On the 22 September 2009 the Advocate General Poiares Maduro delivered his opinion on the question of the legality of Google Adwords in relation to EU trade mark law.  He found that Google is not infringing trade mark laws by allowing people to bid on keywords corresponding to trade marks in their Adwords service. This is an ‘opinion’ from an independent officer of the court who is not a judge and the ECJ has yet to deliver its judgment. It is considered, however, that Advocate Generals’ opinions are persuasive, with the Times noting that 80% of AG opinions are followed by the ECJ. With such a high level of co-concurrence, it is not exaggerated to take Poiares Maduro’s opinion rather seriously.

But was Maduro’ opinion ground breaking in respect of the state of EU law? Or was he taking a more conservative approach?  On the whole, with the majority of his opinion favourable to Google, he appears to be following a prudent line as the AG is apprehensive about the “unpredictable consequences” of taking an alternative view.  There are a number of referrals outstanding before the ECJ, but how far does he go in dealing with all these questions?

Limited Scope
One thing is for sure that Adwords has been a popular subject for referral to the ECJ over the past few years.. “There is an Austrian (C-278/08), a Dutch (C-558/08), a German (C-91/09) referral pending before the ECJ. In the UK, Mr Justice Arnold, in making the latest referral to the Court mid this year, explained “that there is at least a real possibility that the rulings by the ECJ on the existing references will not clearly resolve all the issues of law which arise in the present case” (para 93, Interflora v. Marks and Spencer Plc).
All of these referrals deal with the question of the legality of Google Adwords. The current AG’s opinion deals with 3 French cases which were grouped together (C-236/08, C-237/08, C-238/08), so, strictly speaking, the scope should be limited to those cases. Moreover, the current case is being brought against Google, the provider of the Adwords service. In Interflora, the case is between 2 private parties, one of which is being accused essentially of using the Adwords service to redirect interest towards their sites. The AG is analysing Google’s use of a trade mark and his finding will not unequivocally answer whether Marks and Spencer’s use of the trade mark ‘INTERFLORA’ is an infringement of Interflora’s trade mark.
Lastly, the AG emphasizes the limitations in his own opinion stating “that the Court is being asked only about the use of keywords which correspond to trade marks; it is not being asked about the use of the trade marks in ads”.

The Opinion – Technical Failing
The AG analysed the claims made in all three of the French Cour de Cassation references and gleaned the essential differences. He distinguished between the first reference (Louis Vuitton) which involved counterfeit goods and the other references (Google v Viaticum and Luteciel; Tiger v. CNRRH) comprising competitor sites, then consolidated all the questions so that he could present his findings comprehensively.

He summarised the standard conditions for trade mark infringement:  the infringer’s use of a sign and their goods and services must overlap, in the sense of being similar or identical, respectively with a trade mark owner’s sign and goods and services. Also, the ‘use’ has to be done in course of trade and there must be a likelihood of confusion on the part of the public.

But what type of ‘use’ is Google providing? The AG dissected the different types of use into 2 parts and assessed each separately for trade mark infringement: 1) the practice of selling trade marks as keywords in the AdWords facility; 2) the display of AdWords generated by a keyword search where the keyword corresponds to a trade mark.

1.    Strictly speaking, Google does not sell good or services identical or similar to the trade mark proprietors, i.e. they are not in the business of selling handbags such as Louis Vuitton. This was enough for the AG to find that the usage was not in infringement of trade mark law.

2.    However, the displayed advertisement triggered by trade mark keywords is advertising because a link is established “ between the trade mark and the goods or services advertised” (§79). But this was not enough to establish infringement. There must also be confusion on the part of the consumer. But the AG was very sure that the internet user was much more discerning than the trade mark owners had made out: “internet users are aware that they will have to sift through the natural results of their searches”. He thought that we decide on the origin of goods or services not from the results page of a search engine, but from actually leaving the page and clicking on the link provided by the search engine. On this ground, amongst other considerations, infringement was not found.

The AG’s conventional application of EU case law to this situation, where he stated that he would not depart “from the well-established case-law of the Court”, demonstrated plainly the technical failings of the case against Google; this seemingly not down to deficient argument but rather due to a rather particular set of facts. EU trade mark law was maybe not designed to apply to information service providers such as Google as they are relaying information and are not actually selling counterfeit or competing goods or services. So, on mainly technical points, Google was out of the reach of EU trade mark law.

The Bigger Picture -  Unpredictable Consequences
But beyond the technicalities, the AG took upon himself to look at the bigger picture, as much of his discussion revolved around the risk of an ‘overspill’ as a result of finding a trade mark infringement in the Google Adwords service. The AG was concerned that a decision made against Google Adwords would lead to trade mark proprietors wanting to target the natural results of the Google search engine (para 109), as there is not much difference between the two services: AdWords is clearly the commercial pillar of the Google search engine but the natural results could also be indirectly commercial, as root of the income of AdWords relies heavily on the performance of the general search facility. Also, both AdWords and natural results characteristically are the same in terms of their presentation (a short piece of text and a link).

The AG was concerned that the Court would not be able to limit the scope of the case to Adwords and that, as a result, the normal search function might be impeded by trade mark owners trying to stop anyone from using their trade marks on the internet.  The AG didn’t want to give too much control to trade mark owners, stating that the effect of accepting a trade mark infringement by Google  would provide trade mark owners with an “absolute right over whatever shown and said in cyberspace “ (para 108). Essentially the AG was balancing the consumer/ commercial interest and that of trade mark owners and in this balancing act, the AG noted that trade marks were inherently relative concepts, not equatable with traditional property rights where one has absolute rights over a physical space to the exclusion of others.

Contributory Trade mark Infringement
The AG provided a strict application of EU law that made the claims fail on technicalities. There was no desire to look purposively at the application of EU law to this specific situation. But even if Google was not directly responsible for trade mark infringement what about their contribution to such infringement? Should not that be a cause of action in itself? The AG was well aware from the outset of his presentation that contributory infringement was the right format for the Adwords set of facts. He deferred the issue to later in his discussion but unsurprisingly wasn’t prepared to make such a concession to the trade mark proprietors on this point.

Contributory infringement was not an EU doctrine and, in principle, the AG was convinced that it should not become one. He referred to the ambition of the trade mark owners, due to the difficulties of enforcing their rights on the internet, as now wanting to stop the “messenger rather than the message” and referred to cases in the US, where the aim was to ban the manufacturing of video recorders, as being most unwelcome. The AG wasn’t prepared to accept such an extension to EU law.

Where does that leave Google?
It may appear that the AG was falling down on the side of Google, but he did emphasise that although trade mark infringement did not apply to this situation, Google had not reached complete immunity. The AG applied the exemption for service providers such as Google in the Information Society Services Directive and found that although the keywords function of Google was content neutral, the AdWords side of the service was not. The effect being that Google would have exposure in this particular area of their service, and could still be held liable at national level for “civil or criminal matter[s]” (para 127).

Google Adsense?

As a result of a recent decision against Google in the USA, a new weapon should be considered by  trademark owners like Microsoft in the battle against cybersquatters.  If misspellings or other versions of trademarks are registered as domain names by third parties who are earning click revenue from Google’s adsense program,  suing Google may be an option worth considering.

The adsense program effectively allows Google to profit from cybersquatting.  To understand why that is, it is worth taking a  look at how Google’s Adwords program works. 

When a surfer searches for specific terms Google’s search results along the top and on the right hand bar of the page are the advertisements of businesses who are participating in Adwords – that is paying Google to feature their ads 

Adwords involves ‘bidding’ on keywords, so that whenever your desired keyword is searched on by a surfer (for example, Azrights bids on the keywords ‘register trademark’) your ad will appear among the results.  As such your site stands a chance of being visited (clicked on) by the surfer.  As these surfers are specifically looking for the product or service that your website offers it is a good way of promoting your services to potential buyers Each time a surfer clicks on one of youre ads, you pay google something  for the click.  Some keywords are more expensive than others.  If  only very  few advertisers are bidding on a keyword that term will be less competitively priced. 

Google uses a number of third party sites to display its advertiser’s ads, in order to promote your ads more widely.  Amazon is an example of a third party site that participates in Google’s adsense program.  So, for example, if you are looking at books about brands and  trademarks on Amazon you will notice some ads by our competitors about trademark registrations.  Our ads would not appear because we have opted out of  adsense. 

Similarly, many  domainers or ‘click farmers’ websites and parked pages also participate in adsense, so that their parked pages or websites will feature lists of  Google’s featured ads. .  Sometimes such pages purely exist as a page of links, such as trademark.co.uk does for trademark ads.  ,

If a cybersquatter has registered a misspelt trademark name such as MIROSOFT they too are likely to use a parked page to receive Google’s ads.  Their page   will feature a selection of ads by Microsoft’s competitors or by businesses  offering similar goods and services to those that Microsoft would sell.  So, the technology Google uses clearly enables it to decide which of its advertisers have suitable ads for such a page, and therein lies the argument as to the liability Google should bear for the wrongdoing.

The third party site receives a share of Google’s  revenue.  So if Google collects 60 pence per click from the advertiser it may  pay 20 pence a click (this is a complete guess) to the owner of the third party site.  Therefore whenever a surfer  clicks on an ad on a third party’s site rather than on google’s own search result page the surfer’s click generates revenue for the cybersquatter (a term that applies to anyone who has registered someone else’s trademark as a domain name).  What’s more it is Google that has created the possibility for the cybersquatter to earn anything from its wrongdoing..Google’s practice was  successfully challenged in the recent litigation by Vulcan Golf in the US District Court in Illinois see here .   They argued that under the Anticybersquatting Consumer Protection Act (ACPA) Google’s role in facilitating such profiteering by cybersquatters should attract liability.  The court agreed.

Of course, there are perfectly legitimate uses of parked pages, and it is difficult for anybody to claim rights in names like ‘trademarks’.  Therefore, the question is to what extent should  Google be expected to police the rights of trademark owners.  Where should it draw the line when if it notices that the parked page could possibly belong to a cybersquatter rather than to a legitimate domainer who has good reason to own a domain name, that on the face of it might be someone else’s trademark. 

While for brands like Microsoft it may be quite clearcut that a variation of the name Microsoft is likely to be held by a cybersquatter, it is not always easy to know whether or not a domain name is actually infringing someone’s trademark rights, especially where the brand name is a generic word like APPLE.

One goal is to keep this blog on track during 2009.  I want us to be writing about law as part of the business issues people are facing.  Many of these issues are internet related, given the vast changes being brought about in all walks of life by the connected web, or web 2.0, as it is sometimes referred to.  There are already plenty of others who write pure Intellectual Property blogs so that the law of IP is already exceptionally well covered.  IP law as part of the many issues businesses need to understand is not so well covered.

Last year I attended the Society for Computer and Law conference, a full report of which appears here and returned very enthused to participate in the world being opened up by social technologies like blogging, facebook, Second Life etc.  So in a fit of enthusiasm  some time after the conference I did a lot of surfing to formulate a plan for our participation in these social developments.  I didn’t get very far though.

So, I understand the huge challenge businesses face when trying to formulate a plan and a strategy to participate in web 2.0.  How do you even begin to decide how to make best use of your limited time and resources when you first have to understand what’s out there, how it will be changing, what it could mean for your business, what you need to do to join in etc?  This is especially difficult given the unfamiliar concepts and jargon.  There’s plenty of free advice and nuggets of information, but information overload is the problem.  If my experience is anything to go by, surfing is hugely entertaining, but unlikely to produce answers to key questions.

To compound the problem, every site has its own lengthy terms and conditions.  Is it any wonder then that nobody bothers to read these?  One assumes and hopes for the best that they will be fair.  But that may not be a reasonable assumption.

Which leads me onto a separate matter, namely Yahoo’s terms and conditions for keyword advertising.  From this post I gather Yahoo has quietly introduced new terms of business giving itself the right to change customers keywords and ads.  Reportedly, judging by the comments to that post, Yahoo has used this right to change some people’s ads, ( and even sent traffic to website pages of their own choosing).  In the process, some customers have received substantially increased charges on their accounts.  All this, without even an email forewarning them of these unilateral changes…  The mind boggles.

Clearly Yahoo needs legal advice because it would have serious problems enforcing these terms.  And in this web 2.0 environment when people are more easily able to unite to take a stand against large corporations, if Yahoo has any sense it will immediately take steps to reverse these changes before it suffers further  adverse publicity.

I would hazard a guess that in many organisations the people at the top and the legal department are rarely aware of what is going on on the ground.  Otherwise, why else has Marks and Spencer now ceased to bid on the Interflora in its keyword advertising? More than likely the marketers had simply decided to bid on other brands as keywords because Google relaxed its policy on such bids.  What they would not be aware of, is that the Court of Justice’s ruling is eagerly awaited on this question of whether bidding on competitors’ keywords is trade mark use.  If it is, then the practice will be trade mark infringement. 

I will watch this case with interest.  In the meantime, small business owners should take the case as an example of why it is so important to use a written contract when engaging the services of web marketing experts. 

If you are paying someone £150-£200 plus a month to handle your google adwords account it makes sense to spend a few hundred pounds on lawyers fees so you know what the web marketer is or is not going to do for you.  Who will be liable for what?  If the web marketer is going to bid on your competitors brands as keywords will they accept liability if you are sued?  If they will not indemnify you, then at least you should know that they are running these risks in your name, so you can take an informed decision whether to allow it to continue.