Keywords - Germany becomes second EU country in two months to raise questions with the ECJ

Germany has become the latest EU Member State to have its senior court refer a question to the European Court of Justice (“ECJ”) about the link between sponsored search engine keywords and trade mark infringement.

Keywords are words that are sold by search engines which, when typed by internet users into search engines, trigger a ‘sponsored link’ advertisement. They have become the focus of increased litigation over the last few years in Europe and the US. The problem for many brand owners is that some search engines allow advertisers to bid on their competitors’ trade marks – or even suggest trade marked terms they might want to bid on. This leads to competitors’ sponsored links appearing on the same search results page as the brand’s official website. If a brand owner is not happy about this, its only option is to outbid its rivals to obtain its own trade mark as a keyword – or, as some have decided instead, to test the legitimacy of the practice in the courts.

The questions referred by the German court echoed the main thrust of those referred by the Dutch courts in December 2008 and the French courts in May 2008, which all asked for clarification on the meaning of “use” of a trade mark under the Trade Marks Directive.

The UK – Google’s policy change

Sponsored keywords have been a particular issue for UK brand owners since May 2008, when Google did a U-turn on its policy relating to the registration of trade marked terms as keywords. Google ditched its practice of allowing trade mark owners to notify it of their trade marks and to prevent the registration of those trade marks as keywords. Instead, Google decided not only to allow advertisers to bid on trade marks, but to allow its ‘keyword suggestion tool’ to suggest any words, including trade marks, that advertisers might want to bid on as keywords.

The change in UK policy brought Google’s UK and US policy on this issue in line. Many commentators saw the change as a response to a UK case that generated much attention in March 2008: that of Mr Spicy. In the Mr Spicy case (Wilson v Yahoo!), the claimant lost his case for trade mark infringement against Yahoo!, which it claimed had sold his trade mark ‘MR SPICY’ as a keyword. However, although the judge commented that the use of a trade mark as a keyword by a search engine would not infringe a registered trade mark, the decision was only a summary judgment by a lower court, and Yahoo! had not used the claimant’s trade mark as a keyword (it used the generic word ‘spicy’). This and the fact the claimant was not represented by lawyers means that the decision has questionable significance.

Google UK’s policy change has fanned the flames of controversy over keywords in the UK, and many trade mark owners strongly objected to the change. In December 2008, it was reported that Interflora had commenced proceedings against Marks and Spencer and another online flowers retailer for bidding on the word ‘Interflora’ as a Google keyword. In light of the Dutch and French court references to the ECJ, as described below, it will be interesting to see how the English courts deal with such claims in the absence of an ECJ decision.

The German Question

On 22 January 2009, the German Federal Supreme Court (BGH) referred the following question to the ECJ:

"Is there use for the purposes of Article 5(1)(a) of Directive 89/104/EEC where a third party provides as a keyword to a search engine operator a sign which is identical with a trade mark, without the consent of the proprietor of that trade mark, so that, on inputting the sign identical with the trade mark as a search term into the search engine, an electronic promotional link to the third party's website advertising identical goods or services appears in an advertising block set apart from the list of search results, that link is marked as a sponsored link and the advertisement itself does not comprise the sign nor contain any reference to the trade mark proprietor or to the products it is offering for sale?"

The German court’s question arose from the Bananabay case, in which the claimant took action for trade mark infringement against its competitor’s use of its mark as a keyword. The BGH will not be able to rule on this case until it has received the ECJ’s guidance.

The Dutch Questions

The Dutch Court’s questions related to whether the use of a trade mark as a keyword by an advertiser (rather than by the search engine) to prompt a sponsored link could constitute trade mark infringement. The questions complemented the questions asked in May 2008 by the French courts, which related to whether the sale of a trade mark by search engines could constitute trade mark infringement.

The case in question related to claims brought by Portakabin for trade mark infringement against Primakabin, which re-sells second-hand Portakabin products. The alleged trade mark infringement involved Primakabin’s registration of PORTAKABIN (a trade mark owned by its competitor), and mis-spelt versions of the same, as a keyword with several search engines. Searches for these words generated sponsored links to Primakabin’s website.

The Dutch lower court and court of appeal found no trade mark infringement. However, the Dutch Supreme Court decided it needed to refer the following questions to the ECJ before ruling on the case:

1. Does the use of another party’s trade mark as a keyword constitute “use for goods and services” under the Trade Marks Directive? In particular, does it make a difference if the link to the advertiser’s website, which appears as a result of a search, appears as a ‘natural’ search result, or as a ‘sponsored link’, and does it make a difference if the advertiser’s offer for sale of goods which are identical to trade marked goods appears on the search engine results page?
2. If the answer to question 1 is yes, is use of a trade mark as a keyword still acceptable because it is an indication of the characteristics of the goods?
3. If the answer to question 1 is yes, is use of trade marks as keywords still acceptable because the trade mark owner’s rights have been exhausted (because in this case the advertiser is offering genuine but second-hand trade marked goods for sale)?
4. Would the answers to questions 1-3 be the same if the advertiser had registered only mis-spelt versions of the trade mark?
5. If an advertiser’s use of a trade mark as a keyword does not constitute “use for goods and services”, may an EU Member State apply its national trade mark law to prevent this use if the use occurs “without due cause” and “takes unfair advantage of” or is detrimental to the distinctive character or repute of the trade mark?

The questions of the Dutch court were directed to the issue of the use of trade marked terms as keywords by advertisers (rather than by search engines). They should therefore be seen as complementary to the questions asked by the French courts earlier in 2008, as they addressed a slightly different issue.

The French Questions

In May 2008, the French courts referred several questions to the ECJ from a case where Louis Vuitton accused Google of infringing its trade marks. The lower French courts had found Google liable for this, but Google appealed. The highest national court decided to ask the ECJ whether Google could be liable for allowing advertisers to register another company’s trade mark as a keyword.

The logic of taking on Google rather than a competitor is that success for the trade mark owner could put a stop to its trade marks being registered as keywords by any advertiser.

The questions referred to the ECJ by the French court in May 2008 are still to be answered. These included:

1. Are search engines which allow advertisers to bid on trade marked keywords with links to sites which sell counterfeit products making “use” of a mark under the Trade Marks Directive and Regulation 40/94 on the Community Trade Mark which the trade mark owner is entitled to prohibit?
2. Furthermore, if the trade marks have a significant reputation, can the owner prohibit this use?

Conclusion

The German, French and Dutch courts are not the only courts that have been asking the ECJ questions relating to keywords. In August 2008, for example, the Austrian courts also referred several questions to the ECJ on the issue. The law on trade marks should be harmonised within the European Union and, if it was not already clear from the numerous conflicting decisions on this subject, it is clear from the numerous questions being asked of the ECJ that guidance on this issue is required as soon as possible.

Unfortunately, regardless of the number of questions being asked of the ECJ, the prospect of receiving any answers from the ECJ is still a distant one. The gap between a referral and an ECJ ruling can be up to 18 months, meaning that brand owners (and search engines) may have to wait a number of months yet before they finally hear the ECJ’s answer to any of the questions asked.