Wednesday, October 21, 2009

Google adwords v LVM (Louis Vuitton) registered trademarks

Registered Trademarks Under Threat - If Google Wins, Do Consumers Really Gain Anything? So far the Courts have upheld the property rights embodied in registered trademarks in the cases in France involving Google and LVM, the owner of luxury brands including Louis Vuitton. The Google adwords case is under appeal at the highest court in France. The Google lawyers are using defences to support its case. One of the foreseeable outcomes is that a win for Google adwords could undermine the property rights of owners of registered trademarks. The matter is quite complex. The real outcome for consumers is less certain. However, some fundamental principles appear to need to be considered in arriving at an appropriate judgment. If the Google adwords case is accepted by the French court's final judgment, some of the potential outcomes could include the following:
  • Title to property may be over-ridden by competitors,
  • A party could use LVM's registered trademarks to sell his goods effectively,
  • A competitor could piggy-back on LVM's marketing and branding to win business,
  • A counterfeitor may be given wider scope to abuse a competitors registered brands,
  • The consumer would be potentially more exposed to non-genuine originating goods/services,
  • Scope for likelihood of confusion would be widened, and
  • Competitors could lure customers into buying their goods at the expense of brand-builders.

Would a win for the Google case deliver progess for consumers or for Google? The question as to whether the progress would actually represent any advancement for the consumer, is left for the reader to consider:

  • Would you agree that the role of trademarks as badges of origin would be undermined to a considerable extent, if competitors were allowed free use of others' registered trademarks, even in an adwords context.
  • A Google win would be likely to see the ability of brand owners to prevent infringement weakened. As a result, it would be likely that consumers would lose on the integrity of knowing the origin of the goods come from the rightful owner.
  • The use of registered trade marks by competitors in adwords would be such that consumers would not be able to rely on brands or brand makers for the quality of the goods, when using search engines that are driven by adwords or commercial placement SEO type services with access to other owners trademarks.
  • The scope for likelihood of confusion between manufacturers would be thrown wide open for further brand abuse. If a consumer searched for Vuitton, and was led to Baggers Lane bag shop selling WUTTON bags, who thought they were Vuitton-made but made by an inferior manufacturer, one might question whether the consumer was actually well-served by the adword?

The French Court's judgment needs to consider the commercial dynamics underlying the case in greater detail, and the implications for the consumer, owners of trademarks, and the rights and qualities conveyed under registered trademarks. There are substantial monies at stake. Especially for Google, and for competitors. Is this at the expense of the consumer, or the trade mark owner.

The Google position understandably wishes to preserve and expand its access to increased revenues. Adwords provide revenues, and have a strong commercial dimension underlying them. If the use of registered trade marks by competitors in adwords campaigns is scaled back, its revenues could be adversely affected. There would be fewer words competitors could use. Fewer clicks. Lower income. To what extent it is hard to know, but the scale of Google's revenues is substantial, and amounts to a multi-billion business model. This leads one to look more closely at the commercial attributes behind the cases, namely

  • Google makes substantial turnover from adwords and search engine listing,
  • Competitors are prepared to pay for adwords using registered trademarks of others,
  • The owners of the registered trademarks do not obtain revenues from their inclusion in adwords, when used by unauthorised competitors,
  • The consumer does not appear to pay, in an up-front monetary sense. However, the marketing costs of acquiring customers are ultimately borne in the end price for such goods, and therefore by the consumer,
  • The consumer could also pay in the sense of obtaining lower quality goods or services, and in not being able to associate the originator of the goods as belonging to the badge used to catch their custom,
  • Competitors of owners of registered trademarks may be allowed use those trademarks in adwords to sell their goods, perhaps misleading consumers as to the origin or quality of the goods,

So, who are the real winners and losers in the circumstances, assuming judgment favours the Google case?

  • the competitors could win trade,
  • competitors could be allowed cause more confusion with consumers,
  • it is often worthwhile for competitors to pay for the adwords, so there can be commercial aspects involved,
  • Google wins revenues,
  • Google addwords could benefit the competitors,
  • the competitors bid-up keywords so that registered trademark owners could have to pay more in relation to their own property,
  • Google could gain more,
  • Trademark owners could lose their rights to control their property,
  • the consumer could lose on their ability to rely on badges of origin,
  • the consumers could pay more if marketing costs increase,
  • trust in registered trademarks could be undermined,
  • scope for counterfeiting could be enlarged,
  • scope for infringement could be enhanced.
The case will be watched closely. The issue of providing a social service, for which huge revenues are gained, may be a grounds for an appeal. However, the commercial dynamics may be fundamentally usurped. The implications of the French highest Court's decisions could be far-reaching.

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