UK: Is Your Brand Safe In Cyberspace?

Last Updated: 8 November 2010
Article by Sarah Hadland

If you look at the internet you might well think that it is a rights-free zone where intellectual property law does not apply. The truth of the matter is that rights owners and the courts are struggling to keep up with the pace of technology says Sarah Hadland, Intellectual Property partner at Boyes Turner.

On-line auction sites in particular are full of counterfeit branded goods that are peddled as authentic to unsuspecting buyers, and a bargain to others. Social media and file sharing has had a similar effect on the music and publishing industries and as a result rights holders continue to find themselves losing out on millions of pounds of revenue.

Over the last few years, rights holders have tried to tame the internet and enforce their rights. The most high profile cases have been those where individuals, including children, have been pursued by record companies for copyright infringement for downloading songs without permission. Only recently, a group called Operation Payback which believes that ideas, and the music and literature which results from them, should be freely available, hacked the website of ACS:Law (which handles a high volume of piracy cases), leaking the personal data of thousands of ISP customers.

Other high-profile, although less controversial, actions by brand owners have involved eBay and Google, in particular Google AdWords.

eBay – a vehicle for selling fake goods?

In May 2009, litigation between eBay and L'Oreal concerning the sale of fake L'Oreal perfumes on eBay resulted in a ruling that eBay is simply the host of the site and not liable for any infringing goods sold on it. Further, the Court held that eBay already takes adequate steps to help prevent the sale of infringing or counterfeit goods. For example, brand owners can sign up to its VeRo programme which helps those wishing to prevent the advertisement on eBay of goods which infringe their rights, and track down those responsible. Having lost a similar case in France against LVMH, this ruling was important for eBay.

'key words' and 'adwords' – a growing problem for brand owners

The other issue which was dealt with in the L'Oreal case was the use of keywords by eBay. EBay purchases keywords consisting of various trade marks on search engines such as Google and Yahoo. It selects the keywords on the basis of the activity on its site and their purpose is to cause a sponsored link to eBay to be displayed when a user types in the keyword. One of the keywords referred to in the case, for example, was "Shu Uemura". L'Oreal claimed that eBay's use of its trade marks as keywords infringed those trade marks.

The UK Court considered that a Europe-wide approach should be taken to the use of keywords and therefore referred the matter to the European Court of Justice (now the Court of Justice of the European Union - CJEU). The ECJ has not yet made a ruling but in light of recent rulings, it is likely that the court will conclude that the mere use of trade marks as keywords does not infringe.

Google AdWords is Google's main income generator. Google "sells" keywords to companies so that when a user types those words into the search engine, the company's advert is listed as a sponsored link to the right of the search results page. Advertisers often use the brand names of their better known competitors in their keywords. This enables their website advertisement to appear in the list of sponsored links, preferably at the top of the list. The brand owner's website may appear lower down the list or only in the general search results.

So, what does constitute an infringement?

Trade mark proprietors complain that such use of their trade marks constitutes infringement. This was claimed by Louis Vuitton in the case it brought against Google for allowing advertisers to purchase LV's trade marks, such as Dior, for use as adwords. The litigation resulted in a referral to the ECJ which made a ruling earlier this year. The court ruled that by merely allowing advertisers to purchase key-words corresponding to a third party's registered trade marks, Google was not infringing those trade marks. However, infringement may occur where the consumer is unable to distinguish the advertiser's goods from those of the brand owner.

A similar claim was brought against an advertiser by Porta Kabin Ltd. It complained that a company called Prima Kabin BV was using the trade mark PORTAKABIN and various mis-spellings of it, as key words, and that this infringed its trade mark rights. Again, the matter was referred to the ECJ which handed down its ruling in July of this year, upholding the Louis Vuitton v Google ruling.

What does this mean for brand owners?

As a result of the ECJ's decision in the Louis Vuitton case, Google has changed its policy. Originally, when the search engine received a complaint from a brand owner that its trade mark was being used as an ad word, it would stop the use by the third party. Now, it essentially ignores complaints about the purchase by third parties, in Europe, of trade marks as ad words unless it is alleged that that the sponsored link which appears as a result of the use of the trade mark as a key-word makes it difficult for the internet user to easily distinguish the advertiser's services or goods from those of the trade mark proprietor. In these cases Google will investigate the complaint and if upheld, will remove the advert.

With the recent cases against eBay and Google, the way in which intellectual property law applies to the internet is becoming clearer. In some areas, such as the use of adwords, the ECJ rulings favour the internet host rather than the brand owner. In others, such as the illegal downloading of music, the application of the law favours the rights owner. The difficulty here is in tracking the illegal users. No doubt there will be an increasing amount of litigation as the internet, which is already an important platform for trade, continues to develop.

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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