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Tuesday, 23 March 2010

The Google AdWords ruling: some comments on today's three cases

Here are some early comments on today's decision by the Court of Justice of the European Union in the three cases referred by the French Cour de Cassation for a preliminary ruling (noted by the IPKat here).

"European Court of Justice rules in Google’s favour" is the conclusion of the Official Google Blog. According to Dr Harjinder S. Obhi, Senior Litigation Counsel, EMEA,
"... Today, the Court confirmed that Google has not infringed trade mark law by allowing advertisers to bid for keywords corresponding to their competitors’ trade marks. It also confirmed that European law that protects internet hosting services applies to Google’s AdWords advertising system. This is important because it is a fundamental principle behind the free flow of information over the internet.

Our guiding principle has always been that advertising should benefit users, and our aim is to ensure that ads are relevant and useful. 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".
The Wall Street Journal Blog sees the ruling not so much as a win for Google as a pain for trade mark owners -- but good news for the legal profession:
"Overall this is good news for Google, which will continue to see rival companies trying to outbid each other for popular adwords, analysts say. It is also good news for intellectual property lawyers who are going to have to handle a flurry of cases".
The Hindu Business Line reminds readers that this is just a preliminary ruling, but that vast sums are at stake:
"While the case will be referred back to France, it's an important victory for Google — there have been several conflicting decisions on similar cases across Europe so clarification from the ECJ will be welcome.

While Google doesn't specify the revenues that Adword brings in each year, advertising is by far the biggest contributor to its annual revenues – contributing 96.7 per cent of the $23.7 billion in revenues the company made in 2009".
English law firm Shoosmiths was quick off the mark with its assessment that all was not quite as well for Google as might at first blush seem to be the case, together with some practical advice for brand-owners:
"... ‘liability to [Google] may be limited’, but ... on a case-by-case basis, the role of the ‘referencing service provider’ (in this case Google) must be considered.

If that role is purely automatic, technical, and passive, pointing to a lack of knowledge or control, then the provider cannot be held liable. However, if Google has knowledge of the unlawful nature of the activities, and it has failed to act expeditiously to remove or disable accesses, then it may be liable.

We think that this may lead to the following:

* Google will require advertisers to confirm whether they have permission to use the AdWord, and will clearly differentiate rights holders from unauthorised users of trade marks;
* Google will immediately remove or disable any AdWord which it is informed to be unlawful.
We therefore suggest that rights holders take a close look at search engines by carrying out searches for their products and/or brands, then write to businesses that have purchased their trade marks as AdWords or similar; and to Google, requesting that the AdWord or similar is removed or disabled".
Echoing a more cautious view was the New York Times' Technology section, entitled "Europe Says Google Can Sell Trademarks but at a Risk of Suits".

Another perceptive comment comes from Sheldon Klein and his colleagues at Arent Fox:
"One may question the CJ’s finding that Google’s AdWords program is merely technical, automatic and passive in nature. One significant open question for the European national courts to consider seems to be the degree to which Google’s “Keyword Suggestion Tool” negates the company’s “service provider” exemptions by placing it in a more active role with its advertising clients. Certainly, Google will still need to act diligently when it is provided with information about trademark infringement".
Gareth Dickson (Ashurst) has been extensively monitoring the early US response. He identified two points of significance:
"The first is that most of the non-party quotes come from lawyers based in London (where Google's policy is unlikely to change as a result of this ruling) and not France (where Google's policy might well change). ... The second is that while both Google and LVMH claimed victory this morning, LVMH's (NASDAQ) shares are up almost 1.5% while Google's (NASDAQ) shares dropped sharply when the markets opened this morning and have continued to drop throughout the day. As I write this, they are down just over 2.25%. No doubt the largest proportion of this movement is attributable to the anticipated impact of Google's move away from direct interfacing with the Chinese market, but I also wonder whether the lack of a clear "win" for Google on the Art. 14 point is being seen as having negative implications for the (lucrative) YouTube arm of their business".

1 comment:

austrotrabant said...

Concerning the liability of advertisers: It has already been clear in the past that misleading advertisement or advertising bearing the TM of a competitor in the text (description) of the ad is violating the TM holders' rights. Such cases have been and will be in the future be dealt with under trademark law and law of unfair competition.


Concerning the liability of Google's AdWords service we shall see how the courts interpret such things as the Keyword Tool, but in fact Google is there doing not much more than telling the advertiser which search terms are somehow related to each other. The red "Did you mean..." function on the Google website is pretty much the same. And I truly wonder how AdWords should be influencing the advertiser when drafting the text of the description?


So what is the current fuss all about? Maybe lawyers should to accept that "Google Bashing" is not a sustainable way to maintain business. At the same time TM-owners will have to accept that if they believe that the Cost-per-Click price is the only thing they need to worry about they might have missed some developments in online advertising.


Maybe the lawyers-fraction should stop moaning about their future prospects but for once actually be productive and start drafting a European Framework for Advertising on Search Engines? In my opinion the meeting tomorrow could be a god starting point.


Kind regards,

austrotrabant

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