Trademarks constitute a specific kind of industrial property used by manufacturers and traders to identify their goods and services, denoting their origin, to protect the efforts and investments made by the proprietor, and to distinguish the proprietor’s goods and services from the goods and services, made, sold or offered by others. A subsidiary function of Trademark Law is also the protection of consumers who can trust that a product or a service bearing a specific mark originates from a specific manufacturer or trader and possesses certain quality or other characteristics. Trademarks are valuable intellectual property because they become associated with quality, origin and consumer expectations from a specific product or service. Furthermore, proprietorship over a trademark allows restricted monopoly over that mark and its use but only about the classes of goods or services in which the mark is registered.
Directive 2008/95 of the European Parliament and the Council to approximate the laws of the Member States relating to trade marks of 22 October 2008, constitutes the main legislative EU act in the field of trademarks. According to Article 2 of the Directive a trade mark may consist of ‘any signs, particularly words, including personal names, designs, letters, numerals, the shape of goods or of their packaging, provided that such signs meet two requirements – the capability of being represented graphically and the capability to distinguish the goods or services of one undertaking from those of other undertakings.’
For the sake of clarity, Directive 2008/95 was recast in 2015, thus forming the new Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trademarks. One of the main changes enacted by the new Directive is the omission of the requirement for a trademark to be capable of being represented graphically. Thus the definition of trademark has been expanded so now it could include scents and sounds. Nonetheless, pursuant to the new trademark definition set out in Article 3 of Directive 2015/2436 trademarks would have to be represented on the trademark register in a manner which enables the authorities and the public to determine the clear and precise subject matter of protection. Recital 13 of the Directive 2015/2436 sets forth that the representation can be in any appropriate form using generally available technology and not necessarily by graphic means, which creates the opportunity for holograms or motion marks to be registered as trademarks as well.
The functions of a trademark are by definition limited territorially. A trademark can be registered on a national, regional, EU or international level, depending on before which institution the trademark holder has applied for protection (accordingly before a national authority, the European Union Intellectual Property Office or WIPO). A trademark holder, willing to acquire rights functioning across all Member States can apply for registration before the European Union Intellectual Property Office (EUIPO) in pursuit of a European Union Trade Mark.
In its case law the Court of Justice of the European Union (CJEU) has had the opportunity to rule when using a keyword which is identical or similar to a trademark for the purposes of commercial advertising on the internet constitutes an infringement of the trademark owners’ exclusive rights. The main cases from this category alongside their factual background will be commented below.
AdWords is a paid referencing service, part of the Google Search Engine, which displays a set of advertisers’ sites alongside the “natural” search results. The links appear under a heading “sponsored links” and also correspond to the keywords the user has searched for, but in a different way, compared to the ‘natural’ results. AdWords allows any economic operator to reserve a set of keywords, the search of which will ensure the placement of his/her advertising link alongside a short commercial message to every user who performs a search using these keywords. A fee for the referencing service is requested from the advertiser for each click on the advertising link by a user. The fee amounts to a so-called “maximum price per click”, which is negotiated between the advertiser and Google beforehand. Different advertisers can choose identical keywords and the order in which their links appear is determined by the “maximum price per click” paid, the amount of previous clicks on the specific link and the quality of the advertisement, as assessed by Google. Apparently, the only mechanism for an advertiser to push his/her own link up the list is by paying a higher “maximum price per click” or improving the quality of his advertisement.
The link between the three CJEU cases is that they all concern practical cases when an AdWords advertiser has used keywords that are identical or similar to a trade mark.
In Case C-236/08 - Google France and Google (“Google France”), the CJEU has established that a trademark holder can prohibit an advertiser from using a keyword identical with his/her trademark for the same category of goods and services, provided the advertisement deceives or at least impedes an average internet user to ascertain whether the advertised goods or services originate from the original trade mark holder (or his/her representative or lawful distrubutor) or, on the contrary, originate from a third party.
As of Google itself, the CJEU has accepted that Google is neither using the trademark within the meaning of the applicable EU legislation and case law, nor is it liable for trademark infringement. As an internet service provider, which simply accepts keywords from the advertiser which are identical with a trademark, Google qualifies for the exemption from liability under Article 14 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'). The exception allows for an information society service provider which:
- has not obtained actual knowledge of illegal activity or information; or
- has not been notified and has not obtained the aforesaid in point (a) knowledge or awareness, in order to act expeditiously to remove or to disable access to the information;
to be exempt from any liability, arising from the illegal conduct of its users.
In summary, in Google France the Court concluded that advertisers would not infringe a trademark holder’s exclusive rights by using the relevant trademark as a keyword in order to advertise their own services or goods as long as they clearly indicate that the goods and services they offer do not originate from the trademark proprietor. On the other hand, as long as the internet referencing service provider’s role stays neutral in the advertisement process, it will be exempt from liability as well.
In the second of the three cases, Case C-323/09 - Interflora and Interflora British Unit (“Inteflora”), the defendant – M&S, a famous retail chain in the UK, has used the keyword ‘Interflora’ to advertise its flower-delivery business through AdWords. However, INTEFLORA as a registered trademark in the UK was owned by a company of the same name which ran a well-reputed flower-delivery business. In this case, the CJEU has ruled that the use of a reserved keyword in AdWords identical to a registered trademark would constitute an infringement if the use has an adverse effect on one of the functions of the trademark. The Court has confirmed its position from “Google France” that such advertising can harm the origin-indicating function of the trademark if the advertisement fails to clearly indicate the origin of the goods or services offered and whether they originate from the original proprietor of the trade mark or from a third party. However, in the Inteflora case, the Court has also invoked another function of the trademark which might be potentially harmed and thus has to be considered when assessing such violations. This is the so called ‘investment function’, which helps the proprietor of a trademark to acquire and preserve a commercial reputation in relation to his trademark. In this line of thought, if the use of a keyword identical to the proprietor’s trade mark undermines the trademark’s reputation by repelling customers and eroding their loyalty, this would also constitute an infringement to the trademark proprietor’s exclusive rights.
In conclusion, based on the Court’s findings in Interflora, online advertising through trademark keywords, which does not have adverse effects on any of the functions of the trademark, would be considered an act of fair competition, as its purpose would be to offer consumers alternative goods or services to the ones for which the trademark is registered.
The last case from the series – Case C‑558/08 Portakabin, is named after the claimant - a manufacturer of modular portable homes. Primakabin – the defendant, had chosen keywords, identical with the claimant’s trade mark "Portakabin", together with variants such as ‘portacabin’ and ‘portokabin’. The preliminary ruling dealt with the permissibility of the use of such keywords by an advertiser, who sells second-hand, although genuine, goods, manufactured by the trade mark’s proprietor. The CJEU held its position that the use of a keyword identical to a trademark for advertising goods or services identical to those in respect of which the trademark is registered, can be prohibited if such use has an adverse effect on the origin-indicating function and the investment function of the trademark.
By referring to Article 7 of the First Council Directive 89/104/EEC of 21 December 1998 to approximate the laws of the Member States relating to trademarks, the Court concluded that due to the exhaustion of trademark rights, Portakabin is not entitled to prohibit Primakabin from advertising the resale of those goods unless there is a legitimate reason, within the meaning of Article 7(2) of the Directive, which justifies Portakabin to oppose that advertising. A legitimate reason, the Court continues, would exist in the following cases: first, if the use of the keyword gives the impression that the reseller and the trademark proprietor are economically linked and secondly, if the relevant use seriously harms the trademark's reputation. Furthermore, the judgement outlines that such a legitimate reason cannot be ascertained merely on the basis that Primakabin uses Portakabin’s trademark with additional wording indicating that the goods in question are being resold, such as ‘used’ or ‘second-hand’.