HG Alert: Google AdWords: Infringing trade marks? 22 Apr 2010

For many businesses, Google’s AdWords service is an easy way to drive traffic to their website. For a fee, a business can ‘buy’ keywords so that when someone searches for one of those keywords using Google, an advertisement linking to the business’ website appears in the search results. Depending on the arrangement with Google, the advertisement is displayed under the heading ‘Sponsored Links’ either next to or above the natural organic search results list generated.

Anyone can purchase available keywords - which may include registered trade marks. For example, a competitor of Louis Vuitton could purchase the keyword ‘Louis Vuitton’, meaning that Google users may be presented with an advertisement and a link to a competitor’s website when they search ‘Louis Vuitton’.

On 23 March 2010, the European Court of Justice handed down a decision on just this issue. The Court determined the case with reference to the rights of trade mark owners and liability of information technology service providers in Europe. These issues are the subject of litigation in jurisdictions across the world, including in Australia, and so the decision is of great interest to Australian trade mark owners.

Amongst its findings, the Court (unsurprisingly) recognised that owners of trade marks are entitled to prevent others from using identical or substantially similar trade marks in association with the same or closely related goods or services, if such display occurs without the owner’s authorisation. This right extends to internet keyword services such as Google’s AdWords. Accordingly, a trade mark owner could sue a rival advertiser for using its trade mark as a keyword in these circumstances if members of the public were misled or confused as to the source or origin of those goods or services.

However, the case was brought directly against Google, and not against the rival advertiser, and in this situation the Court reached a different conclusion. The Court found that under European trade mark and electronic commerce laws, Google was not involved enough in the actual use of the trade mark to be held liable for infringement. Instead, Google merely performed an activity “technical, automatic and passive in nature”, with no knowledge or control over the information transmitted or stored.

However, the Court found that if Google were to perform a more active role (such as drafting the advertising message which accompanies the link to their customer’s website), it may not be entitled to the relevant exemption applied to it under European laws and therefore may be held accountable.

Although this case was decided under European laws, it is of great interest to companies that operate internationally over the internet.

In Australia, we’re waiting for a decision to be handed down by the Federal Court in the Australian Competition and Consumer Commission’s action against Google. In contrast to the European case, the ACCC's argument is based on a breach of the misleading and deceptive conduct provisions of the Trade Practices Act 1974, as opposed to action for infringement of a trade mark.

As seen through the reasoning in the European decision, in most jurisdictions trade mark law does not provide a cause of action directly against Google in these circumstances, although it may provide one against the rival advertiser. Companies aggrieved by such conduct have better prospects of success if they plead a breach of consumer protection laws.

For more information about protecting your trade marks, please contact HopgoodGanim’s Intellectual Property and Technology practice.