The ECJ's decision in Google (C-236 - 238/08) last March raised more questions than it answered about the intersection between trademark rights and keyword advertising. More cases are in the pipeline, though, and the most recent instalment, in Portakabin Ltd. & Ano. v Primakabin BV (C-558/08), takes matters further, although it still stops well short of condemning the practice of adopting keywords identical to third-party registered trademarks.
The advance of Portakabin relates not to when keyword advertising will infringe in the first place, but rather when defences will apply if keyword advertising is found to infringe.
Building a Case
The claimant, Portakabin, had a business in manufacturing and selling portable buildings, marketed under its registered trademark PORTAKABIN. Its Dutch competitor, Primakabin, had a website on which it promoted its business in selling and leasing new and used portable buildings, including new PRIMAKABIN buildings and also PORTAKABIN buildings (some of which were debranded and presented as PRIMAKABIN products).
Primakabin registered the following keywords for its website through Google's Adwords service: "portakabin", "portacabin", "portokabin" and "portocabin." Internet users searching these terms would be presented with a Primakabin ad, which when clicked whisked the Internet user to the Primakabin website, where it was offered Primakabin goods as well as those of Portakabin and other parties. Some of the debranded Portakabin goods also appeared, described as PORTAKABIN but bearing the PRIMAKABIN trademark.
Portakabin sued for trademark infringement in the Dutch courts, losing at first instance on the ground that, in adopting and leveraging its keywords, Primakabin was not "using" the PORTAKABIN trademark but rather simply offering used PORTAKABIN goods. On appeal, Portakabin won an injunction, but the Dutch appellate court still maintained that Primakabin had not been using the PORTAKABIN trademark in relation to goods and services. Consequently, Portakabin mounted a further appeal on that point only, and the Dutch appeals court appealed to the ECJ for guidance.
The Plot Thickens
In its ruling, the ECJ referred to its own judgment in Google as answering the threshold question of whether the use of keywords by advertisers was use in the course of trade in respect of goods and services. Under Google, it was.
Where the plot thickened, though, was on the question of whether such use could infringe. In Google, the ECJ had held that there would be infringement only where the ad that was displayed as the result of a search for keyword terms "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 proprietor of the trade mark or an undertaking economically linked to it or, on the contrary, originate from a third party."
The ECJ repeated that guidance in Portakabin. This case went a step further, though, in dealing with the registration of keywords that are deliberate misspellings of registered trademarks (similar to "typosquatting" under the UDRP) and asking for guidance on when the various defences to infringement under the Directive would apply.
Primakabin had chosen the misspellt keywords as the variants of PORTAKABIN most likely to be searched by Internet users seeking PORTAKABIN products but not remembering how to spell the name.
The ECJ held that keywords differing from registered trademarks due to "minor spelling mistakes" may only be regarded as identical to registered trademarks if they were indeed identical, or if they differed only in insignificant elements that were unlikely to be noticed by the average consumer. Whether that was the case was a question for national courts.
Where a court found that misspelled keywords were not identical to a claimant's registered trademark, then there could be infringement only where there was a likelihood of confusion. Such a circumstance could be demonstrated where the displayed ad (including any content on the linked website) made it unclear to the average Internet user whether the advertised goods or services emanated from the mark owner or a third party - essentially, the same effect as where the marks and goods were identical.
Where Defences are Few
Where a keyword use rose to the level of trademark infringement because the resulting ad was unclear as to the source of the goods, technically the infringer might have a defence based on use of indications concerning a characteristic of the goods, or an indication of the intended purpose of the advertised goods, in particular as accessories or spare parts, provided the use was in accordance with honest practices in industrial or commercial matters under Article 6 of the Directive.
The ECJ regarded it as a question of fact for the national court whether the use of an identical or similar trademark in an Internet referencing service was intended to provide an indication of any characteristic of the advertised goods. The Court was, however, sceptical of this in circumstances where the trademark in question was distinctive and not used generically.
Whether the use was intended to indicate that advertised goods were accessories or spare parts depended on whether the keyword use was designed to "inform the public of the practical link" between the advertised goods or services and those of the mark owner.
Even where that was the case, however, an infringing keyword advertiser was unlikely to get the benefit of the defence, since use that was unclear as to the source of the goods (a prerequisite for infringement based on both identical and similar marks) was prima facie unlikely to be use in accordance with honest practices.
Exhaustion of Rights
The final issue was specific to the facts of this case, but is likely to apply to many others. As Primakabin was offering genuine PORTAKABIN products that had already been placed on the market in the EU, had Portakabin exhausted its rights such that it could not object to the use of its trademark (as keywords or otherwise) to denote the goods? If so, were there nonetheless legitimate reasons to object to the further commercialisation of the goods under the mark?
Here, the ECJ noted that the use of keywords was no different to other uses of a mark to denote genuine goods, which was generally permissible within certain limits where the mark owner's rights had been exhausted since there was no other way for the third party to advertise his offer of such genuine goods. However, the use could not be such as to damage the trademark owner's reputation, nor could it go further than was necessary in order to denote that genuine goods of the mark owner were being sold.
The Court held that keyword-linked advertising that created the impression of a commercial connection between the reseller and the mark owner, such as affiliation or official distributorship, or a special relationship between the undertakings, went further than was necessary to commercialise the goods, and would therefore deprive a keyword advertiser of a defence based on exhaustion under Article 7 of the Directive, based on the criteria set out in Boehringer Ingelheim & Ors. (C-348/04).
Whilst this might not be the case in all instances where a keyword-linked ad infringes because it is unclear as to the source of the goods, it is likely to apply in most such instances. Consequently, a defence under exhaustion, whilst technically available, is unlikely to aid many who infringe by using keywords.
Although Portakabin is a useful advance in the thicket of keyword infringement issues, the problem still remains with the many who are unlikely to be regarded as infringing in the first place.
Portakabin takes brand owners no further in the push to have the use of keywords identical to trademarks recognised, automatically, as an infringement without the need to prove a likelihood of confusion, on a par with all other "identical mark, identical goods" infringements. Keyword use remains, it appears, a breed apart.
Nonetheless, the most objectionable (if not the only objectionable) keyword uses are likely to be the ones that really do create confusion and mislead Internet users. Those keyword-linked ads are likely to fall foul of the infringement test set out in Google and reiterated in Portakabin.
Where Portakabin nudges the law further is in confirming that misspelled keywords can also infringe if the same criteria are met, a result which is not unexpected, and which is in line with the longstanding recognition of "typosquatting" as an objectionable practice under the UDRP.
Equally or more importantly, the ruling in Portakabin also confirms that infringers are likely to find scant refuge in the statutory defences, since they are prima facie unlikely to meet the required test for honesty, or for going no further than is necessary to commercialise genuine branded goods. This last point is likely to be of significant importance to many companies objecting to misleading keyword use, since such keywords often lead to websites of retailers offering a range of competing products, including those of the trademark owner itself.
So, it appears that the second-class status afforded to keyword infringement continues. However, the law at least is developing in ways that make it clearer when brand owners may have a chance in suing a perceived infringer.