Commercial hyperlinks – Special dossier on European and French case law

Published onApril 2013

Commercial hyperlinks basics

For several years now, with the development of the e-commerce, web search engines have been proposing commercial advertising services which consist in generating, in addition to natural search results, alternative commercial results or ads in response to a given query by internet users.

Advertisers may select and enter specific keywords that, when typed in the web search engine, automatically generate their commercial ads.

The most representative pay-per-click advertising product is Google’s Adwords and, because of its innovative character and its success, it was and is still the source of many legal debates and disputes.

As other similar services, Adwords does not control advertisers in selecting keywords and as a consequence some of them do not hesitate to use their competitor’s registered trademarks to promote their own activities and websites.

Very soon it became important to know if such actions can be considered as infringing trademark owners’ rights and, if so, who is responsible and legally liable, web search engines offering commercial advertising services and/or advertisers selecting their competitor’s registered trademarks as keywords.

Case law

Main decision by the Court of Justice of the European Union

Because French courts did not have a clear and permanent opinion on the subject, the Cour de cassation (French Supreme Civil Court) decided to seek a preliminary ruling from the Court of Justice of the European Union.

The response came in a decision dated 23 March 2010 (Louis Vuitton Malletier SA v/ Google France and GOOGLE INC., joined cases C-236/08 to C-238/08): “An internet referencing service provider which stores, as a keyword, a sign identical with a trade mark and organises the display of advertisements on the basis of that keyword does not use that sign within the meaning of the Trademark Act, now Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008, to approximate the laws of the Member States relating to trade marks.

This means without a doubt that web search engines cannot be convicted for infringing trademark rights with respect to their commercial advertising services.

They can only be held liable if they do not act as mere internet hosting service provider or if they do not act with sufficient promptness in response to trademark holders requesting the removal or deletion of commercial ads considered as infringing their rights, as prescribed by 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 which states that “the service provider is not liable for the information stored at the request of a recipient of the service, on condition that: (a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or (b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information” (in France, Law of 22 June 2004 on confidence in the digital economy).

However the Court decided that “the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, in the case where that advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party”.

As a consequence a trademark infringement action can only be brought before National courts in case an advertiser deliberately has a web search engine broadcast a confusing commercial ad that could create a likelihood of confusion on the part of internet users about the origin of the promoted goods or services.

Trademarks with a reputation

One may have thought that such a solution would not apply to marks with a reputation because of the extensive scope of protection granted to such trademarks.

The Court of Justice nevertheless confirmed and added to its former decision in a case opposing INTERFLORA to MARKS & SPENCER (judgment of 22 September 2011, case C-323/09):

The proprietor of a trade mark is entitled to prevent a competitor from advertising – on the basis of a keyword which is identical with the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor’s consent – goods or services identical with those for which that mark is registered, where that use is liable to have an adverse effect on one of the functions of the trade mark. Such use:

  • adversely affects the trade mark’s function of indicating origin where the advertising displayed on the basis of that keyword does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services concerned by the advertisement originate from the proprietor of the trade mark or an undertaking economically linked to that proprietor or, on the contrary, originate from a third party;
  • does not adversely affect, in the context of an internet referencing service having the characteristics of the service at issue in the main proceedings, the trade mark’s advertising function; and
  • adversely affects the trade mark’s investment function if it substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.

[…] The proprietor of a trade mark with a reputation is entitled to prevent a competitor from advertising on the basis of a keyword corresponding to that trade mark, which the competitor has, without the proprietor’s consent, selected in an internet referencing service, where the competitor thereby takes unfair advantage of the distinctive character or repute of the trade mark (free-riding) or where the advertising is detrimental to that distinctive character (dilution) or to that repute (tarnishment).

Advertising on the basis of such a keyword is detrimental to the distinctive character of a trade mark with a reputation (dilution) if, for example, it contributes to turning that trade mark into a generic term.

By contrast, the proprietor of a trade mark with a reputation is not entitled to prevent, inter alia, advertisements displayed by competitors on the basis of keywords corresponding to that trade mark, which put forward – without offering a mere imitation of the goods or services of the proprietor of that trade mark, without causing dilution or tarnishment and without, moreover, adversely affecting the functions of the trade mark with a reputation – an alternative to the goods or services of the proprietor of that mark.

Once again the content of the commercial ad would determine if renowned trademark holders’ rights are infringed or not. If the advertisement is clear about the fact the advertiser is independent of the trademark holder, there would be no dilution. And if the advertiser only puts forward an alternative offer to the trademark holder’s, there would be no infringement.

The last paragraph leaves little doubt about the Court’s real intention that free competition prevail upon the protection of intellectual property rights.

French case law

In concrete terms, an advertiser may be held liable for trademark infringement in case its ad does not clearly states the origin of the promoted products and services. On the contrary, there would be no trademark infringement if the ad clearly identifies, without any confusion, the physical or moral person on behalf of which the commercial hyperlink is displayed.

For more than two years, French courts regularly implement such interpretation.

For example, the First instance court of Paris decided on April 29, 2011, that there was no infringement of ENVIROJOB trademark because a commercial ad which did not reproduce the conflicting trademark clearly promoted a website identified thanks to its domain name clicandearth.fr. The court stressed that a “normally informed and reasonably observant internet user” could not identify ENVIROJOB services and clicandearth services as originating from the same undertakings or from economically-linked undertakings.

Following a similar argument, the Court of Appeals of Lyon decided on March 22, 2012, to reject a trademark infringement action on the grounds that the promoted services were clearly described under a different name or sign without any reference to nor any imitation or indirect evocation of the trademark. The Court concluded that the contested ad did not suggest the existence of an economical connection between the advertiser and the owner of the trademark.

On September 25, 2012, the French Cour de cassation (French Supreme civil Court) even issued a very circumstantiated decision on the matter, in connection with AUTO IES selected-as-a-keyword trademark: “Keywords “autoies”, “auto-ies”, “auto ies” and “ies” are identical to trademarks owned by AUTO IES company and are used to trigger promotional hyperlinks towards websites offering products and services identical to those covered by the trademarks; however such ads are clearly classified as “commercial hyperlinks” and are shown apart from the natural results provided by Google; they include messages describing the promoted products and services in very generic terms, without any implicit or explicit reference made to the trademarks; each one of the ads is followed by a domain name which cannot be linked to AUTO IES company; each ad is consequently specific enough so that average internet users understand that the promoted products or services do not originate from AUTO IES company nor from an economically-linked undertaking, but from a third party”.

Considering French decisions on that matter, it was feared that no advertiser would ever be convicted for trademark infringement, primarily because the courts deemed that the normally informed and reasonably observant internet user – sort of equivalent of the average consumer on the web – could always and easily determine the difference between commercial ads and natural results.

A recent decision of the First instance court of Paris, on November 22, 2012, nevertheless settled a bit more equally the balance between free competition and IP rights protection.

The court decided that the rights of the owner of ASCUR trademark were infringed because it had been selected as a keyword in Google web search engine to generate a “commercial ad that did not allow the internet user to understand who was the editor of the promoted website since such person promoted its services using only generic and descriptive terms”. Even the name of the website was descriptive of the nature and function of the promoted services and, once on said website, the internet user could not easily determine if ASCUR services were actually offered or not.

According to the court, “the likelihood of confusion was characterized both by the vagueness of the commercial ad on the page of results and by the generic nature of the terms and the generic presentation of the promoted website which could lead the internet user to believe that such website centralized all services in a same business field”.

In our opinion this decision must be welcome, partly at least, since the detailed analysis contained therein provides a good example of what may constitute trademark infringement in such circumstances.

According to the court, there could be trademark infringement if the following conditions are met:

  • the trademark (or the imitation of the trademark) should be selected as a keyword;
  • the commercial advertisement and the name of the promoted website should be described with generic and/or descriptive terms; it is reasonable to expect that, in case the trademark should be reproduced within the ad, the likelihood of confusion on the part of the public would be even easier to characterize (See First instance court of Bordeaux, January 15, 2013 about GENPRO trademark);
  • of course, there should be no products or services originating from the owner of the trademark on the promoted website (or else the owner’s rights would be exhausted) but rival products or services only;
  • the content of the promoted website should be composed in a generic manner, thus making it impossible or difficult for the internet user to determine if the products or services covered by the trademark would be really offered or not.

Should such a decision be confirmed by the court of appeals or implemented in different cases, trademark owners would eventually feel that their rights are not systematically ignored on the internet, especially when pay-per-click advertising services are concerned.

One may regret however that the Court of Paris decided to give so much attention to the content of the promoted website since this was not among the prerequisites set by the Court of Justice of the European Union. By adding such condition in its argument, the Court of Paris de facto reduces the cases in which an advertiser may be held liable for trademark infringement.

In any case, trademark owners should definitely set up specific trademark monitoring services on the internet to know precisely which of their competitors use their trademarks on the internet and to what extent.

© INSCRIPTA