Google Does Not Infringe With AdWords Louis Vuitton
A discussion of the long-awaited judgment of the European Court
of Justice dated 23 March 2010 in the case about Google
AdWords 
On 23 March 2010 the European Court of Justice ("ECJ")
gave a long-awaited judgment in response to preliminary questions
asked by the French court. Google offers AdWords against payment.
In the results of a search for such an AdWord, an advertisement (a
'sponsored link') is depicted. Louis Vuitton and other
trademark holders had brought proceedings against Google in France
in connection with the sale of AdWords to third parties, and the
French court had ruled that Google was infringing the rights of the
trademark proprietors. The ECJ placed the risk on the advertiser
who has bought an AdWord from Google. Google itself is in principle
not liable for trademark infringement when AdWords are used.
However, an advertiser who buys the trademark of another party as
an AdWord from Google may be sued by the trademark proprietor. The
advertiser uses the trademark of the trademark proprietor, and the
question is whether he is infringing that trademark.
The internet user may be mistaken about the origin of the goods
or services when his search term is still on the screen and the
advertisement is shown at the same time. The ECJ thinks that
showing the advertisement creates the impression that there is a
material link between the advertisement and the trademark
proprietor. In that case detriment is caused to the so-called
'function of indicating origin' of the trademark. In the
words of the ECJ: this detriment exists if 'the advertisement
does not enable normally informed and reasonably attentive internet
users, or enables them only with difficulty, to ascertain whether
the goods or services referred to by the ad originate from the
proprietor of the trade mark or originate from a third party'.
So the trademark proprietor must be able to prohibit the
representation of third-party ads of which internet users may
wrongly think that they originate from the trademark proprietor.
However, the trademark proprietor should attack the advertiser, and
not Google, in such cases.
The ECJ held that the so-called 'advertising function'
of the trademark is not affected by the mere fact that a third
party buys the trademark of the trademark proprietor as an AdWord.
According to the ECJ, it is relevant here that normally the website
of the trademark proprietor appears in one of the highest positions
of the list of unsponsored results.
Finally, the judgment contains an interesting consideration
about Google's liability. According to the ECJ Google is
subject to the same regime as hosting providers, namely that there
is no liability if certain conditions have been met. Preventive
supervision by Google of AdWords it sells is not necessary, but
Google does have to take quick action after it has been notified of
the unlawful nature of an AdWord. It remains to be seen how this
will work out in practice. A condition for this favorable regime
for Google to apply is that Google's activity is of a mere
technical, automatic and passive nature. The French Court still has
to establish whether this is the case.
All things considered, Google has won a victory. Google may
continue its lucrative business model of selling AdWords. If an
advertiser wishes to buy another party's trademark as an
AdWord, Google may sell it. The trademark proprietor must point its
arrows especially at that advertiser.
Click here for the complete judgment