Use of trademark as Google adword

A trademark owner may prohibit the use of the trademark if that use affects or is liable to affect one of the "functions" of the trademark. Apart from the origin function a trademark also is a commercial strategic tool which can in particular be used for advertising purposes or to build a reputation, so to create consumer loyalty.

On September 22, 2011 the European Court of Justice gave a little more clarity about the functions of a trademark and the question of when the use of keywords ("adwords") is permitted.

Summary of Interflora case
Interflora operates a global flower delivery network. The network consists of florists with whom clients can place orders in person, by phone or internet. The orders are handled by the network member located nearest to the delivery address of the flowers.
INTERFLORA is a UK and European trademark. In the United Kingdom and other countries of the European Union the trademark enjoys a considerable reputation.

The British company Marks & Spencer is a large retailer in the UK. Among its services is engages in the sale and delivery of flowers. Accordingly, Marks & Spencer is a competitor of Interflora. Marks & Spencer has selected several key words with the trademark INTERFLORA for its Google ads.

Through the English courts, the case ended up before the Court of Justice to give guidance in the explanation of the trademark laws.

Consequences of the decision

The national court must in each case assess whether those using keywords corresponding to the trademark of someone else in Google ads, adversely affect any of the functions of the trademark or will thus illegitimately profit from the reputation of the trademark ("free riding").

The Interflora case the national court must in particular examine whether or not the use by Marks & Spencer of the keywords containing INTERFLORA, could jeoperdize the conservation by Interflora of a reputation that can attract consumers and create brand loyalty.

Interference with the functions of the trademark?

Adverse affect on origin function: generating confusion about the origin
The trademark function of indicating origin is adversely affected if the normally informed and reasonably attentive internet user can not properly identify the source of the ad with the keyword corresponding to the trademark. In other words, if he does not or can not easily find out whether the goods or services from the ad come from the trademark owner (or economically related company) or a third party.

Adverse affect on investment function: trademark owner is seriously hindered in acquiring or maintening reputation
Examination of this function of the mark by the Court is a new element. If the use of the trademark 'seriously' hinders propietor in acquiring or maintening a reputation that can attract consumers and create brand loyalty.
In a situation where the trademark already has a reputation, the investment function is undermined  the use adversely affects this reputation and therefore puts its preservation at risk.
But there is no prejudice to the investment function if the use by a competitor only leads to necessity for the proprietor of that trademark to increase its efforts to acquire or maintain a reputation that can attract consumers and can create brand loyalty. Nor can the trademark proprietor successfully rely on the fact that the use in the adword can possibly bring a number of consumers to ignore the goods or services bearing the trademark.

Adverse affect on advertising function?
The use of a sign identical to a someone else's trademark as part of a keyword in advertising services of search engines like Google, however, does in itself according to the Court not adversely affect the advertising function of the trademark.

Well-known trademarks: unlawful profiting / free riding

According to the Court, the selection of someone else's well-known trademarks as keywords - without due cause - as part of an advertising service can be seen as unlawful profiting / free riding. This is especially true when web advertisers offer imitations for sale through the use of keywords that match with well-known trademarks.

Use in providing alternatives is allowed: healthy and fair competition

The Court rules that it is in principle allowed to use a well-known trademark as a keyword, if the advertiser merely uses this to offer an alternative to the well-known brand (and no imitation). In that case, such a use would according to the Court in principle qualify as fair and healthy competition in the sector of the goods and services concerned.

This may be different if it leads to dilution of the mark or adversely affects the reputation or otherwise adversely affects the functions of the trademark. Such is for example the case when the use could cause the trademark to become a generic name for the goods concerned.

Comparative advertising (out of scope of the Court's judgement)

The Court has only given the lines to be followed by national courts in their decisions and interpretation of the law. Therefore, other aspects of cases like this have not expressly been considered by the Court such as rules on misleading or comparative advertising when a trademark of a competitor is used in a Google adword to promote competing alternatives. Advertising can be considered comparative when it explicitly or by implication identifies a competitor or goods or services offered by a competitor. Under circumstances the competitor's trademark used as a Google adword can serve that purpose.

As long as the requirements of comparative advertising are met (and therefore also the functions of the trademark are not compromised), the use of the trademark of a competitor is permitted. In that respect, this case provides more clarity on trademark use in comparative advertising.

publicatiedatum: Friday, September 23, 2011