European Court rules on Google Adwords - July 2010

On 23^_rd March 2010, the Court of Justice of the European Union handed down a much anticipated decision relating to Google’s AdWords service.  The AdWords service allows an advertiser to purchase keywords, so that when these keywords are keyed into Google, adverts linking to their website are displayed in a section entitled, “Sponsored links” alongside the search engine’s main results.  In this landmark decision, the Court held that when Google stores trade marks as keywords and displays adverts on the basis of those keywords, it is not infringing any trade marks, even if those keywords do not belong to the advertiser and correspond to the trade marks of their competitors.  The Court also ruled that the advertisers themselves are not infringing their competitor’s trade marks when they use those trade marks as keywords linking to their own websites unless the advert does not enable the average internet user to ascertain whether the goods or services originate from the trade mark owner or from an unrelated third party.

The case against Google, originating in France, was brought jointly by LVMH, the luxury goods manufacturer which owns the Louis Vuitton, Moët and Dior brand names, and two other companies.  The French courts had initially decided that the activities of both Google and the advertisers did amount to trade mark infringement.  However, in an appeal to the French Supreme Court, it was decided to refer the matter to the European Court for further clarification.

The ruling is generally considered to have struck a good balance between the interests of the search engines, for whom the sale of keywords is a key part of their business, and the interests of trade mark owners who want to protect their brand names.  This is because trade mark owners will still be able to take action against third parties who use their trade marks as keywords in such a way that internet users  are mislead by the adverts displayed.  For example, Nike International Ltd would still be able to take action against companies who use “Nike” as a keyword if the company in question does not sell Nike products and the advert displayed gives the impression that they do sell such products or that they are somehow linked to Nike International Limited.  Furthermore, the ruling has provided Google and other search engines with the legal certainty they needed to ensure that their keyword businesses can go from strength to strength.