CJEU Establishes Framework for Use of Trade Marks in Keyword Advertising

Keyword advertising – the best-known example of which is Google AdWords – is a new and promising way of promoting a business.

Advertisers can buy keywords, which trigger the display of ads when a search is made using these words. The ads appear in separate areas around the “natural search results”, which are ranked according to relevancy. However, this new form of advertising has raised concerns amongst brand owners whose trade marks are used as keywords to trigger the ads of competitors or counterfeiters.

Over the past few months, the Court of Justice of the European Union (CJEU) has laid down a legal framework for the use of trade marks as keywords.

Aside from straightforward cases of counterfeiters offering a mere imitation of the goods or services of the proprietor, the CJEU's position is quite favourable to keyword advertising, which it deems a way of drawing the internet user’s attention to the existence of an alternative product or service to that of the proprietor of the trade mark.

According to the Court, the use of a trade mark as a keyword by a third party does not have the effect of denying the proprietor of that trade mark the opportunity of using its mark effectively to inform and win over consumers. In this respect, the CJEU holds that the home and advertising pages of the proprietor of that trade mark will appear in the list of the natural results. This position is however debatable since there is no guarantee that the trade mark proprietor’s website will appear at the top of the search results or even on the first page, especially if the trade mark does not enjoy a particular reputation.

To prevent third parties from using trade marks as keywords, proprietors should demonstrate that the ad does not enable normally informed and reasonably attentive 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 an undertaking economically connected to it or, on the contrary, originate from a third party. This assessment should be based on the general knowledge of the market of the reasonably well informed and reasonably observant internet user.

This criterion, which is similar to that used to determine likelihood of confusion, is widely cited in the CJEU's case law on keyword advertising. Indeed, it is used to assess infringement both when a keyword identical to a trade mark is used for identical goods or services and when a similar keyword is used for similar goods or services. It is also applied to assess dilution and free-riding, when the case involves a trade mark with a reputation, and to determine whether a “legitimate reason” prevents the exhaustion of the rights conferred by the trade mark, when the goods at hand were put on the market under the trade mark by the proprietor or with the latter's consent.

The CJEU chose to hold only the advertiser liable for potential infringement. Search engine operators are released from liability on the ground that they do not use trade marks in the course of trade and only create the technical conditions necessary for the use of the trade mark.

The proprietors of Benelux trade marks should bear in mind the specificities of Benelux trade mark law when a sign is used other than to distinguish goods or services. This provision, which has not been harmonized at the European level and hence is not covered by the CJEU's recent case law, could offer an interesting basis for Benelux trade mark owners to object to the use of their trade marks by competitors or, under certain circumstances, the sale of their trade marks as keywords by search engine operators.

For more information, please refer to the CJEU's three main judgments on keyword advertising, namely:

•Google, C-263/08 to C-238/08, 23 March 2010
•Portakabin, 8 July 2010, C-558/08
•Interflora, 22 September 2011, C-323/09