AdWords saga continues with new Court of Justice ruling

As we know, the CJEU decided last year that the Google AdWords system was legal and that Google therefore had the right to sell company trademarks to third parties. The limitation imposed on the other hand consisted, for the most part, of buyers acting legitimately.

In the case of Marks & Spencer v Interflora of 22 September 2012, the CJEU laid down another stone in the legal structures of the AdWords service and internet referencing. The facts: M & S offered a sale and delivery service for flowers and bought keywords consisting of the term “Interflora” and its variants on the AdWords referencing service.

The question that was referred to the CJEU sought to ascertain whether:

* the community laws could be interpreted to mean that a company is entitled to prevent a competitor from advertising, using a keyword which is identical to the trademark

* the fact that the relevant public may be given the wrong impression as to the origin of the products or services, and that the internet referencing service (Google) does not permit trademark owners to prevent their trademarks being selected as keywords, may be considered in answering the first question

The CJEU’s response, which was a bit complicated at first, was quite clear insofar as it stated that a trademark owner may prevent a competitor from advertising using a keyword which is identical to its own trademark when such use adversely affects the trademark’s function of indicating origin

The CJEU also specified that the competitor commits infringement:

– when the relevant public is unable to or cannot easily determine whether the product or service advertised originates from the trademark owner or from a company to which the owner is linked.

– when the use adversely affects the trademark’s advertising function

– when such use adversely affects the trademark’s investment function

The CJEU also provided other specifications for situations where a trademark’s reputation is affected.

Key points

The CJEU neither gives free rein to companies that wish to buy their competitors’ trademarks on AdWords, nor does it give trademark owners absolute rights to object to this practice.

In the end, it all depends on the context, and the consequences, in providing a maximum of information on existing products, without overdoing it. In short, this is likely to become a major source of dispute given the obvious level of subjectivity involved!

On the other hand, it may also reinforce sanctions against “non-competitive” company referencing, or against a company that does not offer products or services which differ from those associated with the trademark in question…

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