Nathan Fan is a JD candidate at Osgoode Hall Law School.
On March 23, 2010, the European Court of Justice (ECJ) released its long-awaited decision over Google’s sale of trademark keywords in its AdWords service and the resulting litigious skirmish with various trademark owners in France (this French skirmish was covered in a previous IPilogue post). The ECJ’s decision is found in all three French cases (C-236/08, C-237/08 and C-238/08) and held that Google’s AdWords advertisement system did not infringe the trademarks of these French companies, echoing the Advocate-General’s recommendation from last year.
Google’s AdWords advertising service allows its customers to purchase keywords that trigger their advertisements that appear on the sides of the Google search page. The point of contention from these French companies was the fact that Google was allowing third parties to purchase the French trademarks as keyword triggers for sponsored link advertisements, allegedly causing confusion for the general public. In attempting to resolve the three separate keyword advertisement disputes, the French High Court (Cour de Cassation) had referred a set of questions to the ECJ for preliminary ruling in May 2008.
Of these questions, the Cour de Cassation had asked the ECJ to address the issue of whether Art. 5 (1)(a),(b) and Art. 5(2) of the European Trademark Directive (1988) gave trademark owners the right to prohibit the unauthorized use of their trademarks as keywords in an internet referencing service. Art. 5(1)(a) prevents the use of signs identical to protected trademarks in connection with goods or services that are also identical or similar to the trademarks. Art.5(1)(b) prevents the use of identical or similar signs in a way that would likely cause confusion with the original trademark. Art 5(2) prevents the dilution of a trademark’s goodwill or reputation through the use of any identical or similar sign in relation to goods or services unrelated to the goods and services of the protected trademark.
The requirements under Art.5(1) and (2) both require that the use be from “using in the course of trade”. In defining this qualification, the ECJ held that a use satisfies a use in the course of trade “where it occurs in the context of commercial activity with a view to economic advantage and not as a private matter”. With regard to the advertisers, the ECJ held that the advertisers’ use of the trademarks as triggers to their AdWord advertisements clearly qualified as a use in the course of trade, and would thus allow the trademark owners to prevent that use. In contrast, the Court held that Google itself did not satisfy this definition of use in operating AdWords. Google, as the internet referencing service provider, merely stored the trademarks as keywords and organized the display of ads on the basis of that keyword. As such, it did not constitute a use of the sign within the meaning of Art. 5(1),(2) and would not entitle the trademark owners to bring a suit against Google.
The Cour de Cassation had also asked the ECJ to address the issue of whether the safe harbour provisions under Art.14 of the E-Commerce Directive, which limits the liability of intermediary service providers, could be applied to internet referencing services such as AdWords to excuse liability for the data that they store at the request of a recipient of that service. The Art. 14 exemption only applies where the conduct of the service provider is characterized as an “intermediary service provider”, which according to recital 42 of the preamble to the E-Commerce Directive means a service provider “of a mere technical, automatic and passive nature” and implies that the service provider “has neither knowledge of nor control over the information which is transmitted or stored”. Further, the Directive requires that once the service provider is made aware of the unlawful nature of the data, the service provider must expeditiously remove or disable access to the information.
With respect to Google’s situation, the ECJ held that neither the revenue Google received from the AdWords service nor the concordance between the keyword selected and the search term entered by the internet user were sufficient to remove Google from the safe harbour protection offered under Art. 14. The Court noted that Google’s role in drafting the commercial messages that accompany the advertisements may threaten its qualification as a neutral service provider. However, the Court reserved that determination for the national courts.
While the ECJ’s decision may come as a loss for the French trademark owners in regards to the suit against Google, the Court has also opened the doors for advertisers’ liability when using the AdWords service. As Google’s safe harbour protection is dependent on its expeditious response to any notices of trademark infringement, Google will also have to play a role in helping the trademark owners protect their marks. Thus, it seems that the ECJ has finessed a balance between the freedom of commerce while offering trademark owners an ability to further preserve their rights and protect their marks.