Why the Advocate General got Google AdWords wrong

Brand spanking anew

Opinion We have been waiting for the formal opinion of an advisor to the European Court of Justice, in cases brought by three French companies against Google. Now that it has been published, we think the analysis is wrong.

The opinion is important because the analysis concerns the Google AdWords policy and the broader acknowledgement of brand rights online.

Three companies are suing Google because they object to the current Google AdWords policy, which allows anyone to bid for their brands as triggers for sponsored links on Google searches. The companies argue that their trade mark rights are infringed when other companies use their names as triggers for ads.

Google's AdWords system displays adverts next to the 'natural' search results generated by a search term. Advertisers pay to have their ads appear beside chosen search terms. So, for example Pepsi could pay to have their ads triggered when a user types "coke" or "coca-cola" into a search.

The Advocate General's opinion is the forerunner to the full judgment of the Court. The Court usually, but does not always, follow the opinion. Opinions have been known to be wrong when it comes to the eventual legal analysis. We hope this is the case for the Google claim. The Advocate General has advised the Court that Google's behaviour is legal and does not infringe trade mark rights.

The opinion and the eventual judgment have to answer written questions which have been referred to the court. In this case, the questions put to the court were legalistic, but in essence they were: if I have exclusive rights to a particular trade mark, and Google 'sells' that term in the context of the Google AdWords programme, is that trade mark infringement?

The Advocate General said no.

We disagree with the Advocate General because of our analysis of trade mark law – a pretty basic disagreement. The starting point is Article 5(1)(a) of the Trade Marks Directive (Directive 89/104):

"The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered…"

This is generally recognised as a property right. A registered trade mark can be bought, sold, and licensed. It has a value, although value tends to be described as the 'brand' value. It is an exclusive right. The starting point is that only the owner of the registered trade mark can use the mark for the goods and services for which it is registered.

It would seem obvious, then, that if Google uses the mark to generate adverts in relation to identical services, then it is trade mark infringement.

The Advocate General was concerned that the scope of trade mark protection was being expanded. He says:

"The Court is… being asked to expand significantly the scope of trade mark protection. I shall make clear why I believe that it ought not to do so. My examination of the question whether there is trade mark infringement will reveal, first, that the use in AdWords of keywords which correspond to trade marks does not, in itself, constitute a trade mark infringement, and, secondly, that the connection with other (potentially infringing) uses is better addressed, as it has been hitherto, through the rules on liability."

There seems to have been a general nervousness about how the internet will develop. Enforcing the trade mark exclusivity against a trader (Google) who is using and letting others use trade marks without permission of the trade mark owner does not expand the scope of trade mark protection at all. This case is the opportunity for the Advocate General and the European Court to restate established trade mark law but in the context of a new advertising model.

The Advocate General has also added an extra condition for trade mark infringement: He says:

"According to established case law, there are four cumulative conditions which must be satisfied if trade mark proprietors are to be able to prevent the use of their trade marks under Article 5(1) of Directive 89/104 (or, in other words, for there to be a trade mark infringement). One of those conditions is clearly satisfied: the use by Google, in AdWords, of keywords which correspond to trade marks is manifestly not consented to by the trade mark proprietors. It therefore remains to be ascertained whether the remaining three conditions are satisfied, that is to say, whether: (i) that use takes place in the course of trade; (ii) it relates to goods or services which are identical or similar to those covered by the trade marks; and (iii) it affects or is liable to affect the essential function of the trade mark – which is to guarantee to consumers the origin of the goods or services – by reason of a likelihood of confusion on the part of the public."

This is simply not the case. As can be seen Article 5(1)(a) carries no requirement to prove confusion. Article 5(1)(a) says: "The proprietor shall be entitled to prevent all third parties... from using in the course of trade... any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered".