UK: Keywords, Yahoo And The Indigestible Effect On Mr. Spicy

Last Updated: 27 June 2008
Article by Michael Gardner


Mr Wilson is a mobile caterer who runs a business selling, inter alia, spicy foods from a catering unit. He uses the trading name MR SPICY. On 5 December 2001, Mr Wilson filed an application to register MR SPICY as a Community trade mark. His mark achieved registration on 4 February 2003.

The mark was registered in Class 29 for meat, fish, poultry and game, in Class 30 for sauces, spices and in Class 42 for providing food and drink including restaurant and bar services.

Mr Wilson was aggrieved to discover from making internet searches via the Yahoo! Search engine, that when he keyed the words "Mr Spicy" into his web browser, the results for the search showed a number of "sponsored links" for other parties such as Sainsburys, the supermarket retailer and Pricegrabber.

He decided to take legal action to protect his trade mark and eventually ended up suing Yahoo! and Overture Services Ltd, the provider of Yahoo!'s search engine technology ("the Mr Spicy case").1

The result of the Mr Spicy case was announced in the High Court on 25 February 2008. The judgment records that the Defendants successfully killed off Mr Wilson's case at the summary judgment stage leaving him with a hefty bill for legal costs.

However, Mr Wilson's demise did not go unnoticed in the internet industry. Shortly afterwards, Google, the famous internet search engine company, conducted a legal review of its "AdWords" policy. No doubt influenced by some of the findings of the judge in the Mr Spicy case, Google announced that it was changing its policy on sponsored keyword searching. This policy change has not been without controversy and threatens to lead to a spurt of law suits in the UK against Google itself and advertisers who use its "AdWords" services.

So Mr Wilson may have unwittingly set off a chain of events which could have significant ramifications for trade mark law in Europe.

This handout examines the state of trade mark law as it impacts on the use of so-called "AdWords". First, it is necessary to provide a brief explanation of what AdWords are and how they work.

1. Google AdWords – What Are They And How Do They Work?

When a Google search is made using a search term entered by the searcher, it produces two sets of search results – "normal" search results and "sponsored" search results. This handout concerns the latter.

"Sponsored" search results are generated for advertisers who pay Google for the privilege. They can "bid" a cost per click ("CPC") against certain keyword search terms called "AdWords". Based on the amount of money that the advertiser is prepared to bid, and the characteristics of the advertiser's website, a search result under the "sponsored links" column will be produced. This will be in the form of an advert for a website and link to that site.

Broadly speaking, Google offers four types of "AdWords" to help advertisers target their advertising campaigns via Google. These can be used in combination or separately.

The types of search results are as follows:

"Broad" Match: This is the default option for AdWords. Under this type of search, the Google AdWords system automatically generates sponsored search results based on what it determines to be relevant variations of advertisers' keywords. Keyword variations can include synonyms, singular/plural forms, relevant variants of the keywords and phrases containing the chosen keywords. So even if an advertiser has not chosen particular keywords as AdWords, an advert for that advertiser's website can still be generated.

Google gives the example of the broad-matched keyword as "web hosting". According to Google's website, if that term is chosen, it may generate search results for "web hosting company" or "webhost". But because Google's technology continually monitors various factors as well as the CPC bid, the search results generated by Broad match queries will themselves be subject to change.

"Phrase" Match: Google gives the example as "tennis shoes". With Phrase match searching, the advert would be eligible to appear when a user searches for the phrase tennis shoes as well as searches for that phrase and other terms. For example, the advert could appear for the query "red tennis shoes" but not for "shoes for tennis", "tennis shoe" or "tennis sneakers".

Exact Match: As its name suggests, Exact match for AdWords restricts search results for specific phrases without additions. As per Google's own example, "tennis shoes" with Exact match would not produce a result for the query "red tennis shoes" or "tennis shoe".

Negative Match: This enables advertisers to reduce results which they are unlikely to need and which wouldn't be targeted correctly. If the keyword is "tennis shoes" and a negative keyword for say "red" is selected, the advertiser's website will not be advertised when a user searches on "red tennis shoes".

Users of Google AdWords can use an agent to take care of their AdWords needs or log on and do it themselves.

AdWords are a major source of Google's revenues. But the use of AdWords which correspond with trade marks has been a source of contention. Many brand owners have objected to the use of their trade marks in this way and Google and other search engines who use similar systems have been on the receiving end of a number of law suits in various jurisdictions.

2. What Has Been Happening In Other Jurisdictions?

The US

As usual, the United States has been leading the way with internet related law suits. However, to date there has been no clear winner.

A number of trade mark owners have struggled to win cases against advertisers using their trade marks as Google AdWords. Similarly, Google has been able to fight off some legal challenges and others have been settled. So the situation is by no means clear cut.

More recently, in the Virginia courts, insurance company Geico failed in its claim against Google. However, in the Florida courts the decision of Orion Bancorp v Orion Finance has produced an interesting result. The Court in that case held in favour of the trade mark owner and imposed on the Defendant an injunction which covered the defendant's use of Google AdWords. One of the terms of the injunction imposed by the Court was that the Defendant was prohibited:

"from purchasing or using any form of advertising including keywords or "AdWords" in internet advertising containing any mark incorporating Plaintiff's Mark, or any confusingly similar mark, and shall, when purchasing internet advertising using keywords, AdWords or the like, require the activation of the term "ORION" as negative keywords or negative AdWords in any internet advertising purchased or used..."

It is fair to say, however, that US trade mark law is different to the law in Europe so these cases, whilst interesting, are not determinative of how the courts here would see similar cases.


Again, as with the US situation, the messages coming out of the German court have been mixed.

In 2000, the Hamburg District Court found in favour of Estée Lauder, Clinique and other fragrance brand owners in a case brought against some fragrance retailers and the internet search engine Excite.2

The Court held that the commercialisation of search terms corresponding to the Claimants' trade marks amounted to trade mark infringement and unfair competition. The Court's rationale for holding that the search engine Excite was also liable was:

"In the opinion of the Court, the view that the second defendant has acted culpably ensues from the fact that by its "dealing" in keyword buys the second defendant first presented the possibility for the first defendant to implement the disputed anti-competitive channeling of the inquiries of persons interested in the brand and products of all four claimants and the diverting and directing of such inquiries to the homepages of the "virtual" perfumeries of the first defendant. By so doing, the second defendant has not only offered a platform for the advertising of another , but has itself actively collaborated therein by virtue of the configuration of its own search engine..."

However, in the 2004 case of Metaspinner Media v Google, a claim against Google for infringement based around use of AdWords was dismissed by the court.

In 2006, the German Bundesgeerichsthof ruled that the use of metatags corresponding to trade marks was infringement.3 Although not strictly an "AdWords" case, this decision is nevertheless significant as there are certain parallels between the use of metatags by advertisers and the use by them of paid for keywords or "AdWords".

Further decisions are expected this year in Germany on the AdWords issue.


France has seen a significant number of cases reaching judicial decisions. Almost all of these have gone in favour of the trade mark owners and against Google in particular.

Among the successes for trade mark holders to date have been the decisions in Viaticum/ Luteciel,4 Meridien Hotels, Louis Vuitton and TMD. In the first three of those cases Google unsuccessfully took the cases to appeal and suffered even worse results – having its financial penalty increased. A solitary success for Google has been in the Court in Nanterre where the Claimant Atrya's claim for infringement was dismissed.

However, the French Courts have now made references to the European Court of Justice in, inter alia, the Louis Vuitton case. This means that a ruling of pan-EU significance can be expected in due course.


In January 2008, the online auction site eBay was successfully sued in Belgium by brand owner Ralph Lauren for using Google AdWords to help promote the eBay website. The Court held that its use of the AdWords took unfair advantage of the reputation of the Ralph Lauren trade marks.5

Though not a judgment against Google, this ruling shows the willingness once again of European Courts to take a tough line with internet advertisers.

3. Mr Spicy And The Position In The UK

Given that EU trade mark law is supposed to be harmonized, it is deeply unsatisfactory that the position vis-à-vis Google AdWords in the UK remains anything but certain.

Indeed, it was the recent ruling of the High Court in the Mr Spicy case which appears to have contributed to Google's decision to change its AdWords policy in the UK. Yet this is a different policy to that in force across the channel in France. This makes no sense.

The Background

Back in 2000, the High Court (albeit only in a Master's judgment) held that passing off had occurred where a defendant had used metatags corresponding to the claimant's trade marks when promoting its website.6

However, doubts were expressed about this decision when the Court of Appeal delivered its judgment in Reed Executive plc v Reed Business Information Ltd.7

As found by the Court of Appeal, the Reed case concerned s10(2) of the Trade Marks Act 1994 (i.e. the use of "similar" signs to the claimant's trade mark rather than s10(1) – use of identical signs). This meant that it was necessary to find a likelihood of confusion present in order to establish liability. The Court of Appeal held that there was no such likelihood of confusion. However, in giving judgment, the lead judge, Jacob LJ, made some interesting (albeit obiter) observations on whether or not it was possible for the use of sponsored search terms8 or metatags to amount to infringement.

In particular, Jacob LJ appeared to dismiss the concept of "initial interest confusion", a concept currently accepted in US law at present. He clearly did not think it was enough that a keyword producing a banner advert would be enough to confuse anyone if the resulting advert did not itself make any visible reference to the trade mark. It seems his view was that Infringement (at least for s10(2) or passing off purposes) would depend on whether the searcher then clicked through to the sponsored web site and was confused by what he saw once on that site.

No doubt Google and its advertisers will draw comfort from what he said at paragraph 140 of his judgment:

"The web using member of the public knows that all sorts of banners appear when he or she does a search and they are or may be triggered by something in the search. He or she also knows that searches produce fuzzy results – results with much rubbish thrown in. The idea that a search under the name Reed would make anyone think there was a trade connection between a...banner making no reference to the [trade mark] is fanciful..."

However, that the position is still not fully decided is clear from paragraph 142 where Jacob LJ had this to say:

"If this had been an Article 5.1(a)9 case then the position might have been different. For then there would have been no requirement to prove a likelihood of confusion. The question would appear to turn on whether the use of the word "Reed" by Yahoo at the instance of RBI properly amounted to a "use in the course of trade" as to which, as I say, I reserve my opinion. It may be that an invisible use of this sort is not use at all for the purposes of this trade mark legislation – the computers who "read" sets of letters merely "look for" patterns of 0s and 1s – there is no meaning being conveyed to anyone – no "sign".

As far as metatags and trade mark infringement are concerned, Jacob LJ also reserved his opinion on whether such use could be infringing.10

So although nothing was irrevocably decided in Reed that would prevent a trade mark holder taking on a Google AdWords infringer or Google itself, it is fair to say that the judgment isn't terribly encouraging.

However, worse was to follow for would-be AdWords challengers when the High Court gave its judgment in the Mr Spicy case on 25 February 2008.11

The Mr Spicy Case

As has been said, the Claimant, Mr Wilson operated a mobile catering business which included, inter alia, the sale of spicy foods. He had registered a Community trade mark (CTM) for the mark MR SPICY in 2003 in classes 29, 30 and 42.

He was concerned to note from conducting internet searches via Yahoo! that when he keyed in "Mr Spicy" as a search term, the sponsored results which showed up were for companies such as Sainsburys and Pricegrabber which had nothing to do with him. He initiated legal action and eventually ended up suing Yahoo! for infringement of his CTM.

Yahoo! applied to strike out Mr Wilson's claim and asked for summary judgment.

The judge, Mr Justice Morgan agreed with Yahoo! and dismissed Mr Wilson's claim.

Crucially, it was established on the facts that neither Sainsburys nor Pricegrabber had registered the phrase Mr Spicy as an Adword. Rather, the evidence before the Court convinced the judge that search results showing adverts for them against the search term Mr Spicy were simply the result of Yahoo! "broad matching" the term "spicy" which had been registered by them. The judge was satisfied that there was no use of the term Mr Spicy as a trade mark, merely the use of the generic, descriptive term "spicy".

Clearly then, the Judge did not believe that he was dealing with a meritorious claim. However, in finding for Yahoo! he did make some rulings of wider importance (i.e. which did not depend on the finding of fact that no one had actually bought the Adword "Mr Spicy").

In particular, he held as follows:

  1. When the search term "Mr Spicy" is put into the web browser by someone carrying out a search, they are the only person who is using the trade mark. The response of the search engine to the use of the trade mark by the browser is not use of the trade mark by the Defendants.12

  2. The offer by a search engine to provide a service whereby third party advertisements will come up in response to particular keywords is not use of a trade mark "in relation to goods or services" and so can't be trade mark infringement.

It seems to be the case that in Mr Spicy the Court has dismissed the notion that a service akin to Google AdWords can result in trade mark infringement by an advertiser or the search engine.

However, although described by the solicitors for Yahoo! as a "landmark" decision, the Mr Spicy judgment is certainly not authority for the proposition that no one can take on an advertiser or search engine in relation to the use of AdWords corresponding to a registered trade mark. There are many features of the Mr Spicy case that make it a very poor test case and readily distinguishable from other scenarios.

First, Mr Spicy was only a summary judgment / strike out application at first instance. It does not bind other High Court judges.

Secondly, the Claimant was a litigant-in-person who represented himself. Perhaps as a result, there was virtually no deeper discussion of the facts and the law applicable to AdWords. For example there is no attempt to consider how the Courts in other jurisdictions have approached the matter. Whilst not binding on an English Court, it is surely of some relevance that in Europe – where trade mark law is supposed to be harmonised with UK law – judges have repeatedly found against search engines over "AdWords".

Thirdly (and importantly) in Mr Spicy, the judge was satisfied on the evidence that no one concerned had actually made use of the term MR SPICY as an Adword. Rather, the generic term "spicy" had been used. Although in view of his conclusion as to who "uses" a trade mark in these circumstances, this wasn't critical to his decision, it must have played an important part in influencing him. Moreover, the trade mark "MR SPICY" is itself partially descriptive anyway. There are many other trade marks where there could be "broad matching" of descriptive elements of the marks as had happened in Mr Spicy.

Fourthly, because Mr Wilson's trade mark was not a mark "with a reputation" it was not open to him to argue that the Defendants were taking "unfair advantage" of his trade mark. So Mr Spicy has no application to a case brought under Article 9(1)(c) of Council Regulation 40/94/EC ("the CTM Regulation") or s10(3) of the Trade Marks Act 1994. This is important because an attack under those provisions might be more appropriate than an attack on the identical sign/ identical mark provisions.

All in all then, whilst the outcome of the Mr Spicy case may have contributed to Google changing its policy on AdWords, the way remains open to other trade mark holders to take action against advertisers and the search engines themselves. Indeed, legal action has already been taken in the UK against advertisers for misusing AdWords.

4. What Happens Next In The UK?

There is a lot of discontent among trade mark holders at present who believe that their trade marks are being unfairly exploited by commercial rivals using AdWords. They are also angry that Google is making money from the use as they see it of their trade marks and the goodwill attached to them.

It is possible to see much stronger legal cases arising from AdWords scenarios than was the case with Mr Spicy.

Suppose that the well known online travel agent Expedia were to notice that a rival travel agent had registered Expedia and the misspellings Expeedia and Expidia as Google AdWords so as to produce sponsored search results for their website.

Expedia is registered as a CTM. Under EU trade mark law, "use" of a trade mark includes use in relation to advertising. It seems to us that it must be arguable that by paying Google specifically for the right to use the term "Expedia" - which is a made up word - so as to draw consumers to their advertisements, the defendant advertisers would be using a sign identical to the trade mark in relation to identical services to those for which the mark is registered. This would be infringement under Article 9(1)(a) of the CTM Regulation. The use of misspellings would result in the use of confusingly similar signs to the registered trade mark and would infringe under Article 9(1)(b).

Further, given that Expedia is a mark with a reputation, there is the possibility that it could cite Article 9(1)(c) and claim that the use being made by the advertiser is without due cause and takes unfair advantage of its mark or is detrimental to its distinctive character or repute.13

What of Google's position in all this?

It seems to us that Google's liability could be as a joint tortfeasor for helping, procuring and assisting in the acts of infringement by the advertiser.14 However, it might also be argued that Google is infringing in its own right under Article 9(1)(c) of the CTM Regulation by making money from the commercialisation of terms corresponding to trade marks. Google would have potential arguments in defence to a stand alone case of this type, however. For instance, it might argue that its use of the marks was not "without due cause" given the important function it performs by enabling people to conduct research and information gathering over the internet.

It remains to be seen whether anyone will attempt to take on Google in the UK or whether any other advertisers using AdWords will be sued.


However, whilst there might be cases which look reasonably good (such as the Expedia example referred to above), there are many scenarios where the position would be more complicated. The following are some obvious examples:

  1. advertisement by retailers selling lawful parallel imports of trade marked goods. Under EU law, they are entitled to advertise those goods for sale in the normal course of business provided they do not falsely create the impression that they are official or approved retailers.15 How could use of AdWords for this purpose be infringing use?

  2. advertisement of counterfeit or illegal parallel imports of trade marked goods. The advertiser would be infringing by advertising for sale counterfeit goods. But how would Google be expected to know the status of the goods being advertised are at the moment the AdWords are being used?

  3. trade mark law does not prohibit use of words as such, only words where they are registered as trade marks for particular goods or services. Google may be entitled to allow AdWords to be used for advertising some types of businesses but not others. If so, how is that to be achieved?

  4. registered trade marks may incorporate generic terms e.g. SKY HOLIDAYS. In these cases, where a consumer searches for SKY HOLIDAYS, the use of the broad match Adword "holidays" may throw up adverts for competitors in the sponsored links section. However, in such a situation can it really be said that Google or the advertiser are "using" the trade mark?

  5. trade mark law allows some uses of trade marks provided the use is in accordance with honest practices (e.g. s11(2)(b) of the TMA). A price comparison website might argue that it is entitled to use AdWords corresponding to the brands of goods or services which are among those it is comparing prices for.

So as these examples show, there are likely to be numerous different scenarios in which AdWords corresponding to trade marks can be used. Also, "broad matching" can throw up difficult issues. It is therefore hard to see how a "one size fits all" law applicable to the use of Google AdWords can be imposed. The ECJ may well be able to help (or hinder!) with points of principle (e.g. what constitutes "use" of a trade mark in the context of AdWords) but it will probably still be for national courts to decide the particular facts of each case.


Google and other search engines are making huge sums of money from their AdWords services. The expansion of AdWords to include hitherto prohibited terms means that Google can make even more money out of the service – arguably at the expense of trade mark owners. Whilst Google will argue that it's actions help consumers and internet users, the trade mark owners would argue to the contrary.

The legal position remains uncertain – not just in the UK. There is clearly a pressing need for clarification of the law. Trade mark law should be harmonised across the EEA. There should not be differences in how the courts approach infringement cases involving AdWords in different member states of the EU. The current situation is a lottery.

It is to be hoped that the references to the ECJ will help clarify the law. However, as noted above, given that there are so many scenarios and complications, it seems unlikely that a blanket decision will be made that will at a stroke make the situation clear for all concerned.

One thing is certain. The Mr Spicy case and the change of Google policy that seems to have resulted from it will not be the last words on this subject.


1. Victor Andrew Wilson v Yahoo! UK Ltd & Anor [2008] EWHC 361 (Ch)

2. Estée Lauder Cosmetics Ltd & Ors v Fragrance Counter Inc [2000] E.T.M.R 843

3. Impuls Medienmarketing GmbH's Application [2007] E.T.M.R 46

4. Viaticum, Luteciel v Google France [2004] E.T.M.R 63

5. report in IP Newsletter April 2008 Vol 31 No.4

6. Road Tech Computer Systems Ltd v Mandata (Management and Data Services) Ltd [2000] E.T.M.R 970

7. [2004] EWCA Civ 159

8. strictly speaking, the judge judgment referred to "banner" adverts but the analogy with sponsored links/ AdWords is very close.

9. corresponding to s10(1) of the Trade Marks Act 1994 – use of an identical sign to the trade mark in relation to identical goods or services to those for which the mark is registered

10. See paras 148 and 149 of the judgment

11. [2008] EWHC 361 (Ch)

12. this contrasts starkly with the French Court's ruling in Viaticum where it stated "it is not the use of the trade mark in a search sent to the search engine that is unlawful, but the commercial use being made of it by its advertising services for the benefit of third parties".

13. The "unfair advantage" ground of infringement was successfully argued by Ralph Lauren in its case against eBay in Belgium earlier this year.

14. MCA Records Inc v Charly Records Ltd No. 5 [2001] E.W.C.A Civ 1441

15. Parfums Christian Dior SA v Evora SA [1998] R.P.C. 166

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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