The European Court of Justice has ruled that Google’s Adwords service does not infringe trademark law
Google has won a key victory in its battle with international brand owners, after the European Court of Justice ruled that Google’s practice of selling keywords in advertising searches to the highest bidder does not infringe trademark law.
The news follows a four-year legal dispute with luxury goods retailer Louis Vuitton (LVMH), over the use of the Vuitton brand name as a search word. The company argued that allowing the sale of brand names on Google AdWords aided counterfeiters and confused consumers about the authenticity of products.
Internet users can see who advertisers are
The European Court of Justice said that Google had not infringed trademark law, but added that advertisers themselves “cannot, by using such keywords, arrange for Google to display ads which do not allow Internet users easily to establish from which undertaking the goods or services covered by the ad in question originate”.
Google’s Adwords service allows companies to bid for a position in the “Sponsored Links” section at the top right hand side of the search page. Income from Adwords now generates 97 percent of the search giant’s annual revenue of nearly $24 billion (£16bn) from advertising, according to Reuters.
Google used to block advertisers from buying others’ brand names as keywords, but changed its policy in the United States in 2004, and extended the change to Britain and Ireland four years later. The company says it will honour valid complaints from brand owners and prevent their rivals from using a trademarked keyword in their ad text.
Despite losing the case, LVMH says it is pleased things are clearer: “This long-awaited decision will be welcomed by the business community as well as by consumers,” said LVMH in a statement. “It confirms and emphasises the critical role played by trademarks in a dynamic economy to protect innovation and the investments carried out by businesses, and will avoid confusion on behalf of consumers as to the quality of the products and services they are buying.”
More trademark cases in the pipeline
Google has been sued several times for trademark violations in courts around the world. The company is currently facing eight cases in the United States alone over the sale of trademarked keywords. In the majority of cases, Google will only remove ads after receiving a complaint from the trademark owner.
“Our guiding principle has always been that advertising should benefit users, and our aim is to ensure that ads are relevant and useful,” said intellectual property lawyer Dr Harjinder S Obhi in a Google blog post. “We will study the decision as we move forward in order to make sure that we continue to deliver advertising that is perceived as both valuable and relevant by our users.”
Obhi also said that trademark rights were “not absolute”, and that user interest is best served by “maximising the choice of keywords, ensuring relevant and informative advertising for a wide variety of different contexts”.
Google has been facing trademark issues of its own, after its application for the Nexus One trademark was rejected because of a “likelihood of confusion” with a Nexus patent (number 3554195) owned by Integra Telecom. Blog comments suggest Google is most likely to contest the claim arguing there is no danger of confusion, or else offer to buy the trademark from Integra.