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UNITARY PATENT

In 2012 Member States and the European Parliament agreed on the "patent package" - a legislative initiative consisting of two...

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Who'll Win on AdWords?

Google's grip on keyword sales revenue tightened in September, when the Advocate-General opined that its sale of third-party trademarks as keywords to competitors was not trademark infringement. Google's display of competitors' sponsored ads as search results for such keywords was also held harmless by the Advocate-General, with the ECJ's judgment expected soon.

This opinion is not the last word in a dispute that has vast implications for online business. However, as the ECJ normally follows the Advocate-General's reasoning, it could point to the likely outcome for right owners and advertisers, whose businesses stand much to gain or lose.

"Use in Respect of Goods or Services"?

The heart of the dispute is whether or not Google's sale of registered trademarks to competitors as advertising keywords can infringe registered marks. To get an action off the ground, though, any brand owners mounting a challenge must prove that the sale of keywords amounts to use by the advertiser and/or by Google in respect of goods or services identical or similar to those of the registered mark. 

Can they?

The companies challenging Google through the referring French courts stumbled in the attempt. Although the Advocate-General recognised that Google was selling keywords for commercial gain and was therefore acting "in the course of trade," nonetheless the keywords were not, in and of themselves, linked to any goods or services, much less to ones identical or similar to the registered ones. 

In the Advocate-General's view, no link between a keyword and actual goods or services arises until an Internet user types in a keyword and prompts Google's search engine to employ an algorithm to display search results, which, when accessed, then display content linked to goods or services. That was a long way down the line from the keyword sale and purchase, and was in any event more relevant to the question of whether Google's display of search results could infringe. At the keyword sale stage, however, there was no link between the keyword and any goods or services and the provision of a keyword selected by an advertiser was, in the Advocate-General's view, an internal matter for Google, despite money changing hands. This pure logic applied even to keywords combining brand names and words such as "counterfeit." 

Consequently, in the Advocate-General's view, the mere sale of a keyword by Google could not in itself infringe a registered trademark.

But It's So Confusing...Or Is It? 

The Advocate-General then turned his attention to what happened after keywords had been sold. Could Google be liable for trademark infringement where searches for a keyword presented an Internet user with advertisements for infringing and counterfeit goods?

He thought not. Trademark infringement could only occur where the unauthorised use was capable of affecting the essential function of the registered mark-namely, its ability to guarantee origin to consumers. Consequently, trademark infringement presupposed a likelihood of confusion. However, Internet users, the Advocate-General believed, were not the credulous creatures the challenging brand owners contended they were. Internet searches typically disclosed a list of natural search results, sometimes a very long list, many of which would have no connection with the site that an Internet user was seeking. Searches for brands would yield hits not only for brand owners' sites, but also for distributors and authorised and unauthorised re-sellers, competitor sites offering competing brands, and in some cases sites offering counterfeits and replicas. 

The average Internet user was used to this in natural search results and therefore viewed them with a healthy scepticism, accepting a hit as the site he or she was seeking only once the site had been visited and its contents perused. Why, the Advocate-General asked, would the situation be any different with sponsored advertisements generated through the sale of keywords to advertisers?

Internet users were a phlegmatic lot who typically reserved judgment on the origin of goods offered through a site until the site had been visited. Consequently, the mere display by Google of third-party sponsored advertisements in response to searches for keywords which happened to be registered trademarks was not an infringement by Google, because there was no resulting likelihood of confusion.

The Advocate-General was reluctant to find even contributory liability in Google's display of search results, even in cases where the content of the actual websites themselves infringed on the traditional criteria. The Advocate-General saw dangers in hanging Google's liability on the indeterminate and unpredictable acts of third parties after the sale of a keyword, which the Advocate-General considered to be blameless in and of itself. 

How to Trap a Google Now?

The Advocate-General left the door open for national courts to find contributory liability on Google's part where it could be shown that Google had engaged in practices that directly contributed to acts of infringement by a keyword purchaser.

If, for example, Google were to offer automated information to prospective keyword purchasers "suggesting" third-party trademarks combined with words such as "counterfeit," then such suggestions, regardless whether automated, could be regarded as contributing to any resulting later infringement arising from the linking of the keyword to a website offering counterfeit branded products. Whether this was the case was a matter for the national courts, however.

The Advocate-General also rejected Google's argument that it could resist any such liability by relying on the "safe harbour provision" of Directive 2000/31 ("the E-Commerce Directive") relating to information society services. That provision is intended to protect providers of hosting services from liability in cases where they were storing information at another's request, where the information being stored was in fact unlawful but not known as such by the host, and where the host acted promptly to remove it upon being notified that the content was unlawful.

The Advocate-General accepted that Google was providing a hosting service and storing information at the request of third parties. 

However, unlike a typical hosting service, Google had an interest in third parties clicking on sponsored links bought and paid for by Google's advertisers through the so-called AdWords programme. In the Advocate-General's view, the E-Commerce Directive was intended to facilitate a free and open Internet by preventing the imposition of a duty on hosting services to monitor content hosted. 

However, with such benefits came also responsibilities: in particular, that hosting services should remain neutral as regards the content hosted. Where a host had a vested interest in hosted content being accessed in order to sustain its own advertising revenue, that aim of neutrality was not fulfilled.

Consequently, where national courts saw Google's conduct as tainted enough to create contributory liability, Google could not hide from it behind the "safe harbour provisions" of the E-Commerce Directive.

Comment

With Google largely shielded, the Advocate-General's final but brief examination of liability on the part of the advertisers themselves is of particular interest.

It offers little hope to brand owners, though, as the Advocate-General considered the mere purchase of a keyword not to be a "use in the course of trade" as required for trademark infringement. By merely buying a keyword, an advertiser is acting, in the Advocate-Genera's view, as a private consumer. It intends no doubt to use the keyword later in trade. But when buying the keyword it is entering into a purely private transaction with Google.

In a crowded and confusing legal landscape, the Advocate-General's fulsome opinion still leaves some areas unaddressed. He considered that where Google sells a brand name solus as a keyword, there is no link between the keyword and any goods or services. However, what if the keyword term is a trademark coupled with a product name, such as "BOSCH refrigerators"? And what of brand names that are so famous as to be automatically associated with a certain product in the public mind, such as PEPSI? If the sale of keywords is truly an internal process only, then there can indeed be no link with goods or services even in these cases.

However, since the value of keywords is inextricably linked with their ability to communicate a link with products or services offered by the purchasing advertiser, the distinction the Advocate-General was making here is arguably too fine.

Arguably, too, the Advocate-General gave insufficient attention to the possibility that trademark infringement might arise where other functions of trademarks were affected by Google's display of search results including keyword sponsored links. Internet users might indeed be savvy enough, for the most part, to tell a competitor's site or a counterfeiter's site from the real thing. However, the advertising function of registered marks, recognised by the ECJ most recently in L'Oreal, could be damaged and undermined by the undue profile given to competitor and counterfeit results arising directly from the sale of third-party trademarks as keywords. National courts are likely to have to explore this issue for themselves, and it may end up before the ECJ again before too long.

Clearly, though, the ECJ has a difficult line to tread. On the one hand, it is not in the public interest to hobble the Internet with more restrictions than have ever had to be applied to other traditional means of transmitting information, such as the printing press. On the other hand, though, Google appears to be making substantial hay by exploiting competitors' desire to attract custom by relying on the attractiveness of others' registered trademarks to give their own brands undeserved prominence. There is something intrinsically unfair about profiting in that way, both on the part of Google and on the part of those whose activities it facilitates.

It remains open to brand owners, as always, to challenge actual infringing uses on Internet websites. However, many would like to see the problem rooted out at the source. Whether that is likely depends much on what the ECJ says, when it comes to grapple with the Advocate-General's views. One question that Court might wish to ask itself is, does Google sell the term "google" as an Adwordto its competitor search engines? And if not, why not?

In this regard, it is interesting that a search for the term "google" on Google brings up no sponsored links. Nor does a search for "yahoo" on Yahoo, nor one for "ask jeeves" on Ask Jeeves, nor yet one for "alta vista" on Alta Vista. Readers, and the ECJ, will no doubt draw their own conclusions.