You may have heard of and even have used Google’s AdWords service where Google allows you to purchase other companies (even competitors) registered trademarks as advertising keywords in order to improve the ranking of your own website. A number of companies (owners of marks which were used by Google as AdWords keywords) took exception to this practice and challenged Google for infringement of their trademarks.
For the companies to maintain this, they had to show that the sale of keywords amounted to use (by the advertiser and/or Google) in respect of goods or services identical or similar to those to which the registered trademarks were applied.
Consequently, in an interesting and long awaited decision, the European Court of Justice (ECJ) confirmed the following:
1. Use of Trade Marks as AdWords: such use can only be prohibited to the extent that such use “is liable to cause detriment to any of the functions” of the trade mark. These functions include, inter alia, the essential function of indicating the origin of goods or services.
According to the ECJ decision, this function is affected, if the use of the mark suggests an economic link between the advertising company and the mark proprietor or if it is unclear to the normal internet user, whether there is such an economic link. So, in conclusion, the trade mark proprietor cannot prevent the advertiser from using its trade mark as an AdWord, unless the advertisement or the website to which it refers suggests, directly or indirectly, an economic link with the proprietor of the mark (i.e. the use does not enable internet users or allows them only with difficulty to ascertain whether the goods referred to in the advertisement originate from the trade mark proprietor).
2. Use of Similar Sign as AdWord: It will depend on a case by case basis whether the use of a mark similar to a registered mark may be allow. The test focuses mainly on whether the signs (the similar mark and the trade mark) are likely to cause confusion to the ordinary person/internet user. However, if the advertisement suggests an economic link with the trade mark proprietor, then it will be difficult for the advertiser to justify its use of the registered mark and to be considered as “honest practice” if such link does not exist.
3. Second Hand Goods: The ECJ clarified that, where the use is seriously detrimental to the reputation of the mark or the use of the sign gives the impression that, the reseller and the trade mark proprietor are economically linked, then the mark proprietor can prevent the further sale of goods bearing the registered marks.
The ECJ stated that, the mere use of terms, such as “used” or “second hand”, is not sufficient to find detriment to the repute of the mark or to establish a commercial link between the advertising company and the mark owner. Also, the ECJ clarified that the fact that, an advertisement may bring the internet user to a website where not only the advertised trade mark goods are sold, but also other products, does not constitute a legitimate reason to prevent the resale of goods bearing the trade marks. In contrast, de-branding (i.e. removing the original trade mark and affixing its own brand name) is considered an example of a practice which would permit the intervention of the mark owner.