323/09, Interflora Inc, Interflora British Unit v Marks & Spencer Plc, Flowers Direct Online Limited, Opinion of Advocate General Jääskinen, delivered on 24 March 2011.

64 Ibid, paragraph 49.

65 Ibid, paragraph 59.

66 Ibid, paragraph 46.

67 Case C-323/09 Interflora Inc, Interflora British Unit v Marks & Spencer Plc, Flowers Direct Online Limited, Judgment of the Court (First Chamber) of 22 September 2011.

68 Ibid, paragraph 62.

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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