Use of trademarks as keywords: Supreme Court requests ECJ ruling

Almost 80 per cent of web traffic is generated by search engines, such as Yahoo! and Google. For advertisers who wish to harness this web traffic, many search engines offer referencing services that allow advertisers to purchase keywords which, when used in a search query, result in a link to the advertiser’s website being displayed at the top of the search results. Some advertisers choose generic names for their goods or services and some use their own trademarks; however, others use competitors’ trademarks in an attempt to increase their online visibility and more accurately target potential customers.

Over the past five years French courts have had several opportunities to rule on the liability of advertisers reserving keywords that contain trademarks registered by another party and the liability of search engine operators for offering for sale and selling such keywords. While most decisions have found the search engines liable for such conduct, the legal grounds for these decisions have varied from trademark infringement to misleading advertising and civil liability.

However, this situation may soon be resolved since the French Supreme Court has requested a preliminary ruling from the European Court of Justice (ECJ) on these issues. The ECJ’s preliminary ruling should harmonise case law throughout the European Union.

Keyword sales are generally considered as trademark infringement by French courts
In several instances the French courts have held search engine operators liable for trademark infringement based on Article L.713-2 of the IP Code.

One of the best-known decisions on this issue was handed down in early 2005, when Accor sued Overture (Yahoo!’s sponsored keyword services provider) for offering to reserve keywords, including Accor’s trademarks, to advertisers in the same field of activity as Accor (Accor v Overture, Nanterre High Court, 17th January 2005). These reservations allowed links to Accor’s competitors’ websites to appear at the top of the search results when an internet user typed Accor’s trademarks (eg, IBIS, ETAP, MERCURE and NOVOTEL) into the Yahoo! search engine. The Nanterre High Court found Overture liable for trademark infringement and ordered: 

• damages amounting to €200,000; and 
• the publication of the decision on Overture’s website.

The decision was appealed before the Versailles Court of Appeal, which partially upheld the judgment and specified that:

“in offering the opportunity to bid on keywords reproducing the trademarks […] of the company Accor, in trading these keywords for money without the authorization of Accor in order to allow the creation of sponsored links […] to services identical to those designated in the Accor trademarks, [the companies Overture and Overture Services] infringed these trademarks.” (Overture v Accor, Versailles Court of Appeal, 2nd November 2006).

These decisions were based on Article L.713-2 of the code, which prohibits the reproduction, use or affixing of a trademark for or to goods and services that are identical to those designated in the registration, without the consent of the trademark owner.

Many subsequent decisions by the French courts have confirmed the approach adopted by the Nanterre High Court that search engines should be held liable for trademark infringement for such conduct. However, in several decisions claims based on trademark infringement have been dismissed (although search engines have been held liable on other grounds).

A different approach by some French courts
The Paris High Court has deviated from the main trend. Indeed, in two instances it found Google not liable for trademark infringement. (Kertel v Google, Paris High Court, 8th December 2005; Laurent v Google France, Paris High Court, 13th February 2007). The court considered that by merely offering a keyword to an advertiser, Google did not infringe third parties’ trademark rights. It held that if Google used a third-party trademark to reference and present the advertiser’s sponsored links, this use did not involve offering products or services designated by the trademark, but instead amounted to use of the trademark in relation to advertising services. However, Google was still held liable on the basis of civil liability for failing to carry out preliminary verification as to whether the keywords reserved by the advertisers were registered trademarks and for “favouring” trademark infringement.

However, in a similar case the Strasbourg High Court excluded Google’s liability on all grounds. Indeed, in a judgment of 20th July 2007 (Atrya v Google), that court ruled that Google: 

• did not commit infringing acts based on the fact that a trademark is protected only in relation to the products and services that it covers (the principle of speciality); and 
• had put in place efficient policies and processes to prevent the unauthorised use of registered trademarks, as well as prohibiting the use of keywords to advertise counterfeit products.

Therefore, although there is a trend in case law that considers that search engine operators commit trademark infringement by offering sponsored keywords corresponding to trademarks, the law regarding the online use of trademarks as keywords and sponsored links still needs clarification.

In our view, this uncertainty is exacerbated by the fact that, whereas trademark law is significantly harmonised across the EU member states, decisions issued by courts in member states, have taken a different position from the main trend in French case law.

Liability in other EU member states
It appears that the main trend in French case law is contrary to the most recent decisions in other EU member states.

On 20th February 2008 a UK high court ruled that the use of a trademark alone or in combination with another term in keywords and sponsored links was not use “as a trademark” (Wilson v Yahoo! UK Limited). The court considered that the search engine company had not infringed the trademark because it had been used only by the search engine user (and not the search engine operator), and even if the search engine operator had used the trademark, it would not have been used as a trademark (ie, to identify the origin of the goods or services). 

A German court and an Italian court recently took similar positions. A German court ruled that the use by an advertiser of a trademark as a keyword is not contrary to German trademark law (Frankfurt Appeal Court, 26th February 2008, 6W 17/08), and an Italian court considered that such use is not prohibited since it does not affect the function of the trademark, which is to indicate the origin of specific products or services (Key 21 v Multiutility, Court of Milan, 15th October 2007).

Just as there is no consensus in France, there is no agreement at EU level as to whether the use of a trademark in sponsored links constitutes trademark infringement by search engine operators. 

However, this situation may be resolved by the preliminary ruling of the ECJ requested by the French Supreme Court.

ECJ preliminary ruling: towards a harmonised solution
On 20th May 2008, in three different keyword cases against Google (Google v Viaticum Ltd; Google v Cnrhh; Google v Louis Vuitton Malletier), the Supreme Court requested a preliminary ruling from the ECJ on the following issues: 

• Do the EU Trademark Directive of December 21 1988 and the Community Trademark Regulation allow trademark owners to prevent a search engine from referencing keywords that reproduce or imitate a trademark and organising the creation and display of commercial links to websites which offer products or services similar or identical to those designated by that trademark? 
• Is the answer different where the trademarks are well known? 
• If such use cannot be forbidden by the trademark owner, is the provider of sponsored links an intermediary service provider within the meaning of EU Directive 2000/31, in which case it can be held liable only after having been informed of the unlawful use of a trademark?

Therefore, the ECJ will rule on whether a search engine operator is liable for trademark infringement, and whether it is liable on any other grounds. The ECJ decision should therefore unify EU case law on such issues.

The position adopted by the Paris High Court may well prevail since it is more consistent with trademark law principles. The mere use of a trademark as a keyword by a search engine operator does not constitute use as a trademark to identify the origin of the products and services of the search engine operator. Therefore, the liability of search engine operators, if any, should be based on grounds other than trademark infringement.