Adwords and Registered Trademarks - Google v LVM (Louis Vuitton)

GOOGLE v Louis Vuitton Mattellier SA (“Vuitton”) Outcome of Preliminary Ruling - Judgment of European Court of Justice dated 23 March 2010

Background

Vuitton markets luxury bags and other goods. It owns the VUITTON registered trade mark covering the EU, in addition to other registered trademarks.

In 2003, Vuitton noticed that when internet users entered its trade mark into Google’s search engine, the results showed links to other sites offering imitations of Vuitton’s goods. Such links could be sponsored by competitors to Vuitton, through use of adwords (using keywords) corresponding to Vuitton’s registered trade marks.

Vuitton sued Google in the French courts. Google was found guilty of infringing Vuitton’s registered trade marks in 2005. An appeal by Google was also unsuccessful to over-turn the ruling. Google has brought an appeal on points of law to the highest court in France (Court de cassation), against the latter judgment.

Questions for a preliminary ruling

The French supreme court referred questions on EU laws to the European Court of Justice, pending its consideration of the points of law. The questions sought to clarify certain legal points concerning: -

1. the rights of the owner of a registered trademark to prevent a provider of a paid referencing service from storing information or providing links to infringing sites, such that the search engine cannot incur a liability until it has been notified of the unlawful use of the sign by the advertiser;

2. whether the owner of the registered trade mark can oppose use of the marks where they have a reputation under the laws;

3. If the use in adwords cannot be prevented by the trade mark owner directly with the search engine, does the search engine incur liability prior to it being notified by the registered trademark owner of the unlawful use of the sign by the advertiser.

Similar questions were referred to the ECJ in two other cases, while staying the cassation appeals. In those cases Google had been found guilty of infringement of registered trade mark rights, and in one of the cases, the court upheld an appeal and found Google guilty in that it had acted as an accessory to infringement of the trade mark rights. The ECJ was asked for preliminary rulings on similar questions, pending the supreme French court’s decision on the cassation appeals by Google.

Registered trade mark issues

The ECJ agreed that use by an advertiser of a sign identical with a registered trade mark as a keyword falls within the concept of “use” under the trade mark laws. Therefore, it is true the proprietor of the mark is entitled to prohibit that use, where it adversely affects the functions of the trade mark.

Advertisers on the internet can be made liable for infringement of registered trademarks. The ECJ found the proprietor of the registered trademark must be entitled to prohibit the display of third-party ads.

Search engine use

However, the ECJ concluded that use of a sign by a search engine per se identical with another person’s trade mark is not, of itself, liable to have an adverse effect on the advertising function of the trade mark, in certain circumstances.

Search engine liability for trademark infringement

A search engine, as an information society information provider, can have exemptions from liability only in cases where the search engine “has neither knowledge of nor control over the information which is transmitted or stored”. So, when the search engine or information society service provider’s activity is “of a mere technical, automatic and passive nature”, without knowing of the infringement, it may be exempt from liability.

This implies that the search engine may be held liable, after it has been made aware of infringement, should it continue to allow such infringement. This is because Google can have knowledge of, or control over, the data entered into its system by advertisers and stored in memory on its server.

The court’s judgment was that a search engine can be exempt from liability where it has not played an active role of such a kind as to give it knowledge of, or control over, the data stored.

But, the ECJ judgment indicates the search engine can be held liable for the data, which it has stored at the request of an advertiser. If having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, the search engine fails to act expeditiously to remove or to disable access to the data concerned, it can be held liable for infringement of registered trade marks.

Google and Vuitton claim victory in the ruling.

JAMES JONES v JACK JONES

Likelihood of confusion and trademark opposition - February 2010 A recent case in the European General Court considered a dispute concering the registration of two trademarks. The trademarks involved related to JAMES JONES and JACK JONES. The marks JACK JONES, and JACK & JONES were registered trademarks for goods including clothing. JACK & JONES was also a registered Community trade mark. Mr. Ozdemir, the owner of JAMES JONES applied to register the trademark as a Community trade mark. The application was published, but was then opposed by the owners of the JACK JONES trademarks. The opposition was upheld. The opposition decision was then appealed. Again the opposition was upheld. The court case considered a further appeal in this instance. The court considered the likelihod of confusion under the usual tests for similarity. Both trade marks refer to people's names and contain the surname JONES. It was conceiveable that consumers might interpret the marks as referring to the same person. The court agreed that a likelihood of confusion did exist. The appeal was dismissed.

Official emblems - can be refused registration as trade marks

Refusal to register trademark resembling Canadian flag stands American Clothing Associates, domiciled in Belgium, applied to register a community trademark covering the EU, with a sign that contained a maple leaf above the letters RW. Initially, OHIM refused to register the trademark because it resembled the national emblem of Canada. One of the corner-stones of laws on trademarks is the Paris Convention on Industrial Property 1883. Article 6ter prohibits the registration of state flags. A lower court decision was appealed by both parties to the European Court of Justice, ECJ. American Clothing sought to have the mark registered in relation to the services in its application, since the Paris Convention referred to goods. However, the ECJ held that the Community trademarks regulations applied to both goods and services. Article 6ter leaves the extension of the protection guaranteed to trade marks for goods to service marks to the discretion of the States party to the Convention. Accordingly, the ECJ held that Article 7(1)(i) CTMR applies without distinction to trade marks for goods and service marks, so that registration could be refused, for example, to a service mark containing a badge. The application to register a trademark resembling the Canadian flag was refused.

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.

Google adwords v LVM registered trademarks

Google v. LVM – adwords appeal case in France.

Google adwords has appealed recently against court decisions against it concerning adwords and registered trademarks in France. LVM has won the cases favouring its registered trademarks in the lower courts in France against Google to date. Currently, the highest court in France is considering the issues in the case. The issues in this case include the following: - Google adwords are used by competitors to bring customers to its goods/services. Some competitors use another party’s registered trade mark in the Google adwords campaign. When the adword is clicked, the competitor pays a fee and Google receives payments for the use of the adword. A key issue is whether the use of adwords like Louis Vuitton by a competitor abuse the rights held by the owner of a registered trade mark. A registered trademark conveys a property right to its owner. The owner can control the users and uses of the registered trademark. Unauthorised use is preventable by the owner of a registered trademarks. The ownership of a registered trademark carries exclusive rights. This means nobody else can use the mark without permission. The case challenges the rights of property owners. It also challenges the fundamental rights embodied in registered trademarks. Can Louis Vuitton prevent a competitor from using its registered trademarks in Google adwords campaigns? Can Google adwords limit the excusive rights held by the owner of a registered trademark? Are there commercial aspects to the use of Google adwords involving registered trademarks? Who receives payments? Who pays? Does Google adwords involve “use” of a registered trademark in commerce? Because the goods per se may not be traded commercially in the advertisement linkage process, the question is whether the registered trade mark is being “used” commercially. A registered trademark conveys exclusive rights to its use under the trade marks legislation. So can another party include the registered trademark of another party in its advertisements campaigns? If the use of the registered trademark leads to the consumer being misinformed or misled, then is the use of the Google adword an infringement of the registered trade mark? Search engines use words to search for sites. In the search engine format, one of the commercial links is made when a party pays to be listed under the search engines. So there may be a commercial feature of the use of search engines. However, under French law there is an exemption from liability for search engines in a social sense of providing a social service, where the service provider is unaware of any abuse of a registered trade mark. Does Google adwords fit the terms for exemption as applied to search engines under French law? Is there a limit to the exclusivity obtained when registered trademarks are used, even by competitors? Is Google adwords a commercial activity in relation to the laws affecting registered trademarks? Does Louis Vutton lose custom to competitors as a result of the use by the competitors of its registered trademarks? The issues in this case are very important for the owners of registered trademarks.

Google adwords v LVM registered trademarks

Google v LVM (Louis Vuitton) Trademarks BATTLE A legal opinion (not a decision) has recently issued on cases in Europe between Google and LVM, and others. LVM is owner of several luxury registered trademarks, including Louis Vuitton. Google has allowed competitors to use registered trademarks belonging to others in their search engines and adwords campaigns to attract business, in return for payment for clicks on the adwords that link to the competitors websites. Google has lost certain trademark infringement cases in France in relation to its Google adwords/trademarks policies, and has also lost appeals there. Google has blocked some of the trademarks for selection by advertisers in France. However, it has lodged appeals before the highest court in France (Cour de Cassation). The current opinion has been issued in relation to the French court actions over certain trademarks, Google adwords and hosting services. Key issues include: -

• Are the rights of the registered trademark owner being abused?
• Who benefits?
• Is there commercial gain for Google and competitors?
• Who suffers?
• Is the property right in the registered trademark violated?
• Is control of the registered trademark adversely affected in commerce?
• Is the use of a brand name that is a registered trademark in a Google adwords campaign actually infringement of the registered trademark?
• If the use of the registered trademark in a Google adword leads to the sale of counterfeit goods, what responsibility does Google carry in relation to assisting the counterfeitor?
• Can Search Engines/ISP's ignore complaints of abuse from owners of registered trademarks?
• Are the commercial interests of the Search Engines/ISP's aligned more with the competitors than with the owners of registered trademarks?
• What remedies are available to owners of registered trademarks?
• Do consumers of registered trademarks have any rights as to the origin of the goods over competitors?
• Does the State, which grants the registered trademark rights, have any roles in protecting title, assuring consumers, or in permitting business to control the origin of goods/services under registered trademarks law?
• Does the Google adwords policy usurp the laws affecting registered trademarks?
• Should Google adwords change its policy on registered trademarks?
• Is there a difference between hosting, searching and advertising in the case of registered trademarks?
• Do web site hosting, search engines, adwords providers or ISP's have any exemption to liability for infringement of registered trademarks?
• Should they hold any responsibilities legally in relation to registered trademarks?
• Should they allow counterfeitors free reign on the internet, at the expense of consumers, and trademark owners?

We are reviewing the opinion.

Registered Trademarks Win Damages of over $30m Against ISPs

LOUIS VUITTON registered trademarks win over $30m v Internet Service Providers A jury held that the registered trademarks of Louis Vuitton Malletier, SA were infringed when counterfeit goods were marketed via web sites hosted by internet service providers. The jury in the Northern District Court of California awarded damages of around $30.5 million in favour of Louis Vuitton for infringement of its registered trademarks, and a further $0.9m in copyright infringement (August 2009). The case established that ISPs carry a considerable commercial responsibility and can be held liable for damages when they host websites involving sales or promotion of goods that abuse registered trademarks or that supply counterfeit goods. Further, the case is likely to have wider implications for search engines. Some search engines do not appropriately prevent or block advertising by copycats of goods/services protected by registered trademarks. It is now more probable rather than possible a jury would hold a search engine liable for damages for unauthorised/unlicensed advertisers or ads containing references to brands, that abuse or infringe registered trademarks owned by others.