Court of Justice of the European Union: Liability of advertising keyword providers – Liability of purchasers of keywords (Decision [Grand Chamber] of March 23, 2010 – Joined Cases C-236/08, 237/08 and 238/08 – Google France SARL & Google Inc. v Louis Vuitton Malletier SA, Google France SARL v Viaticum SA & Luteciel SARL and Google France SARL v Centre national de recherche en relations humaines SARL, Pierre-Alexis Thonet, Bruno Raboin & Tiger SARL – GOOGLE ADWORDS)

On March 23, 2010, the ECJ rendered its judgment in Joined Cases C-236, 237 & 238/08 – the so-called GOOGLE ADWORD cases. The preliminary ruling was requested by the French Cour de cassation (/Supreme Court), where judgments finding Google liable for trademark infringement and unfair competition were pending. At issue is Google’s AdWords program: Google allows parties to acquire or bid for “keywords” which, when entered by Internet users in the Google search bar will trigger paid advertisement – so-called “sponsored links” – appearing above or alongside the “natural” search results. When the “sponsored link” is clicked, the user will arrive at the website of the purchaser of the keyword. The program is of great economic significance as Google derives more than 95 % of its revenue from advertising, and the prime source is the AdWords program.

The ECJ was requested to answer essentially three questions:

  • Is Google liable for trademark infringement when it offers trademarks without permission of their proprietors as keywords, and is the answer different when the trademark is a mark with a reputation, such as VUITTON?
  • Is the purchaser of a keyword consisting of a trademark in order to advertise his own goods or services liable for trademark infringement?

  • Assuming that Google is not liable for trademark infringement, but may be liable on other grounds, can Google rely on the liability exemption for web hosting services provided in Article 14 of the e-commerce Directive?

As regards the first question, the Court concluded that, while Google was acting “in the course of trade”, it was not using the marks for its own goods or services, and was thus not liable, as a “direct” infringer.

The Court added however the following (emphasis added):

57      That conclusion is not called into question by the fact that that service provider is paid by its clients for the use of those signs. The fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign. To the extent to which it has permitted its client to make such a use of the sign, its role must, as necessary, be examined from the angle of rules of law other than Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94, such as those referred to in paragraph 107 of the present judgment.

As regards the second question, the Court held that keyword purchasers were making use of the purchased mark for their goods or services. Thus liability depended on the question whether such use was liable to infringe one of the protected functions of the mark. The Court considered (only) the origin and publicity function, and considered that the origin function would be affected if the reasonably prudent internet user would not be able to determine or would have difficulties to determine whether the goods or services offered where those of the trademark proprietor or a person economically related to the proprietor. The publicity function was held not to be adversely affected, essentially because of the following:

97      It follows from those factors that, when internet users enter the name of a trade mark as a search term, the home and advertising page of the proprietor of that mark will appear in the list of the natural results, usually in one of the highest positions on that list. That display, which is, moreover, free of charge, means that the visibility to internet users of the goods or services of the proprietor of the trade mark is guaranteed, irrespective of whether or not that proprietor is successful in also securing the display, in one of the highest positions, of an ad under the heading ‘sponsored links’.

As regards the third issue, the Court held that Google could invoke the liability limitation of Article 14 of the e-commerce Directive only of its role as a “host” was technical, passive and automatic”, terms used in the preamble to the Directive:

114     Accordingly, in order to establish whether the liability of a referencing service provider may be limited under Article 14 of Directive 2000/31, it is necessary to examine whether the role played by that service provider is neutral, in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores.

The answers of the Court to the questions posed are the following:

1.      Article 5(1)(a) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks and Article 9(1)(a) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark must be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, in the case where that advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.

2.      An internet referencing service provider which stores, as a keyword, a sign identical with a trade mark and organises the display of advertisements on the basis of that keyword does not use that sign within the meaning of Article 5(1) and (2) of Directive 89/104 or of Article 9(1) of Regulation No 40/94.

3.      Article 14 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) must be interpreted as meaning that the rule laid down therein applies to an internet referencing service provider in the case where that service provider has not played an active role of such a kind as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned.

Remarks

On the very day the ECJ delivered its judgment in the Google AdWords cases on March 23, 2010, the papers and blogs and press communications amounted to many hundreds – on the next day, March 24, 2010, the judgment made the headlines of leading international newspapers. Rarely has an ECJ case attracted so much attention from everywhere, not only in the IP community. Comparable references are pending before the ECJ from courts in Austria, Germany, the United Kingdom, and Denmark. The next judgment will be delivered on March 25, 2010, after this IP Report will have been published.

Is this a “victory” for Google, as many of the commentaries suggest? In part, certainly: Google is not liable for trademark infringement, regardless of the renown of the mark it sells as keyword, on the – it seems to me – quite narrow finding that it does not use the marks for its own services. The requirement that trademark infringement requires use of the mark for the alleged infringer’s own goods or services is a relatively recent, and indeed debatably, development in the ECJ’s trademark cases. But, as the Court made clear in para. 57, quoted above, this finding does not preclude liability of Google, not amounting to direct infringement, such as on a theory of indirect or contributory liability (participating in one way or another in a third persons infringement). In any event, Google’s liability on the basis of national laws other than trademark law, such as unfair competition, interference with business relations, secondary liability etc. is not precluded either. In this regard, the exemption claimed by Google under Article 14 of the e-commerce Directive as a web-hosting service provider is unlikely to apply, given Google’s activities in operating its AdWords program, which are unlikely to be qualified as “technical, automatic, and passive”.

The liability of purchasers of keywords will hinge on the manner in which their “sponsored links” appear alongside the natural search results and what they contain or what they link to. This is likely to lead to more litigation, now against the purchasers of such keywords. When the sponsored link actually displays the protected trademark, and the advertiser offers counterfeit or otherwise infringing goods, the liability of the advertiser is obvious.

It will be interesting to see how the ECJ will deal with the variations presented in subsequent cases. We will continue to report on developments in these pages.

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