Google AdWords

Posted on Posted in Prawo internetu

Porządkuję moje wypowiedzi sprzed lat, tak żeby wszystko było dostępne w jednym miejscu. To artykuł z 2010, który ukazał się w American Investor. (Old piece of my writing. This one is from 2010)

European Court of Justice judgment on AdWords

On March 23, 2010, the European Court of Justice issued a judgment involving AdWords, Google’s system for displaying ads (Google v. Louis Vuitton, joint cases C-236/08, C-237/08 and C-238/08). The system of displaying ads works the following way: when a search term is entered, the Google search engine displays results starting with the most relevant and continuing in order of diminishing relevance, known as the “natural” search results. Alongside the natural results, sponsored links are displayed using the AdWords service.

What’s the problem?

Anyone can buy AdWords from Google—which might include, for example, a trademark—and then an ad will be featured, as a sponsored link, when a user inputs the trademark as a search term. This enables the competitor of a trademark holder to advertise to Google users searching under the trademark term. Trademark holders objected and filed suit against Google in France. The French courts sought a preliminary ruling from the ECJ concerning the Trademark Directive and the Electronic Commerce Directive. The ECJ found, firstly, that by offering the opportunity to purchase and display advertising using trademarks belonging to other firms, Google itself is not “using” the trademarks. Thus Google could not be liable for trademark infringement that might result from use of the AdWords service.

Secondly, the ECJ stated that advertisers using the AdWords service could potentially be liable for trademark infringement. Most significantly, the court stated that a condition for such liability is the possibility of misleading consumers with respect to whether the advertiser using trademark terms in Ad-Words is related to the trademark holder. For example, under the ECJ ruling, if a man manufacturer or distributor of pens that is unrelated to Parker advertises using the Parker trademark without Parker’s consent, it may be liable for trademark infringement if there is a risk of misleading consumers concerning whether the advertiser is connected to Parker.

Trademark protection?

The ECJ thus added new conditions for trademark protection. National and E.U. laws clearly state that a trademark owner may prohibit use of the mark for goods of the same kind as those for which the mark is registered. The ECJ held, however, that the holder will be able to do so only if there is a risk that the consumer will be confused as to whether the goods bearing the mark come from the holder of the trademark or an authorized user. Returning to the Parker example: if a third party begins to sell pens falsely labeled as “Parker,” the Parker firm will be able to prohibit sale of the pens if there is a risk of misleading consumers as to whether the pens come from Parker or an unrelated business. In this example, it should not be difficult to demonstrate the risk. But it is easy to imagine a situation where the proof would not be so obvious. What about a case where a producer refers to its pens as “a cheaper Parker,” or advertises them as “X pens— Parker quality at a lower price”? On the other hand, what if a company distributes original office products and advertises using the producers’ trademarks—will the producers be entitled to prohibit such advertising by claiming that there is a risk that the consumer will not know whether the distributor is affiliated with the producer?

Additional grounds

The ECJ does not seem to be headed in the right direction for trademark protection. It conflates trademark protection with protection against unfair competition—which does not involve awarding rights to a business, but fighting unlawful actions by competitors. The essence of trademark registration is awarding exclusive rights, similar to ownership rights, in order to provide the holder a monopoly on use of the given designation for certain goods. This construction should foster trademark protection. However, the ECJ ruling tends to require additional grounds for protection, which may thus weaken trademarks.

It should also be pointed out that in several cases the Polish Supreme Court has prohibited a holder from using its own registered trademark on the grounds that the holder violated principles of fair competition. Will the protection afforded by trademark registration become illusory if the courts take this approach? Or is it sufficient to use a trademark without bothering to register it?

ISPs’ liability

Another crucial issue discussed by the ECJ is the liability of Internet service providers for materials uploaded via their service. Is Google liable for unlawful advertising placed online via the AdWords system? Are services with user-generated content (such as YouTube) liable for materials uploaded by users?

As a rule, an entity providing hosting services, involving storage of information provided by users of the service, is not liable for the information stored. The question is where hosting ends and active participation by the service provider begins. The AdWords ruling sets out valuable guidelines for determining when the ISP will be liable. According to the ECJ, if the service provider plays such an active role in storing the information that it can be found to have knowledge of the content or control over it, then the service provider’s liability may be considered. The ECJ also stated that if an Internet service provider (Google in this case) has created software in order to process information stored by users of the service, and controls the stored information using the software, this may weigh in favor of the ISP’s liability.

 Another brick in the wall

The ECJ ruling appears to confirm a trend which has been noticeable for some time of departing from the nearly complete exclusion of ISPs’ liability for content published on their sites. The ruling may encourage claims against Internet service providers, for example when content that infringes copyright is hosted. Similar cases are already pending in the U.S., the most important of which is Viacom v. Google, concerning content on YouTube.

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