Luxury brands lose Google challenge

A group of luxury brands led by Louis Vuitton has lost the European round of its claim against Google that the search engine had breached their trademark rights.

Google AdWords allows advertisers to purchase keywords which, when entered as terms in the search field, will be associated with the advertisers' products or services under a 'sponsored link' section.

Where the keyword bought was a trademark-protected brand name, the links listed, in some cases, took web users to sites operated by competitors.

'This is a very sensible conclusion which ensures that the internet can continue to provide commercial services, as the ECJ has pointed out that making money is not the same as exercising control', commented Alasdair Poore, technology partner at Mills & Reeve.

He added: 'Google and others will not be liable just because they take money from advertising which they do not control, even if the advertising can be prohibited by the trade mark owner.'

Vuitton and a number of French trademarks owners brought proceedings in the French courts arguing that Google had infringed their intellectual property rights by allowing AdWords to be used in this way.

Ruling earlier today in case C-236/08 to C-238/08 Google v Louis Vuitton Malletier the European Court of Justice held that a trademark owner was entitled to prevent third party advertisers from using keywords identical to their trademark if this could confuse the average web user.

However, the court said, the mere storage by Google of these keywords did not breach the trademark owner's rights.

A referencing service such as Google could only be liable under the separate e-commerce directive if it took an active role where it had knowledge of or control over the data stored on behalf of the advertiser.

A referencing service would also be liable if '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'.

'Google's integrity has been upheld even though there are now serious questions for advertisers and could be a question mark over its business model', said Poore.

Poore also warned that companies buying AdWords will only be able to avoid trademark infringement if it is clear to consumers that the goods they are advertising are not associated with the trademark owner and the advertisements do not undermine that owner's advertising.

'Ironically this will be more difficult for owners of famous trademarks to prove, as Google will already be promoting their genuine sites in its statistical results', Poore said.

One passage in the Luxembourg court's ruling could pose further problems, as it will be for the national courts to decide, on the basis of the facts in each case, whether a competitor's use of AdWords infringes any trademark rights.

'There will be plenty of scope for different decisions across member states and key questions will have to be asked', Poore continued. 'Does the way the link is presented clearly show that there is no association with the trade mark owner; is there other information from other searches which clears up the position for the consumer; is there other trade mark misuse in the message given by the advertiser?'

However, Google and other internet service providers will be able to rely on the 'safe harbour' exemption from liability as long as they don't interfere, and act quickly to remove offending material. 'This still applies if they make money out of the service', commented Poore.