The internet search giant Google was involved in a five-year court battle with Louis Vuitton. The case was based on a determination regarding trademarks of original companies that were used by counterfeit dealers. Google is a world leader in the search industry sector and uses this unique feature as a marketing vehicle. However, the use of AdWords as used by Google has recently come to sharp criticism from within the European Union and in the United States of America. It is argued that the use of AdWords promotes trademark Infringement. Therefore, the courts of law had been called in to determine this fundamental question that touches on the essential functions of Google and the rights of Trademark holders.
Google owns a search engine that produces a list of “natural” results whenever a word gets searched. The results are produced in order of relevancy in a descending order from the most relevant or close to the searched word. This means that the relevant websites are algorithmically arranged in a descending order with those containing the requisite “key words” at the top. The search service was free and supported by money paid for referencing service. This led to AdWords advertising. To trigger more views, a feature regarded as “Keyword Suggestion Tool” was developed. In the year 2003, a manufacturer of luxury leather goods was furious at Google for letting counterfeit manufacturers of his products advertisements appear when a person searched Louis Vuitton trademark keywords. In view of these facts, Louis sued Google in a French regional court. Louis sought, inter alia, a declaration by the French court that by letting counterfeit products adverts appear while searching their key words, they had infringed on their trademarks.
At the first instance, the court heard that Google through its “Keyword Suggestion Tool”, allowed advertisers the chance to elect either to use the word “copy” or “replica” in expressing Louis Vuitton’s trademarks. The court also heard that the adverts could also choose to use the Vuitton’s trademarks as standalone keywords. Therefore, the first issue to be determined at the French court was whether these acts by Google constituted trademarks infringements. The court held that Google was liable. The intermediate court also affirmed the first court’s ruling. Google appealed at the Cour de cassion. In this court, Google sought to determine the interpretation of the Trademark directive of 1989 under EU law. In order to arrive at its ruling, the Cour de cassion referred several facts in issue to the European Court of Justice for an advisory opinion. In the Opinion of the ECJ under the 1989 trademark, directive Google was not liable for infringement of trademarks.
The ECJ argued along traditional European Trademark analysis. Advocate General Poiares Maduro drafted in his opinion a checklist to determine whether a trademark has been infringed and, therefore, the defendant liable. In his opinion, the trademark must be used without the prior consent of the proprietor by the defendant. Secondly, the use of the trademark by the defendant must be in the “course of trade”. The third requirement is that the trademark must cover the use “similar or identical” to the goods or services that are in issue. The fourth requirement required that the functions of the plaintiff’s trademark must be affected or at a risk of being affected. It is vital to note that the court set out to protect the “essential” function of a trademark. The court also takes into consideration the origin of the services or the goods and protect its source.
In the ruling of the court, it identified AdWords as having two cardinal uses; the permission granted of Google to advertisers to elect keywords and the display of adverts by Google when a person searches the keywords. In this regard, Google was undertaking a commercial activity with an objective of obtaining profits from the charges. However, the court held that the third requirement was fulfilled because Vuitton’s goods were similar or identical to the results that appear when their keywords were entered. Despite these findings, the ECJ ruled that the mere fact that there was a display did not make it sufficient to sabotage the “essential” functions provided by the trademark. The court also held that there was no confusion as the trademark still protected the origin of the goods from Louis Vuitton’s company.
The main sources of law relied on by the court in its ruling was the 1989 trademark directive. This rule provided the basis upon which the court could determine the question of infringement of all goods and services in the European market. Another significant rule applied in the case was the UDV North America Inc. v Brandtraders NV C-62/08, 2009 E.C.R. I-1279. This case had set a precedent that a broker of beverage could be found liable of infringing trademark rights irrespective of whether he owned the beverages or not. This was as long as the use of the trademarks met the requirement of use in the “course of business or trade”. Furthermore, the ECJ considered whether the practices that Google engaged in were in line with Regulation 40/94/EC that governed community trademarks and Directive 89/104/EEC on trademarks.
The court held that one could only be held liable if one used the trademarks in the course of “its internal communication”. Therefore, Google was not liable under the circumstances. However, this is a debatable rationale considering that the words “internal communication” is not found in EU case law and the 1989 trademark directive. Moreover, these words tend to limit liability of trademark infringement only to third parties who use them to promote their own services and goods. However, this leaves trademark holders vulnerable to marketers and advertisers. This is because despite promoting the counterfeit products, Google also used the trademarks to further its own services, that of promoting AdWords. Secondly, the case departed from a cardinal principle that has been recognized and enforced in trademark cases as applied in the case of Arsenal Football club (2002) E.C.R. I-10273, 40. The consideration of “own commercial communication” together with “in the course of business” was a departure from the main consideration which was to attain an “economic advantage”. The third rationale adapted by the court is also problematic. This is because it directly affects, negatively, the practicality of the use of trademarks. By using the “course of business” criterion, the court neglected its obligation to determine whether an essential function of the trademark could have been compromised. This is a cardinal obligation of trade mark law and all requisite laws protecting the subject matter should have this objective at heart.
Court of Justice of the European Union. Google has not infringed trade mark law by allowing advertisers to purchase keywords corresponding to their competitors’ trade marks. Luxembourg: Court of Justice of the European Union, 23 March 2010.
Tan, Ashley . "Google AdWords: Trademark Infringer or Trade Liberalizer?" 16 Mich. Telecomm. Tech. L. Rev. 473 (2010): 1-37. available at http://www.mttlr.org/volsixteen/tan.pdf.