Nathan Fan is a JD candidate at Osgoode Hall Law School.

Luís Miguel Poiares Maduro, the Advocate General of the European Court of Justice (ECJ), concluded in a recent recommendation to the ECJ that Google’s AdWords system does not violate trademarks when it allows advertisers to select trademarks as keyword triggers for its advertisement service.

Google’s AdWords is a service that allows advertisers to create ads that are displayed alongside Google search results (i.e. the “Sponsored Links” on the right side). These ads are triggered by specific keywords found in user search queries. What is controversial about this system is the fact that Google has allowed trademarked keywords (e.g. brand names) to be used with its service without permission from the trademark owners. Not only is there the claim that Google would be profiting from the use of an unauthorized use of a trademark, there is growing fear that the ability for any advertiser to choose these trademark keywords may lead to potential damages in lost profit and reputation (e.g. counterfeit products sold on the advertisers’ websites).

There have recently been three actions taken against Google Inc. by various brand holders in the EU (Google France v. Louis Vuitton, Google v. CNHRR , and Google v. Viaticum Luticiel). The French Cour de Cassation has referred a number of questions regarding the interpretation of Google’s use of trademarks in its AdWords service to the European Court of Justice. These three cases have since been reviewed by the Advocate General together as a single case (Joined Cases C-236/08, C-237/08 and C-238/08)

One of the main issues in all three cases was the interpretation of the rights conferred by a trademark provision found in Article 5(1) of Directive 89/104. The provision provides that registered trademarks (and similarly community trademarks) are given protection against any unauthorized use of signs which are identical or similar to the trademark in relation to the goods and services provided, and to which there is possible confusion from the public as to the original source.

Google has argued that since the keywords are not affixed to goods nor do they conduct their business activity under them, that the use of keywords does not constitute a ‘sign’ and thus cannot be considered an infringement of trademark. It was in Poaires Maduro’s opinion that such a narrow interpretation was not what the policymakers had envisioned when drafting the provision. Keywords which correspond to trademarks can also be said to be representing those marks.

Despite this fact, Poaires Maduro stated that AdWords had not met the threshold for trademark infringement on the basis that the selection of keywords was not in the same form of goods and services as the trademark according to Article 5 (i.e. the selection of keywords was used to attract advertisers to Google’s own advertising services). He also stated that the risk of confusion for the public as to the original source of the trademark was not a sufficient concern stemming from the mere appearance of advertisements alongside the search result. Internet consumers are conscious and knowledgeable enough to understand that other sites other than the trademark holder’s site may appear in the advertisement slots.

Poaires Maduro was also careful to point out that the trademark proprietors’ push for a more expansive reach of trademarks (i.e. even a mere possibility that a system may be used by a third party to infringe a trademark makes the system in itself an infringement), would be going beyond the scope of trademark rights. An internet user’s access to information regarding the trademark should not be restricted to or by the trademark owner.

Poaires Maduro does make the conclusion that while not directly at fault in the advertisement system, Google profiting from its AdWords service means that it is no longer a neutral information vehicle. Google’s “pecuniary interests” with its advertisers removes it from the immunity of providing the “natural results” presented by the search engine. As such, Google may be liable for the content that it places in the advertisement space if trademark owners can prove specific instances of damage.

While the Advocate General’s recommendation carefully straddles the boundaries of the ‘freedom of expression v. freedom of commerce’ concepts, his recommendations are not binding on the ECJ. This is of some relief to opponents of the AG’s recommendation, who see the recommendation as a step-backwards in the development of commerce and trademark law and hope that the ECJ will consider the ramifications of such an outcome (read more about these concerns here). The ECJ must still examine the case and the final decision is not expected until early next year – however, about 80 per cent of AG recommendations are upheld by the ECJ.

Posted in IP, Innovation, Internet, Trademarks