Over five years ago, in early 2004, luxury fashion designer Louis Vuitton sued Google in connection with the sale of search-related advertising. You will recall the company behind the Louis Vuitton brands and many others (LVMH Moët Hennessy • Louis Vuitton S.A., usually shortened to LVMH) has been very aggressive in policing and protecting its marks on eBay and other Internet sites. The Paris District Court held that Google was engaged in trademark infringement, unfair competition and misleading advertising. The Paris Court of Appeals subsequently ordered Google (and its French subsidiary) to pay €300,000 in damages. When those rulings were announced, a spokesperson for Louis Vuitton, praising the Court’s decision, said, "It was absolutely unthinkable that a company like Google be authorized, in the scope of its advertising business, to sell the Louis Vuitton trademark to third parties, specifically to Web sites selling counterfeits." The remarks went on to state, "This milestone ruling grants protection for the first time to both consumers and brand owners” adding that Louis Vuitton believed the Court’s finding meant that Google's services were “misleading advertising services."
Google appealed, and today the European Court of Justice (ECJ) released its ruling on appeal of that decision. For you purists in the audience, procedurally within the ECJ, the decision is one in respect of the Joined Cases C-236/08 to C-238/08, in the proceedings captioned Google France SARL, Google Inc. v. Louis Vuitton Malletier SA (C-236/08), Google France SARL v. Viaticum SA, Luteciel SARL (C-237/08), and Google France SARL v. Centre national de recherche en relations humaines (CNRRH) SARL, Pierre-Alexis Thonet, Bruno Raboin, Tiger SARL (C-238/08).
The case essentially asks whether Internet search providers can be liable for trademark infringement when selling ‘keywords’ that are based upon the trademarks of another. The ECJ ruling doesn’t completely immunize or exonerate Google, nor does it leave advertisers defenseless either, but it does in effect give the green light to Google and other search providers to continue to offer keywords to bidders; there had been concern in Europe that a negative judgment from the ECJ would have brought all such services to a halt. The decision takes a now familiar, “let’s examine if you do more than just sell the trademark as a keyword at the request of the advertiser” approach.
So, if all an Internet search company such as Google is doing is selling keywords, the decision appears to allow Google to do so, despite a showing of confusion by consumers. But – as those of you advertisers and marketing professionals who are tuned in to AdWords’ algorithmically driven ‘suggestions’ will know – Google’s program actually suggests keywords derived from previous selections. So Google’s AdWords code might suggest “British Airways” as related to “Virgin Atlantic” or “Ryanair” or, as in this case, "imitation” or “fake” coupled with “handbags” as a keyword related to "Louis Vuitton.” Not merely passively selling an existing word or mark and more actively engaging in the ‘suggestion’ process, in the Court’s view, consequently attaches liability.
By analogy, one can rationalize such a decision with similar rulings in the United States under the Digital Millennium Copyright Act (DMCA) or more directly under Section 230 of the Communications Decency Act (CDA). In the case of the DMCA, if one has no notice of infringement and innocently publishes infringing content, until knowledge is shown – by ‘take down’ notice or otherwise – a passive distributor would generally not be held liable for intellectual property infringement. Similarly, the CDA distinguishes between those who participate in the content creation process and those who merely distribute (the traditional news media distinction between editor/publishers and newsstand/distributors).
Under the instant ruling by the ECJ, although simply purchasing a keyword would not seem to constitute a per se legal violation in the EU, some rather arcane wording by the ECJ seems to suggest that advertisers (not necessarily the search provider) could now be held liable for trademark infringement resulting from their keyword purchase if their advertising can be shown to be confusing to consumers. Thus, courts in the EU will now be examining both the appearance of the advertising and its demonstrable or likely effect on consumers. One of our Associates, Drew Boortz, who follows these developments, notes that we are not aware of any U.S. case that has delved this deeply into keyword sales. While there are trademark and advertising cases that deal with “use in commerce,” the eight or nine recent cases against Google directly involving keywords are yet to come up for trial (e.g., Rosetta Stone Ltd. v. Google, Inc., U.S. federal complaint filed on July 10, 2009 in the Eastern District of Virginia; scheduled for trial in May).
Chris Hackford in our London office notes that trademark owners will no doubt be a little disgruntled after this ECJ judgment, as they will have to continue to bid on their own registered trademarks in order to ensure that they remain at the top of the listings.
If you want to form your own view of the ECJ decision, you can read it right here: Louis Vuitton v. Google; or you can call Reed Smith for help. Our offices in Paris, as well as London, Munich and Piraeus in the EU, stand ready to assist; and, of course, you can contact me, Joe Rosenbaum, in New York; Chris Hackford in London; Drew Boortz in our Washington, D.C. office; or the Reed Smith attorney with whom you regularly work.
