Links & Law - Google's Ad Words Under Attack - Overview over the pending lawsuits

Keyword advertising is an essential revenue stream for search engines. Several lawsuits threaten this revenue model and could cut into the revenue streams of Google, Yahoo, and others. This page covers the development of lawsuits against Google in Germany, France and the USA.

What exactly are Google's adwords? They are a quick and simple way to purchase highly targeted cost-per-click (CPC) advertising, regardless of your budget. AdWords ads are displayed along with search results on Google, as well as on search and content sites in our growing ad network, including AOL, EarthLink, HowStuffWorks, & Blogger.... When you create a Google AdWords ad, you choose keywords for which your ad will appear and specify the maximum amount you're willing to pay for each click. You only pay when someone clicks on your ad"

And where is the legal problem? Google's AdWords service allows advertisers to sponsor particular search terms. Whenever that term is searched the advertiser’s link will appear next to the search results. A company can choose a trademark protected term as keyword. So if you enter "trademark protected term" in the Google search box and hit "Search", you would get listings from advertisers who paid for placement with this keyword. Google puts those listings off to the right side of the screen, clearly marked as ads. Trademark owners are concerned about their brand awareness and insist that this behaviour violates their trademarks.

What does Google think about it? Google's FAQ states: "As a provider of space for advertisements, we cannot arbitrate trademark disputes between advertisers and trademark owners. As stated in our Terms and Conditions, advertisers are responsible for the keywords and ad text that they choose to use. We encourage trademark owners to resolve their disputes directly with our advertisers, particularly because the advertisers may have similar advertisements on other sites. As a courtesy, we are willing to perform a limited investigation of reasonable complaints. When we receive a complaint from a trademark owner, our review is limited to ensuring that the advertisements at issue are not using the trademarked term as a keyword trigger. If they are, we disable those keywords from the ad campaign...."

"Companies have also filed trademark infringement and related claims against us over the display of ads in response to user queries that include trademark terms. The outcomes of these lawsuits have differed from jurisdiction to jurisdiction. A court in France has held us liable for allowing advertisers to select certain trademarked terms as keywords. We have appealed this decision. We were also sued in Germany on a similar matter where a court held that we are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating similar issues in other cases in the U.S., France and Germany.

In order to provide users with more useful ads, we have recently revised our trademark policy in the U.S. and Canada. Under our new policy, we no longer disable ads due to selection by our advertisers of trademarks as keyword triggers for the ads. As a result of this change in policy, we may be subject to more trademark infringement lawsuits. Defending these lawsuits could take time and resources. Adverse results in these lawsuits may result in, or even compel, a change in this practice which could result in a loss of revenue for us, which could harm our business."

I personally don't believe that Keyword advertising does confuse consumers because consumers don't expect that the ads are connected to the trademark. But we will have to wait and see what the courts say.

Despite several lower and higher regional court decisions in Germany there is no legal certainty yet. The German Federal Court of Justice (BGH) is expected to issue a decision on AdWords in 2008, hopefully bringing the many year long discussion to an end. In 2006, the BGH has held that the use of a trademark as a metatag constitutes trademark infringement. Even if the trademark itself is not displayed there can be a trademark use. Following the Meta-Tag decision, German courts mainly argue if metatags and keyword should be treated equal. Finding and reasoning differ. In my opinion there is no trademark infringement, if the advertisement is labelled as such and the trademark itself is not displayed in the ad (see Ott, MMR 2007, 123 f.).

Austria

In 2007 the Supreme Court of Austria held that the use of a trademark as a keyword infringes the rights of its owner, if the ad appears above the search results (advertisers can't choose between above and on the right side of the search results...) using the trademark as header (it is unclear if this citation of the trademark had an impact on the decision...). The decision has also been criticised for confounding arguments from trademark and unfair competition law. The court had reasoned that users could get the wrong impression that the advertiser is closely related to the owner of the trademark.

You can find the decision (in German) at http://www.linksandlaw.de/urteil175-haftung-adwords-oesterreich.htm.

United Kingdom

Following the reasoning in the Reed Executive plc v. Reed Business Information decision (for more information see Update 37) it is unlikely that keyword advertising constitutes trademark infringement or the common law tort of passing off (Please note: There is no unfair competition law in the UK).

France

1. Advertisers in France should not use trademark protected terms as keywords. The Court of Nanterre, the Court of Paris, the Court of Appeal of Versailles - all have found that advertisers committed a trademark infringement. Only the Court of Strasbourg (decision of July 20, 2007, Atrya vs. Google and K par K/Techni Feneres) has stressed the initial function of a trademark to distinguish a product or a service and to associate it to a specific origin and found no trademark infringement. Nethertheless the court deemed the use of the trademark to be unfair competition (parasitism based on the profiting of the well known brand of a competitor). So far no French court held the use of trademark protected keywords to be legal!

2. As for the liability of search engines, courts in France differ on the reasoning. According to the Court of Nanterre Google is an active trademark infringer. The mere fact of suggesting the infringement by using the mark as proposed keyword is enough. The court of Paris in contrary underlines that Google does not use the trademark for identical or similar products / services in a commercial manner. So there is no trademark infringement. But nethertheless Google's conduct was not deemed legal. Google's liability was based on the common civil principle of fault (Section 1382 of the Civil Code) due to the lack of preliminary control to check whether chosen keywords do infringe third party rights. The Court of Strasbourg, (decision of July 20, 2007, Atrya vs. Google and K par K/Techni Feneres) took into account technical measures implemented by Google (a filter and links to check third parties' rights) and excluded Google's liability on all grounds. This is the most recent decision from France and the first to exclude a search engine from liability in an Adword related lawsuit! It remains to be seen if other courts adopt the approach of the Court of Strasbourg.

3. According to the Cour d'Appel de Paris, French courts have no jurisdiction if the incriminated ads lead only to websites owned by companies established outside France and appear only on google.co.uk, google.de and google.ca, but not on google.fr. (decision of June 6, 2007, Google Inc. and Google France v. Axa et al, CRI 2007, 155 ff.).

According to the Amsterdam Court of Appeal (Portakabin v. Primakabin, Decision of December 14, 2006) advertisers are allowed to use a trademark as keyword, at least when

- the link in the ad leads directly to the subpage on which the branded products are offered for sale, and not to the homepage.