Portakabin ruling: a bad result for trade mark owners?

Another day, another AdWord ruling, it seems. The Court of Justice of the European Union gave its ruling this morning in Case C‑558/08 Portakabin Ltd and Portakabin BV v Primakabin BV, a reference for a preliminary ruling from the Hoge Raad der Nederlanden (Netherlands).

Portakabin Ltd, who made and sold mobile buildings, owned the Benelux trade mark PORTAKABIN for goods in Classes 6 (metal buildings, parts and building materials) and 19 (non-metal buildings, parts and building materials). Portakabin BV was its subsidiary and licensee of this mark. An unrelated company, Primakabin, sold and let new and second-hand mobile buildings, both its own and those made by Portakabin.

Using Google's AdWords referencing service, Primakabin chose the keywords ‘portakabin’, ‘portacabin’, ‘portokabin’ and ‘portocabin’, representing Portakabin's name and three popular mis-spellings of it. Originally, the heading of Primakabin’s ad, which appeared once one of those words was entered into the search engine, was ‘new and used units’. Later Primakabin changed this to ‘used portakabins’.

Portakabin sued Primakabin for trade mark infringement, seeking injunctive relief, but failed, the trial judge taking the view that Primakabin did not use the word ‘portakabin’ to distinguish goods and wasn't gaining unfair advantage through such use: it was merely using the word ‘portakabin’ to direct interested parties to its website, on which it offered ‘used portakabins’ for sale. Portakabin appealed to the Gerechtshof te Amsterdam, which prohibited Primakabin from using advertising which contained the words ‘used portakabins’ and, in the event that it used the keyword ‘portakabin’ and its variants, from providing a link leading directly to pages of its website other than those on which units manufactured by Portakabin were offered for sale. However, since that court held that use of the keyword ‘portakabin’ and its variants did not constitute use in relation to goods or services, Portakabin appealed further to the Hoge Raad der Nederlanden. The Hoge Raad decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1. (a) Where a trader in certain goods or services (“the advertiser”) avails himself of the possibility of submitting to the provider of an internet search engine [a keyword] … which is identical to a trade mark registered by another person (“the proprietor”) in respect of similar goods or services, and the [keyword] submitted – without this being visible to the search engine user – results in the internet user who enters that word finding a reference to the advertiser’s website in the search engine provider’s list of search results, is the advertiser “using” the registered trade mark within the meaning of Article 5(1)(a) of Directive 89/104 …?

(b) Does it make a difference in that regard whether the reference is displayed:

– in the ordinary list of webpages found; or

– in an advertising section identified as such?

(c) Does it make a difference in that regard

– whether, even within the reference notification on the search engine provider’s webpage, the advertiser is actually offering goods or services that are identical to the goods or services covered by the registered trade mark; or

– whether the advertiser is in fact offering goods or services which are identical to the goods or services covered by the registered trade mark on a webpage of his own, which internet users … can access via a hyperlink in the reference on the search engine provider’s webpage?

2. If and in so far as the answer to Question 1 is in the affirmative, can Article 6 of Directive 89/104, in particular Article 6(1)(b) and (c), result in the proprietor being precluded from prohibiting the use described in Question 1 and, if so, under what circumstances?

3. In so far as the answer to Question 1 is in the affirmative, is Article 7 of Directive 89/104 applicable where an offer by the advertiser, as indicated in Question 1(a), relates to goods which have been marketed in the European Community under the proprietor’s trade mark referred to in Question 1 or with his permission?

4. Do the answers to the foregoing questions apply also in the case of [keywords], as referred to in Question 1, submitted by the advertiser, in which the trade mark is deliberately reproduced with minor spelling mistakes, making searches by the internet-using public more effective, assuming that the trade mark is reproduced correctly on the advertiser’s website?

5. If and in so far as the answers to the foregoing questions mean that the trade mark is not being used within the meaning of Article 5(1) of Directive 89/104, are the Member States entitled, in relation to the use of [keywords] such as those at issue in this case, simply to grant protection – under Article 5(5) of that directive, in accordance with provisions in force in those States relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services – against use of that sign which, in the opinion of the courts of those Member States, without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark, or do Community-law parameters associated with the answers to the foregoing questions apply to national courts?

Today the Court of Justice ruled as follows:

1. Article 5(1) of ... Council Directive 89/104 ... must be interpreted as meaning that a trade mark proprietor is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that mark, which that advertiser has selected for an internet referencing service without the consent of the proprietor, in relation to goods or services identical to those in respect of which the mark is registered, where that advertising does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party [does this remind you of the first ruling in Google France, here?].

2. Article 6 of Directive 89/104 ... must be interpreted as meaning that, where use by advertisers of signs identical with, or similar to, trade marks as keywords for an internet referencing service is liable to be prohibited pursuant to Article 5 of that directive, those advertisers cannot, in general, rely on the exception provided for in Article 6(1) in order to avoid such a prohibition. It is, however, for the national court to determine, in the light of the particular circumstances of the case, whether or not there was, in fact, a use, within the terms of Article 6(1), which could be regarded as having been made in accordance with honest practices in industrial or commercial matters.

3. Article 7 of Directive 89/104 ... must be interpreted as meaning that a trade mark proprietor is not entitled to prohibit an advertiser from advertising – on the basis of a sign identical with, or similar to, that trade mark, which that advertiser chose as a keyword for an internet referencing service without the consent of that proprietor – the resale of goods manufactured and placed on the market in the European Economic Area by that proprietor or with his consent, unless there is a legitimate reason, within the meaning of Article 7(2), which justifies him opposing that advertising, such as use of that sign which gives the impression that the reseller and the trade mark proprietor are economically linked or use which is seriously detrimental to the reputation of the mark.

[This is the really interesting bit, says the IPKat: the Court is getting into some detail here in directing how the trial court exercises its judgment in determining whether there is a "legitimate reason"] The national court, which must assess whether or not there is such a legitimate reason in the case before it:

– cannot find that the ad gives the impression that the reseller and the trade mark proprietor are economically linked, or that the ad is seriously detrimental to the reputation of that mark, merely on the basis that an advertiser uses another person’s trade mark with additional wording indicating that the goods in question are being resold, such as ‘used’ or ‘second-hand’ [one can see why: any other result would make it difficult for traders in the second-hand market to attract and inform consumers];

– is obliged to find that there is such a legitimate reason where the reseller, without the consent of the proprietor of the trade mark which it uses in the context of advertising for its resale activities, has removed reference to that trade mark from the goods, manufactured and placed on the market by that proprietor, and replaced it with a label bearing the reseller’s name, thereby concealing the trade mark [This looks wrong in principle and would possibly be caught in the UK as 'reverse passing off' even if it doesn't infringe the trade mark. Might it also be an act of unfair competition?]; and

– is obliged to find that a specialist reseller of second-hand goods under another person’s trade mark cannot be prohibited from using that mark to advertise to the public its resale activities which include, in addition to the sale of second-hand goods under that mark, the sale of other second-hand goods, unless the sale of those other goods, in the light of their volume, their presentation or their poor quality, risks seriously damaging the image which the proprietor has succeeded in creating for its mark [This ruling is understandable in theory, though it means that business practices which might otherwise be seen as legitimate or not, per se, are being made to depend increasingly on combinations of facts -- some subjectively assessed -- before a lawyer can confidently advise a client to proceed or not].

The IPKat is stopping here, because he has had a long day and needs to think about this ruling before making any further comments. Merpel says, it's strange how the Court of Justice seems to oscillate between decisions that are really generous, arguably unreasonably so, to the trade mark proprietor and those which appear to be likely to damage him.

Comments here from The Inquirer, PC World, Wall Street Journal