ECJ in Portakabin / Primakabin: use of AdWords can be trademark infringement
On July 8, 2010, the European Court of Justice
ruled on the circumstances of trademark
infringement by the use of Google AdWords. AdWords are search
words that, if they are typed in a search engine like Google by
an internet user, create sponsored links or advertisements next
to the "objective" results that are selected on the basis of
algorithm. AdWords are sold by an auction to the highest bidder.
The highest bidders gets the top sponsored link in the search
results. Earlier this year, the Court published a ruling
concerning
the responsibility of Google herein.
These Dutch proceedings concern two competitors: Portakabin
produces and sells mobile building systems and is the holder of the
trademark "Portakabin". Its competitor Primakabin sells and rents
out new and second hand mobile building systems. For a big part,
the trade of Primakabin exists of used Portakabin units. Both
parties offer their products online.
Primakabin bought the AdWords "portakabin", "portacabin",
"portokabin" and "portocabin" for its advertisements. Those search
words are (almost) identical to the Portakabin trademark. De cabin
competitors end up to be involved in legal proceedings on the
question whether such way of online advertisement constitutes
trademark infringement.
Prejudicial questions
The Dutch Supreme Court subsequently asked, inter alia, the
following
prejudicial questions:
- Is the use of a trademark as an AdWord by a competitor
trademark use (for its own goods and services) when the
sponsored link of the advertiser appears in the search
results?
- Are there circumstances that an advertiser can rely on the
exception of referring use of the trademark, i.e. that the
advertiser has a valid reason to use the trademark of its
competitor?
- If an advertisement refers to second hand products that
were rightfully marketed in the European Community under the
(permission of) the trademark holder, is then the right of the
trademark holder exhausted?
- Are the same answers applicable if the by the advertiser
used search words are not identical to the trademark, but
contains for example a typographical error?
Trademark infringement?
Trademark infringement: the functions of the mark as the key
element
First of all, the Court establishes that the use of a
trademark as an Adword should be looked at as if the AdWord is
identical to the trademark and is used for similar goods and
services. A trademark holder can object such use, if the use of the
AdWord is liable to cause detriment to any of the functions of that
mark. Those functions include the function of indicating origin,
but also its other functions such as the communication, investment
or advertising (see also the decision
L'Oréal/Bellure). The national court must
assess whether there is such a detriment to the functions of the
mark. Important here is whether the normally informed and
reasonably attentive internet users are able to determine if the
advertiser is economically linked to the trademark holder. If
such a link is suggested, trademark infringement is easily
established.
Typo's
Concerning the AdWords with so called "typo" variations
on trademarks, the Court states that a sign is identical to a
trademark only where it reproduces, viewed as a whole, it contains
differences which are so insignificant that they may go unnoticed
by an average consumer. If the national court concludes that the
trademark and the keywords are not identical, it can still be
trademark infringement where there is a likelihood of confusion,
i.e. the understanding of the average internet user: is it an
advertisement of the trademark holder or from a third party?
Referential use
The Court argues that if an advertiser uses somebody else its
trademark, the advertiser cannot very easily rely on the exception
of referential use. An advertise can rely on such exception if the
trademark is for example used to indicate characteristics of the
goods or services, or to indicate the intended purpose as
accessories or spare parts. The national court should take all
circumstances into account, but the Court states that, in
principle, the use of an AdWord usually does not have the purpose
to indicate characteristics of the goods or services, or to
indicate the intended purpose as accessories or spare parts.
Especially when the AdWord and the linked advertisement suggest an
economic link between the advertiser and the trademark owner it is
difficult to rely on a use, which could be regarded as having been
made in accordance with "honest practices in industrial or
commercial matters".
Use of trademark is allowed by reseller
According to standard jurisprudence the trademark holder cannot
prohibit third parties the resell of the product concerned and from
using the trademark, where goods have been placed on the market in
the European Economic Area by the trademark holder or with his
consent. The trademark holders' exclusive right is then exhausted.
Since Primakabin is selling second hand Portakabin it can therefore
use the trademark "portakabin" as an AdWord to indicate such
business. This can only be otherwise when such use would damage the
reputation of the trademark. And the mere fact that a reseller
derives an advantage from using another person's trademark (i.e.
lend an aura of quality) is insufficient. However, it could be
seriously detrimental to the reputation of the trademark when, for
example, the reseller has removed reference to that trademark from
the goods. The sale of other goods by the reseller should also be
taken into account, especially when in light of their volume,
presentation or poor quality risks damaging the image which the
trademark holder has succeeded in creating for its trademark.
Conclusion
The use of AdWords is usually trademark use. If that use is liable
to cause detriment to any of the functions of that trademark, and
for example suggests an economic link between the advertiser and
trademark holder, it is considered to be trademark infringement. If
an advertiser sells second hand goods of the trademark holder, that
is a reason why he ís allowed to use the trademark as an AdWord -
unless such use of the AdWord could be detrimental to the
reputation of the trademark.
With this decision, the Court consequently applied the standard
trademark jurisprudence to online advertisement. The function of
the trademark is the key element and the Court did not introduce
any new criteria. The use of AdWords can constitute trademark
infringement under certain circumstances, but AdWords can be used
for the trade of second hand brand products. After answering these
questions, the Netherlands Supreme Court can now deliver judgment
in this matter. It looks good for Primakabin in so far as its
AdWord use of Portakabin's trademark concerns the used Portakabin
products. However, randomly using all kinds of trademarks for an
commercial (competitive) website is not sensible.