The Use of Ad Words When Selling Trademark Products on the Internet
A short discussion of the judgment of the Court of The Hague
dated 9 January 2008 in the Portakabin / Primakabin case.
Introduction
To what extent is a seller of another party's trademark
products allowed to use this trademark to advertise? In principle,
in the analog world the use of a trademark to advertise for
trademark products is allowed - think for instance of dealers of
second hand cars who lure their customers with the notice 'BMW
specialist'. Advertising in a digital environment, however,
appears to be somewhat more complicated. With regard to this issue,
The Court of The Hague was faced with the question whether the use
of another party's trademark in Ad Words constitutes trademark
infringement. Ad Words are sponsored search terms which, if you
enter them on the Google website, provide an ad or link to a
website in addition to the ordinary search results.
Two companies, Primakabin and Portakabin, both engaging in the
trade of cabins for temporary accommodation, had a conflict
regarding these Ad Words. Primakabin had registered the words
'portakabin', 'portacabin', 'portokabin'
and 'portocabin' as Ad Words. When entering one of these
search terms in Google, a Primakabin ad appeared above or next to
the search results with a hyperlink to the homepage of its website.
Via this website Primakabin shows its product offer, including
products by Portakabin . Portakabin, rightholder of the word mark
'Portakabin', is of the view that the registration and the
use of its trademark in the Ad words constitutes a trademark
infringement.
Trademark Infringement?
Already in 2006 preliminary relief proceedings were conducted
regarding the dispute between Portakabin and Primakabin, in which
proceedings the Court of Appeal of Amsterdam (Court of Appeal
Amsterdam 14 December 2006, IER 2007, 27) ruled that the
registration and the use of the same Ad Words by Primakabin could
not be regarded as a use to distinguish goods within the meaning of
Article 2.20 paragraph 1 sub a through c of the Benelux Treaty on
Intellectual Property. The Court of Appeal was also of the view
that there was no unlawful behavior and commented that the Court of
Appeal only considered the use of the Ad Words justified in so far
as clicking on the link produced a direct link to the Primakabin
page on which the Portakabin products are offered. Therefore,
Primakabin was not allowed to first direct the internet users to
its homepage.
In the proceedings on the merits instituted by Portakabin, the
Court of The Hague ruled differently. The use of the trademark
'Portakabin' in an Ad Word can actually be regarded as a
use to distinguish goods (Article 2.20 paragraph 1 sub a). The same
is true for the terms 'portacabin', 'portokabin'
and 'portocabin', because the differences with the word
mark 'Portakabin' are so insignificant that they may go
unnoticed by an average consumer; all this as was decided by the
European Court of Justice ("ECJ") in the Arthur &
Félicie judgment (ECJ 20 March 2003, case no. C 291/100, NJ
2004, 208). What is more, the Court established that the other
terms are precisely used as Ad Words because internet users
sometimes make a mistake when entering a search term. The
resembling words are used as Ad Words in order to still direct
consumers who make a typing error to the correct ad. According to
the Court, this use of The Portakabin trademark by Primakabin
nevertheless does not constitute a trademark infringement.
When Portakabin puts its products on the market its trademark right
with regard to these products will be 'exhausted', which
means in the present case that Primakabin is free to use the
trademark 'Portakabin' when advertising for the second hand
Portakabin products it is selling. This rule nevertheless only
applies if the ad actually relates to Portakabin products and if
the manner of advertising does not constitute a legitimate reason
for Portakabin to oppose this (ECJ 23 February 1999, case no.
C-63/97, NJ 2001, 134 BMW/Deenik). In the view of the
Court, Primakabin's actions do meet these requirements and
therefore do not constitute trademark infringement, neither with
regard to the other search terms.
To conclude, it is striking that the Court does not follow the
judgment of the Court of Appeal in preliminary relief proceedings
regarding the linking: it considers that it is not unlawful that
internet users first arrive at the homepage of Primakabin, instead
of the underlying site where (amongst other things) the trademark
products of Portakabin are offered. This is remarkable, because the
above-mentioned European case law requires that the ad must
specifically relate to the trademark products, and that the
impression may not be created that there is a commercial relation
with the rightholder. In the event of a mere reference to a
homepage, which usually mostly contains information about the
company itself, one may wonder to what extent this requirement is
met.
Conclusion
The judgment of the Court of The Hague in the Portakabin /
Primakabin case does not change the rule that trademark use by
means of advertisements for third-party trademark products is, in
principle, allowed, as was established by the ECJ in the
above-mentioned BMW/Deenik judgment. The starting point is
that sellers of such products must be able to make clear to their
customers that they sell these products and where these products
can be found, and this also applies to sales over the Internet. It
is nevertheless remarkable that the Court also allows the use of
signs that are similar to the trademark as Ad Words.
To conclude, one could still argue about the question whether or
not Primakabin should have created a deep link instead of directing
internet users to its homepage.