Google Wins European Legal Case Over AdWords Trademarks

On March 23rd, the European Court of Justice announced its long-awaited decision in three Google Ads (AdWords) cases regarding copyright infringement and the use of trademarks, all with favourable outcomes for Google. The result also has implications for AdWords advertisers who bid on the trademarks of competitors.

The Louis Vuitton luxury goods maker had sued Google in France over its AdWords policy which allowed third parties, including LV competitors, to bid on its trademarked terms as keywords. The outcome was that the ECJ supported Google’s position that it merely provides technology services to advertisers who make legally significant judgments using the technology. Therefore the ECJ ruled that advertisers, not Google, make the requisite trademark “use”, and Google can qualify as a web host of its advertisers’ content and thus is eligible for the associated safe harbour, if it remains sufficiently passive.

Google has been using a different approach to trademarks in some countries. For example, in the US & UK, AdWords advertisers can bid on competitor’s trademark keywords although the terms can’t be used in the advert text. In most other countries, including France, Google has a policy of allowing advertisers to protect their own trademark as a keyword, to stop others bidding on it.

These different approaches reflect local copyright legislation but makes for a confused policy and the latest ruling means that parties using AdWords may still sue each other if there’s an alleged trademark violation. Once Google is notified of a violation, it must act, much like copyright claims for unauthorised use of video in the US on YouTube, for example. In such cases Google removes the video at the copyright owners behest and, if it fails to comply with these requests, Google could be liable.

For advertisers that are able to bid on a competitor’s business name or trademarks, they need to determine if this is a worthwhile strategy. Such an approach can create bad feeling between companies and advertisers also have the avoid the charge of trying to ‘pass off’ their own advert and link as a competitors listing, which can also have legal implications as well as create negative feelings from the searcher. Clickthrough rates on competitor keywords tend to be low anyway, which drives up the average cost per click and it can be a policy that can backfire on the advertiser.

Although Google has escaped serious censure from the Louis Vuitton case, it will need to review its position and practices concerning trademarked search terms. Advertisers will also need to consider the implications of bidding against competitor terms within their local copyright legislation, plus companies that are affected by such tactics will need to weigh up the likely cost of responding to advertisers and taking direct legal action against them.

If you’d like more information about how this ruling and how it could affect the marketing of your business through Google Ads (AdWords), please contact us now.

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