Updated: European Court of Justice: Google NOT liable for keyword trademark infringement but others maybe

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Updated: Sorry for the confusion but we’d been given conflicting information (see here, for example) relating to this story. After a back and forth, here’s our understanding of the ruling.

Keyword advertising using the trademark of others without their permission is illegal and services providers such as Google are also liable for any infringement.

Google and other advertising providers aren’t liable for keyword trademark infringement in most circumstances, and the search giant says this upholds one of the key principles of the Internet, that of safe harbour.

That’s the ruling given today by the The Grand Chamber of the European Court of Justice (ECJ), in a move that will likely shake up give much needed guidance to the search-based online advertising industry.

The fact that Google et al can no longer claim safe harbour in Europe is particularly significant as it now firmly places the burden of enforcement on service providers.

The case being settled, which now sets the precedent in Europe, is LVMH, the luxury goods company behind such brands as Dom Perignon, VS Google. The dispute had been referred to the European Court of Justice by The French Supreme Court (Cour de cassation) who asked the European court to decide on the rules governing trademark law online as well as the liability of providers of a paid referencing service – in this case Google.

“Google has not infringed trademark law by allowing advertisers to purchase keywords corresponding to their competitors’ trademarks,” said the European Court.

“Advertisers themselves, however, cannot, by using such keywords, arrange for Google to display ads which do not allow internet users easily to establish from which undertaking the goods or services covered by the ad in question originate,” added the ECJ.

In other words, advertisers if they blatantly mislead consumers through their use of keywords that use another company’s trademark will be liable – though it will still be on a case-by-case basis decided by local courts. The onus on service providers, such as Google, will be to remove such keyword ads, if it is shown that this is the case.

Commenting on the ruling, LVMH is obviously delighted. LVMH Senior Executive Vice-President, Pierre Godé, says:

“This decision represents a critical step towards the clarification of the rules governing online advertising, of which LVMH is one of the foremost clients. As the world’s leading luxury group, with more brands actively engaged with the Internet than any other luxury company, we are committed to working with all parties, including Google, to eradicate illicit online practices and to promote a framework that fosters the continued growth of the digital economy”.

Google has long claimed that advertisers using its service did not commit any illicit use of registered trademarks, and more importantly, as a service provider it was merely hosting the service and therefore could not be held liable.

With today’s ruling, an advertising service, including Google, can be found liable alongside the advertiser itself. Either because it was aware that the keywords being bought by the advertiser infringed a trademark or because it did not verify that the advertiser had the permission of the trademark owner to use the trademark.

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